EUR 236.14 For Business Accounts Only

Aldar’s Salvation = Recurrent revenue

From Ugly Betty to Pretty Woman
Aldar’s debt situation is a far cry from the gloomy days following the financial crisis. At that time, the company’s debt soared to AED38.6bn (As of 2009), and the company was at the mercy of its non-recurring revenue which accounted for 84% in 2009. It was literarily on the edge of going bust. Lucky Aldar, the government of Abu Dhabi (Shareholder through its Fund Mubadala) came to its rescue, and bought 3 large assets, and the company has since then worked hard to rebuild its balance sheet through a merger with its biggest rival, Sorouh. Aldar is now in a better shape, and stronger than ever with a recurring revenue accounting for more than 70% by the end of 2015, and a gearing of -2.5% considering its gross cash.
Music to the ears
Recurring revenues more than doubled between 2012 and 2015 to around AED3bn thanks to its expanding portfolio of assets that includes schools, retail and offices, as well as hotels.
“Yes, I want to increase my recurring revenue; I will continue to increase my recurring revenue. That strategy is always going to be enhanced. Because I believe in the long-term prosperity of my sites,” says Mr. Al Mubarak, CEO.
Currently, the hospitality and leisure assets are predominantly hotel properties on Yas Island, such as the Viceroy. They make up 8% of the overall recurring portfolio, contributing 22% of recurring revenues.
Its hotels are also outperforming the overall Abu Dhabi market both in terms of revenue per available room and occupancy levels. In 2015, occupancy was at 79% compared to 75% for Abu Dhabi, and revenue per available room growth was at 4.3% when the overall market was flat. However, the market is currently softening. Abu Dhabi’s average occupancy rate in February was 77%, down from 81% a year earlier, but Aldar’s rate went down by only 3% to 76% as mentioned in their 9M 2016 presentation.
Clearly, Aldar’s efforts to improve its recurrent revenues and margins are paying off. In fact, its recurrent revenues’ gross margin is recovering from a steep drop in 2012 (53%) to reach 83% in 2015. And its contribution to the overall gross profit outperformed the non-recurrent one… Music to the ears!!