Damac Properties’ (Damac) management (Ziad Chaar, MD; Hazem Abdulla, IR Head) held a conference call, hosted by EFG Hermes, to discuss the 2Q16 results. Below are the main highlights from the call.
• On track to meet 2016 contracted sales guidance of AED7bn Contracted sales in 1H16 totalled AED3.6bn including cAED900mn in Aykon City, cAED1.5bn in Akoya Oxygen, cAED400mn in Akoya and cAED800mn from other projects. Management added that 85-90% of launched units were sold, indicating that market activity remains strong. July was a strong month in terms of sales, according to management, with the successful launch of a number of phases in Akoya Imagine, which has seen a lot of traction. It indicated that it is regularly changing its product offering to meet market demand, yet maintaining prices and demanding 30-40% of the units’ value in the first 6-12 months. Management confirmed that the company is on track to meet its 2016 contracted sales target of AED7bn, with more launches planned for 2H16 compared to the first six months of the year, noting that Q2 numbers were dragged down by three weeks of Ramadan. We estimate contracted sales of AED6.5bn for the year.
• Buyers profile remains broadly unchanged Buyers continue to mostly come from the GCC, India, Pakistan, China and Russia. Chinese investors do not account for a significant portion of its client base yet, but this remains a long-term target.
• Maintain guidance for dividends and debt level The company’s dividend policy requires that 25% of paid-in capital is distributed as cash dividends. Management indicated that while the decision is subject to board approval and market conditions, there is no reason to believe that the commitment will not be met this year. Moreover, the guidance for leverage also remain unchanged at USD1.2bn, or 1.1x EBITDA, whichever is lower.
• Planning a major unit delivery event in September-October 2016 Damac is planning a major unit-delivery event in September-October 2016 at Akoya, which is planned to represent a major milestone towards the company achieving its 2,700-3,000 units’ delivery target for the year (494 in 1H16). Upon the successful delivery of c3,000 units, cUSD650mn will be released from the escrow account, assuming all deliveries will be on time. Management is comfortable with the timing of the event, in the sense that it allows enough time to finalise the delivery procedures before year-end (usually takes 30-45 days) and with the higher likelihood that the non-resident buyers will be visiting during that time of the year.

Mai Attia
Sara Boutros