During 2018, Manazel made significant progress implementing its strategy to diversify the Company’s business portfolio and develop long-term recurring revenue streams; which has continued to drive steady growth and shareholder value. Our company has gone from strength to strength, which was seen our net profit for FY 18 increase by 4.6% to AED 231 million and our book value per share for the period up 1.57% to AED 1.13 per share.
Our robust financial performance has been achieved, despite the cyclical nature of the real estate industry, due to the contribution of our three clearly defined business verticals; Management & Joint Project Management; Lease Income; and Expanded Property & Facilities Management Services. The success and growth of all these verticals have allowed us to capitalise on the significant opportunities that exist across the entire real estate spectrum which in turn has created long term cash flow visibility whilst also de-risking our business. In order to better reflect the increasingly diversified nature of our business.
Manazel’s core business of developing high quality affordable housing for the region’s middle-income segment underpins our growth which to date has already delivered over 7,500 units in the UAE. We remain committed to expanding our portfolio, which is why Manazel signed co-development agreement with Tasameem Real Estate at the beginning of 2018 for three new projects in Yas Island, Dubai Silicon Oasis and Jumeirah Village Triangle (JVT).
In addition, we are in the process of finalizing the masterplan for our iconic 1.4 million sqm Ghantoot Waterfront Project. Once complete, the Ghantoot Waterfront project will be one of the largest integrated real estate projects in the UAE’s tourism sector, consisting of a resort, villas and facilities such as a school, community centers and retail areas.
I am also pleased to share an update about our Al Reef 2 development, which is progressing well with the handing over of the villas already commenced in a phased manner. Al Reef 2’s retail units are expected to be completed and leased out simultaneously with the handing over the villas. We remain confident that Al Reef 2 will emulate the success of Al Reef 1 which now has approximately 17,000 residents.
Continuing on from the success of our Al Reef 1 and 2 communities, and the growing demand for high quality middle income housing, Al Merzab project has been significantly presold in a phased manner. The complex consisting of 18 low-rise apartment blocks is also located on the Abu Dhabi – Dubai highway, across Khalifa Industrial Zone (KIZAD) and about 35 minutes from the Dubai Expo 2020 site.
Manazel is also developing schools in Al Reef 1 and Al Reef 2. These ‘build to lease’ assets will generate long term recurring revenue streams through land lease and asset rental. In 2018, Manazel also entered into an agreement, to lease and manage its two schools in its Al Reef 1 and Al Reef 2 communities. Al Reef 1 is now home to 17,000 residents, including 5,000 students – creating steady long-term demand for the new school. The school in Al Reef 2 will serve 1,100 students. The long-term operator agreement with the operator will generate future revenue through land lease and asset rental.
Our diversification strategy has allowed us to venture into high-growth sectors such as retail, healthcare and education through the creation of our subsidiaries Manazel Malls, Manazel Specialists, Al Reef Cooling and Census International. Manazel Malls has taken over operational and managerial responsibilities for Capital Mall and all retail areas in Al Reef Community and Al Reef 2 as well as our future retail projects. With this subsidiary we have put in place a dedicated team of experienced professionals who will drive efficiencies and improve performance across our retail assets.
In terms of our retail portfolio’s current performance, Capital Mall has attracted some of the region’s leading brands and we are in advanced discussions with other operators including a cinema company; which will help ensure the necessary footfall. With our anchor tenants PAN Emirates and Multi Fit already secured, the mall has now leased 65% of its Gross Leasable Area (GLA) and our current pipeline will take the leasing to 70% of total GLA in the near future.
Our subsidiary Manazel specialists, which provides real estate consultancy services including sales, resales, leasing and management support, made significant contributions to our performance; with the management of Prestige Towers 16 and 17 in Abu Dhabi. The leasing of this 20-floor twin building, which has over 55,000 sqm of office space, will continue to generate long term revenues for us over the coming years. Additionally, our fully owned subsidiaries Al Reef Cooling and Capital Cooling provide district cooling services to Capital Mall, the Al Reef Downtown community and its retail areas. Al Reef Plant is operating at 100% capacity and the Capital Cooling plant is currently operating at 50% capacity with the opportunity to double its output with no additional capex ,and we plan to scale up their operations, which will offer us business growth and diversification opportunities without significant capital expenditure.
In the year ahead, Manazel will continue to focus on unlocking value from the growing demand for affordable housing for the middle income segment of the population in the UAE and wider region. Our financial performance over the past years, along with our growing revenue base from our property, retail, education and healthcare assets, positively positions us to grow our presence across the region through the three business verticals created. This is also only possible due to the support of our shareholders and a dedicated team of professionals. I am delighted with our ongoing positive performance and remain optimistic about our continued success as one of the UAE’s leading companies in the middle-income segment.
Mohamed M. Al Qubaisi