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Abu Dhabi's Aldar Properties will introduce a new formula to calculate its dividends from 2016 onwards which could lead to higher payouts for shareholders, its chairman said on Wednesday.
The new policy is based on the underlying cashflow of Aldar's business, the company said in its annual report published on Wednesday.
Dividends will be made up of two parts. The first will be a payout of 65-80 per cent of distributable free cashflow derived from Aldar's wholly owned investment properties, plus a discretionary second part based on cash profits from the completion of newly built developments.
"There is a formula for dividend payouts from now on and dividends will grow as the company grows," Aldar's chairman Abubaker al-Khoori told Reuters on the sidelines of the firm's annual shareholder meeting.
The company has not disclosed how it had calculated its dividends previously.
Aldar has increasingly focused on its leasing business in recent years, retaining ownership of some its developments to rent out residential, commercial and retail units. These provide recurring revenues, which are considered more stable than those derived from build-and-sell property development.
Aldar's annual net profit for 2015 was Dh2.56 billion ($697 million) in 2015, up 13 percent year-on-year, while its 2015 gross profit from recurring revenue was Dh1.51 billion, 49 percent higher than 2014.
The company will pay a cash dividend of Dh0.1 per share for 2015, up from Dh0.09 per share for the prior year.
New Abu Dhabi Property Law: Aldar is master developer
Aldar Properties, Abu Dhabi’s top developer, said on Tuesday it has received a master developer license from the Abu Dhabi Department of Municipal Affairs under the provisions of the new Real Estate Law.
“We are excited about the introduction of real estate law in Abu Dhabi. We believe it will bring a high degree of predictability and transparency to the market and thereby increase the attractiveness of the market to existing and a new generation of customers,” Talal Al Dhiyebi, Chief Development Officer, Aldar, said in a statement.
The law came into effect January 1, 2016, and provides enhanced protections for customers of off-plan developments and rights of owners/residents in existing communities.
The Department of Municipal Affairs in Abu Dhabi expects similar move by other real estate companies to take the necessary measures needed to comply with the new law and fulfill the requirements and conditions needed to ensure quality and timely implementation of development projects.
Emirates 24|7 reported earlier that developers have to register under the Law No. 3 of 2015 regulating the Real Estate Sector in Abu Dhabi by no later than March 31.
“Developers now need to act swiftly to meet short deadlines imposed by the law to avoid incurring considerable penalties,” David Bowman and Maha Dahoui of Al Tamini & Co law firm had said.
The law provides that no person may engage in real estate development in Abu Dhabi unless they have been registered in the Real Estate Development Register and licensed as either a master developer, or a sub-developer.
“Developers who fail to apply for a licence and register by March 31 risk penalties of between Dh100,000 and Dh2,000,000. In addition, the law provides that developers who are not licensed and registered will not be entitled to any fees, profits or rewards in return for the activities they undertake,” the lawyers mentioned.
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