Aldar Properties PJSC (ALDAR) Earnings Call Transcript & Summary

Good morning or good afternoon, and welcome to today's Aldar Properties Q3 earnings call. My name is Adam, and I will be your operator today. [Operator Instructions] I will now hand you over to Mohamad Haidar to begin. So , please go ahead when you are ready.

Hello, everyone, and welcome to Aldar Properties Third Quarter and 9 Months 2021 Earnings Conference Call. This is Mohamad Haidar from Arqaam Capital, and we are joined today by Greg Fewer, Group Chief Finance and Sustainability Officer. Greg, over to you.

Thank you very much, Mohamad. And sincere apologies for the late start, everyone, we had some technical problems with the line. So as mentioned, I'm Greg Fewer, I'm Group Chief Financial and Sustainability Officer. I'll read some prepared statements, and then I'll get into Q&A. So overall, we're very pleased to be reporting another strong group performance in the third quarter of 2021 across our diverse client business. Our performance has been achieved against the backdrop of living consumer and business content municipality. This is in large part due to the UAE's successful and effective response to the pandemic. And overall world-leading vaccination rates and further supported by strong government all of the initiatives that are spurring economic activity and promoting Abu Dhabi as a leading destination for [indiscernible] and capital markets investment. We're seeing economic recovery being reflected across a range of business indicators, such as the fall in repayable sales, record residential property sales and increasing student enrollment. Revenue for the third quarter held firm year-on-year at AED 2 billion, bringing year-to-date revenue to AED 6.32 billion, which is up 8% year-on-year. During the third quarter, we achieved another quarterly development sales record of AED 2.7 billion. Meanwhile, our investment properties business continued to generate steady recurring income with improvements seen in Retail and Hospitality segments. Gross profit for the quarter rose 20% year-on-year to AED 834 million, driven by enhanced operating emergencies across the business and net profit increase 14% to AED 474 million. Now turning to our 2 business segments in sequence. First, Yas Acres Magnolias. We've seen a consistent sales performance, delivering over AED 1 billion in sales of each of the last 5 successive quarters. Another strong quarter of record sales in Q3 brought year-to-date sales to one of our best ever at AED 6.14 billion, with new project launches accounting for the majority. We ended the period with our highest ever revenue backlog of AED 5.9 billion, which supports future revenue visibility. Our current development pipeline is 90% sold, reflecting Aldar's sustained market leadership position in the Abu Dhabi [indiscernible] market. And our unique understanding of customer demand and absorption trends. Recent project launches comprise a diverse product mix and appeal to an increasingly broad customer base. Encouragingly, sales [indiscernible] orders and foreign investor demographics continue to grow, further highlighting Abu Dhabi's attractiveness as the destination of both investment and residency. In addition, Aldar witnessed consistent demand from both first time home owners and female{ UHme owners. New product launches have been focused on the villa and townhouse product, mainly based in Yas Island. Yearly revenues for the development business were up 13% year-on-year and quarterly revenue was down 3%. The quarterly revenue variance was principally as a result of higher inventory sales in the comparative quarter of the previous year and the accounting impact of fixed price contracts with government projects, which are starting to near completion. Year-to-date gross profit for the Development business was up 26% year-on-year and quarterly gross profit was up 44% year-on-year. Quarterly growth was driven by higher-margin inventory sales in Mamsha as well as progress -- sorry, as well as progress on a range of government projects, including those awarded at the end of last year. Q3 gross profit for the Project segment rose 97% year-on-year to AED 127 million, mainly due to a significant ramp-up in fee-based business. Cash collections were AED 982 million for the quarter, reaching AED 3 billion year-to-date. As for the latest development in Egypt, you will have seen that in the third quarter, and Aldar led consortiums submitted in all-cash mandatory temper offer for majority stake and SODIC to Egypt's FRA for its approval. This proposed acquisition is part of Aldar's overall expansion strategy into the attractive Egyptian real estate market. We'll be communicating any notable updates on SODIC to the market in due course. Turning to Aldar Investments, our recurring revenue business. In the third quarter, Aldar Investment revenue was 4% higher on the year at AED 791 million, with net operating income from the business increasing 1% to AED 392 million. Year-to-date NOI was up 5% to AED 1.17 billion, mainly driven by stronger performance in the retail portfolio and ongoing recovery in the hospitality and leisure business. For the investment properties portfolio, which is comprised of our residential, commercial and retail assets, the third quarter net operating income held firm year-on-year at AED 337 million. Occupancy across the portfolio increased 91% in the third quarter versus 88% earlier. Residential NOI for the first 9 months decreased 1% year-on-year to AED 352 million. Occupancy was up -- was up to 92% in the third quarter versus 88% a year ago, supported by rising occupancy in Reem Island and at Sas Al Nakhl, one of our villa developments. Notably, we can do the opportunistic sale of strata residential units with AED 150 million raised year-to-date from sale of units, average prices of 11% above book value. Retail net operating income increased 9% year-on-year to AED 332 million for the first 9 months, mainly attributable to new leases covered online at that volume. Within the portfolio, the food and beverage segment witnessed a strong performance driven by improving consumer confidence and a ramp-up of dining destinations, in particular at Mamsha. Occupancy rates rose to 88% in the third quarter versus 85% a year earlier, and this is expected to increase further as handovers of the new units at Yas Mall in accordance with our Yas Mall development plan announced earlier. Commercial NOI declined 4% year-on-year to AED 299 million in the first 9 months -- in the 9-month period due to do some lease [indiscernible] in the noncore segment of our Operative Villages. Whereas the core office portfolio actually saw an increase in leasing activity with more than 22,000 square meters of new leases of renewals in the first 9 months of 2021. Occupancy rates across Aldar's Grade A office property terming resilient at 89%, supported by long-term committed lease contracts from government-related entities and corporate clients. The hospitality and leisure business continues to recover, achieving 120% year-on-year growth, driven by prudent cost and management and an early recovery into the tourism sector. Meanwhile, Aldar Education reported a 27% increase in year-to-date NOI, reaching AED 124 million. This is driven by a 3% increase in overall student numbers. And within the Principal Investments business, Aldar's Property Management Company produced a 99% increase in year-to-date NOI, driven by new contracts and the contribution of [indiscernible] acquisition. In terms of balance sheet, Aldar's balance sheet remains strong with debt levels well within the group's policy ranges. Our liquidity position remains helpful with AED 3.6 billion of unrestricted cash and AED 4 billion undrawn -- of committed undrawn bank facility. ESG remains a core component of Aldar and guides all areas of our decision-making business. We'll have news to reports later this year with our carbon neutral action plan, with our energy efficiency program, which is just concluding its results. In the third quarter, Aldar published it's 2020 sustainability report, which included the company's first application, the TCFD, the Task Force on Climate-Related Financial Disclosures, climate risk disclosure framework. This report is aligned with the UN's Global Compact and the Abu Dhabi Securities Exchange guidelines. We also signed an agreement with HSBC that Aldar will become the first MENA real estate company to secure sustainability-linked loans Through our 5-year facility linked to the interest margin payable to the achievement of the sustainability performance targets. So in conclusion, our strong Q3 results reflect increased activity across the entire business, which we expect to continue supported by the macroeconomic recovery that is well underway. This has been an exceedingly busy period for the company, and we are seeing this momentum carry towards the remainder of the year. The fundamentals of our market remains strong with constructive supply and demand dynamics because of the same [indiscernible] of Abu Dhabi. We plan to bring more new developments into the market, driven by our expanding client base including extended specialty [indiscernible] and [indiscernible]. And importantly, we're seeking value accretive opportunities to grow our portfolio of managed assets and remain vigilant as ever and prudent when we look at reporting capital for investment purposes. And with that, I'm very happy to open the floor to questions.

[Operator Instructions] Our first question today is Taher Safieddine from JPMorgan.

This is Taher from JPMorgan. A couple of questions. I think the first question is what we're seeing in terms of headlines on Bloomberg or the CEO talking about execution on M&A, war chest of around AED 6 billion. I just want to maybe get more understanding how are you thinking about this? We know that at the beginning of the year, there was some capital allocated for growth. We still haven't seen any of this mainly allocated just maybe you can help us think beyond the SODIC deal, if this goes through, how should we think about capital being deployed maybe on the recurring portfolio in terms of priorities, time line? Is it more schools, retail? Just some color there, that would be helpful. And then I have one other question, which I will follow on later.

Okay. Thank you, Taher, for not asking 2 questions because at my old age, I forget them if there's too many. Just on the -- so on the acquisition front, I mean, the pattern -- if I look back over the last decade or so, I just look at the way transformative and meaningful value accretive acquisitions that take place in this region. They're infrequent. But when they come, they're lumpy and they're highly profitable. And I think when I think about today and then the cycle of capital that we're seeing, I mean we built up impairment of cash running into our merger with Sorouh that happened in 2013, 2014. We built up a ton of cash after that, and we deployed a meaningful acquisition in 2018 with the TDIC acquisition. And since 2018, we've been continuing that capital accumulation cycle to today where we -- closed in Q3 was AED 6 million in terms of cash on balance sheet and continuous -- continually showing and demonstrating a strong, strong ability to produce cash from this business. So -- and when I look forward then, we were at the cycle now has been the better part of 3 years since we deployed meaningfully. We've been building up cash ever since. We have a pipeline. The very interesting real estate acquisitions within the UAE [indiscernible] that we're looking at across the main food groups that we're in and it's missing food groups, including warehouse and logistics. Sellers are very patient here. The land owners surely be state health enterprises or large family groups, and generally, they have a low-cost base and -- but periodically, they are market sellers and in our market, you need to be liquid and ready to execute when those sellers are willing to transact. And today's market, I think, is no different. COVID caused a lot of people to reallocate, reassess their portfolios and in the meanwhile, Aldar is still here, it's our core business, we're in all those major food groups from a real estate perspective, and we're poised, ready and liquid to transact when the sellers are already sell at accretive prices. So there's opportunity still within Abu Dhabi in commercial office, in residential, on logistics or warehousing are the key areas that we're still missing in our portfolio, and there are some interesting opportunities in the UAE in that space.

Okay. All right. Okay. Clear. But there's no time line. I mean should we expect something to happen this year, given that you've allocated certain capital at the beginning of the year for 2021? Or I mean, is this something that's still not clear in terms of visibility?

Yes. I mean, look, they're lumpy and infrequent. There are several being worked on and closing times, whether they're 2021 or early 2022, it's too hard to put a time line on some of them. But I think what we find ourselves talking about this now a lot because we have a lot of cash on the balance sheet. People ask us what we intend to do with it. And we ask for patience a little bit with the shareholders because we do see very accretive opportunities. And I wish we were churning 5% of our portfolio every quarter. But that's not the real estate market that's here. I mean Aldar's market is generated when you position yourself to do those larger transformational deals when they come, and that's what we're doing.

Okay. All right. And then maybe just another question on the development business. If you can just help us understand. I mean, clearly, it has been a very strong start of the year or utility performance on the sales side. And thank you for sharing more color also on the breakdown in terms of nature of the buyers and the profile. But again, I mean, how should we think about off-plan sales momentum in the next 6 to 12 months? Do you see the same level of intensity or uptake in terms of the projects? I think this is my -- the first part of the question. And then maybe on the project management service. Is the gross profit or NOI in Q3, the new run rate we should be familiar with. I'm talking here about the numbers that we're seeing in terms of very strong actually margins in the fee-based business for Q3.

Yes. So just in terms of uptake for future projects, look, we're very bullish. I mean we're close to our customers. We're seeing a lot of confidence. We're seeing the investment community, the local investment community very bullish. We're seeing broadening customer base and deepening customer bases, and that's also very encouraging. So in particular, with this trend of expatriates deploying more of their own capital here. As you know, the expatriates are the majority, the resident piece and a lot of expatriates have been living here for a long time. And with things like residency reform, it's amazing, we're finding the sentiment shift that actually creates both with buyers of real estate, but then with investors who anticipate more expatriates buying. And I think that's just self-filling sort of success loop that is driving confidence in the market. So we think this has ways to go still. And we're excited about the governments all investments into our key destinations. So we're really happy to see the Guggenheim finally -- contract finally awarded. So that's now -- and we've got a big development at Gurm, which is that plot of land in between the Guggenheim and [indiscernible] National team at the [indiscernible], which will now have all their whole 3 corners of Aldar and Dubai world-class museums and land bank centers are being developed, and this is the land bank that we have is really marketable to international investors and expatriates and overall occupiers. And so that's an important development in the pipeline, and that will be an important parameter for just how deep this thing is going to run. And then you asked about GP margins. I mean, so they're still pretty healthy. I think when I look forward into the development pipeline, I see near term like rich, like if you just look at our famous chart that shows the pipeline of developments and where they're at. We've got Reem Island and we've got these sort of these land deals, which are very profitable. So those are in the 40%-plus range. You start to see the Noya come up, which are more on the middle income, and you start to get into the third -- like the low 30s, high 20s kind of gross profit margin. And then it's really the revenue recognition in the next few quarters really represents progressive completion on those projects. So the next few quarters should be okay with the remans and the land-based deals progressing and you expect it to sit down a little bit when the Noya starts to take over. But then we've got land also throughout, which are periodic and highly profitable when we -- when we do those. And Al Gurm Phase 2 is also -- which is also basically that will be there to sort of take us from that low 30s into the low to mid-30s as that also starts to progress.

[Operator Instructions] We have a question from Mostafa from Al Rayan Investment.

This is Al Rayan from Al Rayan Investment. Could you -- I was just reading though your presentation and there, you've mentioned that the sale of -- in your residential portfolio, you're selling off 1 of the strata units. So post the sale of these units, what will be the total number of units that you will have, I think earlier it was AED 5,800 something. That's my first question. The -- if you could answer that, then probably I'll go to the next one.

Sure. Yes. So we've actually -- we've added to the portfolio throughout the year. We added a bunch of units that bridges on Reem. So from a strategy perspective, we love -- we love owning full buildings. And that's -- when we add residential to the -- to the residential portfolio and those are the ones that you'll see us rolling into. The team has a strategy to generally reduce not liquidate, just reduce exposure where we don't have the full building. So for example, at Raha Beach, we didn't own full buildings anymore. Some of the towers at the gate. We don't own. We don't own the full building. So some of the synergies that we can drive from full building control are just present. So there's 149 units that rolled off, not large [indiscernible] run over 5,900 units now when you factor the ones we've sold and the ones we've added. So net-net, it's still going up. But just to give you an order, order of magnitude, the portfolio of just under 6,000 units that they primed 150. It's not -- it's more portfolio optimization as much as portfolio -- driving the portfolios direction.

Okay. Okay. And my other question is regarding the development management. Now remember earlier in your previous calls, you have always mentioned that this is a very strong growth area for Aldar. And we've seen that come through. Is it fair to believe -- I mean now that we've seen peaking in the -- revenues have peaked in the fourth quarter and since then, they've like sequentially, it's likely more or less about AED 380 million, AED 340 million. Do you think this is the plateau? Or do we have other deals that should benefit this segment going forward?

Sorry, Mostafa, you were cutting out there, but I think the question was in the project management services business line, do we see more runway for growth there? And the answer is yes.

Yes.

I mean we have -- we're still onboarding that business. The majority of the big projects that are in the scope of that work are still in the early stages. So as we ride the S curve up, on, for example, Baniyas national housing project that we add to [indiscernible] you're going to see continued growth in the quarters to come. Just on those projects, we don't expect those to really peak out even until like the second quarter next year. So you're going to see continued ongoing growth in that space. We're not done yet.

Our next question is from Thomas Mathew from Camco Invest.

I have a couple of questions. One is on the development sales momentum that you're seeing. And for upcoming product launches, I'm just trying to just get some guidance on how you're sort of thinking through the upcoming product launches between the different property types. Are you seeing a change from obviously at the risk of asking you to sort of crystal ball this a bit how are you seeing it evolve for, let's say, 2020 to 2021, has the strategy changed between the different property types for the upcoming launches and the unit types between, let's say, [indiscernible] configuration. That's one. And I'll probably have a question the next question after you've probably responded to this.

Okay. Thank you, Thomas, for also following Taher's lead of not asking too many, my old memory. But -- so on product mixes, so I'd characterize them as follows in terms of the pipeline. Definition focused for sure. So you launch Saadiyat, in particular, the Gurm and Yas Island. This is where the government is investing. I think the market now has seen the benefits of investing into the rising pie of destination development strategy, which is not Abu Dhabi strategy. We've seen what Yas Island has been like. It's now across 50% a golf park. We haven't opened the South, which is a morale development, which is bringing 10,000 workers to Yas Island and [indiscernible]. And then the Sea World is continuing to come. So this ongoing development is highly attractive, driving population and a lot of investors that need notwithstanding some of the [indiscernible] that people have seen in the market, people have made a lot of money, invest in Sorouh into Yas Island and into Saadiyat. in Saadiyat a little bit earlier on the destination convention journey. But with the awarding of the Guggenheim and the ongoing development of National [ Abrahamic ] centers and ultimately our growth settlement, you guys see that take on sort of the same visible and predictable strong investment proposition that we have. And so those 2 will feature heavily. The Gurm is a multiuse -- development a lot of apartments there. Several different price points. And Yas Island is going to see more [indiscernible] coming up. So more villas on the north end of the Yas Island. That's various price points as well. So the other thing that you think about from another value perspective on developing is bringing new price points into the market that's been really very good for us. [indiscernible] $1 million price point as a nice master-class in villas into an overall class destination. So we see a lot more of that coming up. And then there's going to be always a topic here is it's more middle income to drive these price points down. Our Reeman developments is off-island. We're highly successful because they were really piercing those lower-end price points and see more of that in the future as well.

Very clear. And I think the follow-up question was more on the investment properties. Are you sort of -- again, in terms of strategy, are you seeing any sales of tilt towards a particular segment, any of those segments, residential retail or commercial that you really focusing on for, let's say, even through your acquisitions or even your existing portfolio on a stand-alone basis with the individual acquisitions of buildings. Are you looking at any sort of tilt that you see transpiring now that we are sort of like at least getting out of this entire pandemic?

Yes. Yes. Look, as I said earlier, it's -- we view our platform, Aldar investment properties. We view it as the most efficient platform for property ownership certainly not if not the region. And we're in all the major food groups, success with the logistics in size and scale, and we manage. So -- and we've got the highest credit rating, lowest cost of capital for such a larger REIT. So we are [indiscernible] to office, retail and residential. We believe that anyone else is building is worth more in our portfolio than in their own portfolio. And really, what we wait for are just our incumbent owners. We wait for them to restrategise, how they want to own their [ inherits from ] real estate and stay liquid to transact when they're ready to transact. So there are definitely opportunities. There are large landlords in [indiscernible] portfolios that are privately held, and we think were inefficiently managed. And we're talking to a number of them. We're ready to transact. And those are accretive opportunities for us when they come up. I've called out a few times logistics warehouse just as a notable asset class that that's into our portfolio. Also tough to accumulate assets in that space that the government is -- the government generally are the main landlords and in real estate owners in most cases, the deals that are infrequent from where they are -- when they come up there. They're extremely interesting.

Our next question is from Admire Mavolwane from Terra Partners.

I have a couple of questions. If we go to Slide #14. Just looking at the check of segmental breakdown between September 2021 and September 2020. It looked like everything is flat even on the revenue side with the exception of the project management services. Would that be a correct sort of assessment? And at the same time, we know that 2020 was an exceptionally difficult year. How do these numbers, especially at gross profit level compared with 2019 for Aldar. That will be my first question.

Okay. I mean yes, I don't have any 2019 portfolio, what I will tell you is that just from memory at that point, we were guiding our NOI portfolio to be sort of in the AED 1.5 billion range. And today, we're in the sort of AED 1.6 billion overall NOI production. Versus last year, though the only other comment I made on this one. Obviously, we had COVID coming up. And so I think what's nice about our portfolio that has demonstrated a lot of stability in the last 3 years through -- during -- COVID and coming up. That's a very large portfolio pooling assets, which is raised capital that hasn't yet been redeployed. So that's an important comparative item. So notwithstanding those divestitures and then the fact we divested about 150 of our residential units. We have added some units in the form of friction. And we have seen some NOI growth in particular, small coming in year-on-year as new tenants sign leases in range of the IMO development program. We've also seen a fair bit of commercial office activity to just to maybe comment just on just market activity that we're seeing. We move good progress in this space in the first 9 month to government entities and the commercial enterprises bringing people into Abu Dhabi during 2021. We've been quite encouraged by some of that level of activity we're seeing.

Okay. In terms of the acquisition in Egypt in given any time line as to when they want to make the decision? As well on that, is it the standard that you provide the offer to the regulatory authority and not to the company, Board and shareholders?

Yes. So that -- it is a very clear rote process that each has for the public transactions. So you submit to the regulator, the regulator reviews and then the regulator will greenlight the rest of the process to continue and for the shareholders of SODIC to respond. They are under no time line. It's their process. We're compliant with the aspect of the process and we're very [ calmy waiting ], hearing back from them.

Okay. Because my question would be -- arises from 2 sides in that like I'm quoting from [indiscernible]. The normal situation would have been that the offer would be given to shareholders. And then the regulator is informed. So now because the present now for me would be what is the regulator does not give the response even until March next year because it would mean that you still have to redo the figures and everything like that. So maybe on your side, did you have a breakup point, we'd say if we don't get a response by this so much then is the deal is off the table?

Yes. I mean we don't expect to get to that kind of -- that kind of a situation. And the regulator is quite -- I guess, let's say, flexible on that and where regulatory related delays arrive, they can either extend but there was an option to reconsider. We're not at that stage. And we're very hopeful that this will follow it's natural course. And the process will continue very quickly.

Probably my last question on that is we have seen in the years and in the media that some of -- I think shareholders representing about 17% of SODIC, it sort of indicated that they're not happy with the price. Have they engaged you or it's still engagement through the media?

Yes. I mean, look, just given it's a very public process, there's a very low to be clear process follow in terms of going through -- who would speak to how to manage public shareholders, how to manage the regulator and we're in the midst of that right now. So I think it's most appropriate if we just focus on our submission to the regulator that we're compliant with the process and we're waiting for the regulator to continue it.

Our next question is from Jack [indiscernible] from NBK Capital.

And congratulations on good set of numbers. Can you give a little bit of what you are seeing in hospitality. I don't want to regain to any specific number, but I was wondering if there is a significant turnaround after Abu Dhabi opened up from the third quarter. And do you expect that will continue in the next quarter as well?

Yes. Yes. So I think our Q4 number is definitely -- they're probably reflecting more cost cutting [indiscernible] let's say top line picked up. But I think you're really going to see a few change in the fourth quarter because none of the Q3 numbers are really reflecting the most recent opening up of the Abu Dhabi market. We've got a F1 event coming back at the regular capacity. And indeed, the fourth quarter results [indiscernible] the busiest along with Q1 [indiscernible] in terms of visitor numbers. So you haven't had a full 90-day quarter of unconstrained, uncompromised tourism backdrop to showcase to and with events at the same time. So we had another UFC fight just last week, and it was [indiscernible] Gold [indiscernible] event that we've got F1 coming up and we associated concerts and activities around that. So that will really be the first [indiscernible] host in leisure mode. Obviously, Dubai's been much different and open for tourism much longer much longer than that, in terms of Dubai. So I think our fourth quarter should reflect that higher level of activity.

Okay. I finally thank you and thanks for the answer. According to the Bloomberg news article that came out this morning or yesterday, you are also looking for opportunities in Saudi. Is this correct?

Correct. I mean we've called out -- we get asked quite often, our strategy leaving Abu Dhabi. And we've been very -- we've mentioned, I guess, it was a year ago now or 1.5 years ago, the 2 markets that we're most focused on is Egypt and Saudi. The largest in our geographic footprint area, sphere of influence and they're both too big to ignore. So I think the SODIC, I think it's really just indicative of that interest and where we're appointed we haven't announced anything yet in Saudi. There is a pipeline of opportunities there. But that's definitely where we're focused and particularly UAE.

My question is like the AED 5 billion capital. Do you think you would have enough scale to operate in Saudi. I mean I understand if it is in Dubai, but in Saudi, do you have to add bigger check if it is Saudi?

Yes. It really depends on what you're looking at there. I mean, we're entering -- we're entering Egypt as a homebuilder and that really is giving us that confidence that we've had a rare opportunity to potentially have a platform. And then when you're home building, you really need to have that local platform. So I agree with you just in terms of scale and size, if you're going to enter the Saudi market in homebuilding, that's something that's expensive and hard to -- hard to acquire going in. We've generally been looking at the asset management side in Saudi, built an ownership service. So we're already in Saudi right now, our facilities management, we've been in Saudi for several years getting to know that market. So you can make money and you can financially invest in Saudi with properties and you can get accretive returns if you have services, you could throw services around it as well. That's a -- and education also as a very interesting space in Saudi.

Okay; one last question from my end. In terms of tenant sales in retail, where are you compared to 2019?

Sorry, can you repeat? You just broke up a little bit there Jack, sorry.

Sorry. In terms of tenant sales in Retail segment, so year-to-date, compared to 2019, where are you positioned? Are you better off? Are you still a lot more to catch up? Can you please give me some more information on that, please?

Yes. So we're not quite at 2019 levels yet. But just 2 interesting trends. I think we're catching up and so football has really started to ramp up. And I think that will really start to change when we have tourism come back as well. What we have found is costs -- sorry, like the average spend basket has gone up per visit. So reflecting, I think, a large savers base, consumers opening up a fair bit more in terms of discretionary disposable income and expenditure. So with a slightly lower footfall number we're getting in higher sales across the board. And I think the uptick we're seeing in a very prominent measure, the veracity of that [indiscernible] is going to come with the success of the YMR or Yas Mall redevelopment program. The fruits of which we're starting to see come through now and have built some of our tail growth that we saw this quarter versus [indiscernible] previously. As the [indiscernible] signing leases, they're seeing in sort of very interesting activity that the Abu Dhabi market has. And I think a lot of the tenants really woke up to that and the power of the Abu Dhabi market. The borders were closed in Dubai and we've retained a lot of that spend. I mean the footfall really dropped in one point. But the spending power that [ aimed ] in Abu Dhabi is quite powerful. And I think these strategies either retailers will start to execute on more strategies and target those kind of clients here. And through our mall.

And when will you be done with your Last Mile [ refurbishment ]?

That will carry into the first quarter next year, you'll start to see some of those hoardings drop down. Some of the lease are starting now though. So the tenants take over, there's a lease commencement date. Maybe there's another 6 weeks before they actually [indiscernible] put the training, but we'll actually report revenue based on when we think hand over the unit.

Our next question is from Raj Vaswani from International Securities.

Congratulations on good set of numbers. As you rightly mentioned, I just have one question on -- basically, as you mentioned that this quarter was the highest ever sales on the development front. Sort of my question is more broadly in order to understand how do you see this demand scenario going forward. And do you see the demand and supply, how they are going to pan out and what it could have an impact on the price stability going forward on the real estate market as a whole?

Sure. So I guess the first comment would just be that Abu Dhabi overall is very much in a constructive supply and demand situation. Aldar being by far the dominant developer, new supply introduction for the whole market is really down to the pieces which Aldar developed. And of course, there are other developers, and they do supply. It's a much more control market in that sense from a supply perspective. From a demand perspective, I go back to the comment earlier on some new and very encouraging and positive trends that we see rolling into 2022, namely more customers, more expatriate customers more overseas investors and our bedrock customer who has always been around forever in the financial and estate are seeing all these positive trends, and that encourages more investments into those trends just as a financial investment. So I think for those reasons, we see very positive sustainability to this upward [indiscernible] thinking and sales. [indiscernible] there always is $1 billion a year in sales, sometimes 4, sometimes 6, whether it's a jump to 7, 6 or 5, time will tell, but we definitely see a more -- with just more customers. And when we do launch something for sale, which is typically around the destination enhancements around Yas or Saadiyat or Reem or 1 of these other ones that we've done, the community supports it rudimentary. And then we think that this pace is going to be sustainable.

[Operator Instructions] We do have a final follow-up from Taher Safieddine from JPMorgan.

It's Taher again. Maybe just 2 small questions. The first one is on the dividends. I mean, clearly, your cash collections and development business is going well. Also, the development management seems to be also picking up in terms of NOI and a stable recurring portfolio. Should we expect this progressive dividend policy to continue. I think this is my first question. The second question is more about I don't know, value unlocking for -- I mean -- I mean given where the stock price is, I don't think there's really a pressing -- pressure at this stage, but how should we think about maybe the -- the education and the principal investments, is this more going to be M&A driven? Or you think this is more positioned for some kind of a sale or value creation or disposal. Maybe if you can just give us some color on how to think about these components of the recurring portfolio. That would be helpful.

Sure. Yes. So on the dividend, I don't want to sound like a broken record, but we've got a policy and it operates and it is progressive. And so our numbers are really improving. So we'll see in freeway when the Board gets together to review the dividend recommendation, but I think that [ issue ] goes and the Board is also very beholden and appreciate the policy and the transparency that the policy brings. And it's there to hopefully remove a lot of speculation and just to allow the business to operate and have a massive policy to work through. The only other thing that the Board will always balance is just in terms of, we have a scale, right? It's Aldar, AMD business, we have a range where you end up in that range but ultimately be, but where you want to guide the market around how we grow. So there are amazing growth opportunities, it might see it bow down. We're very happy to flip a coin and balance growth with more payouts than to flag up. But by and large it's there. It's meant there, the policy, to provide visibility and flexibility. So we'll see. Longer to say we'll see in February. On value unlocking, I mean, look, we're -- so just to address 2 examples on education. The business continues to go from strength to strength. Another recipient of trends within Abu Dhabi government to privatize. So there the fee-based business, we're getting [indiscernible] and just the steady normal growth in students continues. So it remains a very valuable noncore business to us. And education is one of the sectors that lots of private capital generally has flowing into in this region. So it' definitely one to look for from a monetization event at some point. But we continue to be very happy running it for [ value on all parts ] 4 years now. Our answer to this question was always see lots of low-hanging fruit, and we didn't feel there was a reason to do the deal with anyone because we saw such a visible runway of natural growth coming in, no one would be snobby enough to pay multiple when we needed. And indeed, that made sense because we've grown that business through [indiscernible] since just from some management in doing this job. So we're getting close to that time, we're always offering more of efficient scale. But in terms of the sum of the parts in the way that fits in our value each mall the growth we've shown there is real. I hope you're all giving a very top multiple, and there's definitely more growth prospects to [ indulge ] before around the accretive event.

This concludes today's Q&A session. So I'd like to hand over to Mohamad Haidar.

Thank you, everyone, for joining. Thank you, Greg, for your time today, and this ends our call today. Thank you.

Thanks, everybody. Talk to you in February.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.