Aldar Properties PJSC (ALDAR) Earnings Call Transcript & Summary

Hello, everyone, and welcome to the Aldar Properties H1 2025 Financial Results Call. My name is Emily, and I'll be coordinating your call today. [Operator Instructions] I will now hand over to Mr. Faisal Falaknaz, Group Chief Financial and Sustainability Officer. Mr. Falaknaz, please go ahead.

[Foreign Language] Hello, everyone. Thank you very much for joining this call to discuss Aldar's financial results for the first 6 months of 2025. We are making good progress against the new 2030 strategy launched back in January, which is designed to accelerate growth and diversification as well as enhance long-term institutional resilience. Aldar has delivered broad-based growth across both the development and investment platforms in the context of favorable market conditions and demand in the UAE. The strong performance was driven by the successful launch of new development projects in the UAE, strong sales of existing developed sell inventory, recognition against the substantial development backlog. And finally, a strong performance by the recurring income portfolio through organic growth and contributions from recent asset acquisitions. First half group revenue increased 42% year-on-year to AED 15.5 billion and EBITDA was up 38% at AED 5.3 billion, leaving us on track to reach the upper range of our full year guidance. Net profit after tax for the first 6 months increased 24% year-on-year to AED 4.1 billion. Aldar's effective tax late for the first half of the year was 12.2% versus 4.1% in H1 last year. This reflects the UAE's adoption of the 15% [ DMDT ] rate in January, following the 9% general corporate income tax rate introduced a year earlier. Aldar development has seen strong momentum with 5 new launches in the first half with Fahid Island attracting particularly strong demand in Q2 following similar success of The Wilds launches in Dubai in Q1. Group development sales increased 31% year-on-year to AED 18.3 billion in the first half, which is on track to meet our full year guidance of AED 36 billion to AED 39 billion. Driven by successful project launches, our total backlog has increased further to AED 62.3 billion, including AED 53.4 billion in the UAE, driving significant revenue recognition over the next 2 to 3 years. Aldar investment also delivered strong results with H1 adjusted EBITDA rising 18% to AED 1.6 billion, growth was driven by high occupancy, rental uplifts and contributions from recent acquisitions, including Masdar City assets. The platform will grow and diversify further over the next 3 years, driven by further capital deployment including strategic mergers and acquisitions and our AED 14.3 billion developed D-Hold pipeline. On Slide #4, you will see recent corporate updates. Demand for Abu Dhabi real estate continues to see strong momentum with Aldar's premium residential portfolio at the forefront, attracting individual buyers and institutional investors. In Q2, we launched the first developments on Fahid Island. Fahid Beach Residences and the Beach House, both saw strong sales that marked the beginning of a major new destination in Abu Dhabi. The full Fahid Island master plan spans 3.4 million square meters and will deliver over 6,000 residential units, including apartments, townhouses and ultra-luxury beach and Mangrove villas. The destination will also feature retail, leisure and wellness experiences alongside 5-star hospitality and flagship education assets. This includes the signing of an agreement to bring Kings College School Wimbledon to Fahid Island with its premium K-12 campus set to open in the '28 to '29 academic year. On Saadiyat Island, Aldar completed the sale of a 71-unit residential building at Mamsha Gardens to Gaw Capital Partners for AED 586 million. A clear example of Aldar's and the UAE's ability to attract global institutional capital and to develop to sell assets. Also on Saadiyat Island, in July, we completed the sale of a AED 400 million mansion at Faya Al Saadiyat, the highest-value residential transaction ever recorded in Abu Dhabi. On Yas Island, we had the standout response to the launch of Waldorf Astoria Residences, the first branded residences on the island, a clear reflection of demand for branded luxury living in Abu Dhabi. In investment, we acquired income-generating logistics assets at Al Markaz Industrial Park in Abu Dhabi adding approximately 180,000 square meters of 100% occupied Grade A net leasable area in our portfolio. Finally, on the D-Hold pipeline, we brought ground on the previously announced custom-built Grade A cold storage facility for Emirates Snack Foods in Dubai South with completion expected by the end of this year. Turning to a more detailed look at Aldar development on Slide #5. The platform continues to deliver a very strong performance in the first half, supported by a diversified product mix and growing traction across our international markets. Group sales rose 31% year-on-year to AED 18.3 billion in H1, maintaining a high and sustainable run rate. This was driven by strong uptake across both existing inventory and new launches in the UAE supported by our global sales network and resilient domestic demand. Revenue increased 50% year-on-year to AED 11.3 billion, while EBITDA rose 47% to AED 3.3 billion, reflecting continued revenue recognition and delivery momentum across key developments. Internationally, Saadiyat contributed AED 291 million in revenue in the first half with sales of AED 536 million. In May, the company signed a revenue sharing agreement to develop a major land parcel in New Sphinx City in West Cairo, SODIC received 79% of revenues from the project which has the capacity to generate over EGP 353 billion in sales. London Square contributed AED 710 million in revenue in the first half with sales totaling AED 362 million. The business has acquired 15 land plots and launched 6 developments since Aldar's acquisition in late 2023 including 2 land acquisitions and 3 launches in H1. Notably, 25% of London Square's H1 sales were generated through the world of Aldar network demonstrating the value of cross-platform integration and growing connectivity across our international footprint. Turning to Slide #6. You will see further details on UAE development, sales of AED 17.5 billion in the first half, up 35% year-on-year. Overseas and expat buyers accounted for 84% of that total. A consistent trend that reflects Aldar's strong positioning among globally mobile investors and end users. This is in part attributable to our product mix and the successful rollout of our enhanced international sales network. By the end of July, our UAE development backlog stood at AED 53.4 billion with an average duration of around 30 months. On Slide #7, to look at Aldar investments in further detail, Aldar investment has grown into a well-diversified platform of significant scale with AED 47 billion of AUM that generates solid recurring income streams. Revenue for the platform rose 16% year-on-year to AED 3.8 billion in the first half, while adjusted EBITDA increased 18% to AED 1.6 billion. Excluding commercial disposal in H1 and divestment of strata units on the residential front, adjusted EBITDA rose 24%. This performance was driven by high occupancy and strong rental growth across the core investment portfolio alongside contributions from recent strategic acquisitions, most notably, the Masdar City residential and commercial assets. Turning to Slide #8. The investment properties portfolio delivered strong growth in the first half with adjusted EBITDA rising 17% year-on-year to AED 993 million. Excluding disposals and investments, adjusted EBITDA rose 26% year-on-year. Performance was supported by portfolio-wide occupancy of 97% as at the end of June, along with the continued rental growth and contributions from Masdar City residential and commercial assets which accounted for AED 118 million in adjusted EBITDA in H1. Commercial adjusted EBITDA in H1 reached AED 420 million, up 11% year-on-year. supported by contributions of Masdar assets and the ramp-up of Al Maryah Tower and a strong rise in rental rates during the period. Excluding disposals, commercial EBITDA rose 30% year-on-year. Occupancy remains at 99%, and Yas Place, a recently completed D-Hold project is already 95% pre-leased ahead of its Q3 opening. It's worth highlighting that we have exercised our option to acquire Mubadala's 40% stake in Al Maryah Tower, consolidating our JV stake as was intended. Parties have completed relevant due diligence and valuation work with the transaction expected to close in Q3. Residential adjusted EBITDA increased 35% to AED 263 million in the first half supported by contributions from Masdar City assets and rental growth across the portfolio that maintain 98% occupancy. During the period, we generated AED 65 million from strata sales, in line with our capital recycling strategy, excluding strata unit divestments, the portfolio adjusted EBITDA grew by 41%. Retail adjusted EBITDA rose 12% year-on-year to AED 277 million with an average occupancy at 91%, Yas Mall reported strong momentum with occupancy of 98% driving a 15% year-on-year growth in footfall and an increase of 12% in tenant sales. Al Hamra Mall is also close to full occupancy following the completion of its upgrade, while Al Jimi Mall remains on track for its new expansion opening in Q4. Meanwhile, the formation of the new retail platform under Mubadala joint venture, combining Yas Mall and the Galleria Luxury Collection is expected to close in Q3. Logistics adjusted EBITDA rose 14% to AED 35 million with occupancy at 97%. The recent Al Markaz acquisition has expanded our footprint in this sector which remains a priority asset class for future growth. Supported by the DP World partnership, our developed whole pipeline and over the long term, the Al Falah Logistics Hub under Mubadala joint venture. On Slide 9, you will see that in the first half, our hospitality, education and the state platform continued to deliver a solid performance while advancing key strategic initiatives, the hospitality portfolio maintained 70% occupancy and achieved an 8% increase in average rates and a 3% rise in RevPAR. EBITDA in H1 was AED 171 million, 4% lower year-on-year, reflecting the impact of our AED 1.5 billion redevelopment program with several properties partially offline, a notable development was the reopening of Aldhafra Resort during the first half, a luxury desert retreat in Liwa managed by IHG. The education platform recorded EBITDA of AED 127 million, up 9% year-on-year. Growth was driven by organic expansion and fee increases across most operated schools. Total enrollment stands at 37,000 students with further scale expected from upcoming openings. These include Yasmina American School in Khalifa City and Muna British Academy in Saadiyat Lagoons, both scheduled for the 2025, 2026 academic here as well as the establishment of Kings College School Wimbledon on Fahid in 2028. Aldar Estates also delivered strong growth with EBITDA rising 24% year-on-year to AED 192 million, supported by synergies and continued expansion across property management, facilities management and community services. Turning to Slide 10 and our key balance sheet indicators. In June, Aldar arranged an additional AED 500 million bilateral revolving credit facility, bringing total capital raised in the first half to AED 16.8 billion. Over recent months, we have taken a countercyclical approach to funding aimed at reinforcing our financial resilience and building a robust capital buffer to support long-term growth. This included a number of landmark transactions earlier in the year, notably a AED 9 billion sustainability linked revolving facility along with hybrid and green bond issuances totaling $2 billion. Meanwhile, we have maintained a prudent leverage profile and strong interest coverage while further strengthening liquidity with AED 12.2 billion in free and unrestricted cash and AED 17.5 billion in committed undrawn facilities as of the end of June. The average senior debt maturity now stands at 5.5 years with no material refinancing needs in the near term. Looking ahead, our focus remains on disciplined capital deployment aligned to long-term value creation and strategic priorities. You will find our approach to sustainability and key highlights on Slides 11 and 12. We have continued to make tangible progress on our forward-looking agenda. As a reminder, our 2024 sustainability report published in March outlined our updated framework along with clear targets on energy, water use and construction waste. I am pleased to report that Aldar's ESG rating was upgraded to A by MSCI. And in July, the company was added to the FTSE4Good Index Series, reflecting broad improvements across environmental, social and governance practices. We also advanced our operational performance. Our developments already achieved a 30% reduction in energy use intensity by design from ASHRAE 2007. Embodied carbon and construction materials was reduced by 24% and 96% of construction and demolition waste was recycled. On Fahid Island, the wellness focus master plan received 3-star Fitwel ratings. The first island globally to achieve this. Likewise, The Wilds achieved lead platinum for communities and Fitwel 3-star ratings. First, in the MEA region to achieve highest rating and board certification system. To close and turning to Slide 13. Our full year 2025 guidance remains unchanged supported by the strong visibility we have across both our development and investment platforms. We are tracking to reach the upper end of our full year guidance with group EBITDA of between AED 10.4 billion and AED 10.8 billion and group development sales in the range of AED 36 billion to AED 39 billion. Aldar Development is expected to deliver EBITDA of AED 6.6 billion to AED 7 billion while Aldar Investment is guided to reach adjusted EBITDA of AED 3.2 billion to AED 3.3 billion. The first half of the year has demonstrated the strength and the resilience of Aldar's diversified model. The development platform has maintained strong sales momentum and expanded our backlog, providing solid income visibility over the coming years. At the same time, the investment platform continues to scale while also achieving organic growth supported by high occupancy, rising rental values against a favorable market backdrop. With that, we conclude the presentation and I welcome your questions. Thank you.

[Operator Instructions] Our first question today comes from Steve Bramley with HSBC.

Congratulations on your half year figures. I just had 3 questions, really, number one, and I'm sure you'll get a few follow-ups on this. But just on the margins, and you've held guidance for this year and indeed further years out. But in terms of Aldar Developments gross profit margin today, you were slightly below the lower end. Just to get yourself back in the bookends of your guidance for the full year, presumably, we're looking at a stronger second half. That's the first question. Number two, you've done 5 launches in the first half. How are you thinking about second half launches? Could it be materially stronger or materially weaker or roughly the same again? And then thirdly and lastly, clarification on a comment you've made about international investment in so far as you're not intending to make any further expansion internationally. What's prompted that? And secondly, just to be clear, I mean, does this mean no change to your existing budget? Or are you saying that you're reining in the existing budget? Was it simply that you're not going to make any additional incremental investment?

Thank you, Steve. On the PDS margin. So our guidance is we are probably going to hit the upper end, which I think is around 36% for the full year. Q2 was slightly lower than Q1. Q1, we did the award of Athlon, which was sold in Q3 of last year. So that had an early recognition of the sales fees that we recognize through our JV with Dubai Holding. So that pushed it slightly up. But you will see the margins trending up. We've been doing a lot of work in terms of pushing up our margins on our new projects. It just -- it takes a little bit of time for that backlog of new projects to flow through the revenue. But again, you will see it trending towards that 36% level by -- for the full year by the time we close the year. In terms of launches, I'd say Q3 won't be that busy given the summer. We have a number of launches planned. But the majority of the launches will probably happen at Q4. I think the important thing for us is we don't just push launches to hit our sales targets. We're also very disciplined about managing our inventory levels. And almost 50% of our sales, I can say, typically comes from our inventory, which is good. But there's a few exciting developments on the Saadiyat cultural district that are going to come in the second half. We have a few prime plots that we have left, I would call those the crown jewels. And then Fahid, there's a lot of pent-up demand for that -- for those beachfront apartments. So you should surely see a lot of more Fahid coming from us. But again, in summary, we remain very confident that we will deliver on our group sales guidance of AED 36 billion to AED 39 billion. And then the last question is around international expansion. I don't think there's a change in messaging. I've gotten this question a lot from the investor community around international expansion. And my message has always been we are very much focused on growing our UAE business. We are in Egypt and London today, and we have a lot of conviction around those businesses, which we will continue growing. The comment was around we are not shopping around and looking for new destinations to go into.

All right. And sorry, just lastly, just on that last question. is it NUCA ,isn't it? I saw this morning that the -- in Egypt that NUCA is certainly talking about introducing some levies on developers operating in the North Coast and on the highway from [indiscernible] Cairo up to North Coast both for landowners and developers. Is that something that is concerning for SODIC?

I haven't read that news to be honest. So I'm not optimistic. But for SODIC, I would say, typically, the second half of the year is the time of the period that we see the majority of our sales.

Our next question comes from Harsh Mehta with Goldman Sachs.

My first question is we heard in April that ADQ has formed a new infrastructure JV with [ Modern ] and [ ISP ] So if you could just help us understand, does it compete with Aldar on Abu Dhabi infrastructure projects or this would be completely a different scope of work compared to what you do?

I don't want to comment on their behalf, but my understanding is that it is more focused on the PPP front to attract international capital into the country which is different to what we do at Aldar projects, yes.

Absolutely, yes. The other question I had was when I look at the presentation, for the Al Fahid Island launches, I can see the sales value have been very decent. So for the Fahid Beach Residences, you're showing a sales value of AED 1.5 billion. And for the Beach House Fahid, you're showing a sales value of AED 883 million. But the backlog amount is very low. So for Fahid Beach Residences against the sales value of AED 1.5 billion, you're showing a backlog of AED 720 million. And similarly, for the Beach House Fahid, while the sales value is AED 883 million, the backlog is AED 560 million. So I just wanted to understand what's the reason for this gap? Is there a land sales that's included over here and that's driving the backlog being lower than the actual sales value?

Maybe just on the methodology. We book sales where the SPAs have been signed by the customer and where the deposit has been paid down. Sometimes for whatever administrative reasons, we do not yet countersign the SPA. So it's only when we countersign the SPA, do we put it in the backlog, given the backlog is what drives revenue recognition. So you see in Q2, we announced almost AED 3.5 billion of sales on Fahid. But here, you're not seeing those fully translate through. So it's just a timing thing. Those sales will roll over into Q3 numbers, yes.

Our next question comes from Taher Safieddine with JPMorgan.

Congrats on a solid set of numbers. This is Taher from JPMorgan. Maybe just 2 questions from my side. The first one is on the 2025 guidance. You said that you're on track to deliver on the upper end. But if I just take a basic approach in terms of H1 annualized, is it fair to assume that H2 is going to be stronger across the board, particularly in terms of development EBITDA, gross profit's margin and also on Aldar Investment. Is that a fair assumption?

100% because H2, you'll see the run rate from development pick up further speed. And then on the investment front, for example, the Markaz acquisition that we have done is going to start contributing. Al Jimi Mall, which has been undergoing repositioning is going to come online hopefully in September, October of this year. The Yas Place Office Tower, which is opening...

Apologies, everyone. We have lost connection to the management team. Please bear with us one moment while we reconnect them. Apologies for the interruption, everyone. I can confirm that the management team are now reconnected. Please continue.

Taher, I don't know if you got the last part of the answer. So basically, there's a lot of catalysts coming in H2, which will make the run rate higher, yes.

Okay. And just a follow-up on this. If I look at the deployment and the D-Hold CapEx, we are running below the run rate for FY '25. Is there any thoughts you can share with us? Are there any expectation of accelerated deployment on the M&A and the D-Hold CapEx into H2, if you can shed more color on that?

So we do not need -- so obviously, D-Hold CapEx does not play into the guidance number, number one. The deployment numbers do. But even if we don't deploy the guidance, there is no risk to us hitting our guidance. So fully deploying is upside to the upper end of the guidance that I have just reiterated today. And then I mentioned on the call, we exercised our option with Mubadala to buy out their stake in AMT Tower. That's the building we bought, I think it was back in late '22, early '23. So we're buying Mubadala's 40% stake. That's going to be completed by Q3. So that's further deployment. However, not in the EBITDA numbers given we already consolidate, so more on the [ MCI ] production front. And the other thing is we've made very good progress on the Galleria retail merger. That's also very much on track to be completed in Q3. Now we have told you guys to assume that this has a neutral effect given it's a merger. However, we do see potential upside kicking in towards next year when it comes to the revenue and cost synergies that will come into play.

Okay. Very clear. And the last question is just on the development front, specifically on Dubai. I mean, as you can see, the Dubai property market continues to show very strong numbers in H1, and you guys have been active primarily on The Wilds. I just want to understand how much inventory do we have left in the 3 master plan now that all has been launched? That's my first part. And the second part, what are the plans in terms of maybe further exploring an extension to the JV with Dubai Holding? Or how should we think about your Dubai positioning as we go into maybe '26, '27 from a land bank replenishment point of view?

So we have the apartments to launch in Athlon. We have the apartments to launch in The Wilds. We have a number of high-end villas, the mansions that we launched on Wilds, which is still on our inventory. I would say we have AED 7 billion to AED 8 billion of inventory left in whatever remaining land bank that we have. And yes, we are very focused on replenishing land bank in Dubai and are confident that we will be able to do so, and we'll keep you posted on further developments.

Our next question comes from Gustavo Campos with Jefferies.

Congratulations on the strong results. Very quick from my side. How are you projecting to fund your expected investment outflows for the rest of this year and into 2026. We saw a lot of debt attraction over the last few years and into 2025. Are you expecting to see a lot more net debt attraction into the coming months and 2026 as well? And if you could please comment on how you're expecting to fund this mix, whether you're considering Sukuk or maybe other alternative vehicles like private partnerships or perpetuals like we see. How are you expecting that this mix will be? That's my question.

Thank you, Gustavo. So again, we always take a countercyclical approach when it comes to liquidity. We have had a very active first half, to your point, $1.5 billion of hybrid between public and private, the AED 9 billion RCF that we did, the Sukuk issuance that we did to refinance partly maturing Sukuk that we had coming up. Today, we're sitting on AED 17.5 billion of untapped credit facilities. I would say we've been attracting a lot of interest from debt investors, especially internationally. The new RCF that we just signed, so 2 new international banks come into our bank list. There continues to be significant liquidity within the UAE banking system. So the banks continue to approach us wanting to expand the relationship with Aldar. So yes, I mean, they are all options that we have in our hands. I'd say we would look at the combination. Are we open to doing further hybrids? Absolutely. Are we open to doing further capital market issuances? Absolutely. Are we doing -- are we looking to do more RCFs? Absolutely. It will just depend how we go on about our deployment. But again, today, given the capital requirements that we need for the coming couple of years, I think we are more than set. However, we will not wait, and we will continue shoring as much liquidity as we can because liquidity is credit positive for us.

The next question comes from Harsh Mehta with Goldman Sachs.

Maybe one more question. In the presentation, there's an interesting breakdown of sales by nationality in Dubai and Abu Dhabi. And one thing that I noticed is while in Dubai, the breakdown is very similar to some of the other large developers. In Abu Dhabi, for example, you still don't have Indians among the top 3 buyers. And if I were to kind of just try to understand, is it because of the product offering or price points? And is there an effort that the management or the company is going to make to make sure that also becomes a big part of the buyers because they have been the biggest buyers in Dubai and driving the market. It would be really interesting to hear your views.

Yes. I think this is a very Dubai-specific thing, Masha Allah. They have a very big customer base, both from a resident expat point of view and international investors that buy into Dubai. But similar to China, China in the past was not representing a significant portion of sales in our Abu Dhabi backlog. But last year, we did AED 1.5 billion in sales for China full year. This first half, we have already done AED 1.7 billion for China. And we're seeing a somewhat similar trend for India. So our international sales team does a lot of time -- spends a lot of time in those key international markets and India is surely one of them. So you'll see that number grow with time.

Perfect. So it should be another kind of big uplift for you as we've seen in Dubai over the last 18 months that could potentially drive future sales in Abu Dhabi, if I were to think about it in terms of the opportunity?

Yes, absolutely, 100%.

We have received several text questions from Aaron Armstrong with Ashmore Investment Management. The first of which he asks, please, can you comment on what drove the GP margin decline in development? And what is the outlook from here?

Okay. I've already answered that, but I'll keep it brief. In Q1, we had the recognition of some sales fees from our JV because of the award of Athlon. And then the outlook is our GP margin should close the year somewhere around 36% at the upper end of the guidance that we gave. Why did international presales decline this quarter? And what is expected for H2? We are expecting a much stronger second half in terms of sales for international, both SODIC and LSQ, SODIC specifically, you'll see that trend. If you look at the 2024 numbers, what are the key launches for the UAE in the second half? I've already answered that question on what is coming on the growth and Fahid. And even in Dubai, we still have the apartments that we need to launch in Athlon and [indiscernible].

Our next question is one from [ Anup Dakuna ] with Moon Capital, who asks, how do you see ability to deliver on backlog going forward?

I think that confidence is coming in our guidance. We have very good confidence around doing that. Is it a risk? Absolutely, but it's a risk that we are proactively managing. Contractors are probably the biggest risk in our supply chain which is why we need to stay close to them, which is why we need to make sure that they continue to pay their subcontractors down the chain, which is why we need to continue bringing new contractors into the ecosystem. So not awarding everything to Tier 1 contractors and creating concentration risk, but also working with Tier 2 contractors so that they can become Tier 1 contractors and deliver on our ambitions.

Our next question comes from Taher Safieddine with JPMorgan.

It's me again. Just maybe a bit expanding on the guidance. I mean, clearly, you have confidence in terms of delivering on the upper end of FY '25, which is on the group EBITDA of AED 10.8 billion. If I look at consensus, it's still below AED 10 billion. And then if I take a longer-term view in terms of the 3-year guidance, I remember you said 25%, 30% EBITDA group CAGR, but also, I mean, consensus is way below that. I think the question here is, what is the market missing maybe from your standpoint, given you speak to a lot of analysts and investors. So maybe just a bit of color there. And also the other point is, do you really need the full deployment, both on the D-Hold CapEx and the M&A deployment to hit your 2027 guidance that you shared, if I remember correctly, at the beginning of this year?

On the first question, what is the market missing? I think the market is generally conservative by nature. They want to see to believe. And that's the message I've always been giving. We will continue delivering. And as we deliver, the stock price is going to continue re-rating. I think we've somewhat bridged that gap with the significant additional disclosures that we've been making, the longer-term outlook that we have been giving. And as long as we continue again delivering, I think that confidence will translate -- confidence from investors will translate into the stock price. Sorry, Taher, your the second question was, is deployment of D-Hold key?

Yes. Do you need the full deployment on M&A and D-Hold CapEx over '25, '27 to achieve your medium-term target in FY '27?

See, I think D-Hold is very important, okay, because part of our strategy as well, if you remember, we have set an ambitious target in ourselves on maintaining a 50-50 split between development and recurring. So for us to hit those numbers, I think, yes, there's a significant portion of that D-Hold that needs to come online in that period. And we've been making very good progress on that front. And that AED 14 billion that we've announced to date does not include a lot of stuff that we have yet to announce to you guys and which will be coming over the next 3, 6, 12 months. There's a big pipeline that we are working on.

And sorry, can you just remind us what kind of yield to cost you're looking at in terms of D-Hold? I mean, clearly, this is a much more lucrative avenue versus M&A because I mean, you control the whole thing. So can you just help us share some guidance there?

See on average, I would say, 9% to 10% and then cap rates of around 7% to 8% depending on the asset class. There's a lot of things that we've been building today that are making -- yield on cost significantly higher than 10%, like the logistics stuff we're building is extremely accretive to the portfolio. But on average, 9% to 10% yield to cost.

Our next question comes from Steve Bramley with HSBC.

I just had a follow-up question, if I may. The Gaw Capital [indiscernible], can you just perhaps just share a little bit of detail around this? I mean, how does this work? They purchased the property at 71 residential units completion in 2028. Do they get a form of discounted purchase because it's a bulk purchase? And then do they take all the on sale risk? Or does Aldar participate either on any future upside through the deal? Or does it have any exposure should they not realize, I guess, the profit on the disposal of 71 properties, 71 units. Just how does that work just to give us a sense as to what the deal is that you've done, please?

So there's a few rationales for doing this. So one, again, is attracting this global institutional capital to the city. Number two, when you do a bulk sale, you don't spend money on marketing and you don't spend money on commissions. So there's a very minor discount that is given to them on the price. But then they have somewhat similar payment plans to the individual buyers today, which is a 60-40. So they pay like any other customer with their payment plan and they make their payment at handover. They take handover of those units, and we don't call out, we treat them like any other buyer. We have no say in their upside or whatever. But the choice of the buyer for us is very important because I don't want to go sell bulk to buyers who want to buy bulk and sell individually in the market. So the reason we went with them is knowing them, we were very confident that they will not sell. Their strategy is to buy this, have the asset delivered, probably lease it for a number of years and then sell it. And their thesis on the Saadiyat Cultural District is with all the social infrastructure that is going to be ready in the next few years, those apartments are going to be significantly worth a lot more than what they are buying at today.

Right. So if they're not going to sell piecemeal, it will be a rented building -- is that the thinking?

Yes, yes. And even like the other thing we do, even on the somewhat discount that we offer, that's even given as a rebate, like the customer has to complete that full purchase for him to take benefit of that full discount that was given.

Right. Right. Okay. And as it stands today, and I see it's the first foray into the UAE, do you think it's likely you'll -- do you get any sense that there are more deals behind it or perhaps not.

[indiscernible] of such nature? Nothing imminent in the pipeline. But yes, I mean, we'd surely be open to doing a lot more of those.

Our next question comes from Harsh Mehta with Goldman Sachs.

Maybe one last question. So within the residential real estate market, is there any segment you would be cautious about given especially over here in Dubai, there are a lot of talks of potential oversupply in some segments and some of the developers are navigating towards, let's say, from multifamily to single-family homes in terms of their backlog. I'd be keen to hear your views.

Our preference is not to buy a single plot multifamily. Like for us, the community aspect is a very important part of the development. Our preference is to be predominantly horizontal and not vertical, not that we wouldn't look at a master plan vertical development, it would really depend on the location and the competitiveness of that development. But typically, our approach in Dubai has been focused on horizontal, which is where you have more pent-up demand than you do for -- or more undersupply than you do for apartments.

Great. And any trends or changes in Abu Dhabi between vertical and horizontal and you position yourselves in a specific segment?

No, not really. There's a significant demand, same as Dubai, significant demand for horizontal. But obviously, the land bank by nature, facilitates for more vertical than horizontal. But we still have a significant supply of horizontal that is coming up. I got asked this question today in the media. I'd say the area where we'd really like to play in more is the affordable segment. And for us, affordable is affordable to lease. Today, if you look at a young professional who is just moving to the country, his biggest challenge in terms of buying a property is making a down payment. And typically, a young professional does not have enough savings to make a down payment. Therefore, their option is typically to lease. So affordable leasing product is very important, and we classify those by segments. You have the working class segment, let's call them something between the AED 5,000 to AED 10,000 levels of income. And then maybe you have the teachers, the nurses who are maybe somewhere between AED 10,000 to AED 20,000, AED 25,000. So those would have different product offerings. And then you go into the affordable, which is affordable to buy. And you would have to back solve for -- you look at a professional, a family whose annual income or monthly income is somewhere, let's say, between AED 30,000 to AED 40,000 a month. And if they can only afford to pay 1/3 of their income in terms of a mortgage. So that's the way you try to price that product for those type of segments. That's the way we look at it. And there's a very serious effort today in terms of strategically replenishing our land in Abu Dhabi to facilitate for that type of offering in the city because our land bank today, if you look at it in Saadiyat and Yas, is very valuable land bank and the best use for that land is not affordable, unfortunately. So we need to cater for that demand by getting more appropriate land bank for it.

Our next question comes from Taher Safieddine with JPMorgan.

That's really last question. Just on the recurring portfolio, I mean, if we just look at the D-Hold, we see that there is a lot of focus within that on commercial and logistics. I mean, clearly, you're very well represented in commercial. Logistics is actually scaling up quite nicely from a GLA perspective. But then if I look at the residential leasing portfolio, it just feels that the uptake there in terms of D-Hold has been a bit shy. Is that a fair assumption? And do you feel that there is more scope to punch above your weight within the residential leasing, also keeping in mind that rental rates in Abu Dhabi have been actually quite supportive on the residential front. So maybe if you can share some color there and if there are any future plans to deploy more from a D-Hold perspective or M&A deployment on the residential leasing portfolio?

So far, it follows up my earlier point. So the affordable is something that will start adding to the residential pipeline for D-Hold. And you're right, that was a missed opportunity from our side. We were very much focused on selling rather than renting. So there will be a number of announcements that are coming soon in terms of more residential lease products that we're bringing to the market.

We have time to take one further question, and we have received a question from Jonathan Milan with Waha Capital, who has sent 3 questions. Asking, are you looking to launch more projects in Abu Dhabi? For example, like on Yas Island or mid-end apartments on Reem Island, are you maintaining your market share in Abu Dhabi and yield to cost of 10% assumes full occupancy. It sounds like a few years after delivery, this yield to cost easily goes to 14% to 15% as rents go up.

So first question, yes, we have a very active pipeline of projects that we are launching in Abu Dhabi. We don't launch stuff in Reem today. We are more sellers of land on Reem for other third-party developers. We continue to hold a very strong market share in Abu Dhabi. Obviously, our competitors have been doing well, and I think the results came out yesterday. This is all, I think, positive for the market in terms of future liquidity that is going to come here. And then the 10% yield to cost assumes a stabilized yield to cost, not stabilized at 14% to 15%.

Thank you. This concludes our call. I will now hand back over to Faisal for closing comments.

Thank you, everybody, for taking the time again. We'll keep you posted on further events. We have a number of announcements coming up in Q3, and we look forward to seeing you again in Q3 when we have another set of good results to show you. Thank you very much.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.