Barwa Real Estate Company Q.P.S.C. (BRES) Earnings Call Transcript & Summary

Hello and welcome to Barwa Conference Call. Please note that this call is being recorded. I would now like to hand the call over to Roy Thomas. Please go ahead.

Thanks, Janice. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Barwa Real Estate Company's First Quarter 2025 Financial Results Conference Call. On this call, from Barwa Real Estate Company, we have Tamer Elsayed, the group Chief Financial Officer; Tariq Al Jaber, the director for investment management and business development; Dr. Abdulla AlKaabi, director for construction and projects control; and Mohamad Daakour, the director for budget and financial planning. We will conduct this conference call with management, first, reviewing the company's results, followed by a Q&A. I will turn the call now over to Tamer Elsayed. Go ahead, Tamer.

Thank you, Roy. [Foreign Language] Good day, everyone, and a warm welcome to Barwa Real Estate's First Quarter 2025 Post-results Conference Call. I am Tamer Elsayed, the group Chief Financial Officer. And I am joined by our team to share our performance and outlook and answer any questions you may have. First, I would like to express our gratitude to QNB Financial Services for hosting this call on behalf of Barwa Real Estate. Before we begin, a brief note on forward-looking statements. Except for historical facts, any projections or expectations shared today regarding future events or financial performance are forward looking. These statements are based on current assumptions and are subject to risks and uncertainties. Barwa undertakes no obligation to update or revise them based on new information or future developments. Barwa Real Estate announced its quarter 1 2025 financial results on April 29, 2025. The financial statements and the investor presentation are available in the investor relations section of our website. For those new to Barwa. We are one of the -- Qatar's leading real estate developers, specializing in developing, leasing and managing a diverse portfolio of assets. Our operational portfolio spans approximately 5.5 million square meters of built-up area including 14,220 residential units, 55,000 labor accommodations, warehouses, retail showrooms, offices and hospitality properties. These assets generate roughly 80% of our operating revenue and 90% of our operating profit, as detailed in our investor presentation. Additionally, Barwa hold a strategic land bank of approximately 2 million square meters, with 1.9 million square meters in Qatar. Of this, we own about 815,000 square meters, with the remainder under lease. Moving forward, we plan to selectively monetize this land bank through sales or development guided by market demand. Now let's review our Q1 2025 performance highlights. For the revenue, total operating revenue reached QAR 440 million compared to QAR 481 million in Q1 2024. For the operating profit, operating profit was QAR 313 million, down from QAR 333 million in Q1 2024. For the net profit, profit attributable to equity holders remained stable at QAR 239 million, slightly up from QAR 238 million in Q1 2024. On the balance sheet side, our financial position strength -- with net debt reduced to QAR 11.2 billion from year-end 2024 levels, yielding a net debt-to-equity ratio of 0.51. This robust liquidity and balance sheet strength position us well to pursue our growth strategy. We are -- also actively refinance select facilities to optimize liquidity and cash flow projections. With that overview, we are ready to address your questions. Thank you for joining us. And I will now hand over to the moderator from QNB Financial Services to facilitate question-and-answer session. Thank you.

[Operator Instructions] And your first question comes from the line of [ Alia Saad, Dar Albaraka Investment ].

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

Seeing as there are no more question in the queue, that concludes our question-and-answer session. I will now turn the call -- sorry. We have a question that came through now, [ Mr. Mohamed Annan ] of Al Rayan Investment.

There is Zohaib Pervez from Al Rayan Investment. If you could just give us a small, quick intro on the questions that the earlier caller was asking. I mean it was quite a long question-and-answer, so if you could just sum it up what the different information that we would -- maybe that was discussed. That's one thing. The second thing is if we could have your insights into the market, general real estate market. As I see, your rental revenues were lower for the -- year-over-year and even quarter-over-quarter. Could you tell us this is related to a lower occupancy or pricing? That's one of -- that's one other question. And on the income from consultancy that last year was about 111 million, in the same first quarter of last year. This year, it's come down. Could you give us more color on that, please?

Regarding the first question. The first call was mainly asking regarding the decrease in rental income during the period. So this was mainly we -- the answer was -- so the decrease in rental income, mainly from the decrease in labor camp occupancy. Also he asked about the other sectors. We are doing well in the other sectors, as you know. And the residential is we have increased; and high, stabilized occupancy. And second question was regarding the loan -- the balance of obligations. And that was -- we just mentioned, [ for the increase ], it was very -- a minimal amount due to the capitalization of finance costs. And regarding the finance income, we didn't have much difference. The main difference was regarding, related to school package 1 project. And for the cash balance between 2024 and 2025. Currently the full -- major part of the cash balance is invested in deposits and bank deposits. Now regarding second question, for the market, my colleague [ Anuj ] will [ answer it to you ].

So regarding the overall real estate market in Qatar. So we expect the market to be poised for continuous growth. There were certain indicators which are quite positive. IMF had recently come out with a GDP forecast for the next couple of years. So currently it is 2%, which is expected to go to 4% or 4.75% over the next couple of years. So we are witnessing that Qatar is focusing on economic diversification, which will lead to new sectors like solar and -- solar energy, green energy or in tourism; or technology-related kind of projects on that. Overall, we are quite -- if you really see the -- from the Barwa's perspective: The -- Barwa's portfolio is quite stabilized from the residential and the commercial one. As mentioned by my colleague, there is some -- we have witnessed decline in the labor accommodation, which is in general, but at the same time, if you really see the overall labor accommodation, we are still managing it around 55%, which in current time we expect it is a quite okay performance. And we are expecting in the next couple of -- like for -- during this year and a couple of more years, with the expansion in the LNG and the recent announcement of a metro line as well as the Simaisma project -- where the new announcement came just last week about a Trump tower. So all these factors -- including there is a big thrust we are witnessing from the government side on the tourism sector. People are quite following up about this new outlet mall which were expected to open in Q1 this year. It has got 1,000 branded retail shops, so it is kind of a destination where more layovers will come from the tourist sector. So overall, the real estate sector in the quarter 1 has stabilized in terms of the rental rate. We have witnessed there are certain increase in the premium segment. Definitely -- office sector, grade A buildings, definitely they have managed to maintain their rate, maybe a little bit of increase in the West Bay, but definitely there were some stress we have witnessed in the secondary market on it. And overall, retail and the hospitality is still managing it very good. If we can -- one of the data points that you would like to see: Last year, we have got 5 million visitors visiting this country. And in the first quarter, we have already achieved 1.5 million. So all these indicators are quite positive towards the Qatar economy. Thank you.

We don't have any questions at the moment. I will now turn the call over -- sorry. Go ahead.

My -- yes. So my other question was on the income from consultancy is -- using the -- what was the rationale for the decline in that segment?

Regarding the consultancy revenue. We had [indiscernible] adjustment in Q1 2024 related to prior years, recorded in Q1 2024. That was the mainly difference between last year and this year.

Okay. And on the balance sheet, you have investment through other comprehensive income, which went up from 56 million in September '24 to about 600 million now. Could you give us some color on what is this investment? And is it in equity? Is it in fixed income? Also there's an asset held for sale of 152 million. Which asset is this?

Yes. So the investment, this is -- it's short-term investments. The maturity varies from 3 months to 10 months. This is a mixed portfolio between debt investment or -- and REIT, and the purpose for that to enhance our return of liquidity. For the second line, which is noncurrent assets held for sale: We have some properties now under negotiation for sale. We have one plot...

[indiscernible]

Yes. That's why we recorded as held for sale.

Sounds good.

We don't have any questions at the moment. I will now turn the call over to Roy Thomas. Please go ahead.

All right, if there are no further questions, we would like to thank Barwa Real Estate Company's management for the results update and answering all the queries. And we look forward to speaking to you all for the Second Quarter 2025 Results Conference Call. Thank you.

Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.