Mazaya Real Estate Development Q.P.S.C. (MRDS) Earnings Call Transcript & Summary

This is Zaid Al-Nafoosi from QNB Financial Services. I want to welcome everyone to Mazaya Real Estate Development Company First Quarter 2020 Financial Results Conference Call. From the company, we have Mr. Joseph Al Hamod, who's the Senior Manager in Finance and Administration. And we also have on the call Mr. Mohammed Al Qadi, who's the Manager of Communications and Investor Relations. We will start this conference call with a presentation of the company's performance for the quarter followed by questions-and-answer session. I will now hand over the call to Mr. Al Hamod to get us started. Please go ahead, sir.

Hello, everyone. Thank you, Zaid, for the introduction. We would like to welcome all the investors for the investor call for Q1 2020. As we have reached out to -- the presentation in your hands, if any, it's available on our website and definitely -- and we had circulated for all of you, gentlemen. Just to start with, as you've seen in the latest news that we have announced, Mazaya had announced the sale of the Gloria Hotel asset. We are now in the process of finalizing the requirements for the transfer. And as of that, we have announced the execution of the transaction. That goes along with the announcement of the financial statements. A brief of the assets that -- from Mazaya are available in the presentation in your hands, which is the normal Sidra project, as you know. I will give a fast brief for the purpose of reminding everyone. Sidra has been submitted to the tenant, Qatar Foundation. It has been occupied, all settled. It's a normal income-generating asset for now. There is nothing much to discuss about. We'll reach out into the financials, and we'll talk about the income from the project. Tala Residence is an old one and have been -- old, I mean, that's been recurring for quite a couple of years, the same with the tenant occupied. And all is well. Marina Mall. Marina Mall is a project, as we know, that was put as a mall on hold currently. The management have invested into a new idea and have reached out to the developer and to the landlord. As we know, this is a BOT between Mazaya and Qatar Foundation. The new idea would include a different investment other than a mall that has some -- it would still include some retail area, but it's not going to be in the form of a [ mall ]. As and when we reach to a final position that the project is feasible for the investors, it will be announced accordingly. Again, Gloria Hotel, as we said, it has been -- lately, we have executed the exit from the sale of the hotel. And there's not much to discuss about the hotel. We'll run through the financial statements of Mazaya. As we have seen, Mazaya have recorded a total of QAR 6.8 million for Q1 for this year, comparing to QAR 11.5 million losses from last year. This takes us 160% on top of -- as a movement year-to-year. The main movement, as you can see, is the finance income that has been booked QAR 18 million, QAR 18,250,000, coming from the Sidra project. This is the finance income. It's related to the asset that's in our financials as finance lease receivable, which is in Sidra. As we see, the Sidra project has been recorded in our project at around QAR 1.2 billion. And that's the major asset in the total assets for the company, QAR 2.1 billion. Other than that, if we can go through the asset list, as you know, we have a bulk of an income at -- of -- in investment properties that's shown for QAR 745 million, out of which that includes the rest of the assets, Tala, Gloria because in the financials for Q1, Gloria was there and the other assets that we do have. Not much to discuss about the balance sheet, and we'll keep -- in case any of the investors who have any query, we will take the Q&A session towards the end. That balance sheet goes with an income statement as -- sorry, with an equity liability and equity movement. As we see, the equity has been -- has remained the same, slightly enhanced with the QAR 6 million profit that has been recorded. And the other movement, we can see that the liabilities for the overall liabilities for the company is coming to around QAR 770 million, which was around QAR 800 million by year-end. Now we have dropped because of the settlement going forward. And out of which also, the company had successfully a discussion that took place earlier than the general assembly. The company has successfully completed restructuring for the loans of the company into a longer tenor for an 18-year facility. So as you can see, the facilities of the company has been restructured into a longer tenor in order to ease the cash flow and give more room for investments in the future for the company. That's, in brief, the results for the Q1. And we will, by now, open the floor for any questions from the investors that would be there.

[Operator Instructions]

I would like to ask a couple of questions if you don't mind. Can you please shed some more light on the finance income of the QAR 18.2 million? Also, do you expect any changes in any of your operations after the COVID-19 fallout?

Fine. Just to start with the first part, QAR 18.25 million is related to Sidra project, as I said. Or would we expect the same amount to be all over the coming quarters? It's going to be maintained or be similar. It's not going to be exactly the same, but it will be much similar to the same income that will be recorded throughout the year of the contract. Now this, you may see a bit of an enhancement during this year for 2 main reasons. Number one, we have -- as I said, we have finalized the restructuring of the loan for an 18-year period, out of which we had room for a slight enhancement in the first couple of months. So you may see an enhancement in the [ finance ] income for this period. And at the same time, you would say that we have worked out into a better financing cost and you will start to see it into quarter 2 onwards and a saving on the finance cost related. So accordingly, that will have an effect to the bottom line of the profit and loss for the company. As for the COVID-19, now Mazaya in their project, as you can see, the income-generating assets had been straightforward submitted and ongoing. There was no effect to this other than the normal precautionary actions that we have taken in our residential compounds but does not have any effect to our P&L. Currently, there was -- there is no asset that's under development at Mazaya, which may have an effect from the COVID-19 either from a delay or from other perspectives. So we do not expect to see any effect that can come to Mazaya other than the very minimal effects that's related to the short working hours and working-from-home policy that the government has implemented. But on the balance sheet and income statement, we do not see any effect.

And we have the next question now.

Sorry, I joined the call late. I was wondering if you could just give us an update on -- or apologies if you already have given update, but I was just wondering where things are with the merger with Al Bandary and also where things are with the car parks with [ Bejra ].

Okay. Great. First, I would like to understand the -- I would like to understand which part are you representing before answering for the car parks.

Sorry. I didn't -- I forgot -- I thought the operator would introduce me. This is [ Herbert ] from [ Orion ] Investment Planning and Asset Management.

Okay. You're welcome. Okay I'll start with the Al Bandary transaction. Al Bandary transaction, there is a couple of points still under discussion between the Board and the Al Bandary team. We can see that most of the items have been agreed upon. The finance stage on the execution of the transaction has been still pending. The execution of the transaction can come in a couple of forms, out of which a proper merger or in a different form that can be as an acquisition of an asset by asset. These ones had some legal restrictions from the commercial company's law, which we are discussing. And in line with these restrictions, we had to confirm with Al Bandary on the process by itself. That may involve Al Bandary by themselves for this. And accordingly, we'll need to clarify the form of the execution. I will give a small example on this. The execution of a merger would require a 75% quorum for a general assembly, which we are facing an issue with getting 75% quorum, attending a general assembly to vote on the transaction. So we're trying to waive this with the Ministry and -- or else, we need to go into another form of process for the transaction, which we need to discuss with Al Bandary. That's -- I can confirm that it's still ongoing. The -- and with the recent closures and changes where we're facing a bit of difficulties to get into a closure for the matter. As for the car park project, what I can say that -- Mazaya is keen to submitting the project. We have put all the resources along with the time for the project that we have created an internal team that is following this, headed by our Board member. As we have earlier mentioned in the general assembly, it's been managed, the process from A to Z, by one of our Board members who's following the matter. All the consultants required for the project has been appointed. The deadline for submission has been amended by [ Azwal ], and now we're talking about the 19th of May as deadline for submission for the tender document, which we are finalizing. We are on track. We don't foresee any delay into this. Rather, we would be able to submit a bit earlier from that time. We foresee some competition in the market. So internally, we believe that we had formed a consortium that would have a better positioning into the matter. And one key point I wish to highlight to the investors that we need to look about it, this project has been submitted as a consortium between Mazaya and QDVC along with their subsidiary, QDVP, which is the leading operator, car park operator in Qatar, well-known as Mawaqif, branded as Mawaqif. This submission includes a guarantee from the government from the [ MMEP ] on the minimum return that you would require. So accordingly, Mazaya is targeting a return and the -- if the project has been awarded, there is a minimum return that the [ MMEP ] is guaranteeing for Mazaya or for the consortium, out of which we are not taking an open risk for the market, number of car parks, fluctuations. So that's one level of guarantee we have from the [ MMEP ] on the income for the company, out of which I would like to highlight for those who's not fully aware of the project. This is a project that has been required by [ Azwal ] to be jointly the winner. The winning bidder will go jointly and submit with [ Qarwa ]. So accordingly, we foresee that if we run the project -- so you will see a consortium that includes [ Qarwa ] on a 50% and 50% that will be split between Mazaya and QDVC.

So you would have 25% of it in...

No. Just to clarify, we would have 45%, not 25%, as Mazaya.

Okay. Got it.

QDVC, [ they'd be 25% ], which is required by [ Azwal ].

Understood. Just one other question. Who was the buyer of the Gloria Hotel?

Come again?

Who was the buyer of the Gloria Hotel?

It's a local investor, but we cannot disclose the name unless we have clearance from their end.

And there are currently no further questions in the queue. So I'd like to hand it back over to Mr. Al-Nafoosi. Please go ahead.

Thank you, Simone. There are no further questions. I would like to thank Mr. Al Hamod for giving us the presentation and taking some of his time. And thank you also, everyone, for participating on this call. Please do reach out to us at QNBFS or Mazaya Real Estate Development company's teams if you have any further questions or inquiries. Thank you very much, and please stay safe. Goodbye.

Thank you. That will conclude today's conference call.