Aldar Properties PJSC (ALDAR) and Sorouh Real Estate Co. (SOROUH) rose before Abu Dhabi’s biggest real estate companies post quarterly results this week and as investors await an update on a potential merger.
Abu Dhabi-based Aldar, the biggest developer in the United Arab Emirates capital, climbed 0.7 percent, the largest gain since Oct. 23, to 1.37 dirhams at the close in the emirate. Sorouh advanced 2.3 percent to 1.36 dirhams, the highest close March 15. The ADX Real Estate Index (ADRE) increased 1 percent while the ADX General Index (ADSMI) fell 0.2 percent. The stocks were the most traded by volume on the benchmark gauge today.
Both companies will hold board meetings on Nov. 6 on third- quarter results and to “consider general business,” they said in separate statements last week. Aldar expects a decision on the potential merger “toward the end of” October, deputy Chief Executive Officer Mohammed Al Mubarak said Oct. 1, adding the companies were still conducting due diligence.
“We were expecting a merger update by the end of October, and are now seeing some momentum ahead of the scheduled board meeting on Tuesday,” said Julian Bruce, the Dubai-based head of institutional trading at EFG-Hermes Holding SAE.
The developers, which have played an integral part in Abu Dhabi’s drive to turn itself into a tourism and business hub, said in March they are studying a possible merger with the “blessing” of the emirate’s government. Abu Dhabi bailed out Aldar last year after house prices in the emirate slumped about 50 percent in the aftermath of the 2008 global credit crisis.
Aldar’s second-quarter profit more than tripled, while Sorouh may post a 31 percent advance in net income for the three months ended Sept. 30 to 88 million dirhams ($24 million), according to the median estimate of three analysts on Bloomberg.
Shares of Aldar have surged 49 percent this year and Sorouh’s are up 60 percent, outpacing the Abu Dhabi gauge’s 11 percent gain.
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