Abu Dhabi : Sorouh Real Estate yesterday said its net profit for the fourth quarter for the fiscal year ending December 2009 fell 39.44 per cent on the year to Dh28.1 million.

The decline was a result of higher provisions and share of losses from associates, as well as a reduction of other sundry net income.

Sorouh, Abu Dhabi's second largest property developer by market capitalisation, said its quarterly revenue fell as well, from Dh532 million in the fourth quarter of 2008 to Dh438 million.

"Revenue for the fourth quarter was principally driven by the sale of land at Alghadeer [to] a new joint venture company and recurring rental income from Sas Al Nakhl, Khalidiya Village and Al Oyoun," a Sorouh statement to the Abu Dhabi Securities Exchange, revealed.

Sorouh said its fourth quarter operating profit was, however, up 60 per cent on the year to Dh333 million.

Sorouh's shares rose 3.59 per cent yesterday on the ADX, closing at Dh2.33 as the company fared much better than expectations.

"Sorouh's result positively surprised the markets today. The year 2010 should be a better year for the real estate companies, including Sorouh," Mohammad Ali Yasin, chief executive of Shuaa Securities, told Gulf News yesterday.

Sorouh said that had it continued to focus on improving the quality of its earnings during 2009 by increasing the amount of recurring income from leasing and rental properties.

"Sas Al Nakhl, Khalidiya Village and Al Oyoun Village are now all fully leased, resulting in their annual revaluation adding Dh53 million to the income statement," the company said.

"Further rental income will be derived in 2010 from the investment portfolios in [the] Sun and Sky Towers, including the retail podium on Shams Abu Dhabi and in 2011 from Al Rayyana," it added.

Sorouh said its net profit after provisions for the 2009 financial year was Dh495 million, down from Dh1.8 billion the year earlier. Revenue for the full year was fell from Dh3.7 billion a year earlier to Dh3.1 billion.

Sorouh said 2009 revenue was driven by the sale of land plots on Shams Abu Dhabi, Saraya and Alghadeer, the handover of Golf Gardens and an increase in rental income from investment properties.

Cautious optimism

"We are approaching 2010 with cautious optimism, continuing our emphasis on increasing recurring income, cost control, cash collections and focusing our resources on key projects and delivery targets. Mid-year, we will start handing over units in Sun and Sky Towers," Abu Bakr Al Khoury, Sorouh's managing director, said yesterday.

Sorouh's assets at the end of 2009 stood at Dh6.1 billion, with total bank borrowings at Dh132 million, representing a debt-to-equity ratio of 2.