Rising business occupancy boosts profits for Tecom

Tecom

• Revenue hits $133m as demand rises for offices and warehouses
• New customers include Motorola Solutions and EV maker M-Glory
• Board recommends interim cash dividend payment of $54m

Tecom Group, the Dubai-based operator of business parks and free zones, announced today that third quarter revenue rose by 12.5 percent year-on-year, driven by rising occupancy levels.

Revenue reached $133.4 million as demand rose across the Tecom portfolio for office, warehouse and worker accommodation.

The company, which is owned by the investment vehicle of Dubai’s ruler Sheikh Mohammed bin Rashid Al Maktoum, raised $460 million from investors via its initial public offering in June.

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• Dubai workers return to office in their droves as rents rise

The company also posted a 70 percent rise in net profit to $57.7 million due in part to “very high customer retention rates and [an] increase in [the] number of new customers”, a statement said.

“Our strong revenue and profit growth since the start of the year and our particularly remarkable performance in Q3 is a testament to the group’s ability to effectively deliver on its growth strategy to drive net asset value growth and maximise shareholder returns,” Abdulla Belhoul, CEO of Tecom Group, said.

“The increase in occupancy rates across our portfolio reflects the sharp rise in demand in the commercial real estate market, underpinned by Dubai’s economic expansion and the government’s pro-growth initiatives to further improve the ease of doing business and attract top global talent and foreign direct investment.

“Tecom Group remains well positioned to capitalise on the encouraging economic growth and positive business sentiment within the six knowledge-based economic sectors it caters to.

“Improvement in commercial rental rates and strong occupancy levels will continue to drive revenue growth across our commercial leasing properties.

“Structural medium term tailwinds in the industrial, construction and logistics sectors will bolster our industrial, land leasing and value-add service segments.

“We remain optimistic in our ability to maintain a robust financial performance in light of global market uncertainty.”

Revenue for the first nine months of 2022 increased by 15 percent annually to $400 million, with occupancy levels for commercial and industrial assets at 83.5 percent, up from 78.3 percent in 2021. 

New customers include Motorola Solutions, Rakuten, Dubatt and electric car manufacturer M-Glory.

Nine-month net profit grew 51 percent to $174 million, underpinned by revenue growth and lower operational expenses, Tecom added.

On October 14 the Tecom board recommended an interim cash dividend payment of $54.4 million, the first payment of the proposed $108.8 million payout for the second half of 2022, subject to shareholder approval at the next annual general meeting.