Kuwait City, Sunday 21 June 2020 – United Real Estate Company K.S.C.P (URC), a leading real estate developer in Kuwait and the MENA region, held its Ordinary Annual General Assembly Meeting for the financial year ended 31 December 2019, along with Shafafiyah Forum transparency presentation, at the Business Center on the 56th Floor of KIPCO Tower in Sharq. The meeting was held virtually through an online platform and chaired by Mr. Mazen Issam Hawwa, URC’s Vice Chairman & Group Chief Executive Officer, in the presence of URC Management Team and URC’s external auditors.
Following the Ordinary Annual General Assembly Meeting, Mr. Hawwa presented the Shafafiyah Forum with an overview of URC’s major achievements over the past year and highlighted the significant financial highlights from the annual report for the year ended 31 December 2019. The report demonstrated the resilience in adapting to different economic conditions and challenges to achieve both balanced financial results and substantial project milestones.
URC Performance in 2019
URC revenues increased by 10% to reach KD 113.8 million in 2019 as compared to KD 103.5 million in 2018. Gross profit increased by 12.5% to reach KD 24.5 million in 2019 as compared to KD 21.8 million in 2018, and net loss decreased by 19.7% to reach KD 7.2 million in 2019 as compared to KD 9 million in 2018.
The total value of URC’s assets increased 1% to reach KD 623 million at the end of 2019 as compared to KD 617 million at the end of 2018.
Commenting on the financial results, Mr. Hawwa said that URC improvement in 2019 attributed to the increase in revenues and profits of its Subsidiaries operating in the contracting and services sector, an increase in rental revenues from its commercial shopping centers, and stable revenues from its hotel properties. He added that URC was also successful in its cost optimization program, which contributed to significant reductions in general and administrative expenses and financing costs.
Regionally, Mr. Hawwa added that URC’s mall operations in the Kingdom of Jordan, Abdali Mall, witnessed a significant increase in its occupancy and was able to close the financial year ended 2019 with leased occupancy reaching 78%, which significantly improved the Mall’s revenues during the year.
Despite ongoing challenges, Mr. Hawwa assured that URC is continuing its efforts to rationalize its portfolio of assets and investments, identify future growth and expansion opportunities, diversify sources of revenue, monetize non-core assets, optimize debt, and target an efficient capital structure. These measures aim at enhancing the operating results of URC and position it to provide a sustainable return to its shareholders.
A New Leadership
Internally, URC has achieved significant milestones in its human capital strategy. Early in the year 2020, URC announced the appointment of its Vice Chairman of the Board of Directors, Mr. Mazen Issam Hawwa, as URC’s Group Chief Executive Officer. As part of KIPCO Group’s Senior Management Team, Mr. Hawwa brings over 19 years of diverse experience in various industries which include real estate and financial services.
URC also onboarded new members to its Management Team, in Kuwait and in Egypt. With growth in business in the contracting and services sectors, the workforce of URC also increased significantly during the year.
Local and Regional Development Projects
In Kuwait, Mr. Hawwa emphasized URC’s continued developments in Hessah AlMubarak District, which includes the residential components of Hessah Towers and Byout Hessah, and a Commercial District, with a total expected development cost of KD 250 million, of which KD 120 million has been securely financed by a leading Islamic bank in Kuwait and in partnership with other investors from the KIPCO Group companies. The Hessah AlMubarak District project features state-of-the-art developments, services, and facilities.
Meanwhile, Chief Development Officer, Architect Mishary S. Al Muhailan, announced that URC has recently signed a contract with AlGhanim International General Trading & Contracting Company for the construction of Hessah Towers. He added that the Hessah Towers project encountered minor delays in construction due to the (Covid-19) pandemic but is still expected to be completed by the end of 2022.
This luxury residential development generated excellent demand from its clients and over 40% of the units were reserved and sold, prior to the commencement of construction. Demand was primarily driven due to its premium location, which is situated opposite to the Daiya area and on the Arabian Gulf, in addition to URC’s position as a trusted developer and a brand in developing world-class projects.
Mr. Al Muhailan also revealed the second residential project in Hessah AlMubarak District, Byout Hessah, a high-end two 12-floor residential building development offering 105 upscale apartments, and 40 premium four-bedroom townhouses, set amidst landscaped surroundings with unobstructed view of the Arabian Gulf and Kuwait City.
He added that the design phase for Byout Hessah is awaiting municipal approval, and the enabling works for the project are ready to commence but pending municipal permits, while the tendering and awarding for the project’s main works are contingent upon the government resuming their normal operation.
Mr. Hawwa also announced the latest mixed-use development project, the Commercial District, an all-inclusive community, lifestyle hub, located at Hessah AlMubarak District. He added that the project, which is currently in the schematic design phase, encompasses the latest architectural trends in office buildings, medical polyclinics, and serviced apartments, in addition to a retail mix of selected international and local brands and complemented by an offering of exquisite food and beverage outlets, which will cater to the District’s residents and the nearby commuters.
In the Kingdom of Morocco, URC continued its progress in developing the infrastructure for its second phase of the 2.5 million square meters Assoufid project, a luxurious mixed-use combining tourism and a residential resort situated in the vibrant city of Marrakech. With a total expected development cost of KD 142 million, the Assoufid development comprises a multiple award-winning 18-hole high-end golf club along with several luxury residential villas. The second phase of the project will consist of an iconic five-star hotel, alongside residential components, including branded villas and high-end apartments. While the third phase of the development will introduce additional premium villas and apartments.
In 2019, URC successfully signed an agreement with Marriott International, Inc. for the management and operation of The St. Regis Marrakech Resort in the Assoufid development. URC has also obtained a building permit for the construction of the hotel and awarded all main works contract to one of Morocco’s leading contractors, Travaux Généraux de Construction de Casablanca (TGCC). Following the rapidly unfolding outbreak of COVID-19 global pandemic, the construction of the hotel has been delayed and is expected to commence after all curfew measures are lifted in the Kingdom of Morocco.
URC’s Outlook in 2020
In regard to URC’s outlook, Mr. Hawwa stated, “Due to the ongoing COVID-19 global pandemic, we speculate a challenging year ahead in some of URC’s operational sectors, both locally and internationally. URC has been proactively assessing the situation and has devised plans to address these challenges effectively.”
Mr. Hawwa added, “The initiated steps include shoring up URC’s liquidity through accelerated collections, especially from the governmental entities, and through continuous engagement with our tenants and customers. These measures are supplemented by various cost-saving initiatives, including ongoing discussions with our relationship banks to lower finance costs and extend debt maturities. Through these proactive measures, we are confident of minimizing the financial impact on our various businesses to the maximum possible extent.”
In addition to the above annual review, the present shareholders at the Ordinary Annual General Assembly Meeting approved all items of the agenda for the financial year ended 31 December 2019, which also includes validating the Board of Directors Report, the Financial Statements, and the Board of Director’s recommendation to not distribute cash dividend to shareholders.
United Real Estate Company (URC) is one of the Middle East and North Africa’s leading real estate developers, with consolidated assets of KD 602 million (US$ 2 Billion) as of 31 December 2017. URC was founded in 1973 and listed on the Kuwait Stock Exchange in 1984.
URC primarily operates through a number of
URC’s operations extend to construction and contracting, facility management, and project management through its several subsidiaries. The company’s portfolio of assets and businesses are geographically spread across a number of countries through several assets such as Marina World, Marina Hotel, and KIPCO Tower in Kuwait, Salalah Gardens Mall & Residences in Oman, Abdali Mall in Jordan, Raouche View 1090 in Lebanon, Avaris and Aswar Residences in Egypt, and Assoufid in Morocco.
URC’s majority shareholder is KIPCO Group, one of the biggest holding companies in the Middle East and North Africa, with consolidated assets of US$ 34.5 billion as