JODC records 407% revenue increase in Q3 2022

A notable development during the period was the company’s successful closing of the Alinma Fund’s debt-to-equity transaction, the company said.

Saudi developer Jabal Omar Development Company (JODC), the master developer of the massive Jabal Omar mixed-use project in Makkah, has announced its financial results for the third quarter of 2022.

Key highlights included a 407% increase in revenue to $58.25 million in the quarter, driven by strong occupancy levels across its hotel and retail portfolio. Gross profit also improved in the three-month period to $2.13 million from a gross loss of $17.29 million in the same period a year ago. This was mainly due to a strong revenue recovery as well as effective cost containment measures implemented as part of the overall transformation strategy, the developer said.

A notable development during the period was the company’s successful closing of the Alinma Fund debt-equity transaction. The company increased its issued share capital to $3.07 billion by creating 225,134,162 new common shares, which were issued to the unitholder of the fund in exchange for the settlement of $1.41 billion of debt owed to the fund .

In July 2020, JODC released the Makkah project title deed, and in December 2020 the developer agreed to the sale for $221 million of land on its Jabal Omar project in Makkah.

In doing so, the company also freed up $143.63 million in cash which was used as rent for the fund each year (of which JODC’s ownership was previously 16.42%), resulting in a cash saving of $120 million, allocating it to more productive and rewarding use.

Finance costs for the three-month period were $3.99 million, down 92% from the prior year period, driven by the positive execution of initiatives under the strategy optimization of the capital structure, which is part of the overall transformation plan.

Net loss was $40.7 million, down significantly from a net loss of $71.82 million in the third quarter of 2021. This improvement was driven by the return of activity levels from the Hajj and Umrah at near pre-Covid levels, and was also attributed to the one-time gain from the completion of the debt-to-equity conversion transaction of Alinma Makkah Real Estate Fund (the “Alinma Fund”).

In October 2021, the company raised $138 million through the sale of land in the city of Makkah.

Khaled Al Amoudi, CEO of Jabal Omar Development Company, said, “The revenue recovery we saw in the second quarter accelerated in the third quarter. The return of visitors and pilgrims to Makkah and the removal of pandemic-related restrictions have pushed up occupancy levels at our hotels, and a recovery in business and consumer confidence has underpinned a strong improvement in hotel performance. our business portfolio.

“Operationally, we are more efficient than ever and have a leaner cost structure, which enables a significant improvement in operating margin. This is due to the successful deployment and implementation of the transformation strategy at the company-wide and the proactive efforts of our asset management teams. We will focus our efforts on completing the exceptional phases of the project and aim to develop and complete a portion of the 2,613 new guest rooms. hotel and the addition of over 5,000 m² of gross leasable area in our commercial assets by Ramadan, which will support the growth of our operating portfolio,” he added.

For the first nine months of the year, revenue increased 330% year-on-year to $162.27 million thanks to a rebound in Hajj and Umrah activity and a return to life and business as usual in Makkah and throughout the Kingdom.

In October 2022, JODC stated that the completion of phases two and three of the development of the Makkah megamaster was on track for the end of the year.

Gross profit for the nine-month period was $21.01 million, a significant improvement from gross loss of $53.20 million in the same period a year ago. said the developer. Finance costs for the nine-month period were $79.27 million, down 46% from the nine months of 2021. This decrease is due to the completion of the Alinma fund transaction, which resulted in a reduction in the debts due to unitholders of the fund.

Net loss over the same period was $42.03 million, with a reduced net loss of $91.77 million produced in the nine months of 2021, the company concluded.

Margie D. Carlisle