Dar Global — £200m Aston Martin branded residence unveiled

Dar Global (LSE: DAR)

Last close As at 19/07/2024

USD3.34

0.00 (0.00%)

Market capitalisation

USD602m

More on this equity

Research: Real Estate

Dar Global — £200m Aston Martin branded residence unveiled

Dar Global’s latest luxury branded residential project, its first with Aston Martin, fits well with its strategy and follows its other recent announcements including its initiative in the Maldives with Dolce & Gabbana and its geographical expansion into Saudi Arabia. We anticipate that Dar Global will generate a return on equity in the mid-to-high teens across its portfolio in the medium term and, thus, we continue to value the company on a multiple of shareholders’ funds basis at c US$930m (US$5.17 per share), implying c 40% upside. Our forecasts are unchanged but we believe this new project implies that risks are to the upside.

Andy Murphy

Written by

Andy Murphy

Director, Financials & Industrials

Real Estate

Dar Global

£200m Aston Martin branded residence unveiled

New collaboration

Construction and materials

19 June 2024

Price

US$3.7

Market cap

US$664m

Net cash (US$m) at 31 December 2023

113.1

Shares in issue

180.0m

Free float

12%

Code

DAR

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

0.5

0.5

0.3

Rel (local)

3.2

(5.1)

(6.5)

52-week high/low

US$3.74

US$3.58

Business description

Dar Global is a highly differentiated international real estate business. It focuses predominantly on developing real estate projects comprising second homes for internationally mobile customers, in some of the most desirable locations across the Middle East and Europe, including downtown Dubai, Muscat in Oman and the Costa del Sol region in Southern Spain.

Next events

Interims

September 2024

Analyst

Andy Murphy

+44 (0)20 3077 5700

Dar Global is a research client of Edison Investment Research Limited

Dar Global’s latest luxury branded residential project, its first with Aston Martin, fits well with its strategy and follows its other recent announcements including its initiative in the Maldives with Dolce & Gabbana and its geographical expansion into Saudi Arabia. We anticipate that Dar Global will generate a return on equity in the mid-to-high teens across its portfolio in the medium term and, thus, we continue to value the company on a multiple of shareholders’ funds basis at c US$930m (US$5.17 per share), implying c 40% upside. Our forecasts are unchanged but we believe this new project implies that risks are to the upside.

Year end

Revenue
(US$m)

EBITDA
(US$m)

EPS*
(US$)

DPS
(US$)

P/E
(x)

P/NAV
(x)

12/22

80.0

(6.9)

N/A

N/A

N/A

N/A

12/23

360.6

84.8

0.2

0.0

15.9

1.4

12/24e

309.4

72.9

0.4

0.0

10.5

1.3

12/25e

391.6

94.2

0.5

0.0

7.6

1.1

Note: *EPS is normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Latest project fits well with existing portfolio

Dar Global’s collaboration with the British luxury car maker Aston Martin is the latest branded development to be announced, following other high-profile projects with well-known luxury brands, such as Lamborghini, Pagani and Missoni. It follows the same capital-light model as many of Dar Global’s other projects, with Dar Global bringing its construction and project management skills and its brand partner providing the distinctive styling that brings the project to life and supports the anticipated price premium over similar non-branded residences.

Developments follow the target client base

This latest development continues to target the expanding pool of high-net-worth individuals and ultra-high-net-worth individuals, and those who are becoming increasingly nomadic in lifestyle, benefiting from a global trend where this pool of potential buyers is becoming increasingly wealthy. By definition, these buyers tend to be cash rich and are, therefore, not affected by interest rates or affordabilityrelated lending criteria. Furthermore, this cohort has shifted more wealth from riskier equity assets towards cash, implying that the pool of money available to buy a second luxury home has increased.

Valuation: Risks pushed to the upside

We retain our valuation of Dar Global but believe this new project implies risks to the upside given that we believe the company will target a mid-to-high teens return on equity. This expected return, in our view, justifies valuing Dar Global on a multiple of 1.5x estimated shareholders’ funds. Our unchanged forecast of FY25 shareholders’ equity of US$620.5m values the group at c US$930m, versus a current market capitalisation of US$664m, implying a c 40% upside. Previous revenue and margin guidance could prove to be conservative, suggesting further upside.

‘The Astera, Interiors by Aston Martin’: A £200m project

In June, Dar Global announced its latest collaboration, this time with high-end British car maker Aston Martin. This brings the total number of Dar Global projects under development to 13, with a total gross development value of over $6bn. The new development, known as ‘The Astera, Interiors by Aston Martin’, will be an ‘exquisite’ beachfront development on Al Marjan Island, located in Ras Al Khaimah in the United Arab Emirates. This project builds on the recent opening of the Aston Martin Residences in Miami and Aston Martin’s other high-profile design collaborations in the United States and in Japan. ‘The Astera, Interiors by Aston Martin’ has a gross development value of AED900m (c £200m) and will be 16 storeys tall and contain over 250 residences.

Exhibit 1: Image of proposed ‘The Astera, Interiors by Aston Martin’

Source: Dar Global

The project is due to be completed by December 2028 and is set on the waterfront of Al Marjan Island with its own secluded private beach. It is adjacent to the highly anticipated Wynn Resort and an hour’s drive from Dubai. It will offer one-, two- and three-bedroom apartments and threebedroom villas. In addition to the beach, the outside of the development offers an infinity pool with ocean views, a walk track, a yoga lawn and green communal spaces. Inside, there will be an indoor cinema, fitness centre, children’s play area, a spa and a multipurpose hall.

Exhibit 2: Map of the local area

Exhibit 3: Detailed location map

Source: Dar Global

Source: Dar Global

Exhibit 2: Map of the local area

Source: Dar Global

Exhibit 3: Detailed location map

Source: Dar Global

Exhibit 4: Financial summary

$m

2022

2023

2024e

2025e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

80.0

360.6

309.4

391.6

Cost of Sales

(34.3)

(214.1)

(179.4)

(227.1)

Gross Profit

45.7

146.4

129.9

164.5

EBITDA

 

 

(6.9)

84.8

72.9

94.2

Normalised operating profit

 

 

(7.7)

81.6

72.7

94.0

Share-based payments

0.0

0.0

0.0

0.0

Operating profit - Underlying

(7.7)

81.6

72.7

94.0

IAS 19R Pension scheme expenses

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

Impairment and acquisition related costs

0.0

0.0

0.0

0.0

Other

0.0

0.0

0.0

0.0

Reported operating profit

(7.7)

81.6

72.7

94.0

Net Interest

2.5

(0.3)

(2.3)

2.7

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(5.2)

81.2

70.4

96.7

Profit Before Tax (reported)

 

 

(5.2)

81.2

70.4

96.7

Reported tax

0.0

2.0

(7.0)

(9.7)

Profit After Tax (norm)

(5.2)

83.2

63.4

87.0

Profit After Tax (reported)

(5.2)

83.2

63.4

87.0

Net income (reported)

(5.2)

83.2

63.4

87.0

Basic average number of shares outstanding (m)

N/A

361

180

180

EPS - basic normalised ($)

 

 

-

0.23

0.35

0.48

EPS - basic reported ($)

 

 

-

0.23

0.35

0.48

Dividend ($)

-

0.00

0.00

0.00

Revenue growth (%)

N/A

350.7

-14.2

26.6

Gross Margin (%)

57.2

40.6

42.0

42.0

EBITDA Margin (%)

-8.6

23.5

23.6

24.1

Normalised Operating Margin (%)

-9.7

22.6

23.5

24.0

BALANCE SHEET

Fixed Assets

 

 

316.9

246.6

399.6

502.4

Tangible Assets

308.4

231.1

389.6

492.4

Investments & other

8.5

15.5

10.0

10.0

Current Assets

 

 

241.0

520.7

816.3

1,192.8

Debtors

40.6

221.9

324.8

391.6

Cash & cash equivalents

112.6

228.5

421.1

726.7

Other

87.8

70.4

70.4

74.5

Current Liabilities

 

 

(206.8)

(176.6)

(561.7)

(949.4)

Creditors

(30.7)

(25.7)

(95.9)

(321.1)

Tax and social security

(4.0)

(6.8)

(16.8)

(26.8)

Short term borrowings

(2.1)

(1.2)

(1.2)

(1.2)

Advances from customers

(94.5)

(57.5)

(363.1)

(515.6)

Development property liabilities and other

(75.5)

(85.2)

(84.6)

(84.6)

Long Term Liabilities

 

 

(69.7)

(125.4)

(125.4)

(125.4)

Long term borrowings

(69.7)

(125.4)

(125.4)

(125.4)

Shareholders' equity

 

 

281.4

465.4

528.8

620.5

CASH FLOW

Retained profit for year

(4.3)

83.2

63.4

87.0

Depreciation and amortisation

0.0

3.2

0.2

0.2

Working capital

(73.6)

(107.1)

65.9

155.4

Exceptional & other

11.4

(3.0)

0.5

(1.8)

Net operating cash flow

 

 

(66.5)

(23.7)

130.0

240.8

Capex

(0.7)

(4.4)

(4.4)

(4.4)

Acquisitions/disposals

(10.3)

(2.8)

(2.8)

(2.8)

Net interest

0.0

3.8

(2.3)

2.7

Equity financing

0.0

72.0

0.0

0.0

Other

173.7

70.0

72.1

69.4

Net Cash Flow

96.3

114.9

192.6

305.7

Opening net debt/(cash)

 

 

130.6

48.8

113.1

305.7

FX

(176.1)

0.0

0.0

0.0

Other non-cash movements

(2.0)

(50.5)

0.0

0.0

Closing net debt/(cash)

 

 

48.8

113.1

305.7

611.4

Source: Dar Global accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Dar Global and prepared and issued by Edison, in consideration of a fee payable by Dar Global. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Dar Global and prepared and issued by Edison, in consideration of a fee payable by Dar Global. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Dar Global

View All

Latest from the Real Estate sector

View All Real Estate content

Research: Real Estate

Impact Healthcare REIT — Visibly growing income and capital

Impact Healthcare REIT’s Q124 update showed a continuation of the positive trends that contributed to the strong FY23 performance. Rental growth is driving income and capital values, while the operational and financial performance of tenants continues to strengthen. This is reflected in a record level of rent cover. With cash flow remaining strong, the Q1 DPS increased in line with the company’s full-year target of 6.95p (+2.7%).

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free