Daily News Egypt interviewed Maged Sherif CEO of Sixth of October Development and Investment Company (SODIC) to talk about the company’s current business and projects and strategy for the coming years.
When will SODIC launch the first phase of New Heliopolis project in collaboration with Heliopolis Development Housing Company?
We are going to offer the project after designing its master plan, which will be adopted by Heliopolis Development Housing Company (Heliopolis Housing) and will be launched after the accreditation phase, the architectural design of the units, and the marketing phases.
The project consists of three phases and will be implemented over 10 years, with an investment cost of EGP 20bn.
After agreeing with Heliopolis Housing on a certain percentage of sales, we will move to the next phases. The launch of units for sale will start in the first quarter (Q1) of 2017.
The project will require external financing. Its size and timing will become clear after the completion of the master plan and cash flows.
What is the volume of company’s liquidity?
The funding available to the company is approximately EGP 2bn. Approximately EGP 1.3bn is allocated to meet the company’s obligations in the current projects that have already been implemented, while approximately EGP 700m is allocated for the purchase of new land and partnership.
What the volume of the company’s business?
The size of the company’s business is approximately EGP 2.4bn and I expect it to increase this year. In 2016, we are going to adopt estimated budgets that will be greater than the current amount because the company is implementing new project such as the Caesar project, which is located on the North Coast on area of 82km to Marsa Matrouh, and other projects.
What about the company’s acquisition of 80 acres in Matrouh governorate?
The original land size that we own is 100 acres. We are negotiating with the governorate to obtain some land adjacent to that of 80 acres, which is a natural extension to our land.
We have a big desire for new land in general and in Matrouh governorate specifically. We are very serious about acquiring new lands in New Cairo, 6th of October City, and North Coast.
The company submitted a request to Sheikh Zayed City to acquire 400 acres, will SODIC cooperate with the Ministry of Housing in other projects?
There is no clear reply from the ministry about our demand, but I think the priority for the ministry is the foreign investors to pump funds from abroad. However, we are continuing to pursue the project and demand the land.
Will SODIC participate in the new capital?
For the new capital, the government is currently facilitating the lands. After being facilitated and offered for bids, the company will consider the possibility of participating in it.
What is the company’s plan for 2016, both at the level of offering lands and delivery?
We have a range of projects being implemented. We launched the first phase of the Caesar project and started implementation of the second phase; we will launch its marketing in next summer.
The first phase consists of 180 units, whereas the second phase consists of 75 units.
We are continuing to offer new phases of SODIC West project, in the west of Cairo on an area of 30,000 acres, in the third quarter (Q3) of the current year in 6th of October City after the issuance of the ministerial decree.
The company also launches new phases of Westown project and another in the west of Cairo in addition to new launching in SODIC Eastown Project.
What are new areas that the company is expanding in?
We are continuing to expand in the east and west of Cairo, new cities and North Coast. We are also studying obtaining new land in the Red Sea governorate.
What is the size of company’s land portfolio?
After the last contract was signed with Heliopolis Housing, the company’s portfolio reached 6.1m sqm. Before adding 2.75m sqm, our land portfolio was enough for the next three years but after the addition, our land portfolio will be enough for the next ten years.
What the size of the company’s market capital?
The size of the current market capital is almost EGP 4.2bn.
What the size of the total debt of the company to NUCA?
The total debt of the company to New Urban Communities Authority (NUCA) for 2016 is EGP 360m.
What tourist projects does the company implement?
The company is developing one tourism project, a hotel located inside SODIC West project. The hotel had been implemented, but it is only semi-finished. We are negotiating with a group of management companies to run the hotel.
We have a hub in SODIC West project on an area of 13,000 sqm gross leasable area (GLA). The hub is a foreign beverage concept and began operation in May 2015, about 55% of the hub is leased. After the completion of 100% leasing, the project will achieve annual revenue of EGP 30m.
What is the volume of the company’s recurring revenues?
In 2019-2020, our goal is to acquire recurring revenues through the hub’s revenue or through SODIC Eastown project revenues. [Recurring revenue is a portion of a company’s revenue that is continuing in the future]. We have 100,000 sqm allocated for launching commercial and administrative project on an area of 90,000 sqm GLA. We expect recurring revenues from this commercial and administrative project amounts EGP 250m annually.
How many units are delivered by the company?
We delivered 721 units in 2015 compared to 490 units in 2014.
Why the company did not participate in the latest bid?
The lands auctioned in that bid were very expensive and it is difficult to implement projects on these expensive lands due to lack of economic feasibility.
Is there a possibility of future partnerships between SODIC and the Ministry of Housing? Will SODIC execute economy-housing projects?
If there were projects in line with our policy, we would participate to meet our expansion policy strategy.
With respect to economic housing, there must be land available at suitable, low prices much less than EGP 1,000 per sqm. If the government adopted a strategy to provide land at reasonable prices, the company can participate in such projects.
