Barwa Real Estate Q P S C : Annual Report 2023

ANNUAL

REPORT 2023

H.H. SHEIKH TAMIM BIN HAMAD AL THANI

H.H. SHEIKH HAMAD BIN KHALIFA AL THANI

THE EMIR OF THE STATE OF QATAR

THE FATHER EMIR

The Barwa brand has become synonymous with careful project identification, timely execution, adherence to quality standards, cost efficiency and prudent fiscal management, complemented by valuable local expertise. Straddling the residential, commercial, mixed-use and hospitality sectors, we continuously strive to produce a well- balanced portfolio that is geared towards consistent income-generating annuity assets.

Our strategy is centered on keeping our portfolio optimized, by aligning it with market and stakeholder demand, while being focused on long-term value creation.

We have invested wisely in a well-proportioned development pipeline that adds further diversity to our portfolio, and enables us to capitalize on future market opportunities in a thoughtful and risk-mitigated way.

By diversifying into the education-based assets, PPPs and other well studied opportunities, we aim to further insulate ourselves from economic-cycle swings.

By adding mid-to-high residential units to our portfolio, we aim to strengthen our holdings of annuity income-generating assets and further bolster our ability to produce free cash-flows.

To enable a more sustainable payback from our new freehold positions taken in emerging areas such as Lusail, we aim to add the "built-to-sell" model

as part of a judicious portfolio mix that yields appreciable returns.

With efficient capital allocation, well-conceived projects, operational excellence and efficient corporate structures, we are on the path to strengthening our position as a multi asset-class realty major.

TABLE OF

CONTENTS

OVERVIEW

Barwa at a glance	10
Financial highlights	14
What we do	16
Where we do it	18

STRATEGIC REPORT

Board of Directors report	22
Six compelling reasons to invest in Barwa	32
Message from the group Chief Executive officer	34
Our market drivers	36
Our well positioned development pipeline	38
Freehold zones a growing opportunity	40
Securing Barwa's ICT framework	41
Actively managing risk	42
Our people: Bringing Barwa's vision and values to life	46
Our commitment to community	48
Real estate projects in Qatar	50
Qatar real estate investments	52
International real estate investments	63
Independent subsidiaries	64
International Associate Companies	66
Board of Directors	68

CORPORATE GOVERNANCE REPORT

Corporate Governance Report	72
Appendix (1) Board Member CVs	92
Management Assessment of
Internal Control over Financial Reporting	94
Shari'a Supervisory Board Report	96

FINANCIAL REPORT

Independent Auditor's Report	100
Consolidated statement of financial position	104
Consolidated statement of profit or loss	105
Consolidated statement of comprehensive income	106
Consolidated statement of changes in equity	107
Consolidated statement of cash flows	108
Notes to the consolidated financial statements	110

BARWA AT GLANCE

Barwa is one of the leading real estate developers, headquartered in Doha, Qatar. We develop and manage properties that reflect the changing needs of the people living, working and visiting the country.

COMPANY VISION AND STRATEGY

STRATEGIC DIRECTION

• Barwa's fundamental strategic direction		• Barwa will make balanced income yielding
is to be a real estate development and		investments in both its core real estate and
investment holding company.		synergistic businesses with above market return
		on investment.

The Segmented Business Model is organized around the following elements:

CORE BUSINESS

Real Estate Development,

EFFECTIVE GOVERNANCE

(Proper Control & Risk

SYNERGISTIC BUSINESSES

Subsidiaries (Controlling stake) Private

VISION

To be a reliable real estate

MISSION

To create better places in an

VALUES

Entrepreneurship,

Investments and Operations (Value Creation): We will establish the Barwa way of planning and delivering projects and will replicate the model to the expanded and emerging portfolio.

Management): Investment management best practices and performance management that sustain the value proposition.

Equity (Diversifies and enhances revenue stream)

• Well-balancedportfolio.
• Supporting profitability and sustainable growth.
• Enhance credibility and strengthen the brand geographically.

company recognized for its strong values, excellence and sustainable returns to its stakeholders.

effcient manner for people to

live, work and enjoy.

commitment, reliability, teamwork and integrity.

ABOUT OUR PORTFOLIO

QR	QR
27 mn.	1,391 mn.
Properties available for sale	Properties under development
2.02 mn. sq. m.	QR
36,138 mn.
Land bank available	Total properties book value
	(Real Estate & Land Bank)
QR	QR
8,160 mn.	27,978 mn.
Book value of land bank	Book value of real estate

10

11

BARWA AT GLANCE CONTD...

OUR FINANCIAL STRENGTH

QR

39,986

2.97%mn.

Return	Total assets
On Assets

10%

CAGR - Rental

Income (FY2019-

2022)

WHAT WE HAVE ACCOMPLISHED

QR

15,581

mn.

Net debt

5.5

mn. sq.m.

BUA Under

Operation

*BUA Built-up area

Balanced Portfolio Of Assets (BUA distribution)

5.40%

Return

On Equity

94%

Operating

profit from net

recurring rentals

Land Bank

Balanced Product Mix	Net debt:Equity mix of	Leadership
Resulting in a stable yield	73%	in affordable housing
Landbank of	QR 7,18 billion	14,069
1.95 mn. sqm	Total number of residential units
Dividend distributed for
in Qatar, 46% owned	55,129
years 2014 to 2022
		Workers rooms

12

	Schools	2%	Warehouse
	1%	8%
Commerical		9%
			Mixed Use
			Local
			96.5%
Workers	40%
accommodation	40% Residential

3.5%

International

13

FINANCIAL

HIGHLIGHTS

Total Income		Operating Revenue

				2,714	2,623	1,708	3,764	3,454	3,354	2,586	1,155	1,509	1,438
2015	2016	2017	2018	2019	2020	2021	2022	2015 2016 2017 2018 2019 2020 2021 2022
TOTAL INCOME AND OPERATING REVENUE			OPERATING PROFIT

QR in Million

QR in Million

3, 228	1,764	1,838	2,054	1,874	1,642	1,477	1,673	3,069	1,619	1,716	1,917	1,505	1,215	1,119	1,151
2015	2016	2017	2018	2019	2020	2021	2022	2015	2016	2017	2018	2019	2020	2021	2022

EBITDA	PROFIT AFTER TAX
QR in Million	QR in Million

14

31	50	57	31	28	61	57	51	51	40	61	60	3.3	6.0	5.6	4.6	5.9	6.9	6.8	6.4	6.5	3.7	5.0	6.4

2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
DIVIDEND PAYOUT RATIO | (%)				DIVIDEND YIELD | (%)

807	826	841	493	437	563	991	747	389	584	778	856	856	973	973	973	778	486	681	681
2015	2016	2017 2018 2019 2020 2021 2022	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
RECURRING CASH PROFITS			DIVIDENDS

(excl. profit from sales of property) QR in Million

QR in Million

15

WHAT WE DO

This is how we allocate our capitals to create value. Our ability to generate value is dependent on our access to five different capitals: portfolio; funding; relationships; team; and sustainability.

OUTPUTS

OUTCOMES

PORTFOLIO CAPITAL

The Company's updated strategy focuses on active asset management to ensure maximized returns from existing portfolio while also developing new opportunities.

TRADE OFFS

PORTFOLIO CAPITAL

The Company's property portfolio has a long-term investment horizon. Strong investment discipline is required to mitigate the risk of sacrifcing long- term growth for shorter-term distribution growth targets.

INPUTS

PORTFOLIO CAPITAL

The Company's investment property portfolio:

• QR 201 million Properties available for sale
• QR 3,388 million Properties under development
• 2.02 million square meters land bank available

FUNDING CAPITAL

Effective capital management:

• Share Capital of QR 3,891 million
• QR 10,083 million of outstanding debt
• QR 9,337 million of net debt
• 0.46 Net Debt to Equity Ratio
• Recurring cash flows in form of rental income

SUSTAINABLE CAPITAL

To make positive difference:

• Investing in communities in which it operates
• Use of natural resources in a responsible and effective manner

RELATIONSHIPS CAPITAL

Value created with stakeholders:

• Close working relationship with development partners in invested markets
• Investor confidence established through regular communications
• Engagement with local communities and Governments

TEAM CAPITAL

Knowledge and expertise of our team:

• Skilled diversified Board
• Talented people
• Continued investment in established systems and processes,
• Strong corporate governance

OPERATIONAL

FRAMEWORK

AQUIRE

The Company's strategy is to grow the income in a sustainable manner. To enable this, the Company sources the best opportunities in its invested markets.

A robust appraisal process facilitates effective allocation of resources to acquire accretive property.

DEVELOP

Through active engagement with tenants and communities, the Company develops properties to meet the needs of prospective tenants and their customers.

MANAGE

The Company actively manages the investment portfolio to maximize

shareholders returns.

Optimise

The company optimises the allocation of capital by mature assets where value has been extracted and redeployed into opportunities for growth.

FUNDING CAPITAL

Barwa's strong balance sheet gives suffcient room for levered growth with prudent gearing. During the year, the Company took QR 1,962 million additional debt.

The increase in debt has resulted in a rise in the net debt to equity ratio to 0.46 from 0.41. The Company achieved distributable earnings per share for the year of QR 0.31, compared to QR 0.39 in the previous year. A distribution of QR 0.125 per share was declared in relation to the earnings for the year.

RELATIONSHIPS CAPITAL

Stakeholder communication is vital for active stakeholder engagement, which is fundamental to the Company's ability to create long-lasting relationships. During the year the Company interacted with various institutional investors, availed quarterly result update conference calls and with the help of proactive and dedicated Investor Relations team it also interacted with analysts whenever required.

TEAM CAPITAL

The Company has established a strong team with extensive knowledge and experience across its invested markets. Throughout the year, several initiatives were completed to enhance, attract, motivate and retain the team. The Company has robust and reliable processes and operating systems in place.

SUSTAINABLE CAPITAL

The Company recognizes the importance of using natural resources responsibly and effciently to ensure they are sustainable for the environment. Also, it recognizes the importance of investing in the communities in which it operates, and it is at the heart of all its capitals.

FUNDING CAPITAL

Investment in team and relationships capital can impact the funding capital and distribution to shareholders in the short term but has a positive impact in the long term.

RELATIONSHIPS CAPITAL

The investment in the Company's relationships capital allocates time from the other capitals and has a negative impact on the funding capital. In the long term, there is a positive impact on the other capitals.

TEAM CAPITAL

Investing in the Company's people is imperative to generate sustainable and long- term growth. Investing in the Company's systems and processes has a negative impact on funding capital in the short term. However, once implemented, there is a positive impact, improving the quality of information and increasing effciency and staff morale.

SUSTAINABLE CAPITAL

Investing in sustainable solutions increases our sustainable capital but has an impact on funding capital in short to medium term. Through effciencies and renewable sources of energy, there is a positive impact of fnancial capital in the long term.

16

17

WHERE WE

DO IT

Our portfolio is concentrated in areas expected to benefit from strong occupier demand with limited supply of competing products.

► LOCAL (QATAR) PORTFOLIO BY BUILT UP AREA (SQUARE METERS)

Barwa Real Estate Company

5

	1
%
4
	2
3
1. Residential	32%
2. Mixed Use	11%
3. Warehouse	10%
4. Labor
Accomodation	45%
5. School Package 1	2%

Residential

Total BUA

5	6
4
3
	%	1
2

1. Madinatna	49%
2. Al Khor Community	30%
3. Masaken Al Sailiya	7%
4. Masaken Mesaimeer	7%
5. Al Khor Shell	4%
6. Others	3%

Industrial

Total BUA

1

%

2

1. Umm Shaharian

Warehouses59%

2. Al Baraha Workshops
& Storages	41%

Workers Accomodation Total BUA

5

4

1

3%

2

1. Argentina Neigborhood	35%
2. Mukaynis Compound	34%
3. Barwa Al Baraha	23%
4. Alkhor Recreation	3%
5. Others	5%

Mixed Use & Commercial Total BUA

6
	1
5	%
4
3	2
1. Barwa Al Sadd	36%
2. Barwa Village	34%
3. Barwa Village Extension	6%
4. Madinat Mawater
(Phase1)		5%
5. Madinat Mawater
(Phase2)		5%
6. Others		13%

18

19