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Emaar US unit hit by subprime crisis

bai's Emaar Properties said on Tuesday third-quarter results at U.S. unit John Laing Homes (JLH) would be below earlier forecasts due to the subprime crisis.

"Third-quarter JLH results are going to be lower than earlier estimates - not incurring losses, but profits won't be high," Amit Jain, chief financial officer of Emaar Dubai, said on a conference call for analysts.
The firm also said during the call that a proposed land-for-shares deal with Dubai Holding was being looked at, and may be finalised in September.

Shares of Emaar, the largest Arab property developer by market value, tumbled to a 28-month low on Sunday as foreign investors seeking safer assets sold the stock, fearing mortgage defaults would hurt its operations in the United States.

It fell a further 1.46 % on Tuesday to its lowest close since April 12, 2005, having tumbled 7.8 % in the past five days.

Emaar's home building subsidiary, John Laing Homes in the United States, made up 16 % of group revenues in the second quarter. The slowing U.S. housing market was one of the reasons the Dubai developer missed analysts' profit forecasts.

That was before the rising defaults on U.S. subprime, or high-risk, mortgages spilled into global credit markets in July, driving up borrowing costs and triggering a flight from risky assets.

Uncertainty about a deal with the Dubai government has increased the perception of risk surrounding Emaar.

The company's shares have fallen about 14 % since Emaar said on March 19 it would give the government a majority stake by swapping stock for land with Dubai Holding, owned by the emirate's ruler.

Emaar has yet to give details of the deal, including the extent and value of the land that will be exchanged for stock.

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