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Tue 8 Feb 2011 07:54 PM

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Aldar posts $3.45bn loss on biggest-ever impairments

State-backed developer books AED11.3bn in impairments, follows Abu Dhabi bailout in January

Aldar posts $3.45bn loss on biggest-ever impairments
Aldar Properties, Abu Dhabi’s biggest developer, reported a full-year loss of AED12.65bn ($3.45bn)

Aldar Properties, Abu Dhabi’s biggest developer, reported a
full-year loss of AED12.65bn ($3.45bn) on Tuesday after setting aside a massive
AED11.3bn to cover bad assets.

The indebted property developer, which took a $5.2bn bailout
from the Abu Dhabi government, booked a writedown of AED10.8bn in the fourth
quarter to reflect plunging real estate values.

Full-year impairments and fair value losses were AED11.3bn.

The full-year loss of AED12.65bn compares with a profit of
AED837.4m in 2009, the state-backed developer said in an emailed statement.

Abu Dhabi offered a multi-billion dollar bailout to Aldar in
January when it agreed to buy some key assets, including the developer’s
Ferrari World theme park, and subscribe to a bond sale.

The government will pay AED10.9bn for the theme park, roads
and bridges on Yas Island and AED5.5bn for homes and land, Aldar said last

The developer, which is part-owned by the government, also said
it will issue AED2.8bn in convertible bonds to Mubadala Development Company.

Government-owned Mubadala is Aldar’s biggest shareholder.

Aldar chairman Ahmed Al Sayegh said in a statement Tuesday
that the firm has “put in place new financial framework, focused on strengthening
the capital structure and ensuring the business has a sustainable future.

“It will continue to adopt a measured approach to
development, adapting to prevailing market conditions.”

According to Bloomberg, the developer has AED29.7bn of
outstanding debt, including AED16.2bn due this year.

Bank of America Merrill Lynch said in a report in November that
Aldar needed AED9.8bn by 2011, if it was to survive.

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Business Man 9 years ago

To the management of Aldar.............. try running an SME to get some real business experience without the safety net. When your own hard earned assets are on the line.

Red Snappa 9 years ago

The only way to improve the property situation in Abu Dhabi is for companies to tell their employees if you are sponsored by and work for an Abu Dhabi company then you must rent property in Abu Dhabi. The other is to offer long term residence visas with property ownership. Would they adopt either principle, I am not so sure?

Sadly from a purchase perspective property in the capital is still overvalued in global terms. I guess that the enormous writedown taken by Aldar acknowledges that fact.

harry winston 9 years ago

Have to agree with Red Snappa,
Most employees working on Yas island, including the hotels live in Dubai.
I dont see anyone renting out the new towers on Al Raha Beach.
Abudhabi government employees should rent and support Abudhabi's economy and its companies.
Private compaines earning and profiting in Abudhabi should show corporate responsibility and support the local economy as well by forcing their employees to live in Abudhabi.
we need to support ALDAR, Mubadala etc.

With regards to ALDAR, i think it needs a shake down from top to bottom for the massive losses.

Jake 9 years ago

Don't you think if the rents in Abu Dhabi were slightly more reasonable, people would move. I highly doubt that people drive all the way because they are highway fanatics.

And whats the use of the federation if you can not live and work in different emirates?

The rental market is adjusting at the moment. Just be patient.

Business Man 9 years ago

The only way to fill the empty apartments in Abu Dhabi is not by isolationist regulation but by dropping the rents surely. Or is that too complicated ?
The rents could reach a level where people would live in AD and drive to Dubai.
Basic economics that often gets overlooked in a protected economy.

Telcoguy 9 years ago

And why would companies do that? That is akin to impose a salary reduction on their employees and transfer it to Abu Dhabi landlords.
Why not ask directly for a payroll tax to be distributed to AD landlords, because that is equivalent in economic terms to what you are asking... Why should AD employes contribute to the well being of AD landlords instead of choosing the accommodation they find more convenient? On which grounds?
I am not against taxation per se but I am very uncomfortable when people start asking for wealth transfers.

p 9 years ago

there are many apartments ready for handover on reem (5000 units) which will surely ease rents, however, for some reason, the have not been handed over. Supply and demand should find a natural level for rents - however, the approach seems to be to withhold supply to keep rents high - which is a petro-policy, however, it may have a longer term impact as you cannot expect investors to invest if there is a less than level playing field.

J.G 9 years ago

The trouble is no one wants to live in Abu Dhabi when Dubai's rents are on the floor and life in Dubai is 50% better than Abu Dhabi.
The rot is well and truly set in here with the property market . Drop rents people , it's easy.