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Tue 9 Feb 2010 11:27 AM

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Deyaar delays $136m distressed fund - paper

'It's wrong time for Deyaar to go out and try to raise funds from the int'l community.'

Deyaar delays $136m distressed fund - paper
DEAL DELAYED: Deyaar and Dubai Islamic Bank had already put AED200m into the fund.(Getty Images)

Dubai developer Deyaar has postponed a AED500m ($136.1m) distressed property fund after international investors withdrew AED200m previously committed, a local daily reported.The Gulf emirate's second-largest developer by market value launched the fund last summer to buy distressed properties from its own portfolio as well as other properties, as it looked to boost returns for shareholders.

"It is the wrong time for Deyaar to go out and try to raise the funds from the international community," the firm's Chief Executive Markus Giebel told The National paper.

"We will wait until the dust settles ... and restart in two or three months, as we believe the market will come back."

A Lebanese bank and an international institutional investor had committed 200 million dirhams to the fund by October last year but pulled out of the deal a month later after Dubai World's announcement that it would seek a standstill on $26 billion of debt, the newspaper reported.

The fund was set up with Dubai Islamic Bank, which owns a 42 percent stake in the developer.

Deyaar and Dubai Islamic Bank had already put AED200m into the fund.

In October, Giebel said he hoped to close the fund by the end of 2009.

Executives at Deyaar were not immediately available for comment. Deyaar shares were down 1.9 percent in early Dubai trade. (Reuters)