By Claire Ferris-Lay
Chairman says indebted developer on track for increase in revenue
State-backed developer Nakheel made a profit of AED860m ($234.1m) last year and expects to post a profit this year as revamps its operations following its $16bn debt restructuring, its chairman has said.
The developer, which split from its parent firm Dubai World in August to become a government entity, attributed the profit to an increase in the company’s activities, Ali Rashid Lootah told al-Khaleej newspaper.
Revenue for 2011 has increased amid a 10-15 percent increase in the management and leasing of fully-owned assets and a rise in residential unit occupancy, Lootah said.
“Nakheel's announcement of its profits is an important step ... towards fulfilling our promises to our clients and strategic partners,” he told the paper
Nakheel was one of the biggest casualties of Dubai’s real estate crash, suspending at least 100 projects in the wake of a property collapse that more than halved house prices in the emirate.
The emirate saw one of the world’s biggest reversals of fortune following the global credit crunch three years ago, forcing Nakheel to reduce staff and halt work on projects including the man-made islands of Deira and Jebel Ali.
The developer said this month it wrote down AED78.6bn ($21.4bn) from the value of its real estate during the Dubai debt crisis.
Nakheel wrote off AED301.4m in the first half of last year, AED73.8bn in 2009 and a further AED4.44bn in 2008, the company said in an Islamic bond prospectus.
To reduce costs, the developer cut its workforce to 986 in March 2011 from 3,818 in October 2008, the prospectus said. Nakheel expects to spend AED7.4bn this year and another AED1.4bin 2012 to complete nine projects across Dubai.
Nakheel said August 24 it was restructuring some AED59bn ($16.1bn) of liabilities, including AED32bn to Dubai government, AED19bn to trade creditors and AED8bn to banks.
The developer also said it would issue the first tranche of a twice-delayed AED4.8bn Islamic bond to trade creditors at a profit rate of 10 percent.
The company offered trade creditors repayment of 40 percent cash and the remaining 60 percent in the form of an Islamic bond, or sukuk as part of its restructuring program.
If it's profitable, perhaps Nakheel can start repaying customer deposits for cancelled projects? Or is it profitable because it's holding the money of customers for cancelled projects?
Is it profitable because it is not spending the maintenance monies received on the maintenance that has been paid for. here in International City, there has been no paint on the foyers and no gardens as well as no footpaths or amenties finalised since the properties were paid for by purchasers. Nakheel should be proud of making a profit, but not at the expense of owners.