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Fri 7 Jun 2013 11:12 AM

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Qatar's Barwa to sell $7.1bn assets to cut debt

Developer plans to sell projects including Barwa City to property arm of Qatar's SWF

Qatar's Barwa to sell $7.1bn assets to cut debt
Barwas Commercial Avenue project is one of the assets being sold to Qatari Diar.

Qatar has stepped in with $7.1bn of financial support for its ailing property firm Barwa Real Estate, buying some key assets to help the company reduce its debt pile.

Qatar Diar, the real estate arm of the Gulf state's sovereign wealth fund, owns 45 percent of Barwa, according to Reuters data and is stepping in after Barwa notched up liabilities of about QR37bn ($10.16bn) at the end of 2012 due to overexpansion. Its profit plunged 46 percent in the first quarter.

"The sale proceeds will be directed towards extinguishing the company's debts, reducing financing costs and improving the company's financial position," Barwa said in a bourse statement on Thursday.

Qatar, the world's largest exporter of liquified natural gas, is investing billions of dollars to bolster its infrastructure ahead of hosting the 2022 soccer World Cup. Much of that involves propping up a property market which is yet to recover from oversupply that saw prices slump in the aftermath of the global financial crisis.

Last month, Barwa unveiled plans to build a $5.5bn island off the coast of Doha, featuring luxury villas, a water park, and five floating hotels to house soccer fans expected to flock to Qatar for the soccer World Cup in 2022.

At the same time it has been been cutting staff and selling assets to pay down its debts. Last October it announced plans to sell assets worth QR16bn ($4.4bn) in Qatar and Egypt to pay down loans.

Among the assets being sold to Diar will be the Barwa Commercial Avenue, an 8 kilometre long development of road, as well as commercial complexes, showrooms and residential units in capital city Doha.

Other assets include Barwa Al Sadd, a project which includes three office towers and a five star hotel and Barwa City projects, a residential project.

Barwa will also sell an undisclosed part of its investment portfolio in the deal which it expects to complete by year-end.

The company has properties in France, Switzerland and Britain, focusing on retail, office, hospitality and residential developments.

The Qatari government has stepped in to assist local companies in the past. In 2008, it bought up the real estate assets on local banks' balance sheets, in effort to shield them from the global economic crisis.

In neighbouring UAE, Abu Dhabi developer Aldar Properties was given a $10bn lifeline by the emirate to help it repay a massive debt pile. The firm is merging with local player Sorouh Real Estate in a state-backed deal.

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