Nakheel profit jumps 33pc to $353m
Dubai, April 16, 2012
Indebted Dubai state-owned developer Nakheel Properties reported a 33-percent rise in 2011 profit on Monday and said that it anticipated an improvement in the struggling real estate sector.
Nakheel reported a net profit of 1.3 billion dirhams ($353.93 million) last year, up from 1 billion dirhams in 2010.
Revenues rose to 4.1 billion dirhams, a company statement said. Total liabilities fell to 41 billion dirhams last year from 61 billion dirhams in 2010. 'The market is picking up so there was no need for impairments (in 2011),' chairman Ali Rashid Lootah told reporters.
Assets at the end of 2011 totalled 24 billion dirhams, up from 8 billion in the prior-year period. Lootah attributed this to a restructuring, improved market conditions and a revised business plan.
During the year, Nakheel delivered 820 units including land parcels. 'Revenues were mainly driven by the handover of properties in several of the group's developments, mainly Palm Jumeirah, Jumeirah Village, International city, the World, and Al Furjann,' the company statement said.
Nakheel, which overstretched itself late last decade with ambitious projects such as a man-made islands in the shape of palm trees, was brought under direct government control last August as part of the restructuring of its parent Dubai World.
Although there are some signs that Nakheel's business is reviving - it launched a residential project on its Palm Jumeirah site this year, the first to be publicised since the real estate market collapsed - it still faces difficult business conditions and a multi-year process of paying down debt.
Nakheel's $1.0 billion, five-year sukuk is currently bid at a yield of about 14.4 percent, down from levels above 21 percent when the Islamic bond was issued to trade creditors last August as part of a restructuring of the company's $16 billion debt.
Lootah said that 5.3 billion dirhams of claims from trade creditors is still under negotiation. Earlier this month, the chairman said a second, $65 million tranche of Nakheel's sukuk will probably be issued to trade creditors by the end of April.
The tranche will be about a quarter of the size previously expected after the firm persuaded creditors to accept a big discount on their claims. Lootah added the third tranche of the sukuk will likely be issued in June. - Reuters