Emaar's US unit bankrupt

Dubai: US homebuilder John Laing Homes - a subsidiary of Emaar Properties - has sought Chapter 11 bankruptcy protection on Thursday in the US Court for the District of Delaware, due to a sharp decline in home sales.

"John Laing Homes anticipates that the Chapter 11 process will allow it to significantly reduce debt from its balancesheet while facilitating a strategic reorganisation of the company, which will place it in the strongest possible position to sustain its momentum despite extremely challenging market conditions," Emaar said in an e-mailed statement, without elaborating.

The company listed assets of more than $1 billion (Dh3.678 billion) and debt of $500 million to $1 billion in Chapter 11 documents filed in the Bankruptcy Court in Delaware.

Emaar had bought the John Laing Homes in 2006 for $1.05 billion.

John Laing Homes is one of the largest private home builders in the US, and the 31st largest overall, building condominiums, townhomes to residential communities and multi-million dollar luxury estates.

On February 12, Emaar said it has decided to write down its investment in John Laing Homes by Dh1.77 billion ($483 million) during the fourth quarter of 2008 "in order to be conservative in accounting for such an investment".

Emaar officials were unavailable for comment.

In a statement issued earlier, Mohammad Al Abbar, chairman of Emaar Properties, said, "The primary focus of Emaar in the last quarter of the year was to mitigate the negative impact of the global financial crisis by facing up to the new economic realities and identifying innovative strategies to sustain businesses in an unprecedented downturn."

John Laing Homes said in court documents that it is exiting operations in Colorado, Texas and Arizona and plans to focus on its flagship homebuilding and luxury units in Southern California.

Have you lost any money because of this? Do you think fear is fuelling the global crisis? Are people too scared to invest now? Has this become just an ongoing ripple effect? Tell us below

I like Mr H. Mahenti's idea very much. It can be the engine for progress in the property market. To be more concrete let us say that I bought an apartment at Dh2 Million and the price per sq foot was Dh2,000. The developer should reduce it to current market value ie for eg Dh1,400 per SQ foot and readujst installment. Once completed and if sold both deveoper and owner can split the return on investment 50-50
H. Shafe'ei
Dhahran,Kingdom of Saudi Arabia
Posted: February 22, 2009, 18:21

We have invested all our hard earned money in the property market in Dubai too. Every day we read something.The price we bought, is too hight for today's market and we still have to pay the old price and no progress on construction site. It seems all the developers are taking advangtage of the lower cost of construction charges. Why not sharing this benefits with the investors specialy in the current financial situation.Something soon should be done to rescue the market.
From A Reader
Dubai,UAE
Posted: February 22, 2009, 15:33

Most of the investors await opportunities to enter the market to average out their investments and to reenter in the market for them it is right time as the Emaar has not buy back their shares despite of twice taken the approval knowingly that they may face these problems. This has stregethen their position and despite a hadsome provision they still show the good profit. In my opinion Emaar is in better shape to face the challanges of global slow down.However the decision is of the investors who are still making the profit due to high volitility in Emaar shares.
Mohammad Erfan
Al Ain,UAE
Posted: February 22, 2009, 14:42

I invested 4 years back in Emmar and other Shares in UAE market, ever since i bought the stocks, the market only going down day by day. I am compelled to follow guru Warren Buffet's quote "Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years" . What else we can do?
Chuttugulla
Dubai,UAE
Posted: February 22, 2009, 12:47

Yes, due to this global crisis, people are too scared to invest money in any sector.
Mufeed Mughal
Dubai,UAE
Posted: February 22, 2009, 12:32

Lots of my friends invested in Dubai and Ajman properties and they are all stuck.If the developer and investor jointly create a new formula then both of them can be serviced. If developers can calculate the cost of construction now and add a small margin and what so ever they have sold in double or extra prices reduced the o.p. price and rest of the balance compensate to investor, and adjust the amount in there incoming installment and dues so in this way investors get time and later on collect the installment according to construction level, once it?s completed after a year and market will come on balance then time to sell what so ever profit will gain both the developer and investor share equally and hope in this way lot of problem can be solve subject to a compromise in the situation from both side.
H. Mahenti
Karachi,Pakistan
Posted: February 22, 2009, 11:53

U.S. was role model for all education and economic development for rest of the world. At the end of the World War II it has the 1/3 of the whole world wealth. President like FDR really created best world order with U.S. leading every one. But the presidents who came later focused entirely on short term benefits and America lost its capacity to lead the rest of the world because of them. Let us wait to see how the new president is going to lead them and us too. We will hope for the best with him leading.
Halif Al Deen
Khartoum,Sudan
Posted: February 22, 2009, 10:55