Nakheel full-year profits rise 57% to Dh2.017b

Real estate developer to issue a fourth tranche of sukuk to contractors this half

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Clint Egbert/Gulf News
Clint Egbert/Gulf News
Clint Egbert/Gulf News

Dubai: Dubai real estate developer Nakheel recorded a 57 per cent increase in full-year profits of Dh2.017 billion compared to 2011 on the back of higher land sales and leasing revenue — with new projects planned this year, it announced yesterday.

Revenues rose 91 per cent to Dh7.8 billion in 2012 compared to Dh4.1 billion in 2011, it said. The company recorded growth in leasing revenue, with retail revenues up 23 per cent and residential revenue up 17 per cent from 2011.

“We expect good growth this year from here onward,” said Ali Rashid Lootah, Chairman of Nakheel, at a press conference. Nakheel plans to launch new projects with investments of Dh6.5 billion to be completed over three years — mainly in leisure and retail but also the luxury residential segment, he said. “We will not have problems raising money to finance this project.”

The company plans to issue the next tranche of sukuk to contractors before end of mid-year, Lootah said, adding that the value of the sukuk will depend on the result of negotiations with contractors. It has already issued three tranches of sukuk to contractors worth Dh4.148 billion out of a sukuk programme totalling Dh4.8 billion.

Nakheel has paid Dh5 billion worth of settlements to trade creditors “amicably” and hopes to resolve pending claims by the end of the year, Lootah said. The settlements paid on claims have averaged about 15 per cent of the original amounts claims made by contractors after a process of review by independent consultants, he added. Customer liabilities were reduced from Dh9.9 billion to Dh7.3 billion through consolidation and swap schemes offered to a large number of customers, the company said.

Financial position

Nakheel, which restructured debt and got financial assistance from the government, has current liquidity of Dh600 million, Lootah said.

The company’s debt stands at about Dh12 billion, with Dh8.2 billion in debt to banks and Dh4.2 billion in sukuk to contractors, Lootah said.

Lootah noted that Nakheel still had about Dh15 billion to withdraw from the Dubai Financial Support Fund (DFSF), a body that was established in 2009 to provide financial support and liquidity to Government entities and Government-Related Entities (GREs). DFSF had committed a total of Dh26.78 billion to Nakheel.

Asked if he was comfortable enough with the company’s current financial position or more withdrawals from the DFSF will be needed, Lootah said: “It’s too early to judge. Judging by our performance, we require less and less. With hand-overs and deliveries, we are generating our own cash.”

“So far we are doing good on our own, we will call on them when required,” he said.

Nakheel has options to look for refinancing and may do so depending on the right terms, Lootah said, adding that it has been approached by several banks offering loans.

Asked if the limits on mortgages proposed by the Central Bank would affect demand for Nakheel’s residential offerings, Lootah said that more than 90 per cent of its buyers paid in cash. “The risk is on the banks not us.”

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