Dubai’s Nakheel sees 2011 profit, no further sukuk
Chairman says 2011 profit to be in-line with last year; Second tranche of Islamic bond to be issued by year end; Nakheel has no further sukuk plans - chairman
September 27, 2011 1:15 by Reuters
Dubai’s Nakheel , which completed a complex debt restructuring last month, expects to post a 2011 profit and will not require any additional financing in the coming year, its chairman said on Tuesday.
Full-year profit should be in-line with its 2010 results, bolstered by its leasing and retail businesses, Ali Rashid Lootah said in an interview with Reuters at property show Cityscape in Dubai.
“Our leasing year-to-date is up to 70 percent occupancy from 40 percent in 2010,” he said, adding that the company hopes to have an 80 percent occupancy by year-end.
Nakheel made a 2010 profit of 860 million dirhams ($234 million) and sees a rise in revenue this year as it revamps its operations post its $16 billion debt restructuring, Lootah was reported as saying last week.
Lootah said the company has opportunities to obtain financing from institutions looking to invest in the company, but it sees no immediate needs.
“We don’t think we’ll need financing in 2012,” he said. “Our requirements from the Dubai government is to be minimum.”
The developer, which overstretched itself building islands in the shape of palms and other ambitious projects, was taken over by the Dubai government in August as part of its former parent, Dubai World’s restructuring deal.
Dubai has already given as much as $8.71 billion to the property firm. Nakheel has written off up to 78.6 billion dirhams ($21.4 billion) of its real estate assets due to the emirate’s property crisis, its bond prospectus showed.
Under its restructuring deal, Nakheel offered repayment to trade creditors through 40 percent cash and 60 percent via an Islamic bond, or sukuk. It issued $1.03 billion under the first tranche of the $1.31 billion sukuk earlier this month to trade creditors.
Lootah expects to issue the second tranche of the sukuk by the end of the year. The second tranche tranche will be used to settle contractor claims.
Sources told Reuters that much of the land backing the $1.03 billion sukuk is unreclaimed seabed, leaving trade creditors holding the paper scant recourse to tangible assets in the event of a default.
But Lootah defended the asset backing the sukuk, saying “it’s valued by reputable companies and accepted by lenders.”
He added that the company does not plan on issuing any more sukuk.
Some of Nakheel’s ambitious projects such as Palm Jebel Ali, another series of palm-shaped man-made islands stretching into the Gulf, are yet to be complete. (Reporting by Jason Benham, Writing by Shaheen Pasha, Editing by Dinesh Nair)