Nakheel wrote off $21.4B in property crash

Nakheel wrote off $21.4B in property crash

Nakheel wrote off up to $21.4 billion of its real estate assets due to a property crisis in the emirate, according to a bond prospectus.

September 13, 2011 11:46 by Reuters

Nakheel, which overstretched itself building islands in the shape of palms and other ambitious projects, incurred impairments of 73.8 billion dirhams in 2009, primarily related to the carrying value of assets and capital work in progress.

It wrote off 4.44 billion dirhams in 2008 and 301.4 million dirhams in the first half of last year, the prospectus showed. The prospectus for the Islamic bond was issued last month.

Dubai’s property boom ended in 2008, with home prices plunging by about 60 percent, forcing many developers to abandon projects.

Some of Nakheel’s ambitious projects such as Palm Jebel Ali, another series of palm-shaped man-made island stretching into the Gulf, are yet to be complete.

Dubai has already given as much as $8.71 billion to the developer.

The company, which was previously the property arm of Dubai World [DBWLD.UL}, will now be controlled by the Dubai government along with another debt ridden property firm Limitless, that is restructuring a $1.2 billion loan of its own.

The developer is restructuring a total of $16.06 billion in debt, including $8.71 billion of government debt which is to be converted into equity.

The remaining amount is owed to trade creditors and banks. The company plans to issue a 4.8 billion dirham Islamic bond to trade creditors as part of the restructuring. (Reporting by Dinesh Nair, Praveen Menon; Editing by David Cowell)