Nakheel’s ’11 profit up 33% at Dhs1.33b

Dubai-based property developer Nakheel said on Monday its net profit jumped 33 per cent to Dh1.33 billion in 2011 compared with Dhs1 billion in 2010. Chairman Ali Rashid Lootah told reporters that Nakheel would likely issue a third tranche of an Islamic bond, or sukuk, in two months’ time. It aims to issue the tranche to trade creditors in part settlement of claims of Dhs5.3 billion. The first two tranches of the bond are worth more than Dhs4 billion ($1.09 billion), part of a $16 billion debt restructuring. The first tranche was issued last August and the second is due by the end of this month. Lootah said he expected Nakheel would agree to pay about 15 per cent of the amount outstanding after the second tranche, or around 800 million dirhams, in further tranches. The company overstretched itself with ambitious projects such as man-made palm tree-shaped islands, and was brought under direct government control as part of the restructuring of its parent Dubai World. Nakheel wrote off up to $21.4 billion of its real estate assets due to the property crisis, a bond prospectus issued by the developer last year showed. Revenues reached Dhs4.1 billion, driven by handover of properties mainly in the Palm Jumeirah, Jumeirah Village, International City, the World and Al Furjan. Total assets trebled from Dhs8 billion to Dhs24 billion.  Total liabilities fell to Dhs41 billion last year from Dhs61 billion in 2010. The company delivered 820 units in 2011. Dubai house prices have fallen more than 60 per cent from a 2008 peak, but Lootah said signs of resurgence were visible. “Te market is picking up so there was no need for impairments (in 2011),” said Lootah. “It’s the start of the recovery.” He pointed to strong demand in the villa segment, adding the company had achieved a 30 per cent increase in prices on Dubai’s upmarket Palm Jumeirah area over a one-year period. “From the first three months of this year, it’s very promising and I think we will achieve a much better result than 2011,” said Lootah, adding unit handovers would top last year’s total of 820, which  included land parcels. Analysts were bullish about the results. “This is the benefit of restructuring and more profitability means more liquidity, which is good for recommencing projects and meeting obligations,” said Haissam Arabi, chief executive and fund manager at Gulfmena Investments. Bond investors have given a cautious thumbs-up to the company’s recovery.