DCOG loses £4.3bn in property slump

Published 02nd Jun 2010

Dubai Holding Commercial Operations Group (DCOG), the real estate and hospitality business, today reported a net loss of 22.8 billion dirhams (£4.3 billion) for last year.

The collapse of Dubai’s once-booming property market prompted the slump from net profits of 10 billion dirhams in 2008. The group incurred impairment charges of 22.5 billion dirhams.

The group merged its three struggling property companies — Dubai Properties, Sama Dubai and Tatweer Dubai — in an effort to mitigate a 50 per cent fall in prices in the past 18 months.

In December Emaar, the developer behind the world’s tallest tower, backed out of a planned merger with the consolidated real estate business.

DCOG reported total revenues of 9.5 billion dirhams for last year, down from 13.2 billion dirhams in 2008, a fall of 28 per cent.

The company said that it was considering a range of measures to boost its working capital, including rolling over maturing loans and selling some assets.

Ahmad Bin Byat, the chief executive officer, remained upbeat about the company’s prospects. “We have carried out sound strategic measures in 2009, in the form of business re-alignment and financial initiatives, which place us in a strong position to capitalise on opportunities during the recovery phase. There is no need to restructure outstanding debt,” he said.

The group is part of Dubai Holding, which is controlled by the emirate’s ruler, Sheikh Mohammed bin Rashid al Maktoum. Last week the conglomerate’s investment arm, Dubai International Capital (DIC), requested a three-month extension on debt repayments, raising new concerns about the financial stability of the Gulf state.

DIC, which once tried to buy Liverpool Football Club and includes Travelodge and Doncasters in its portfolio, has total debts of $2.5 billion (£1.7 billion), with a $1.25 billion loan due for repayment this month.

The group has reached agreement with a committee of six leading banks to delay repayment of the June loan until September 30. DIC said that it would use the delay to put forward a comprehensive proposal extending the maturity of other loans to allow its struggling portfolio of investments to regain some of its value.

Dubai Holding has around $12 billion of debts. Each of the group’s subsidiaries have appointed financial advisers in prearation for a possible restructuring.

The move comes just days after Dubai World, the state-owned conglomerate at the heart of the emirate’s recent debt crisis, reached agreement with its main banks to restructure $23.5 billion of debts over eight years.

Dubai’s main stock exchange closed down 3.06 per cent today at 1,53.15, its lowest level for 14 months.

Source: ' Times '

View All Latest News