The division of Dubai Holding that owns its hotels and business parks yesterday reported profits of Dh127.5 million (US$34.7m) for last year even after accounting for a Dh10.3 billion write-down.
The profit for Dubai Holding Commercial Operations Group (DHCOG) follows a Dh23.6bn loss in 2009, illustrating the gradual easing of Dubai's property and financial problems.
"This year's financials have shown considerable promise and improvement when compared to last year's results, given 2010 remained a challenging year," said Ahmad bin Byat, the chief executive of Dubai Holding.
The company "continues to overcome challenging market conditions" and is confident of the success of its businesses after cost-cutting measures and refinements to strategy were put in place, he added.
DHCOG released its financial statements on the website of the Nasdaq Dubai, where announcements related to its publicly traded bonds are posted. The company owns and operates 11 business parks in Dubai, including Dubai Media City and Dubai Internet City. Another of its assets is Dubai Properties Group, the developer behind Jumeirah Beach Residence, Business Bay and Dubailand. It also owns the Jumeirah Group, a hospitality conglomerate that counts the Burj Al Arab among the hotels it manages.
Despite booking revenues of Dh13.5bn last year - an improvement from the Dh9.4bn it booked in 2009 - DHCOG's financial statements reveal it still had major write-downs on property.
The company recorded Dh10.3bn of impairment charges against property, investments and joint ventures last year. That was less than the Dh43bn charge it took in 2009, but revealed the extent to which flagging property values in Dubai continue to weigh on the emirate's biggest developers.
"This charge was recorded following management's impairment review of these balances due to the overall decline in the property market and the decline in fair values of certain investments in associates and joint ventures," the financial statements say.
DHCOG also revealed it had Dh14bn of borrowings at the end of last year, less than the Dh15.6bn it had at the end of 2009. But debt also remains an issue for the company and for Dubai Holding as a whole, which is in the early stages of a debt restructuring that reports last month suggested could be worth as much as $20bn.
The financial statements also showed DHCOG was readying more than Dh3bn of its assets for sale. Box Office FZ, Dubai Towers Doha and Al Shoula Abraj Dubai Jeddah - none of which are core investments - were reclassified as "held-for-sale" last year, meaning the company planned to dispose of them within a year.
"Further, the group intends to dispose of certain non-core assets within the next 12 months," DHCOG said.
Despite the twin challenges of a heavy debt load and stagnant property markets, Mr Byat said DHCOG's main divisions put in a respectable performance last year. Jumeirah Group, he said, "recorded consistently high occupancy levels" and improved its profits as tourists came in droves to its beach hotels. Dubai Properties Group had benefited from the handover of properties in Business Bay and Dubailand. And Tecom, the business parks operator, was riding high on rental income and "maintained steady occupancy levels compared to last year".
DHCOG's financial position has recently been in the spotlight as ratings agencies cast increasing doubt on its ability to service its debts. Fitch Ratings downgraded the division this year, citing large, short-term debt maturities and a view of its "ability to refinance externally as limited".
