Nakheel reported a sharp rise in profits for the first nine months of the year as the Palm Islands developer boosted leasing earnings and paid off debt.
Profit during the period rose 47 per cent to Dh2.6 billion – more than the developer’s entire profit last year, Nakheel said.
Third quarter profit rose 31.6 per cent to Dh750 million, according to calculations by The National.
The master developer behind the Palm Jumeirah and The World man-made islands off the Dubai coast said that it handed more than 329 new homes to customers during the quarter, while its retail and leasing businesses remained at “almost full occupancy of available units for lease”.
The private company, which is owned by the Dubai government, is not required to give the market more detailed financial information.
The total number of homes handed over for the nine-month period stood at 956 – significantly lower than the 1,600 homes Nakheel had said it hoped to hand over this year.
Nakheel, which revealed in March that it was evaluating a possible share sale once it had cleared its debts, paid back its entire bank debt of Dh7.9bn in August four years ahead of time, although it still retains a Dh4.4bn trade creditor sukuk that falls due in 2016.
The Nakheel chairman, Ali Rashid Lootah, said that the company was "poised to significantly exceed last year's results in 2014".
“With the bank debt repaid early and new cash-generating assets coming on-stream, Nakheel is well on course to further strengthen its business and financial position going forward,” he added. “Our robust financial results reflect the growth in the real estate sector in Dubai.”
Mr Lootah said in August that the company would be discussing plans with the Dubai government about a possible IPO.
However, analysts warned that Nakheel may be running out of time to raise money on the stock market amid planned share sales.
“The conditions in the markets at the moment are such that now is a very good time for companies in the UAE to raise money by floating,” said Sanyalak Manibhandu, a research manager at NBAD Securities. “However, this window of opportunity is likely to be short lived and companies such as Nakheel that have been standing on the sidelines talking about floating should really get on with it before they miss the boat.”
Dubai government-related entities have been encouraged to return to debt markets as asset values recover and banks view the creditworthiness of some of them more favourably.
Still, many remain wary of becoming too exposed to groups that were unable to pay their debts after the 2008 property crash.
“The name Nakheel isn’t toxic but the company has a legacy,” Mr Manibhandu added. “It’s a good sign that the company has turned around, but the company would have collapsed without the support of the Dubai government and I think investors would want to see a rating that is commensurate with both the value of the company and its legacy”.
lbarnard@thenational.ae
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