United Arab Emirates' Nakheel restructuring activities to save cash

By Caroline Salls

Pittsburgh, Dec. 9 - Nakheel PJSC said it has undertaken a reorganization and restructuring of its core real estate activities in connection with a number of cost rationalization initiatives designed to achieve significant reductions in its future development expenditure and operating overheads, according to a financial statement released Wednesday.

The company said its sales volume and transaction activity remained low during the first half of 2009 because of the impact of global economic challenges on the Dubai real estate market.

To address these issues, Nakheel said it has taken steps to reduce capital expenditure by scaling back or slowing some development activities to beyond 2012.

In addition, the company said it is phasing the delivery of related infrastructure in accordance with market demand and the stage of development of individual projects, which allows Nakheel to reduce its overall levels of immediate and medium-term cash investment.

According to the release, the company's revenues for the six months ended June 30 were AED 1.97 billion, compared to AED 9 billion for the first nine months of 2008. Nakheel said the revenues were driven by the handover of properties in several of its flagship developments.

Meanwhile, gross profit for the six months ended in June was AED 0.64 billion, declining from AED 3.57 billion for the six months ended June 30, 2008.

The total comprehensive loss for the first half of this year was AED 13.43 million, down from an AED 2.65 million total comprehensive profit for the first half of 2008.

Additionally, the company reported AED 12.22 million in impairment loss for the first six months of 2009, compared with no impairment losses for the same period of last year.

Gross profit margin decreased to 33% in the first half of 2009 from 40% in the same period of 2008.

Nakheel had AED 73.33 million in debt at June 30, up from AED 68.43 million at June 30, 2008.

The company also said debt maturities occurring in the coming 12 months are being addressed in conjunction with support from Nakheel's parent Dubai World.

Nakheel said its shareholders are committed to providing continuing support to allow it to meet its financial obligations, and the company has received significant funds from Dubai World.

The company said its ultimate parent also plans to request a standstill and extension of facility maturities from all financiers through at least May 30.

Nakheel is a Dubai, United Arab Emirates-based property developer.

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