(MENAFN Press) Nakheel plans to prepay in 2014 more than half of its bank debt of AED6.8 billion, due for repayment in September 2015, the company has announced.
The company will pay AED2.35 billion in Q1 2014, and plans an additional prepayment of approximately AED1.65 billion in Q3 2014.
The company also says that a robust financial performance that has significantly exceeded its revised business plan, has led to improvements of approximately AED22 billion to date over the plan period
At the time of restructuring, in August 2011, Nakheel had a total bank debt of AED7.9 billion, due for repayment in 2015, 2016 and 2018. The early repayments of AED4 billion in 2014 “ a major milestone in the company's history “ reflect the strength of the local real estate market, significantly improved economic conditions in the UAE and the growing trust and confidence among investors in Dubai and Nakheel.
Nakheel Chairman Ali Rashid Lootah said: "In 2011, Nakheel pledged to construct and deliver some 9,000 units over a five year period across a number of projects that had been stalled during the global financial crisis. We rose to this challenge and, thanks to the support of the Government of Dubai, Nakheel customers and other stakeholders, have been able to achieve this remarkable milestone.
Over the past 28 months, since the successful completion of the financial restructuring, Nakheel has continued its focus on delivering the revised business plan and creating a long term sustainable business. During this period, both revenues and net profits have doubled from FY11. Not only has the company returned to profitability, it has witnessed an almost threefold increase in cash flows generated in FY13 compared to FY11
"This strong financial performance is the result of Nakheel recommencing all 10 of its 'Near Term' projects, giving the required impetus to the local real estate market by providing opportunities for local contractors to restart construction activity in Dubai," said Ali Rashid Lootah
"The result of these efforts is borne out by the fact that by the end of FY13, Nakheel had handed over 7,000 units to customers and paid amounts aggregating to AED12.3 billion to various contractors, creditors and suppliers since the restructuring began in November 2009. Our financial performance has significantly exceeded the revised business plan, leading to improvements of approximately AED22 billion to date over the plan period."
Nakheel not only worked diligently to deliver its revised business plan, but also launched new development projects to revive its core business activity of property development. At 31 December 2013, Nakheel had more than 3,500 units with an estimated current sale value of AED10 billion in the development pipeline across various developments. The first handovers are due in 2014.
In addition, with the objective of increasing its portfolio of cash-generating assets, Nakheel has several retail and leasing units under construction which, when complete, will more than double the existing net retail leasable area from 2.5 million square feet to about 5.6 million sq ft.
The number of leasing units is also set to increase from the current 16,500 to about 17,000 when completed. In addition, the company is developing four hotels with a combined total of 1,200 rooms that will progressively come on stream this year, with more under evaluation.
Ali Rashid Lootah said: "Nakheel is well on its way to establishing its leading position in the local and regional real estate sector. We continue to successfully deliver on our revised business plan and to earn trust and confidence among investors. The prepayment of a significant portion of bank debt is another major Nakheel initiative taken in proactively managing its financial affairs and in laying the foundation for a long term sustainable business. We expect to further reduce our debt burden in subsequent years to further improve the financial health of our business.
"We thank the Government of Dubai and the various regulatory authorities for providing Nakheel with all their support and assistance to date without which it would not have been possible to achieve these results. We acknowledge and admire the commitment and hard work of each of the board members whose determination to overcome challenges was noteworthy and guided Nakheel to its accomplishments. Last but not the least, the management team of Nakheel which displayed tremendous team work blending youth with experience, particularly the young UAE Nationals who rose up to the challenge and worked diligently to ensure the objectives given to them were achieved.