Aldar Q3 loss at Dh731m

UAE's Aldar Properties reported its fourth straight quarter of losses on Tuesday, underscoring its worsening finances, and said it was in the final stages of talks with the government over its cash needs.

Aldar, Abu Dhabi's largest developer by market capitalisation, and the builder of the Yas Marina Formula One circuit that opens next week, said in a statement that it was in the "final stages of discussion with Abu Dhabi government regarding the company's cash requirements."

Shares in the developer recovered from an earlier drop to trade 5 per cent higher, as talks with the Abu Dhabi government were seen as a positive sign.

Chief Financial Officer Shafqat Malik said the framework for a cash deal is expected to be completed by the end of the year, adding that more details would be released later.

Developers across the UAE have suffered as the global financial crisis put an end to a six-year construction boom.

Nevertheless the developer's net loss for the June-September quarter was Dh731 million ($199 million), according to Reuter's calculation based on nine-month figures issued by the company on Tuesday. This figure is worse than the average loss of Dh231 million forecast by analysts in a Reuters poll.

The company, which said it appointed a new chief executive this week, said the loss was due to bad debt provisions and low property sales.

"Aldar results are far below our expectations of Dh195 million in loss," said Roy Cherry, a senior researcher of real estate and construction at Shuaa Capital. "But it's all about the cash rather than quarterly results, survival is at stake."

Aldar's talks with the Abu Dhabi government was a positive indication but investors need to know more, said Cherry.

"What are the main features and terms for these discussions? How do we put the fact they have yet to get paid the cash component for the F1 race track into this context?" he added.

"We know the government will come to the rescue of Aldar, but at what price is what we can't answer," said Majed Azzam, AlembicHC real estate analyst.

"We are hoping there won't be a lot of dilution and that Aldar will issue straight debt rather than equity -- if that was to happen it will be positive for the stock, because the market has already priced in a heavy dilution. Liquidity and how Aldar will pay its debt next year is our biggest concern, results are less important."

Aldar's earnings report follows Abu Dhabi's second largest developer Sorouh Real Estate, which said its third-quarter profit fell 68 percent due to one off expenses.

The Aldar announcement comes just days after the surprise resignation of its chief executive. The developer said on Monday its chief operating officer Sami Asad will succeed John Bullough as CEO, after Bullough's resignation last week.

The firm said it incurred a net loss Dh1.5 billion in the first nine months ending September 30 compared with a net profit of Dh1.4 billion during the same period last year.

A Bank of America Merrill Lynch report earlier this month said Aldar needs Dh9.8 billion by 2011 as it seeks funding to survive. The developer is expected to re-finance 3 billion dirhams of debt by year-end, the bank said.

Aldar's fragile debt position spurred ratings agencies Moody's and Standard and Poor's to each downgrade its ratings earlier in the year and keep it on watch for further downgrades.

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