Nakheel is all set to clear the claims of contractors whose projects were affected following the restructuring of the company in mid-2009, said a top official of the real estate developer.
Nakheel owes Dh8 billion as compensation to contractors, Ali Rashid Lootah, Chairman of the Board of Directors Nakheel told 'Al Ittihad' newspaper.
The initial amount of an estimated Dh10bn was revised by the committee set up to study claims of contractors and trade creditors to determine fair values of compensation, he added.
The value of contractors' claims was cut by up to Dh2bn following the committee's study.
"However, Nakheel does not seize the rights of contractors and creditors to seek maximum claims," Lootah added.
Nakheel re-evaluated about 4,000 commercial contracts with contractors, suppliers and advertising agencies for works carried out before November 2009 and added that the auditing process led to reducing the total receivables from Dh10bn to Dh8bn.
He added: The Government of Dubai represented by Dubai Fund committed to provide $8 billion to Nakheel to finance its operations and its payment obligations and to convert a value of $1.2bn of debt owed to the fund into shares in the company.”
Real estate performance
Lootah said: "The process of restructuring Nakheel will benefit the Dubai real estate market in general."
The company's assets far outweigh the volume and value of financial receivables to creditors, which grants the company significant weight in the negotiations with these parties, he said.
The company will sign a final agreement with creditor banks before end-April.
"The agreements on debt rescheduling will be in accordance with the plan presented by the company to its creditors last March."
"According to the offer made by Nakheel, lenders under the secured credit facilities combined and private clubs and bilateral creditors will get 100 per cent of the value of the assets of their debts and interest or dividends.
This would be through the process of restructuring and extension of maturities of existing credit facilities at interest rates linked to Libor.
He added creditors of unsecured loans will also be given 100 per cent of the value of the assets of their debts and accrued interest or dividends, through new credit facilities, with the continuity of any credit support established and submitted by others in their place.
The company's board, appointed mid-last year, has integrated work plan for up to five years, including completion of the payment of all financial obligations and the delivery of all housing units and the transformation of the company to profitability.
Lootah said: "Real estate prices in some parts of Dubai have reached the bottom and started to record selective highs in some areas, and prestigious properties which point to pave a new wave of high prices during the next phase. The current price levels of Dubai realty have become attractive for foreign investment, which will reflect positively on the rest of the economic sectors in the emirate," he added.
Mortgages
He said mortgage lending in the UAE has started to improve, especially with the reassurance that banks funded to buy real estate at low prices which will help reduce risk.
He pointed out “ the reduction in interest rates for lending between banks contribute to the re-launching of lending, including mortgage lending, which is good for banks and investors alike.”
Customer rights
Lootah said the company has succeeded in resolving 50 per cent of the dues to customers who booked units in the long-term projects.
He added “Nakheel has settled Dh4bn payments to its customers where 50 per cent of the customers of long-term projects agreed to replace their purchased presidential units and villas in other real estate projects that are nearing completion.
Lootah confirmed: "The settlement of customers' dues has been and remains a top priority for the company since the new board was appointed, when Nakheel began to resume work on eight major projects so as to ensure delivery of housing units reserved for customers."
Lootah added: "Nakheel is currently working on the rest of the settlement payments of clients through the provision of different options such as purchases of residential units and villas in projects that are close to completion.”
“The Board of Directors has decided to classify real estate projects into two sections. The first section include projects to be executed and delivered in the near-term. This includes eight projects where work has begun already, such as Jumeirah Park, Jumeirah Island, The Villa and Al Furjan and Badra and Veneto, Jumeirah village.”
The second section includes projects to be implemented over the long term, including the Palm Jebel Ali and the Marine front.
He said customers who booked projects that were delayed would get 100 per cent of the premium value as procurement alternative.
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