Emaar ready to raise stake in Amlak if needed: Alabbar

Mohammed Alabbar, Chairman of Emaar Properties has expressed readiness to increase the company's stake in mortgage provider Amlak if it is part of the restructuring measures. He, however, emphasised that Emaar has not taken such a decision so far.

Emaar owns 48 per cent stake in Amlak.

Alabbar said a solution for is not far off, according to Al Khaleej newspaper.

He welcomed the entry of the government entities in Amlak if such bodies so wished.

In an interview with Al Arabia TV on Wednesday, he stressed the need for separation between Emaar and Amlak as they are limited liabilities companies and independent from each other.

He disclosed that the Amlak problem was due to real estate deals carried out by the company and was not because of its real estate finance activities which achieved good performance and cash flows continue.

Alabbar stressed that Amlak has a very fruitful future and that the mortgage finance sector is still promising.

“One of the solutions is an understanding with financial institutions. Creditors have become innovative and there are many ways... through rescheduling of debt owed to them for longer periods,” said Alabbar.

He said debt owed to Emaar could be converted into share capital.

He confirmed talks between the Central Bank and the Government of Dubai and Emaar on Amlak.

He said the gains over the past years allow the possibility of making allocations to offset the decline in its assets.

Growth in 2011

He predicted that Emaar can make limited growth in profits during 2011, considering that the optimism for the future performance remains constrained with the possible surprises in the overall economic situation worldwide, which needs caution.

"The company achieved growth in 2010 compared to 2009, despite poor economic conditions, and will continue to achieve growth from next year."

He said the value of the Emaar’s investments in foreign markets continues to rise as record numbers achieved in 2010 compared to the year 2009.

He added the value of investments in India and Saudi Arabia, Lebanon and Egypt increased  whereas there is stability in the value of investments in Dubai.

“The amount of land that Emaar has in foreign markets is up to four times the land owned in Dubai, but this is not necessarily reflected in the profit and loss account” Alabbar said.

Alabbar considered the existence of partners in foreign markets such as India as essential to take advantage of their knowledge of these markets.

He explained 2011 will witness the continuation of the company to hand over the units in several projects in Dubai Marina, Emirates Hills, in the midst of the city and Buj Khalifa district.

The growth of profits and market conditions and future projects are all important issues be considered by the Board of Directors before making a recommendation of distributions of dividends in February, he added.

He emphasised that Emaar has proved during the past two years its ability to continue, with no need to get support from the government.

Regarding the potential of merger, he said the company is looking for investment opportunities.

He said Emaar did not re-evaluate its property portfolio, and it maintains the value according to the cost price. Therefore, Emaar has reserves available and expressed optimism about the possibility to take advantage of future opportunities through acquisitions and expansion.

Alabbar expected the revenues of Emaar from foreign markets at 50 per cent of its total revenues within a short period, pointing out that the company's activity in the field of hotels and shopping centers is core, but health and education is still among the complementary services.

Emaar stake

The decision is up to the government to sell part of its stake in Emaar, he said. “Emaar is a public company, but the decision is up to the government whether it wants to sell part of its shares in the company, although I personally think that the Emaar share should be retained.

He said the emergence of some problems in foreign markets is normal, and that the company has made itself ready to deal with these problems” Alabbar said.

He said real estate prices are nearing stability despite the existence of surplus supply, saying that the investors sense of stability, will push them to begin to absorb the surplus.

Alabbar denied there will be talks to sell Dubai Bank to Emirates Islamic Bank.

He added that the issuance of convertible bonds into shares is the best choice for Emaar to ensure liquidity.

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