Nakheel says it will be largely debt-free by September 2015, as it starts to prepay bank debt and outperforms the restructuring plan it set in 2011 by AED22bn ($6bn).
Hopefully at end of September we will be finished [with bank debt], no need for financing, said Nakheel chairman Ali Rashid Lootah on 4 January.
The Dubai-based real estate developers first move is to prepay AED2.35bn of bank debt by the end of February this year. The early payment constitutes more than one-third of its total bank debt of AED6.8bn due for repayment in September 2015. It will pay a further AED1.65bn in August this year. Then, in February 2015, it will pay AED1.5bn, and in September the same year it will pay another AED1.5bn.
The companys AED4.5bn trade creditor sukuk (Islamic bond) due to be paid in August 2016 will be paid on time.
At the time of the restructuring, Nakheel had a total bank debt of AED7.9bn that was due for repayment in 2015, 2016 and 2018. Since then, both revenues and net profits have doubled returning the company to profitability. Cashflows have tripled over the same period.
This strong financial performance is the result of Nakheel starting work on new projects and selling and handing over properties. The result of these efforts is borne out by the fact that by the end of the 2013 financial year, Nakheel had handed over 7,000 units to customers and paid amounts aggregating to AED12.3bn to various contractors, creditors and suppliers since the restructuring began in November 2009, said Lootah. Our financial performance has significantly exceeded the revised business plan, leading to improvements of approximately AED22bn to date over the plan period.
Since 2011, Nakheel has re-established itself as one of the most important clients for construction companies working in Dubai. The company plans to tender construction contracts totalling more than AED6bn during 2014, as it continues to move forward with new projects.
The five-level, 418,000-square-metre (sq m) retail, dining and entertainment centre will have 200 shops including a 4,200 sq m supermarket, two anchor department stores, a nine-screen cinema and six medical clinics.