Dubai-based developer Nakheel says it will have repaid all its AED7.9bn ($2.15bn) of debt owed to bank lenders in August after an early repayment of AED5.45bn. Nakheel paid the other AED2.35bn in February this year.

The debts will be cleared nearly four years before the final loan instalment was due in March 2018.

“We are four years ahead of our restructuring commitments. All of this cash is generated from Nakheel’s own income, it is not from the government support fund,” said Ali Rashid Lootah, chairman of Nakheel, speaking at a media briefing in Dubai on 25 June. “Our only commitment now is the sukuk [Islamic bond], which is due in 2016.”

Bank debt to be prepaid four years ahead of time

Nakheel says without bank debt, it can now borrow at much more competitive rates and have more opportunities to develop new projects. “We will do more and bigger projects,” said Lootah.

Nakheel has had to finance all its projects in recent years, as covenants attached to its bank loans prevented it from securing new loans. Without those covenants, the company can raise finance, which will allow it to develop projects that are not initially self-financing.

“All our new projects [since 2010] were self-financed,” said Lootah. “Now we can look for finance, but it must be at a reasonable rate.”

Lootah also stressed that cash will only be used when needed. “We will look at raising funds, we will look on a case-by-case basis, we have our own cash, we will look when we need it,” He said.

Financing could play a major role in Nakheel’s strategy of developing more cash-generating assets, such as leased residential property, retail centres and hotels. “We are thinking about new projects, we are thinking about buildings, we want assets for the company. We want recurrent income, and that will be our focus for the future,” said Lootah.

The company is expected to launch major new projects that will add to its portfolio of cash generating assets later this year. “We will announce a good number of new projects after Ramadan,” said Lootah.

Revenues from Nakheel’s leasing portfolio are expected to be AED1.2bn ($327m) this year, while in 2010 it was half that amount. The developer is targeting revenues from its leasing portfolio to top AED3bn by 2016.

In March, Nakheel said it is planning to launch a new masterplanned development that will be built in a previously undeveloped location in Dubai. It will mostly comprise residential properties the developer will lease out rather than sell, as well as a large community shopping centre.

For shopping centres, the construction of the second phase of Dragon Mart is close to completion, and contracts were recently awarded for the construction of Nakheel Mall of the Palm Jumeirah and the expansion of Ibn Battuta Mall.

The company is also planning to build a community retail centres at various developments such as Jumeirah Village Circle, together with a major new shopping mall and night market on its Deira Islands development.

The company also plans to build new hotels. They include properties at Dragon Mart, Ibn Battuta, the Palm Jumeirah and Deira Islands. “We will build 10 new hotels in three years,” said Lootah.

Nakheel milestones 2010-14

2010

  • 30 March: Appointment of new board of directors led by chairman Ali Rashid Lootah

2011

  • 24 August: Launches Dragon Mart 2
  • 25 August: Begins implementation of financial restructuring and new business plan
  • 29 September: Launches Palm Residences at Palm Jumeirah

2012

  • 1 February: Launches The Pointe at Palm Jumeirah
  • 9 March: Launches Ibn Battuta expansion
  • 20 May: Launches Palm Views
  • 2 July: Starts construction of Jumeirah Park Community Centre
  • 29 November: Opens Al-Ittihad Park on Palm Jumeirah
  • 1 December: Launches 90 Jumeirah Village Circle Villas

2013

  • 23 January: Announces AED2bn profit for 2012 – up 57 per cent on 2011
  • 7 February: Launches Nakheel Mall on Palm Jumeirah
  • 10 February: Launches Club Vista Mare on Palm Jumeirah
  • 25 February: Nakheel launches Azure Residences on Palm Jumeirah
  • 2 June: Nakheel launches Jumeirah Park Legacy Nova Villas; sells 350 homes in five hours
  • 24 June: Launches Jumeirah Islands Townhouses
  • 1 August: Launches community centre at International City
  • 26 September: Launches Warsan Village
  • 3 October: Launches 400 homes at Al-Furjan phase 2
  • Launches Deira Islands, Palm West Beach, Palm Jumeirah Boardwalk

2014

  • 4 January: Reveals plans to prepay half of its bank debt 18 months ahead of schedule
  • 19 January: Announces AED2.57bn profit for 2013, up 27 per cent on 2012
  • 17 February: Launches The Palm Tower Residences
  • 23 February: Prepays AED2.35bn of bank debt
  • 25 March: Launches new shopping centre at Jumeirah Village Triangle and Jumeirah Village Circle
  • 25 June: Nakheel confirms early repayment of all AED7.9bn owned to bank lenders