Emaar Reports Fourth-Quarter Profit on Malls, Hotels (Update2)

[Lahore_Real_Estate]

By Zainab Fattah

Feb. 11 (Bloomberg) -- Emaar Properties PJSC, the builder of the world’s tallest skyscraper in Dubai, reported a fourth- quarter profit on rising revenue from hotels and shopping malls.

Net income was 720 million dirhams ($196 million), compared with a loss of 2.43 billion dirhams in the year-earlier period, Dubai-based Emaar said in a statement today. The average estimate of four analysts surveyed by Bloomberg was for a profit of 714 million dirhams.

Emaar, which opened the 200-story Burj Khalifa in January, said middle-income housing outside Dubai will be a “strategic growth area” after property prices in its home market fell by more than 50 percent. The builder of the Dubai Mall, the world’s biggest, said its hospitality and shopping mall units were “significant contributors” to revenue.

Emaar booked asset writedowns of 80 million dirhams and another 154 million dirhams to reflect the drop in the value of )for its stakes in Islamic mortgage lenders Amlak Finance PJSC and Dubai Bank. Emaar owns 45 percent of Amlak, according to data posted on the Web site of Dubai’s bourse.

“The company is being prudent on a financial level by taking early provisions and I think they are proving to be quite solid on an operational level too,” Chet Riley, a Dubai-based analyst at Nomura Holdings Inc. said in a phone interview today. He rates Emaar “neutral.”

Looking Abroad

Indian joint venture Emaar MGF Land Ltd. plans to raise 38.5 billion rupees ($800 million) in an initial share offering, Emaar Chairman Mohammed Alabbar said in November. India will need more than 7.5 million homes units by 2013, Emaar estimated. About 85 percent that will be for the “mid and affordable housing segment.” Pakistan and Egypt are seeing similar trends, it said.

About 35 percent of revenue from Burj Khalifa will be included in this year’s results as the building’s units are handed over, Alabbar said last month. Buyers in the tower have paid off about 85 percent of their units’ value, he added. The developer typically receives installments from buyers as properties are built and gets a final payment on delivery.

Emaar may need to refinance about 4 billion dirhams of loans in the next 12 months, Riley said.

“It has enough liquidity and cash coming into the business to cover short term commitments and there are still growth opportunities as well,” Nomura’s Riley said.

The company, 31 percent owned by Dubai’s government, in December abandoned a planned merger with three real-estate units of Dubai Holding LLC, saying it wouldn’t be economically viable.

The shares closed 3.2 percent higher at 3.23 dirhams today, giving the company a market value of 19.7 billion dirhams. The stock has dropped 16 percent so far this year and trades 89 percent below its September 2005 peak.

“Earnings are not a home run, but given market conditions these are very respectable,” said Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital Ltd. “The numbers are good enough for the stock to trade higher from here, especially if the global backdrop remains strong.”


-- With assistance by Vivian Salama in Abu Dhabi. Editors: Shaji Mathew, Ross Larsen.

To contact the reporter on this story: Zainab Fattah in Dubai on +971-4-364-1027 or zfattah@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at +49-30-70010-6223 or ablackman@bloomberg.net.