Tight cash management drives huge gains for Nakheel

Property UAEPeople looking to the Nakheel project poster during the press conference at Rixos The Palm, Palm Jumeirah, Dubai l Image Credit: Atiq-Ur-Rehman/Gulf News


A stringent cash management programme is at the heart of Nakheel’s turnaround, helping the developer effect savings of nearly Dh23 billion. This was attained through a combination of cash received from property handovers, sales proceeds from new projects that were not there in the original plan, as well as steady income from leasing and retail activities.

Another huge advantage was derived from being able to reach colonies on nearly 90 per cent of the claims against it from trade creditors.

“Post-August, with the ban debts cleared, there will be new opportunities to generate more revenues,” said Sanjay Manchanda, CEO of Nakheel.

A sizeable portion of mid-to long-term proceeds could derive from Deira Islands, now taking gradual shape off the coastline. Sale of plots — numbering 90 plus, to third-party developers to build hotels is going according to Nakheel’s projections, said Manchanda.

“It’s a process that will take time given that for a sub-developer acquiring the plot represents a significant initial step,” the CEO said.

Another major investment, this one direct from Nakheel, on Deira Islands will take the form of a mall. Manchanda declined to give a specific schedule for the project’s launch, but confirmed that the various design elements were being put in place.

Timeline on key developments at Nakheel since March 2010
A new board of directors was brought in to script a decisive turnaround for the debt-laden company in March 2010. It was led by Ali Rashid Lootah as chairman. 

Their remit was to complete a full-scale financial restructuring.

They had to devise and implement a new business plan, which involved resolving outstanding issues with trade creditors and investors. 

They also had to strategise to rebuild the Nakheel brand. 

In August 2011, Nakheel launches Dragon Mart 2, its first project initiative post the restructuring. 

The same month, it began implementing the financial restructuring and new business plan. 

In 2012, the developer came out with multiple launches, including the Ibn Battuta expansion. 

In January 2013. Profits of Dh2 billion was announced for 2012. 

In October, it (re-) launched the hugely ambitious Deira Islands, which was to be the platform for a major expansion of its hospitality interests. 

In January 2014, Nakheel said it would bring forward the debt repayment schedule. 

The same month, a profit of Dh2.57 billion was announced for 2013. 

In February, the payment of Dh2.35 billion was made. 

On June 25, the developer said all of its bank debts would be cleared by late August, four years before the deadline. 

As things stand now, the business plan was delivered a full two years ahead of the initial plan.

Source: Manoj Nair, Associate Editor, gulfnews.comGN


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