RAK Properties will pay a dividend despite falling sales and board objections, after shareholders pressured management, the chief executive said yesterday.
The company, the main developer in Ras al Khaimah, reported its first-quarter earnings fell nearly 39 per cent to Dh70 million (US$19m) compared with the same period last year. It attributed the drop to a lack of sales in the reporting period.
"In general, property buying has come to a halt and we did not achieve any sales during the first three months of 2009," said Mohammed al Qadi, the chief executive of RAK Property.
But Mr al Qadi said a dividend would be paid. "The dividends were not recommended by us as a board and as a management, and we objected to it but our shareholders put us under pressure. When they saw that we had cash, they voted for it."
Analysts warned the payment could put the company under financial pressure.
"They made no additional sales so all you are seeing now is cash outflows," said Chet Riley, an equity analyst at Nomura International. "They have around Dh689m cash resources. By giving out Dh150m as a cash dividend, they are burning about 25 per cent of their available cash."
Cash flow is one of the main issues for property developers because sales stall but fixed costs remain.
Mr al Qadi said that in order to finance continuing projects, such as the mixed-use Mina al Arab in Ras al Khaimah, he would need to raise money through syndicated loans or sukuk.
"We are also keeping 25 per cent of all of our developments for rent or for our own use," he said.
Property prices across the UAE have fallen since September last year. Because many buyers have stopped paying their instalments, developers are now finding different strategies to get access to liquidity and keep customers in the payment plan.
Along with dropping their prices and extending payment plans, consolidation of payments has become another popular option.
Emaar Properties, the country's largest developer, said yesterday it was offering customers credit notes instead of refunds to deal with its bad assets.
Naaman Atallah, the chief operating officer at Emaar, told Emirates Business yesterday that clients would be allowed to swap their investments for other Emaar properties.
"In offering these credit notes Emaar is offering investors options," Mr Riley said. "It is another way of defining consolidation around the portfolio."
Emaar posted a surprise fourth-quarter loss due to heavy US write-downs.
Credit notes and consolidation are also being seriously considered by developers elsewhere in the country. Rakeen, the property development arm of the RAK Government, which is developing the Dh1bn Bab al Bahr man-made island project, said buyers who bought several properties would be allowed to transfer their purchases only if they continued payments.
Another option for developers is to sell assets. Union Properties, a Dubai-based private property developer, recently announced it was planning to sell non-core assets, including its district cooling business.
"Clearly there is a need for future funding," Mr Riley said. "All of these businesses have cash constraints in the current market. Regionally, all the developers are facing the same dilemma. Liquidity is key."
ngillet@thenational.ae
Aldar Properties Abu Dhabi T10
*November 15 to November 24
*Venue: Zayed Cricket Stadium, Abu Dhabi
*Tickets: Start at Dh10, from ttensports.com
*TV: Ten Sports
*Streaming: Jio Live
*2017 winners: Kerala Kings
*2018 winners: Northern Warriors
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Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Company%20profile
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NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
What are the GCSE grade equivalents?
- Grade 9 = above an A*
- Grade 8 = between grades A* and A
- Grade 7 = grade A
- Grade 6 = just above a grade B
- Grade 5 = between grades B and C
- Grade 4 = grade C
- Grade 3 = between grades D and E
- Grade 2 = between grades E and F
- Grade 1 = between grades F and G
The rules on fostering in the UAE
A foster couple or family must:
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- not be younger than 25 years old
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- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
THE SPECS
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The Kingfisher Secret
Anonymous, Penguin Books
COMPANY%20PROFILE
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Day 4, Dubai Test: At a glance
Moment of the day Lahiru Gamage appeared to have been hard done by when he had his dismissal of Sami Aslam chalked off for a no-ball. Replays suggested he had not overstepped. No matter. Two balls later, the exact same combination – Gamage the bowler and Kusal Mendis at second slip – combined again to send Aslam back.
Stat of the day Haris Sohail took three wickets for one run in the only over he bowled, to end the Sri Lanka second innings in a hurry. That was as many as he had managed in total in his 10-year, 58-match first-class career to date. It was also the first time a bowler had taken three wickets having bowled just one over in an innings in Tests.
The verdict Just 119 more and with five wickets remaining seems like a perfectly attainable target for Pakistan. Factor in the fact the pitch is worn, is turning prodigiously, and that Sri Lanka’s seam bowlers have also been finding the strip to their liking, it is apparent the task is still a tough one. Still, though, thanks to Asad Shafiq and Sarfraz Ahmed, it is possible.
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