Deyaar board wipes slate, leading to loss

Company's balance sheet stretched as it posts loss of Dh243m.

These are still trying times for Dubai's property developers, especially the younger ones that are yet to build up a significant recurring income portfolio. Case in point: Deyaar Development. The company's balance sheet continued to be stretched in the second quarter as it posted a net loss of Dh243 million yesterday.

Although no details were given on how the losses were amassed, analysts point to the significant provisioning still being made by the developer since its management shake-up in April. Saeed al Qatami was appointed the acting chief executive, taking over from Markus Giebel who joined the company in 2008. Other senior staff were also replaced. "When you get a new management team in you get a lot of provisioning," said Robert McKinnon, the chief investment officer at ASAS Capital in Dubai.

"They kind of clean things out for the future, so that may be part of what's going on." But more broadly the financial crisis has left Deyaar, which went public in the heady days of 2007, in a precarious situation. The company has a list of rental properties but income from the units is yet to contribute significantly to the firm's revenues, especially when compared with the more established developers such as Emaar and Union Properties.

With few sales being made in the market, the focus will be on boosting occupancy levels across the company's rental portfolio, added Mr McKinnon. "From what we see in the market, occupancy levels at Deyaar's properties are below average ?" he said. "They're going to have to get their occupancy and recurring income up and stretch out their liabilities as much as possible." Although Deyaar's consolidation strategy has helped it to keep payment defaults among property buyers to a minimum, the company is in a "critical" situation, said Nour al Zoubi, the general manager at MAC Sharaf Securities in Dubai.

"They have no investments outside ? or significant recurring income," Mr al Zoubi said. "It's very difficult for developers ... right now and there are competitors in the private sector that nobody really speaks about ." [e-mail]