Dubai Holding's main unit swings to 2010 profit

Dubai Holding's main unit returned to profit in 2010 after a massive loss in the previous year on lower impairments and property sales, in the latest sign of a fledging rebound for the debt-ridden Gulf Arab emirate. Dubai Holding Commercial Operations Group (DHCOG), part of the Dubai ruler's personal business empire, also said it would repay a bond maturing in 2011 and had refinanced a $555 million loan.
The business and its parent are part of a matrix of firms known informally as Dubai Inc, which includes conglomerate Dubai World and which were badly battered by the financial crisis, plunging Dubai into a debt crisis in 2009. "DHCOG was a big worry. After Dubai World, people have been concerned about their debt pile," said Mohammed Ali Yasin, chief investment officer at CAPM Investments in Abu Dhabi. "The fact they were able to refinance their loans and are confident of repaying the bonds supports the fact that a recovery is slowly coming back to Dubai."
DHCOG said it earned 225.3 million dirhams ($61.36 million) last year, up from a record $6.2 billion loss for 2009. The company had said it may resort to asset sales to deal with its debt pile. On Thursday, DHCOG said it sold its investment in luxury hotelier Orient Express Hotels in 2010 and booked 59.2 million dirhams.
Revenues rose 43 percent to 13.5 billion dirhams in 2010 driven by the handover of completed projects by Dubai Properties Group in the Gulf Arab emirate, it said in a statement. Impairments for 2010 stood at 5.5 billion dirhams compared with 20.4 billion dirhams for the year earlier.
DHCOG, whose assets include the Jumeirah hotel group and business parks and hospitality units, said it planned to reduce its exposure to non-core assets. "It's great to see the revenue drive the bottom line," said Daniel Broby, chief investment officer at asset manager Silk Invest in London. "I'm very pleased to hear them say they want to focus on repaying an upcoming bond. It should help with the momentum that Dubai has generated from investors of late." The Gulf Arab emirate, famous for extravagant real estate projects like man-made islands in the shape of palms and a world map, has been digging itself out of a debt crisis in the wake of a property slump.