Dec. 19 (Bloomberg) -- Al Jaber Group, an Abu Dhabi-based holding company with interests in construction, is talking to lenders to alter terms on its debt.
The company, which has 16 billion dirhams ($4.4 billion) in projects, “found it difficult to raise the appropriate finance to secure additional work and maintain its expansion in the region” because of the credit crisis, Al Jaber said today in an e-mailed statement.
Property prices dropped by more than half in Dubai and by 30 percent in larger neighbor Abu Dhabi as banks tightened mortgage lending and speculators fled the market during the global financial crisis. State-owned developer Nakheel PJSC, which spearheaded Dubai’s building boom, is seeking to change terms on more than $10 billion of debt and contractor claims.
“Borrowing isn’t easy for contractors at this time and they need the money to finish projects,” Mala Pancholia, an analyst at NBK Capital in Dubai, said by telephone today. “The receivables issue will continue to be an overhang for them in the coming year.”
Al Jaber, which has assets of more than $5 billion, said it expects to reach an agreement with its lenders next year. The group, whose unit Al Jaber LEGT Engineering & Contracting (ALEC) LLC worked on Dubai’s Mina A’Salam hotel and the Kempinski hotel at Dubai’s Mall of the Emirates, owes at least $1.1 billion in loans maturing over the next four years, according to data compiled by Bloomberg.
Construction companies have been struggling as developers delayed payments when the financial crisis prompted banks to restrict lending for real-estate projects and some buyers defaulted on purchases of properties sold before building began.
Emaar Properties PJSC, Dubai’s biggest developer and the builder of the world’s tallest tower, reported a 7 percent drop in third-quarter profit, missing analyst estimates, as costs and writedowns increased. Construction firm Arabtec Holding PJSC saw earnings slump 96 percent in the quarter, while apartment and office builder Deyaar Development PJSC reported a loss.
Aldar Properties PJSC, Abu Dhabi’s largest developer, had its corporate-credit rating lowered two levels by Standard & Poor’s Ratings Services on Nov. 15 on funding concern and “challenging” market conditions. Bank of America Merrill Lynch said on Nov. 4 that Aldar will need 9.8 billion dirhams by 2011 to “survive” as the U.A.E. real-estate market recovers.