Dubai Property Investment :: Dubai Holding Gets $555 Million Credit Extension

Things in Dubai seem as dire as ever, the crash continues to take its toll with the amount of foreclosures in Dubai still climbing and developers struggling to stay afloat. The latest news fro Dubai concerns Dubai Holdings subsidiary, the Dubai Holding Commercial Operations Group, which has just been granted a two month extension to their revolving credit facility of $555 million.

DHCOG posted a net loss of Dh23.5 billion for 2009, including an impairment charge that almost tripled to Dh22.5 billion. According to Gulf News,

Bankers familiar with the situation said it is a normal credit extension purely on commercial terms that was agreeable to all parties and does not imply the company is seeking a debt restructuring. "The extension is required to facilitate the finalisation of the documentation to renew the facility," the company statement said.

"The group is seeking to roll over some of its credit facilities under new terms. The credit extension is to facilitate time for the company and lending banks to finalise the terms of the rollover," said a senior banker. The group and its parent together have a reported $12 billion debt obligations.

DHCOG suffered a total loss of $23.56 billion in the year ended December 31, 2009, including the Dh22.5 billion impairment charges, compared to a net profit of Dh10 billion in 2008.

"The $555 million two-month (credit extension) facility for an entity that lost around that much each month last year looks like a lifeline before it realigned its finances," said Daniel Brody, chief of investment at SilkInvest.

The group carried out a major re-alignment of its business during 2009, including the consolidation of its real estate businesses, Sama Dubai, Tatweer Dubai and Dubai Properties Group. It said last month it has undertaken a rigorous internal organizational re-alignment of various subsidiaries. Dubai International Capital, an investment unit of Dubai Holding with a $1.25 billion loan due in June, had sought a three-month extension on some of its payments on May 27.

Nevertheless, this represents a substantial sum of money and the market for property investment in Dubai is still looking pretty precarious for the smaller investor as developers seize property in foreclosures in an attempt to balance their books..