Sorouh Real Estate, the second-largest developer in Abu Dhabi, posted a Dh199 million loss in the final three months of 2010, compared to a Dh28.1m profit in the same period in 2009, as it wrote down the value of properties and money owed to it from sub-developers.
Provisions to meet doubtful debts increased to Dh141.9m in the fourth quarter, from Dh58m in 2009, while impairment of goodwill rose to Dh162.9m dirhams from 29.77 million dirhams in the year earlier period.
The profits were lower than analyst expectations because of delays in delivering the Sun and Sky towers on Reem Island. The company said yesterday it now expected to hand those homes and offices over to owners by the end of the first quarter of 2011, more than nine months after the original delivery date. Those deliveries will provide an injection of cash as buyers pay their final instalments and allow the company to book all the sales are revenue for the first time.
Editor's Pick - Food meant for Egypt left to rot
"I think the most significant thing now is delivery," said Richard Amos, the chief financial officer of Sorouh. "We are moving into a phase of delivery and can bear the fruit of all the investment we have put into the business."
The company was also honing its "price structures" to become more competitive in the market. Gurjit Singh, the chief operating officer, said office rentals would only be successful if they incorporated rent-free periods and other incentives to lure in tenants.
"A well managed development will have a premium over those that are lacking in management," he said.
Sorouh's shares were trading at Dh1.32, down 3.65 per cent, as of 12:14 p.m.