Alleges two of its 'officers' failed in their fiduciary duties.
Business and legal trials confront Deyaar
Problems abound for Deyaar Development, and investors are suffering as a result. The company has alleged in court documents that two of its "senior officers" failed in their fiduciary duties in a deal involving the purchase of Sky Gardens, a building near the Dubai International Financial Centre (DIFC). Whatever the outcome of the case, the investment in question could result in a write-down for the developer.
The contested investment in Sky Gardens was made at the peak of the property market in late 2008, when prices were as much as 50 per cent higher than they are today. In its second-quarter financial statements, Deyaar said its total exposure to Sky Gardens was Dh372.1 million and that it was "confident" it could recover the funds. Deyaar also said last week it was planning to abandon its Flamingo Creek development because it did not believe the master developer, Sama Dubai, would complete the infrastructure. The project was bought for Dh372m in 2008, but construction has not advanced.
Another issue is that the company has not commented publicly on its future strategy since the departure of three executives, including Markus Giebel, the chief executive. Mr Giebel, who took the helm in late 2008, was one of the first developers to craft a proactive strategy to deal with the financial crisis by reducing prices, consolidating speculators into fewer investments and creating a distressed-asset fund to hold on to apartments that could not be resold in the depressed market. The status of those plans has been in limbo since Mr Giebel's exit, and the new acting chief executive, Saeed al Qatami, has made no comment on his strategy.
Investors have been selling off Deyaar shares. The price has dropped 48.1 per cent this year. firstname.lastname@example.org