Abu Dhabi's Tourism Development and Investment Company cuts its budgeted capital expenditure for this year by 28 per cent, as projects are put on hold or scaled back.
TDIC cuts annual budget by Dh5bn
Abu Dhabi's Tourism Development and Investment Company (TDIC) has cut its budget for this year by more than Dh5 billion - almost a third - by putting on hold or scaling back some of its projects.
The company, which is the master developer of projects in Abu Dhabi including the multibillion-dollar Saadiyat Island development, has cut its budgeted capital expenditure by 28 per cent from Dh18.6bn (US$5.06bn) to Dh13.4bn, according to its latest bond prospectus.
The Saadiyat Island development is to be home to the Guggenheim and Louvre museums.
"None of the projects currently being hibernated are at the construction stage," the company stated in the prospectus. "TDIC will continue to monitor market conditions in the Abu Dhabi real estate market closely in order to assess when to resume developing such projects."
The document, which was filed with the London Stock Exchange, revealed a rare glimpse into the organisation's finances. TDIC lost Dh1.15bn last year, Dh551 million in 2009 and Dh368.6m in 2008, the document showed.
"TDIC's results of operations as at and for the financial year ended 31 December 2010 have been, and its future results of operations are expected to continue to be, adversely affected by the current global economic downturn, and in particular by the downward pressure on real estate sales prices," it stated.
A Dh36m tranche of last year's loss "represented the write-down of investment properties held for undetermined future use located in the between-the-bridges" area of Abu Dhabi, because of height restrictions introduced to prevent blocking the view of the Sheikh Zayed Mosque, the company said.
The Fairmont Bab Al Bahr Hotel, meanwhile, which was developed by an associate of TDIC and opened in 2009, generated losses of Dh11.1m last year, largely because it was in its start-up phase, according to the document.
TDIC has 69 projects under various phases of design and development. Its other projects include the Eastern Mangroves development and Sir Bani Yas Island. The second phase of the Saadiyat Construction Village labour camp is one that has been "hibernated", TDIC said.
"TDIC has significant funding requirements and is currently reliant on the Government for a major part of its funding."
But "the Government is not legally obliged to fund any of TDIC's projects and accordingly may choose not do so, even if the Government has previously approved the proposed budget for the project concerned", TDIC said.
Up until the end of last year, government contributions have been made up of "Dh18.7bn in capital contributions (consisting of the initial equity contribution of Dh100m and contributions of land and other assets of Dh18.6bn), monetary grants of Dh4.4bn and government loans of Dh3.6bn".
A banker familiar with the matter who wished to remain anonymous said "the bond prospectus is an "update", and "could well lead to an issuance, providing investor feedback is positive and the markets are supportive".
A roadshow took place yesterday in Dubai and will also take in Zurich and London this week. As at 31 December, TDIC had commercial debt outstanding of Dh10.5bn, the document showed.