Losses widen at Emaar the Economic City after tough year for commercial real estate

DUBAI: Emaar the Economic City said losses widened after a tough year for the commercial real estate sector.
Losses grew by more than 130 percent to reach SR1.25 billion ($333 million), the company said in a stock exchange filing on Wednesday.
The developer behind King Abdullah Economic City said that beyond the general tough trading conditions created by the pandemic, it also recorded an impairment of SR316 million on properties available for sale and lease and other operating assets.
“Due to the prevailing economic environment and delays in completing projects, the management reassessed life cycle cost estimates of residential and industrial projects and accordingly, the cost estimates were revised, resulting in increase in gross loss by SR307 million as compared to the corresponding year,” the company said in the statement.
Still, it said losses were partially offset offset by an improvement in its hospitality and port development businesses as well as a reduction in administrative expenses.
The developer said it had recently engaged with mortgage and financing companies to make homes in King Abdullah Economic City more affordable and boost its cash flow generation.
It is also pursuing debt rescheduling with its lenders and said that it had agreed with the Kingdom’s Public Investment Fund to convert part of a government loan of R2.83 billion, into equity.