Loans and finance may top RAK Properties' agenda

The company may pay back a loan from the emirate's government early.

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The board of RAK Properties is to meet tomorrow with loans and contracts likely to be on the agenda despite continued short-term pressure on net profits.

The Ras Al Khaimah-based developer has seen a similar pressure on sales as UAE counterparts following the 33% fall in net profits seen in the second quarter of 2010. Results were announced a month before the meeting.

“We notice sales leads flowing in for the right-priced properties," the company said in a statement to the Abu Dhabi Stock Exchange in August.

After-tax profits fell from AED143.31 million for the second quarter 2009to AED96.24 million. Net assets as of 30th June stood at AED3.24 billion, though the company is yet to feature the statement on its website.

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It is believed the company will discuss the possible early prepayment of a US$45 million government loan and may also finalise the award of the contract for the electricity and cooling tender for Julphar Towers project, according to Mubasher.

The company posted a 39.21% drop in net earnings to AED42.634 million against the AED 70.031 million for the first quarter. No sales were recorded between January and March, while operating revenue – mainly from government funding - fell 36.84% year-on-year from AED67.72 million to AED 42.771 million.

However, as with Abu Dhabi developer Aldar Properties, RAK Properties is expecting second quarter sales to eventually filter through onto the balance sheet. The company said it had started to hand over villas and townhouses in Precinct 4 of its flagship Mina Al Arab project in June, with "only part of the revenue on handing over... recognised for the first time in the second-quarter financials".

Chet Riley, an analyst at Japanese bank Nomura tracking the company stock, advised a ‘reduce’ position last Friday. This is a decline in sentiment from the ‘hold’ position advised by Nabil Ahmed on 26th August and an ‘overweight’ position from JP Morgan’s Muneeza Hasan on 19th August.