UAE's Amlak Finance to conclude debt renegotiations by Q2

Islamic real estate financier Amlak Finance on Wednesday said its ongoing renegotiations with financiers on restructuring terms agreed in 2014 and subsequently revised in 2016 are progressing and would be concluded by second quarter 2019.

The Shariah-complaint home financier said in a statement that it continued renegotiating the funding conditions with its financiers to allow it more flexibility in adapting to current market conditions.

"This will provide the company with the opportunity to grow its business resulting in balance sheet growth and increased shareholder value. The renegotiation is currently in progress and, subject to securing approvals from financiers and related authorities, is expected to be concluded by second quarter 2019," the company said as it reported a net profit of Dh2 million in first quarter 2019 compared to Dh7 million in the same period during 2018.

In 2014, Amlak first concluded the restructuring of its Dh10.2 billion investment deposits and settled Dh 2.8 billion in cash with financiers. Since the original restructuring Amlak has successfully serviced its debt, and generated net profits of Dh136 million, Dh107 million and Dh51 million for fiscal years 2015, 2016 and 2017, respectively.

The company said in January that it had paid Dh4.3 billion, representing 48 per cent of its total outstanding debt to its financiers within the first four years of restructuring, and redeemed Dh275 million representing 21 per cent of the Mudaraba Instrument.

In the first quarter, Amlak's total revenues, including unrealised fair value gain related to investment properties, increased to Dh122 million, up by 24 per cent compared to Dh98 million a year ago. Revenues from financing business activities increased by two per cent to Dh43 million during the first quarter compared to Dh42 million year on year. Amlak said in a statement that its operating costs decreased by three per cent to Dh29 million in 2019 first quarter, compared to Dh30 million during the same period last year.

The group recorded an impairment charge of Dh44 million on Islamic Financing Assets in the quarter compared to Dh2 million in the year ago quarter. "This increase in impairment is mainly due to a financial default of one developer."

Amlak recorded an amortisation cost of Dh26 million in the quarter, down by 24 per cent compared to Dh34 million in the same period last year. The amount of amortisation represents the unwinding of fair value gains on initial recognition of investment deposits, and varies according to the level of repayment made to the financers in any reporting period.

Total assets continue to stand at Dh6 billion and total liabilities at Dh5 billion, same as year-end 2018 financial results.

Along with its rival mortgage financer Tamweel and other banks with exposure to the home financing market, Amlak suffered after the 2008 property market crash when prices nosedived.