Emaar says subprime crisis to hit US unit
Emaar Properties told a fractious analysts' conference call on Tuesday third-quarter profit at U.S. unit John Laing Homes would be below earlier forecasts due to the subprime mortgage crisis.
Responding to analysts' concerns, the largest Arab property developer by market value also said it hoped to conclude a deal to give the Dubai government a majority stake by September after months of uncertainty have battered the stock.
Shares in Emaar tumbled to a fresh 28-month closing low on Tuesday as foreign investors worried mortgage defaults would hurt its operations in the United Statesand demanded more clarity on the shares-for-land deal with the government.
"Third-quarter JLH (John Laing Homes) results are going to be lower than earlier estimates -- not incurring losses, but profits won't be high," said Amit Jain, chief financial officer of Emaar Dubai.
Profits in the third quarter will be "extremely marginal", he said.
JLH made up 16 percent of Emaar's revenues in the second quarter. The slowing U.S. housing market was one of the reasons the Dubai developer missed analysts' second-quarter profit forecasts.
That was before the crisis in U.S. subprime mortgages -- loans made to less creditworthy individuals -- spilled into global credit markets in July, driving up borrowing costs and triggering a flight from risky assets.
Emaar bought John Laing for $1.05 billion in June 2006 as the U.S. housing market was peaking after five years of expansion. With defaults on mortgages and a glut of new homes, housing construction in the U.S. is sliding.
John Laing, which accounted for about 3 percent of Emaar's profit in the second quarter, will contribute closer to 0.5 to 1 percent in the third quarter, Jain said. Continue to full story from Source.
Responding to analysts' concerns, the largest Arab property developer by market value also said it hoped to conclude a deal to give the Dubai government a majority stake by September after months of uncertainty have battered the stock.
Shares in Emaar tumbled to a fresh 28-month closing low on Tuesday as foreign investors worried mortgage defaults would hurt its operations in the United Statesand demanded more clarity on the shares-for-land deal with the government.
"Third-quarter JLH (John Laing Homes) results are going to be lower than earlier estimates -- not incurring losses, but profits won't be high," said Amit Jain, chief financial officer of Emaar Dubai.
Profits in the third quarter will be "extremely marginal", he said.
JLH made up 16 percent of Emaar's revenues in the second quarter. The slowing U.S. housing market was one of the reasons the Dubai developer missed analysts' second-quarter profit forecasts.
That was before the crisis in U.S. subprime mortgages -- loans made to less creditworthy individuals -- spilled into global credit markets in July, driving up borrowing costs and triggering a flight from risky assets.
Emaar bought John Laing for $1.05 billion in June 2006 as the U.S. housing market was peaking after five years of expansion. With defaults on mortgages and a glut of new homes, housing construction in the U.S. is sliding.
John Laing, which accounted for about 3 percent of Emaar's profit in the second quarter, will contribute closer to 0.5 to 1 percent in the third quarter, Jain said. Continue to full story from Source.
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