The state of Dubai has replaced the board of one of its largest real estate companies in an effort to restructure the business in light of the recent economic turmoil in the region.
The emirate has replaced the board of Dubai-owned Nakheel, including chairman Sultan Ahmed bin Sulayem, who is close to Dubai ruler, Sheikh Mohammed bin Rashid al-Maktoum, according to multiple reports.
Sulayem, who is also chairman of Dubai World, has been replaced by Ali Rashid Ahmed Lootah, previously a vice-chairman at Dubai bank, Mashreq Bank.
The reports said the new board would concentrate on completing existing real estate projects
The board change comes a week after Dubai World announced it would restructure its debt using $9.5 billion in state-aid, $8 billion of which is to be used to address Nakheel’s outstanding debt. Dubai World stunned world markets when it announced it would seek to delay repaying its then-$26 billion debt pile for six months.
While an immediate $3.5 billion Islamic bond was repaid shortly after the announcement, through aid from neighboring Abu Dhabi, the conglomerate still has a sizeable debt obligation to get in order.
The organisation’s inability to repay its debts came partly as a result of loans taken out by its real estate subsidiaries, including Nakeel, to finance large and expensive domestic projects. Faltering fundamentals in the real estate market, such as a lack of tenant demand, led to many real estate companies in the area finding it tough to service loans.
Nakheel is responsible for some of Dubai’s most iconic developments such as the Palm Jumeirah and The World, thematic developments developed on reclaimed land.