Emaar to float 30% of UAE real estate development business

Emaar to float 30% of UAE real estate development business
Emaar said the decision to go for the IPO was after an internal review of its asset values.

dubai - The funds raised will primarily be distributed as dividend to Emaar's shareholders



by

Issac John

Published: Wed 7 Jun 2017, 6:24 PM

Last updated: Wed 7 Jun 2017, 8:26 PM

Emaar Properties, the Dubai-based developer credited for trailblazing a freehold real estate boom in the Gulf, plans to sell up to 30 per cent of its real estate development business in the UAE in an initial public offering.

The funds raised will primarily be distributed as dividend to Emaar's shareholders, the company said in a statement on Wednesday. Emaar shares jumped as much as 8.4 per cent, the most since January 2016, in Dubai.

The IPO - the largest since the Emaar Malls IPO that raised $1.58 billion in 2014 - will be listed on the Dubai Financial Market.
Emaar said the decision to go for the new IPO was a result of an internal review of its asset values.

Emaar's real estate development in the UAE has recorded significant growth over the past five years. Real estate sales increased from Dh4.2 billion in 2012 to Dh14.4 billion in 2016.

Until the end of May 2017, the developer recorded sales of Dh9.7 billion, 24 per cent above the same period in 2016. Total backlog as at the end of May 2017 is Dh40 billion. This backlog represents the value of properties sold but where related revenues have not been recognised, Emaar explained.

Emaar has handed over around 34,000 units in Dubai since 2001 and currently has a significant land bank of 24 million square metres in the UAE. The total development area on these lands is approximately 30 million sqm.

Mohamed Alabbar, chairman of Emaar Properties, said the proposed listing and the additional dividend to shareholders, including the government of Dubai, underlines its commitment to provide superior value to all shareholders "for their unwavering support" to the company since its inception in 1997.

"We are thankful to His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, for his guidance and inspiration that has been the driving force of Emaar's success," said Alabbar.

He said over the years, Emaar has generated significant returns from the UAE real estate development business and it continues to be a strong driver of growth for the group.

"As Emaar's other businesses have grown and expanded, we wanted to ensure that investors who value the UAE real estate development business the most, the foundation of Emaar's success, could do so directly. This will ensure that the value of this business is properly recognised, thereby enhancing value for all Emaar shareholders."

Alabbar said Emaar is drawing on its success to create a new Emaar defined by an expanded development pipeline in Dubai anchored by iconic structures such as The Tower at Dubai Creek Harbour.

"Emaar's value proposition is an unwavering commitment to provide the best-in-class service to our customers, which will be the main pillar for the UAE real estate development business to achieve significant successes. We have high-calibre professionals who lead our various businesses and we are also investing in young talent."

"Selling down up to 30 per cent of a key asset enables the company to reward shareholders now for cash flow that would be realised at the net level over years into the future," said Sanyalak Manibhandu, head of research at NBAD Securities.

Currently, Emaar has several mega-developments in Dubai including the 11 million sqm Dubai Hills Estate, developed as a joint venture with Meraas Holding, which will feature a world-class retail hub and an 18-hole championship golf course.

Having delivered the iconic Burj Khalifa, Emaar is now developing The Tower in Dubai Creek Harbour. It is set in the heart of a 6 sqkm development, developed as a joint venture with Dubai Holding and will feature a dedicated retail district for high-end brands.

Another smart development for the future, set near the venue of Expo 2020 Dubai, is Emaar South.

- issacjohn@khaleejtimes.com


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