Emaar Hospitality Group, a unit of Dubai's biggest developer Emaar Properties, will sell part of its portfolio to focus on hotel management and is still eyeing listing of its own shares, the parent company's chairman said on Tuesday.
The company is seeking to sell some of its assets but an initial public offering could be possible within four years, Mohamed Alabbar said in an interview with CNBC Arabia.
"It is the start of expanding into the hospitality sector," Mr Alabbar said. "We have to focus on the issue of management and hotel management contracts like other global brands such as Hilton and Marriot."
Mr Alabbar didn't say which properties would be sold or the amount that the company plans to raise. He did not say when the sales will happen or if there are any prospective buyers.
The company may sell assets worth $1.4 billion (Dh5.15 bn), according to a CNBC Arabia story on its website. The UK’s Financial Times was the first publication to report on the potential sale on Monday, citing unidentified people briefed on the process.
Emaar has hired Standard Chartered bank for the sale process and is close to a deal with several parties, the newspaper reported. Emaar wants to raise $700 million by selling its entire hotel portfolio except two properties, and another $700m for clinics and schools across its mixed-use communities, according to the FT.
Emaar Hospitality owns and manages a portfolio of assets including hotels, golf clubs and restaurants. Its main hotel brands are Address Hotels and Resorts, Vida Hotels and Resorts and Rove Hotels.
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Read more:
Rove opens 5th budget hotel in Dubai with rooms under Dh300 a night
Emaar Hospitality expands with private island project in Maldives
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Emaar Hospitality has a pipeline of 35 projects in the Saudi Arabia, UAE, Bahrain, Egypt, Turkey and the Maldives, bringing the total number of destinations in which it operates to 58 markets, the company said in April.
Analysts told The National the potential sale is a good move by the property developer.
"This is very positive news for Emaar, as it shows it is sticking to its core business of building cities," Nabil Al Rantisi, managing director of capital markets at Daman Investments, said. "Emaar Hospitality is supposed to be first and foremost a hotel operator as other hospitality businesses across the world are, so it is just following global standards.”
An IPO of Emaar Hospitality is "not out of the question" as the company is in a "good position" and its loans are "almost negligible" but it's a young company and the listing needs to be at "the right time," Mr Alabbar said.
An asset sale will not threaten the planned IPO because divesting non-core hospitality assets would allow Emaar to increase revenues through hotel management contracts, as many global listed hotel companies do, rather than opt for the more costly hotel development, Mr Al Rantisi said.
“At a time when debt costs are increasing in a higher interest environment, Emaar possibly thought [an asset sale] would be a cheaper way of fuelling expansion than using debt," he said.
The asset sales are likely to yield "significant profit" as their developer Emaar has held them for many years, he said. Emaar would likely retain key assets such as the Armani Hotel at Burj Khalifa and the Palace Downtown, he added.
Some analysts are waiting to see the pricing of the assets before assessing the move.
“While the news comes as a bit of a surprise to us, given that real estate prices are currently still subdued in the UAE, the pricing of the underlying assets is what we curiously await to see to assess if this would be value-accretive,” said Amir Badran, a research analyst at Naeem Holding.
The sale of non-core assets could allow Emaar to finance larger projects in the pipeline rather than accumulate high-interest debt, according to other analysts said. Within the UAE, Emaar announced plans for large projects including Dubai Creek, for which it was expected to issue a multi-billion dirham tender last year.
"Emaar has a very healthy cash position but obviously such a huge project needs to be financed and the sale of non-core assets would mean Emaar would not have to take on debt in a high-interest rate environment," said an analyst who asked not to be named due to the potential asset sale being in the early stage.
The asset divestment "won't be an easy sell" given that Dubai's hospitality market has been under pressure for years.
If it materialises, the Emaar Hospitality IPO would be the fourth listing in the UAE by the Emaar group following share sales by Emaar Properties, Emaar Development and Emaar Malls on the Dubai Financial Market. Emaar Misr, the company's Egyptian unit, is listed in Cairo.
Emaar Properties' shares closed 0.96 per cent lower at Dh5.15 on the Dubai bourse.
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EAlmouneer%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Dr%20Noha%20Khater%20and%20Rania%20Kadry%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EEgypt%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3E120%3Cbr%3E%3Cstrong%3EInvestment%3A%20%3C%2Fstrong%3EBootstrapped%2C%20with%20support%20from%20Insead%20and%20Egyptian%20government%2C%20seed%20round%20of%20%3Cbr%3E%243.6%20million%20led%20by%20Global%20Ventures%3Cbr%3E%3C%2Fp%3E%0A
Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
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Movie: Saheb, Biwi aur Gangster 3
Producer: JAR Films
Director: Tigmanshu Dhulia
Cast: Sanjay Dutt, Jimmy Sheirgill, Mahie Gill, Chitrangda Singh, Kabir Bedi
Rating: 3 star
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
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RESULTS
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Sustainable Development Goals
1. End poverty in all its forms everywhere
2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture
3. Ensure healthy lives and promote well-being for all at all ages
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Killing of Qassem Suleimani
MATCH INFO
Uefa Champions League semi-final, first leg
Tottenham 0-1 Ajax, Tuesday
Second leg
Ajax v Tottenham, Wednesday, May 8, 11pm
Game is on BeIN Sports
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
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The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
The specs
Engine: 4.0-litre V8
Power: 503hp at 6,000rpm
Torque: 685Nm at 2,000rpm
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Where to donate in the UAE
The Emirates Charity Portal
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The General Authority of Islamic Affairs & Endowments
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
Al Noor Special Needs Centre
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Emirates Airline Foundation
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
Emirates Red Crescent
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Noor Dubai Foundation
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
Farasan Boat: 128km Away from Anchorage
Director: Mowaffaq Alobaid
Stars: Abdulaziz Almadhi, Mohammed Al Akkasi, Ali Al Suhaibani
Rating: 4/5
