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Dubai's Emaar plans $2.5 billion listing of shopping mall unit

Flags for property company EMAAR, builders of Burj Dubai the world's tallest tower, are seen in Dubai, November 27, 2009. REUTERS/Steve Cris
Flags for property company EMAAR, builders of Burj Dubai the world's tallest tower, are seen in Dubai, November 27, 2009. REUTERS/Steve Cris

By Andrew Torchia and David French

DUBAI (Reuters) - Dubai's Emaar Properties said it would sell up to 25 percent of its shopping mall and retailing unit in a public offer expected to raise 8 to 9 billion dirhams ($2.18-$2.45 billion), making it one of the region's largest equity offers since 2008.

The proceeds "will be primarily distributed as dividend" to Emaar shareholders, Dubai's biggest listed real estate developer said in a statement on Saturday, without giving a timetable for the offer. The shares to be sold will come from the unit's current equity.

Dubai-listed Emaar's flagship mall is the Dubai Mall, one of the largest in the world, which it says attracted more than 75 million visitors in 2013. The company also built the Burj Khalifa in Dubai, the world's tallest building.

The listing plan underlines Dubai's recovery from its financial crisis, which erupted in 2009. Before the crisis, Emaar talked about listing its shopping mall operations but was forced to put the plan on hold as the emirate's real estate and stock markets collapsed.

Both markets are now rebounding strongly on the back of inflows of foreign money, with residential property prices up over 20 percent last year and Dubai's main equity index rallying about 140 percent since the end of 2012.

Emaar is 31 percent-owned by the Dubai government, which is set to earn a dividend of about $750 million from the listing - an important windfall since Dubai and its government-related firms face tens of billions of dollars of debt maturities in the next few years, a legacy of the crisis.

The malls and retailing unit posted revenue of 2.8 billion dirhams last year, up over 20 percent from 2012, while its gross operating profit increased 20 percent to 2.2 billion dirhams, Emaar said. The company's total revenues last year were 10.3 billion dirhams.

More than 55 percent of the company's revenues currently come from its shopping malls and retail, hospitality and leisure, and international operations, Emaar said, indicating that more subsidiaries would be listed eventually.

"The Board decided that listing of various Emaar subsidiaries, with a view to creating independent companies with their own growth strategies and management structures, was imperative to achieve Emaar's long-term growth strategies ...

"In the future, listing of other relevant subsidiaries will also be considered as and when appropriate," it said.

NASDAQ DUBAI

The listing plan may give a shot in the arm to Dubai's stock market, which has not fully recovered from the crisis. There have been no initial public offers of shares in Dubai since 2009, though a real estate investment trust plans an IPO in coming months.

When Dubai luxury real estate developer DAMAC conducted an IPO last December it did so not at home but in London, where companies can attract wider investor bases and face less stringent ownership rules.

Emaar did not say in its statement where its unit would be listed, and it told Reuters that a decision had not yet been made. However, one of the emirate's top companies might find it controversial to list a unit abroad instead of supporting the development of the local market.

The company's intention to sell no more than 25 percent of its unit suggests that unless rules are changed, the listing will not occur on Dubai Financial Market, the larger of the emirate's two exchanges, which requires bigger proportions of companies to be floated.

Instead, the listing may take place on Nasdaq Dubai, which has a 25 percent minimum. A Dubai government source, speaking on condition of anonymity because of the sensitivity of the issue, indicated that Nasdaq Dubai was likely.

"The intention is not to create an entity that would compete with parent Emaar but to unlock the value for shareholders," he said. "Nasdaq becomes the obvious choice."

Separately, Emaar said its board was proposing a 15 percent cash dividend and a 10 percent bonus share issue for 2013; it would be the company's highest dividend since 2007, which saw a 20 percent cash dividend. The cash dividend for 2012 was 10 percent of share capital.

(Additional reporting by Praveen Menon and Mirna Sleiman; Editing by Susan Fenton)

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