Emaar Properties announced on Tuesday that its wholly-owned hospitality and leisure business subsidiary, Emaar Hospitality Group, has signed definitive documentation with Abu Dhabi National Hotels (ADNH) to divest its entire economic interest in a portfolio of five hotels in Dubai.
Both Emaar and ADNH said in a statement that the transaction closing is subject to meeting various conditions and is expected to occur in late 2018 or early 2019.
The value of the transaction has not been revealed. However, when the developer announced in July 2018 its intention to divest hospitality assets in order to focus on hotel management, CNBC Arabia reported on its website that the company might sell assets worth Dh5.15 billion.
The portfolio of five hotels consists of the Address Dubai Mall, Address Boulevard, Address Dubai Marina, Vida Downtown and Manzil Downtown, together with about 1,000 hotel rooms.
An Emaar statement said ADNH would enter into long-term management agreements with Emaar Hospitality Group to continue operating the assets under its Address Hotels + Resorts and Vida Hotels and Resorts brands as part of the transaction.
Mohamed Alabbar, chairman of Emaar Properties, said Emaar's hospitality business has recorded robust growth since its inception in 2007 and moving to an asset-light model will enable the business to unlock its true potential.
Sheikh Ahmed Mohammed Sultan Suroor Al Dhaheri, vice-chairman at ADNH, said the transaction would strengthen the firm's presence in Dubai and would expand its current luxury portfolio of hospitality assets which comprise the Ritz Carlton Abu Dhabi Grand Canal, The Park Hyatt in Saadiyat Island and Sofitel JBR in addition to upper and upscale properties namely, Le Meridien, Sheraton and the two Hiltons in the Abu Dhabi Emirate (currently under re-branding to Radisson Blu).
"ADNH also holds stakes in resort properties in Morocco and Egypt. With a legacy of over four decades, we are constantly exploring ways to grow and increase value to our shareholders. We are confident that the partnership between ADNH and Emaar Hospitality Group will help drive both companies in their next phase of growth," said Al Dhaheri.
Emaar Hospitality said in April that it has a pipeline of 35 projects in the Saudi Arabia, the UAE, Bahrain, Egypt, Turkey and the Maldives, bringing the total number of destinations in which it operates to 58 markets.
According to analysts, an asset sale would not threaten the planned IPO of Emaar Hospitality because divesting non-core hospitality assets would allow Emaar to increase revenues through hotel management contracts.
Copyright © 2019 Khaleej Times. All Rights Reserved.