Emaar Properties, a global real estate company, has announced plans to offer up to 30 percent of its UAE real estate development business in an initial public offering (IPO), which will be the largest since the Emaar Malls IPO in 2014.
The decision to list Emaar’s UAE real estate development business was a result of an internal review of Emaar’s asset values, said the company in a statement to Dubai bourse.
Subject to market conditions, the funds raised through the sale of equity will be primarily distributed as dividends to Emaar’s shareholders, said the top regional developer. This will help create significant value for its shareholders, it added.
Emaar said this indicated the importance of highlighting the value of this business as a major contributor to the overall profitability of the developer through an independent listing.
Investors who value the proven development track record of Emaar can invest directly in this business and benefit from the strong growth profile of the company’s UAE development business, it stated.
In turn, this will enhance Emaar’s overall valuation as the desirability of this important business is properly recognised in the market.
Emaar’s real estate development in the UAE has recorded significant growth over last five years. The real estate sales increased from Dh4.2 billion ($1.14 billion) in 2012 to Dh14.4 billion ($3.92 billion) in 2016. Until end of May 2017, the business 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.
Mohamed Alabbar, the chairman of Emaar Properties, said: "The proposed listing and the additional dividend to our shareholders, including the Government of Dubai, underlines our commitment to provide superior value to all our shareholders for their unwavering support to the company since its inception in 1997."
“Over the years, we have generated significant returns from our 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, can do so directly. This will ensure that the value of this business is properly recognised, thereby enhancing value for all Emaar shareholders,” stated Alabbar.
"We are drawing on our 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," remarked Alabbar.
"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," he added.
The Dubai developer has handed over around 34,000 units in Dubai since 2001 and currently has a significant land bank of 24 million square meters in the UAE. The total development area on these lands is 30 million square meters.
Focused on its strategy of shaping the future today, Emaar has several mega-developments ongoing in Dubai including the 11 million square meters Dubai Hills Estate, a ‘green city within the city’, developed as a joint venture with Meraas Holding, and the Tower in Dubai Creek Harbour.
Emaar Properties is a public joint stock company listed on the Dubai Financial Market (DFM).
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