Emaar launches property unit IPO

Emaar Chairman Mohamed Alabbar said the IPO of its development business would deliver attractive dividends to investors. (Reuters)
Updated 22 October 2017
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Emaar launches property unit IPO

DUBAI: Emaar Properties, Dubai’s master developer, is to sell 20 percent of the shares of its UAE real estate unit in an initial public offering (IPO) that could value it at around $6 billion.
The IPO is the first significant listing on a UAE market since 2014. The proceeds of the offering will be distributed to shareholders of Emaar Development in the form of dividends worth at least $1.7 billion over the next three years.
The developer said the offer was “consistent with its stated strategy of bringing subsidiary companies to market once they have reached sufficient maturity.”
Emaar is the master developer behind projects such as Burj Khalifa, Dubai Marina, Downtown Dubai and Arabian Ranches.
Emaar is also the developer of the King Abdullah Economic City near Jeddah in Saudi Arabia, but this project will be unaffected by the forthcoming IPO.
Emaar Development is the second Emaar business to be spun off into a separate listed entity in the UAE, following the float of its malls business three years ago.
The newly listed company will be run by chief executive Chris O’Donnell, an experienced real estate operator in the UAE who was head of developer Nakheel during the financial crisis that engulfed its owner, Dubai World, in 2009.
He has been helping advise Emaar on the IPO preparations for some months.
O’Donnell said: “Emaar Development has a clear strategy to continue delivering high-quality integrated lifestyle communities, which offer an exceptional customer experience. Our strong sales backlog and access to significant premium land banks in prime locations — together with a growing real estate market in an enhanced regulatory and stabilized pricing environment — positions the business well for the benefit of future shareholders.”
Mohamed Alabbar, chairman of Emaar Properties, said: “The IPO of our UAE development business will allow potential investors an opportunity to participate in a pure play UAE developer offering strong and stable cashflows and an attractive dividend yield.
“Additionally, it offers the opportunity for Emaar Properties’ shareholders — including the UAE Government — to unlock the true value of our UAE development business.”
The government of Dubai owns 29 per cent of Emaar group via its sovereign wealth fund, Investment Corporation of Dubai, and can expect to receive around $566 million in dividends over the next three years.
A new board will be appointed to Emaar Development under chairman Alabbar, consisting of two Emiratis and one Saudi — Jamal Bin Theniya, Arif Al-Dehail and Ahmed Jawa — who are already on the board of the parent group.
In addition, a team of three Emirati executives — Aisha Bin Bishr, Adnan Kazim and Abdulla Al Awar — will become independent non-executive directors on the new board.
JLL, the real estate consultancy, said that Emaar Development had a gross asset value of 35.6 billion dirhams and net assets of 24.1billion dirhams last month.
Emaar Development reported sales of 6,539 units in the nine months to the end of September 2017 with a sales value of 15.4 billion dirhams, an increase of 32 per cent from the corresponding period for the previous year.
Average gross profit margin of 42 percent. on revenue was achieved in the same period, at the end of which it had 10.2 billion dirhams cash in the bank.
The IPO statement said that Emaar had “spearheaded the development of freehold master-planned lifestyle communities in Dubai; developed over 34,500 residential units since 2002, with over 24,000 residential units under development, across eight master-planned communities in prime locations.”
As of Sept. 30, 2017, Emaar Development has sold 80 per cent of its units under development with an average gross profit margin of 41 per cent for units sold, and a sales backlog of 18 billion dirhams over the next four years.
Mohammad Kamal, an analyst at Arqaam Capital in Dubai, said Emaar appeared to have sufficient resources to meet the planned dividend payments.
“We note that Emaar also has access to 5.5 billion dirhams of debt withdrawn at the subsidiary level that will be fully ‘upstreamed’ to the parent entity, which can theoretically (but not necessarily) be used to support the special dividend payment.
“Historically, previous special dividend payments have exceeded 100 percent. of ‘carve out’ (IPO) proceeds, as was the case with the Emaar Malls IPO,” he said.


Fujairah joins other ports, tightens exhaust rules ahead of 2020 regulations

Updated 23 January 2019
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Fujairah joins other ports, tightens exhaust rules ahead of 2020 regulations

  • Under International Maritime Organization (IMO) rules that come into effect from 2020, ships will have to reduce the sulfur content in their fuel to less than 0.5 percent
  • Singapore, China and Fujairah marine sales volumes represent a quarter of global ship refueling, also known as bunkering

SINGAPORE: Fujairah in the UAE has become the latest major port to ban a type of fuel exhaust cleaning system to comply with a coming tightening in rules regarding global sulfur emissions, mirroring similar moves in Singapore and China.
Under International Maritime Organization (IMO) rules that come into effect from 2020, ships will have to reduce the sulfur content in their fuel to less than 0.5 percent, compared with 3.5 percent now, forcing huge changes upon global shippers and also oil refiners.
Fujairah’s harbor master said in a faxed document seen by Reuters that the port “has decided to ban the use of open-loop scrubbers in its waters ... (and) ships will have to use compliant fuel once the IMO 2020 sulfur cap comes into force.”
This follows top marine fueling port of Singapore announcing a similar move in November, while China banned the use of open-loop scrubbers from Jan. 1, 2019.
Singapore, China and Fujairah marine sales volumes represent a quarter of global ship refueling, also known as bunkering.
Impact for shippers
To comply with IMO 2020 rules, shippers can switch to burning cleaner but more expensive oil, invest in exhaust cleaning systems known as scrubbers that may allow them to still use cheaper high-sulfur fuels, or redesign vessels to run on alternatives like liquefied natural gas (LNG).
Scrubbers use water to clean up fuel emissions, preventing them from being released into the atmosphere.
Open-loop scrubbers are the cheapest option, but they have come under criticism as they wash heavy metals and sulfur from the waste water into seas instead of storing it for a controlled discharge in ports, as closed-loop scrubbers do.
Of the more than 2,000 ships that have so far opted to invest in scrubbers, around three-quarters have installed the cheaper, open-loop type, shipping sources estimated.
Closed-loop scrubbers, which store wash water for later discharge, are still accepted in most ports.
Despite the spreading bans of open-loop scrubbers, Douglas Raitt of ship classifier Lloyd’s Register said vessels can still benefit from such systems as they can pump out the waste water in open seas, outside a port’s jurisdiction.
“The benefits of open-loop scrubbers are largely realized in open water during transit from one port to the next,” he said.
Raitt said shippers, however, should consider alternative measures to prepare for IMO 2020, considering that when the new rules come into force refueling infrastructure will be mostly geared toward compliant low sulfur fuel oil (LSFO) rather than high sulfur fuel oil (HSFO).
“Prevailing wisdom would be for operators opting for scrubbers to have a meaningful dialogue with their supplier base to secure HSFO post-2020 in ports of call,” Raitt said.