Emaar to raise $2.5bn through listing of malls
Dubai-based property developer Emaar Properties plans to list its shopping malls and retail subsidiary, and would distribute the funds raised as dividend to the company’s shareholders.
Subject to market conditions, Emaar will list up to 25 per cent of the Emaar Malls Group equity through a secondary offering of shares. The funds raised through the sale of 25 per cent of the company, estimated to be between AED8 billion to AED9bn ($2bn to $2.5bn), will be primarily distributed as dividend to the company’s shareholders.
Emaar Malls & Retail is one of the high-growth business entities of Emaar, having recorded full-year 2013 revenue of $772 million, an increase of more than 20 per cent compared to the revenue in 2012. The gross operating profit for the Malls and Retail business increased to $608m compared to $506m in 2012.
Chairman of Emaar Properties, Mohamed Alabbar, says: “The proposed listing of Emaar Malls & Retail and the distribution of funds raised through the sale of shares as dividend underlines our commitment and gratitude to our shareholders, including the Government of Dubai, for their unwavering support to the company since its inception in 1997.
“Over the years, they have placed their utmost trust in our development strategy of business segmentation and expansion, as we invested our revenues back into the business to ensure long-term value creation.
Today, Emaar’s shopping malls and retail subsidiary is our high-performing business, which derives its growth impetus from the sustained growth of Dubai and its reputation as an international business and leisure hub.
“Dubai today is the first choice of destination for more than 2.5 billion people who are less than five hours of flying distance. Our malls business will benefit from the higher growth rate in spending, increased disposal income and economic activity of these emerging markets.”
Alabbar said that the growth of the shopping malls and retail business also highlights Emaar’s contribution to Dubai’s economy. “As a National Champion company, Emaar has been a firm partner in the social and economic growth of the city. The Dubai Mall, our flagship mall asset, has established its credentials as one of the world’s must-visit retail, fashion and leisure destinations, and welcomed more than 75 million visitors in 2013 driving the growth of the aviation, retail, tourism and hospitality sectors.”
The decision to list Emaar’s Malls & Retail business was proposed at the Board of Directors meeting of the company, which reviewed the current and projected growth opportunities for the company, and the optimal corporate structure required for achieving its vision to become one of the most valuable companies in the world.
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. Emaar Malls and Retail has been identified as the first subsidiary to be listed in view of its significant size, growth opportunity set and the maturity of the business. In the future, listing of other relevant subsidiaries will also be considered as and when appropriate.
With a significant gross leasable area of over 5.8 million sq ft in Dubai, Emaar’s malls assets include The Dubai Mall, Dubai Marina Mall, Souk Al Bahar and Gold & Diamond Park. The Dubai Mall’s 1,200 plus retail outlets recorded a 26 per cent rise in sales during 2013 compared to the previous year. According to market estimates, more than 50 per cent of all luxury goods sold in Dubai are purchased at the mall.
Emaar is now further enhancing the fashion and lifestyle choices at the mall with the expansion of its Fashion Avenue by another one million sq ft, which will add 150 new brands to the mall, in line with the goal of welcoming over 100 million visitors in the next three to four years.