Dubai's Atlantis The Palm hotel has been sold by a subsidiary of state owned developer Dubai World ahead of a US$4.5 billion debt repayment due in 2015.
Dubai World unit sells Atlantis, The Palm to Dubai investment fund
Atlantis, The Palm has been sold by a subsidiary of the state-owned developer Dubai World to a sovereign wealth fund.
In a move that had been tipped for months, the conglomerate’s property subsidiary Istithmar World sold the 44-hectare resort at the top of The Palm Jumeirah to the state-owned sovereign wealth fund Investment Corporation of Dubai.
Brokers involved in the transaction confirmed that the deal to sell the five-star hotel complex had taken place but declined to comment on the price.
“This transaction is important for Dubai,” said one source close to the deal who asked not to be named.
Investment Corporation of Dubai (ICD) is used by the emirate’s Government to hold some of its highest profile investments. The body has stakes in companies including Emirates Airline, Emaar, Emirates National Oil Company (Enoc), Emirates NBD, Noor Islamic Bank, and Borse Dubai, the holding company for Dubai Financial Market and Nasdaq Dubai.
“Our acquisition of an asset that is a major contributor to the domestic tourist industry is in line with our overall strategy to support long term growth for Dubai,” ICD’s deputy chief executive, Khalifa Al Daboos was quoted by Reuters.
Representatives for Istithmar and Atlantis were both unavailable to comment.
Istithmar, which also owns the entertainment company Cirque du Soleil and the US luxury store chain Barneys, has been attempting to reduce its stake in the Atlantis over the past year amid growing pressure from creditors to sell assets.
The 1,500-room hotel, which has a water park and 18 restaurants, cost its joint developers, Istithmar and the South African hotels company Kerzner International Holdings, US$1.5bn to build in 2008.
Istithmar bought Kerzner’s 50 per cent stake last year for just US$250 million. Kerzner, which owns the Atlantis brand, has continued to operate the hotel.
The latest deal comes as Dubai World seeks to refinance a first package of loans worth about $4.5bn due in September 2015.
The company spent billions of dollars buying domestic and foreign assets before the global financial crisis drove down asset prices.
By 2011 Dubai World had struck an agreement with about 90 lenders and creditors to restructure loans and other debt totalling $24.9bn, much of which is now coming due for repayment.
According to Bloomberg data, Dubai World is due to meet nearly $15bn worth of debt repayments falling due by 2018.
In June another Dubai World subsidiary, Economic Zones World, sold the British logistics business Gazeley to the Canadian investor Brookfield Asset Management for an undisclosed sum. The company had been purchased for between $450 million and $600m in 2008.
Dubai World is also understood to be close to striking a deal to sell its 50 per cent stake in Miami Beach’s historic Fontainebleau hotel, which the company bought for $375m in 2008.
The Atlantis hotel opened just as global financial markets were starting to crash in November 2008.
Yesterday’s news came on the same day that the Atlantis announced that it would stage the world’s biggest firework display, upstaging even its opening.
In June it was reported that the resort was raising an $850m syndicated loan at an initial interest rate of 5.5 per cent, which it would use to refinance a $700m, 12-year loan arranged in 2005 to fund construction.