Abu Dhabi, UAETuesday 17 September 2019

Emaar Properties said to consider sale of district cooling unit

British lender Standard Chartered is among the advisers working on potential deal, sources say

Dubai's Emaar Properties may sell its shareholding in its district cooling business. Reuters
Dubai's Emaar Properties may sell its shareholding in its district cooling business. Reuters

Emaar Properties, the biggest-listed developer in Dubai, has hired advisers to help it sell its stake in its district cooling unit, according to sources familiar with the matter.

British lender Standard Chartered is among the advisers engaged on the potential sale of Emaar District Cooling, by the developer of Burj Khalifa, the world's tallest tower, the sources said on condition of anonymity.

A bank spokesman declined to comment. An Emaar spokesperson said the information is “factually incorrect” and the company does not comment on market rumours and speculation.

Some real estate developers are selling non-core cash-intensive assets such as district cooling business to unlock value and increase their cash buffers.

Last year National Central Cooling Company (Tabreed), which counts Mubadala Investment Company among its shareholders, acquired Aldar Properties’ 50 per cent stake in a district cooling operator serving Abu Dhabi’s Reem Island. Tabreed, one of the biggest district cooling firm in the region, will own 100 per cent of S&T Cool District Cooling Company following completion of the transaction, which values the firm at Dh348 million, Tabreed said at the time.

Union Properties, another Dubai listed developer also sold its entire stake in Emicool to Dubai Investments, which already owned a 50 per cent stake in Emicool, for Dh500 million.

“It’s obvious what Emaar strategy going forward is ….. [it is] trying to reduce the need for cash spending,” said Tariq Qaqish, managing director of asset management, at securities broker Menacorp Finance. “The company is trying to focus again on its core business …. [and] future cash flow where that can become a dividend play in my opinion.”

The company has sold its hotels so there’s no need for future capital on building new hotels, but it managing the properties sold so it is still generating cash from them, he explained.

“This is a good strategy to focus on what you know” Mr Qaqish added.

Emaar, whose developments include Dubai Mall, the largest by square footage gloably, has been selling non-core assets. In February, Abu Dhabi National Hotels (ADNH) bought five flagship hotels from Emaar Hospitality Group, a subsidiary Emaar Properties.

ADNH bought the Address Dubai Mall, Address Boulevard, Address Dubai Marina, Vida Downtown and Al Manzil Downtown, which together account for around 1,000 hotel rooms for Dh2.2 billion.

Emaar recorded a 7 per cent year-on-year rise in the first three months of 2019 on the back of strong growth in international sales. with net income climbing to Dh1.74bn.

Updated: May 27, 2019 12:49 PM