x Abu Dhabi, UAEWednesday 26 July 2017

Massive restructuring at Dubai World

Dubai World, which has debts of $60bn, shifts assets and staff from its troubled property developer Nakheel to its portfolio management arm Istithmar World.

Dubai World, the government-owned ports and property conglomerate, announced today it was shifting assets and staff from its troubled property developer Nakheel to its portfolio management arm Istithmar World. The move offers a rare sign of the massive restructuring process under way at Dubai World, which has debts of US$60 billion (Dh220.3bn). Dubai's overall debts are estimated at more than $80bn.

Among the companies under Dubai World, Nakheel - the developer of the palm-shaped islands off the coast of Dubai - is under the most pressure. It has a $3.5bn Islamic bond coming due in December, as well as obligations to contractors and home buyers that are falling behind. Dubai World officials said today it was shifting "selected hotel and real estate assets and the management teams related to these assets, primarily in international markets" to Istithmar World.

Several of Nakheel's top executives will also join Istithmar World. Hamza Mustafa, the former general manager of The World archipelago, will become managing director of real estate. Andy Watson, the former chief investment officer of Nakheel, and Binod Narasimhan, former chief financial officer of Nakheel, will take the same titles at Istithmar World. Sandesh Pandhare will become managing director of private equity.

"Dubai World and its member companies are realigning their real estate portfolios," said Blair Hagkull, regional director of the property consultancy Jones Lang Lasalle. "Companies and conglomerates are reshaping to better handle the future. The sea change relating to real estate is an incredibly challenging prospect. They are not changing their names, they are changing with respect to their business models."

Analysts said the shift of the assets showed a clear division forming between projects that were still under development and those that were finished or bought for investment, with the latter going to Istithmar World to manage. Dubai World would not comment on whether Istithmar World had paid Nakheel for the assets. bhope@thenational.ae