By  on September 1, 2014

DUBAI (Bloomberg) — Shares in Emaar Properties PJSC climbed for a second day on the Dubai-based developer’s plans to sell at least 15 percent of its mall unit in September and distribute 5.3 billion dirhams ($1.44 billion) of the proceeds as a dividend.

Shares advanced as much as 5.4 percent to 11.75 dirhams, the highest since February 2008, bringing the two-day gain to 15 percent.

The company, which said in March it would sell 25 percent of the business, will make the dividend payment as part of plans to distribute about 9 billion dirhams to its owners including the Dubai government, Emaar said in a statement Sunday. The listing is expected in October, an Emaar spokesman said, asking not to be identified citing company policy.

Emaar is focusing on recurring hotel and mall revenue to cushion itself from shocks in the emirate’s property market. The company is benefiting from a tourism and retail boom at its prized Dubai Mall, which received 75 million shoppers last year and features hundreds of stores as well as an underwater zoo, skating rink and the world’s most expensive cupcakes.

“Emaar is the crown jewel of Dubai,” said Taher Safieddine, an analyst at Shuaa Capital PSC. “Demand will be tremendous as this is one of the most important mall operators in the world with high-quality assets and room for growth.”
At least 70 percent of the Emaar Malls offering will be allocated to qualified institutional investors and 30 percent to individuals, the company said. A minimum 10 percent will be earmarked for Emaar shareholders as of Sept. 10, while the Emirates Investment Authority reserved 5 percent of the offering allocated to institutions.

Properties owned by Emaar Malls were valued at 39.8 billion dirhams by Jones Lang LaSalle in June, Emaar said. Assuming a pro-forma net debt of 6.7 billion dirhams to 6.8 billion dirhams, this would imply a net asset value of 33 billion dirhams to 33.1 billion dirhams, the company said.

The developer, which said in March it expected to raise between 8 billion and 9 billion dirhams, received an exception from the regulator allowing it to sell as little at 15 percent of its shares in the Dubai listing. Regulations in the United Arab Emirates require companies to sell at least 55 percent.

An exception was necessary because “allowing Emaar to list in London would have sent the wrong message about the local market and deprived Dubai of one of its most stable companies,” Safieddine said.

Bank of America Merrill Lynch, JPMorgan Chase & Co. and Morgan Stanley are joint global coordinators of the offering. EFG-Hermes Holding, Emirates Financial Services, HSBC Bank Middle East Ltd., National Bank of Abu Dhabi and Rothschild are also involved in the sale.

Emaar Malls’ assets include four shopping malls and 30 community-shopping and retail centers with a total gross leasable area of around 5.9 million square feet. The properties had 95 percent occupancy during the first half of 2014, according to the statement. Aside from the flagship Dubai Mall, Emaar owns the Dubai Marina Mall, Souk Al Bahar and Gold & Diamond Park. The Dubai Mall is the world’s largest by total built-up area and sixth largest by gross leasable area.

The IPO “for the first time combines institutional and retail shareholders in the same offering on the DFM,” chairman Mohamed Alabbar said in the statement.

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