Emaar Properties, Dubai’s largest listed developer by market capitalisation, sold its 169-room Address Sky View hotel in Downtown Dubai for Dh750 million ($204m) to Evergreen Hospitality.
The deal is "in line with the company's asset-light strategy for hospitality assets", Emaar said in a statement to the Dubai Financial Market on Wednesday, where its shares trade.
Emaar will continue to manage the property and will retain ownership of a sky bridge restaurant. The value of the latest transaction represents 1.4 per cent of the company’s net assets and is expected to be completed by January 15, the company said in its regulatory filing.
“The net impact on the financial position would be an expected increase in assets of Dh50m during the quarter of sale transaction payment [fourth quarter of 2020],” it said.
Emaar Properties had traditionally owned its hotel sites but in 2019 it decided to sell off five prime hotel buildings. The properties – the Address Dubai Mall, Address Boulevard, Address Dubai Marina, Vida Downtown and Manzil Downtown hotels – contain about 1,000 hotel rooms and were sold to Abu Dhabi National Hotels for Dh2.2 billion.
The company's hospitality arm continues to manage the properties.
Emaar Properties is also divesting other assets deemed to be non-core to pursue growth opportunities elsewhere.
The company divested its district cooling business in Downtown Dubai for Dh2.48bn to National Central Cooling Company, also known as Tabreed, in April last year. Tabreed bought an 80 per cent stake in Emaar’s cooling assets.
The hospitality sector has been hit hard as countries close borders and introduce travel restrictions in the wake of the coronavirus pandemic. In November, the World Travel and Tourism Council said the industry had lost more than $3.8 trillion in gross domestic product and more than 142 million jobs globally as a result of the pandemic. A further $4.7tn and 164 million jobs could be lost this year if there is no improvement in conditions, the organisation said.
Tourism is rebounding in the UAE, however, and the country’s economy is projected to grow 2.5 per cent in 2021, according to the Central Bank of the UAE.
The UAE is also promoting staycations among its residents to boost hotel occupancy. Consultancy STR said last month that during the week of the UAE's National Day celebrations, occupancy levels in Abu Dhabi reached 69 per cent and Dubai hotels were 65.8 per cent occupied.
"International travel has been in the crossfire of the pandemic, but the UAE has done a fine job in generating domestic demand and staycations to move the occupancy line in the right direction," Philip Wooller, STR's area director for the Middle East and Africa, said.