In October, Emaar beat analysts’ estimates to announce a 50 per cent increase in third-quarter profits to Dh581 million. Pawan Singh / The National
In October, Emaar beat analysts’ estimates to announce a 50 per cent increase in third-quarter profits to Dh581 million. Pawan Singh / The National
In October, Emaar beat analysts’ estimates to announce a 50 per cent increase in third-quarter profits to Dh581 million. Pawan Singh / The National
In October, Emaar beat analysts’ estimates to announce a 50 per cent increase in third-quarter profits to Dh581 million. Pawan Singh / The National

Property

The property company, which developed Burj Khalifa, said holders of its convertible bonds issued three years ago had asked to convert their investments into shares.

Lucy Barnard

December 15, 2013

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Emaar convertible bond holders have asked the company to turn them into shares amid improving property market sentiment.

Shares of Emaar Properties rose slightly yesterday despite the prospect of dilution of shareholder equity.

The property company, which developed Burj Khalifa, said holders of its convertible bonds issued three years ago had asked to convert their investments into shares.

In a stock market filing, Ayman Hamdy, Emaar’s executive director for legal, said its board would meet tomorrow to discuss the matter.

Emaar issued a US$500 million convertible bond in 2010 with an initial conversion price of Dh4.75 per share.

A company’s stock often declines upon news it is expanding its share capital; that will dilute the value of its stock.

Emaar shares, however, confounded expectations by gaining 2 fils to Dh7.38 apiece yesterday as investors banked on further growth.

“We would normally expect to see share prices fall in this sort of situation but Emaar is an exception,” said Saleem Khokhar, the head of equities at NBAD asset management group.

“Firstly, Emaar is seen as one of the few top-class real estate stocks out there, so we still expect to see an upside,” he said. “And secondly, the Expo win means that there is an expectation of new projects coming in which most analysts have not put in their [earnings] models. It’s a combination of it being seen as a good stock and promising circumstances.”

On Thursday, Emaar shares surged 5.1 per cent to a 63-month high of Dh7.36 after the developer announced that it had signed a deal with Dubai World Central to develop villas, a golf course, hotels and a mall close to the Expo 2020 site.

Shares in Dubai’s largest developer have nearly doubled this year to Dh7.38 at close of trading yesterday, from Dh3.75 at the start of the year.

The company has been among the better performers in the property sector as Dubai recovers from a real estate crash, in which property prices plunged about 60 per cent from their 2008 peak and construction work across the country stalled.

In October, Emaar beat analysts’ estimates to announce a 50 per cent increase in third-quarter profits to Dh581 million. It reported that revenue from apartment sales more than tripled during the period to Dh567m.

lbarnard@thenational.ae

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