The Abdullah family has sold one of its twin high-rise towers on Sheikh Zayed Road in Dubai to raise money to pay back part of the US$165 million (Dh606m) it owes shareholders of the jewellery giant Damas International for "unauthorised" investments. The sale of the tower, to a private investor, marks the first efforts by family members to meet their debt payment schedule, which requires them to pay Dh200m by April this year. The unauthorised investments were made with company money.
The two 49-storey buildings were known as Angsana Hotel and Suites until late last year, when Damas Hotels cancelled its contract with Banyan Tree Hotel and Resorts. Banyan Tree said in a statement at the time that the building would be "converted to residential use" and sold. Yesterday, a temporary sign hung outside one of the buildings, proclaiming the new name "Emirates Grand Hotel". Staff in the building said the tower had been sold to an Emirati investor for an undisclosed sum in October last year and would reopen next month with Iberotel, a German hotel company, as the operator.
The second tower is still for sale. "We just signed a contract last week," said Alaa Hanna, a sales director at the Iberotel Miramar Al Aqah Beach Resort in Fujairah. "It previously belonged to Damas but it was sold because of all these problems." Construction on the two towers started in 2004. The tower that became the suites section of the hotel was opened last year, while the second building, with 364 hotel rooms, did not open despite being scheduled for completion late last year.
A Damas spokesman declined to comment yesterday but a source close to the company said this week that the family had begun liquidating assets to meet its obligations. The brothers have recently been promoting the sale of their largest yacht to raise more cash. Prices of residential property in Dubai have fallen by more than 50 per cent since their peak in 2008, which could be an obstacle to liquidating the investments the family made with the proceeds from the Damas public share offering in 2008. Almost 70 per cent of the transactions were investments in the property sector, with about 90 per cent of those in the UAE.
Blair Hagkull, the head of the regional office for the property consultancy Jones Lang LaSalle, said yesterday the sale was among the only major transactions in Dubai in recent months. "We are seeing a situation where cash-rich organisations are finding attractive deals in this market," Mr Hagkull said. "The market has been quiet, but there are many purchasers and potential investors that are waiting in the wings for the prices to get to the right levels."
The Abdullahs face the risk of losing control of their 103-year-old family jewellery business. The brothers signed an agreement on November 4 to pay back the amount of the unauthorised transactions within 18 months. They have also pledged to return 350 million of their 515 million shares if they fail to pay Dh200m within six months, Dh400m within 12 months and the full amount within 18 months. If they were to default on these payments back to Damas and the shares were taken back by the company, their holding in the firm would fall to 16 per cent, from 51 per cent.