Emaar Properties said on Thursday its hotel sales deal is worth around Dh2.2 billion and the effect of the transaction is expected to be reflected in its first quarter results.
The sales price is “subject to certain adjustments relating to working capital of these hotels,” Emaar said in a statement to the Dubai Financial Market, where its shares are traded.
“There is no separate value for each hotel.”
Emaar Hospitality Group, a subsidiary Emaar Properties, said in November it is selling five of its hotels, including the flagship Address Dubai Mall and Address Boulevard, to Abu Dhabi National Hotels and the deal is expected to be completed either late 2018 or early 2019.
“The transaction is subject to occurrence of a number of conditions. If the conditions are met, the impact of the transaction is expected to occur in the first quarter of 2019,” Emaar said in the bourse filing.
The other hotels in the deal include Address Dubai Marina, Vida Downtown and Manzil Downtown. Together, they account for around 1,000 rooms.
“The reason for the transaction is to implement the company’s strategy and enable Emaar Hospitality to focus on management and operation of hotels while remaining asset light,” said Emaar. “The proceeds of sales will be used to finance commercial properties, which generate higher return on investment.”
As part of the deal, ADNH - one of the biggest hotel owners in the emirate of Abu Dhabi - will enter into long-term management agreements with Emaar Hospitality to operate the assets under the Address and Vida brands.
UAE real estate developers such as Emaar are seeking more efficiency as they continue to tackle the fallout from a three-year slump in oil prices, which has driven down property prices and squeezed their profit margins.
Emaar Properties’ third-quarter net profit declined 29 per cent year-on-year to Dh1.1bn, below analysts’ forecasts.