The Ritz-Carlton hotel has attracted at least seven possible buyers as the Dubai developer Union Properties tries to off-load its hospitality assets to raise cash. Khalid bin Kalban, the chairman of Union Properties, said "everything is for sale at the right price" as Union recovers from losses caused by declining property values and lower sales, which last year totalled Dh498 million (US$135.5m).
Union Properties, one of the emirate's oldest property companies, has priced the Ritz-Carlton, due to open at Dubai International Financial Centre (DIFC) this month, at Dh1.5bn. Mr bin Kalban was speaking after a shareholder meeting last Thursday evening where it was agreed that repayments on the company's Dh6.5bn debt, which were due to begin this year, would be delayed until next year. He said among the potential Ritz-Carlton buyers, two or three had readily available cash for the purchase.
"They have seen the site and the design of the hotel and have made their evaluation," Mr bin Kalban said. "Some investors want the asset but need to raise liquidity, others have the cash already." Mr bin Kalban declined to say who the investors were or when the deal might be closed. "Until then, we will open the hotel as planned," he said. A source familiar with the talks said the investors were a mix of international and local companies, one of which was a large Indian company, and that Union Properties would not sell the hotel for less than its target price.
"So as long as they can hold on to it and not sell at a distressed price, then they could be able to make some good return," said Majed Azzam, a property analyst at Al Futtaim HC Securities. According to a report by Jones Lang LaSalle, released yesterday, the "hotel sector will be the first to recover in a number of regional markets including Dubai, with the investment value of branded hotel properties stabilising over the past six months".
Mr bin Kalban said other hospitality assets, including the Marriott Executive Apartments, one in Deira and the other in the Green Community, were also on the sales list. Meanwhile, two companies are "being evaluated" to take a 50 per cent share in Emicool, its district cooling unit, which has been valued at between Dh400m and Dh500m. The company is also looking to sell other assets across a vast portfolio that includes retail, hotel, commercial and residential properties.
"We buy, we sell, we develop; as a company, we have to make money," said Mr bin Kalban. Union Properties, Dubai's third-largest developer by market value, will record a return to profit for the first quarter, Mr bin Kalban said, mainly thanks to revenue from rental properties and final payments as new properties were handed over to owners. The results are expected to be released later this week. The company also plans to transfer 5,000 units, divided equally between residential and commercial, to its rental portfolio, which will be worth an estimated Dh500m a year.
The residential units are unsold properties or those on which customers have failed to keep up payments. Union Properties has undergone several management changes in the past year as it adapts to the downturn in the property sector, where prices have fallen by as much as 50 per cent. The former chief executive Simon Azzam stepped down last June, while the chief financial officer Ziad Ghoul left this year.
Khalid al Jarwan was appointed the general manager to replace Mr Azzam and Murtaza Chevel recently took over as the chief financial officer. agiuffrida@thenational.ae