Emaar sells Singapore stake as $1bn debt repayments loom (Re-post)

* username: rupertbu

Dubai’s leading real estate developer Emaar Properties is to sell its $164 million stake in Singapore retailer RSH, according to a report from Reuters.

Last September the group reported a total debt of $2.2 billion with around 50 per cent due this year. Third quarter profits totaled $178 million, and full year figures for 2009 are now awaited.

In the black?

HC Securities estimates Emaar’s full year profit will come in at $11.7 million compared with a previously estimated loss of $76.6 million. Indeed, the broker has a price target that has Emaar’s share price doubling.

However, the bigger picture for Emaar shareholders has to be the general market sentiment in the UAE, even if Emaar is the largest company by market capitalization on the Dubai Financial Market.

At the moment investor sentiment is depressed by the poor outlook for business in the UAE for 2009 with officials recently conceding that economic growth would be at best very modest in the year. The real estate sector in particular is dampening growth prospects from other areas of the economy like oil and trade.

According to HC Securities, Emaar likely delivered 3,900 units last year and will complete 4,500 this year, a drop on an earlier estimate of 4,800 units. Emaar is also enjoying a strong rental income from the Dubai Mall which is 95 per cent occupied and increased visitor numbers since the opening of the Burj Khalifa.

Write-offs

Emaar has written off some of its horror stories, like the $1 billion lost on Laing Homes in the USA but it does have an estimated $326 million exposure to Amlak Finance, the Islamic mortgage company whose shares are suspended pending a proposed merger with rival Tamweel.

However, it is hard not to see Emaar as the big survivor of the Dubai real estate crash and a possible long-term beneficiary as indebted rivals implode and their assets are sold off. But that is still an ongoing process and in the meantime the market will not like the uncertainty it proscribes and will discount share prices appropriately.

So although Emaar appears to be acting prudently in selling its non-core stake in this Singapore retailer, the group will probably be very glad of the cash and the Dubai real estate downturn is not fully over just yet.