The United Arab Emirates’ first real estate investment trust, Emirates REIT, said on Tuesday that it planned to raise at least Dhs500 million ($135 million) through an initial public offer of its shares on the Nasdaq Dubai bourse.
The company will use the proceeds for possible future acquisitions and investment in existing assets, Abdulla al-Hamli, chairman of its Management Board, told reporters.
The equity listing would be only the second on either of Dubai’s two stock exchanges since 2009; Bank of London and The Middle East, Britain’s largest stand-alone Islamic bank, listed on Nasdaq Dubai last October.
New listings dried up during Dubai’s financial crisis, which erupted in 2009, but stock prices are now soaring – the main Dubai index is up 153 per cent since the end of 2012 – and several IPOs are in the pipeline, investment banking sources say.
REITs invest directly in properties and distribute profits as dividends. The Emirates REIT IPO could draw massive interest because it would be a way for small investors to gain exposure to Dubai’s red-hot property market, where residential prices jumped over 20 per cent last year and may hit their pre-crisis peaks next year.
Emirates REIT, which was formed in 2010 and complies with Islamic investment principles, appointed Shuaa Capital and Emirates NBD joint bookrunners for the IPO.
Karim Schoeib, chief executive for investment banking at Shuaa, said an investor roadshow for the offer would start in two weeks in Gulf Arab countries, Europe including Britain, and possibly the United States.
Current shareholders will not sell their shares in the IPO; new shares will be issued for the offer. The value of the company is not known yet and the IPO will be conducted through a book-building process, officials said. Nasdaq Dubai IPOs usually sell at least 25 per cent of a company.
As of last December, Emirates REIT had 10 properties comprising 1.2 million square feet of net leasable area; its total assets were valued at about $333 million, it said. Net profit climbed to $34.8 million last year from $10.9 million in 2012 and $1.2 million in 2011.
Emirates REIT focuses on properties within Dubai but its investments may extend to other emirates in the UAE, officials said.
Dubai Islamic Bank currently owns 30.9 per cent of the firm, two units of the Dubai Holding conglomerate own a combined 27.1 per cent, Emirates NBD owns 4.5 per cent, Egyptian investment bank EFG-Hermes has 4.2 per cent and Dubai property developer Deyaar has 3.4 per cent.