Friday, November 2, 2007

Dubai’s man-made Palm islands is preparing to float $800 million (£384 million) of its luxury housing in what could be a prelude for a $60 billion

Artificial islands being pushed towards a float

James Rossiter in Dubai
The company behind Dubai’s man-made Palm islands is preparing to float $800 million (£384 million) of its luxury housing in what could be a prelude for a $60 billion listing of the entire business, The Times has learnt.

Nakheel, whose projects include the Palm Jumeirah island, wants to spin off about 50,000 beach-side apartments into a real estate investment trust (Reit) that it will then float on both Dubai’s nascent stock market and either the London or Singapore exchanges.

Chris O’Donnell, chief executive of Nakheel, said: “We are actively working on Reit structures here as we have residential property on the balance sheet. It is ideal for us to create a Reit.”

A decision whether to have the dual listing in either Singapore or London will be made “within three to six months”, Mr O’Donnell added, ready for a flotation and share offering that could raise up to $500 million.

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A decision whether to float Nakheel or not is tied in with a $3.5 billion Islamic-compliant debt financing the company issued last December.

The company, which is chaired by Sultan Ahmed bin Sulayem, one of the three top advisers to Sheikh Mohammed bin Rashid al-Maktoum, Dubai’s ruler, has 2 billion square feet of housing, shops and hotel projects under development.

Mr O’Donnell is keen to emulate the model Investa used for its growth for his plans to broaden Nakheel’s core property development business into large-scale letting and real estate investment fund management.

The first stage of that development involves spinning off into a Reit what Mr O’Donnell said was “$600 million to $800 million of residential assets; we would retain between 30 per cent and 50 per cent”.

Barclays Capital and Dubai Islamic Bank (DIB) are expected to be among the front-runners to pitch for work connected with the flotation.

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