DUBAI, (Reuters) – Dubai developer Emaar Properties said it will roll over $1.23 billion debt maturing in 2010 into long-term project financing deals with analysts adding the pressure to make hasty divestments was now off.
Emaar has 4.5 billion dirhams of loans maturing in 2010, its financial statements posted on the company’s web site show.
“The loans maturing in the next one year are primarily bridge loans for Emaar’s international projects, and as per terms, are to be converted into longer term project financing,” the company said in an emailed statement on Sunday.
“Emaar expects the loans to be converted into project finance during this year,” the statement said.
Emaar, which is 31.2 percent owned by the Dubai government, is the Arab world’s largest listed developer. The firm is less indebted than some of the other Dubai property firms. In December, a planned merger between Emaar and three real estate units owned by Dubai Holding, owned by the ruler of the Gulf emirate, was called off.
“Emaar’s debt position is very comfortable and the company has one of the lowest debt to equity ratios,” the statement said.
Shuaa Capital analyst Roy Cherry said rolling over the debt would enable Emaar to avoid premature divestments of key investment properties.
“The maturity extension won’t be a problem for most, but the rates will likely see an increase,” he said.
“The creditors see the strong balance sheet, the growing recurring cash flow generated by the investment property portfolio and relatively low debt-to-equity levels.”
Last month, Dubai unveiled a $9.5 billion rescue plan for state-owned conglomerate Dubai World, aimed at restructuring $26 billion debt linked to the conglomerate and its property units.
“The company sits on extremely attractive high value assets producing healthy recurring returns, like Dubai Mall and the downtown hotels,” Cherry said. “Emaar is not in a distressed state.”
Analysts said Emaar’s cash flow remains solid this year and the debt rollover is a positive move.
Sana Kapadia, vice president of equity research at EFG-Hermes said the rollover was widely anticipated in the market and will allow the company to meet its international and local development obligations.
Beginning in the second quarter, she added that Emaar’s cash flow should get a boost from the handover of units from the Burj Khalifa, the world’s tallest building.
Steady rental and hospitality income is also expected to benefit cash flows this year, erasing any concerns that the company’s move is related to any financial crunch, she said.
Details about the nature of the project financing and whether it will contain any equity element were not provided by Emaar.
In February, Emaar said it would focus on mid-income housing in emerging markets and overseas expansion to boost 2010 revenue after returning to profit in the fourth quarter.
Shares of Emaar, builder of the world’s tallest tower, closed down 1 percent in Dubai trading.