September 7, 2021 8:00 AM

Emaar sells unprofitable asset

buy

Reuters reported that Emaar Malls is considering selling Namshi, its fashion e-commerce arm. Emaar paid $ 281 million to acquire this business in 2017-2019. The sale of an asset can bring in $ 600-700 million or even more. Namshi was an unprofitable business with an EBITDA loss of about $ 15 mn in 1H21, so its sale will lead to a reduction in net debt to EBITDA ratio. In addition, the deal could significantly improve the company's debt profile against the backdrop of the buyout of a 15% minority stake. After full consolidation of 100% of the shares, Emaar Properties will have unlimited access to the liquidity of Emaar Malls.

YTM
3.5%

RISK
BB+ / Baa3 / -

DURATION
8.3

Emaar Eurobonds (BB + / Baa3 / -) remain one of the most attractive in terms of risk / return among quality investment grade issuers. Emaar's business will receive significant support thanks to the recovery of the real estate market in Dubai. We love the 2031 issue (ISIN - XS2356219084), which offers a dollar yield of 3.5% with a duration of 8.3 years.

A global real estate group, Emaar Properties is perhaps best known for developing the world's tallest building. The tower known as Burj Khalifa opened in Dubai in 2010, reaches more than 2,700 ft., and includes 160 stories. Other Emaar projects include residential and commercial developments throughout the Middle East as well as in Europe, North Africa, North America, and Asia. Its residential properties range from one-bedroom apartments to seven-bedroom villas, primarily in the United Arab Emirates. Since it began operating in 1997, Emaar has built some 16,000 homes.