(MENAFNEditorial) In line with its strategy to create independent companies with own growth strategies and management structures, maar Properties is moving ahead with spinning off various subsidiaries. In its board of directors meeting held on 13 March 2014, Emaar decided to list its malls and retail business, Emaar Malls Group (EMG), into a separate entity. Given its significant size and growth opportunities, EMG has been identified as the first subsidiary to be listed. A similar step is expected for the hospitality segment
Emaar aims to list, subject to market conditions, up to 25% of EMG equity through a secondary offering of shares, expected to be one of the largest public offerings in the region, at an estimated value of AED8-9bn. Sale proceeds will be primarily used for dividend distribution to Emaar's shareholders. The strength of Emaar's malls and retail segment comes mainly from Dubai Mall
In our opinion, EMG listing should boost investment properties fair value by 111% to AED34bn compared to a fair value ofAED16.1bn and a book value of AED7.8bn at the end of 2012. Furthermore, Emaar'sNAV would effectively increase by around 30%to AED12/share (adjusted for capital increase on bond conversion). Accordingly, Emaar's stock is currently traded at a 23% discount to adjusted NAV
In light of the above, we are adding Emaaragain to our MENA Favorite List (MENA FL) due to the listing of EMG within six months, with a similar step expected for the hospitality segment. We had removed Emaar back in December 2013 after realizing an attractive return of +13.8% over a short period of time. However, the positive outlook for potential projects for EXPO 2020 and the ramping up of new developments by launching one project a week in Dubai in the first two months in 2014 -- all led us to add it again to our MENA FL
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