Dubai: Nakheel is looking to raise about Dh5 billion ($1.36 billion) of equity to finance housing and infrastructure projects via an initial public offering of two real estate investment trusts (Reits).
The real estate developer, owned by the Dubai government, is in talks with banks about creating two Reit companies - one to help finance infrastructure schemes and the other to fund residential projects, the company's chief financial officer Kar Tung Quek told Reuters yesterday.
Between them, the Reits would aspire to hold assets worth between Dh8-10 billion, Quek said.
"We'd sell assets into them," said Quek, whose Nakheel is developing about $60 billion of residential and commercial projects - mostly in Dubai - including three palm-tree shaped islands off the emirate's coast.
Nakheel wants to develop a business managing Reits, Quek said.
"It's fee based and quite a lucrative business," he said. Typically, firms charge about one per cent of the value for managing a Reit, Quek said.
Nakheel said it would retain control of about 30 per cent of shares in each of the Reits, selling the rest to institutions and the public.
The infrastructure Reit would have an asset value of between Dh5-6 billion and the residential Reit between Dh3-4 billion, Quek said.
"We have been talking with some of the banks about a residential Reit and an infrastructure trust," Quek said. "If the market permits it, we will do it this year."
Advantages
A Reit is a listed property company which typically does not pay tax on its earnings as long as these are mostly distributed to investors in the form of dividends.
They are prevalent in several countries including the US, Australia, Japan, France and Britain.
Nakheel's Reits will list on the Dubai International Financial Exchange, with possibly a secondary listing in Singapore, Quek said.
