Nakheel, the Dubai-based property developer, has disposed of its remaining 172 million shareholding in Mirvac Group, the Australian property developer, for A$206.4 million (US $171 million), according to a report in The Australian.
A block trade of Nakheel's remaining 172 million shares, was conducted by Deutsche Bank, which placed the stock with a range of institutional investors at A$1.20 per share. The trade was made at a marginal discount on the A$1.25 to A$1.27 range in which it was trading prior to the conclusion of the placement, said the report. Nakheel acquired a 6.5% stake in December 2007 and subsequently raised its interest in Mirvac to around 12.5%, but had been selling down its stake over the past year.
Mirvac Chief Executive Nicholas Collishaw told The Weekend Australian the property group would not suffer, as a result of the exit of its largest investor, a loss in firepower when pitching for developments.
"It means for us, from our point of view, business as usual," Mr Collishaw said. "It has come as a surprise. If there is a range of institutions that have taken over the big line of stock that has gone through, then I think we will end up with a more stable investor base."
State-owned Nakheel has been developing three palm tree-shaped islands off Dubai's coast, one of which is completed in the form of the Palm Jumeirah plus an archipelago called The World that replicates a map of the world off the coast of Dubai. It has also invested in retail malls and affordable housing in a district known as International City. On-shore developments also include a major extension of New Dubai known as the Waterfront which has slowed considerably to the point of deferral since the economic downturn began to bite into available liquidity.
Dubai property in general has suffered significant price falls from peak, although considered by many as overpriced. The off-plan market is at a standstill but while price falls continue they are of a less-savage nature and the transaction rate on completed properties has risen marginally compared to a virtually barren first quarter. Developers in general are scurrying to complete previously sold developments with a high pre-sold ration in order to achieve handover and secure final installments to support a dwindling cash flow.
The Government stake-held developer reported in May that its 2008 profits fell 90% after takig a US $1.3 billion impairment charge due to falling property prices. Net income for 2008 declined to AED 495.5 million (US $135 million) from AED 4.73 billion a year earlier while revenue advanced 19% to AED 16.4 billion.
Nakheel booked an "impairment and termination" charge of AED 4.8 billion to ensure that asset values reflected "their true future recoverable value," it announced in May, adding that it had also delayed or deferred some of its medium and long-term projects.
Source: Property World ME