Emaar shares hit new low

Emaar's stock had fallen 7.8% in the past five days as foreign investors pull their money out.

Shares of Dubai's Emaar Properties sank to a new 28-month low on Wednesday after the developer failed to allay investors' concerns over a deal to acquire more government land in exchange for stock.

Shares in Emaar, the largest Arab real estate developer by market value, ended 3.47% down at 9.75 dirhams ($2.66), dropping below 10 dirhams for the first time since April 13, 2005. The close was the weakest since April 12 that year.

Uncertainty surrounding the deal, announced in March to give Emaar more land in Dubai until its foreign projects start making money, has soured relations with investors at a time when turmoil in credit markets has made them more averse to risk.

Emaar said on March 19 it would give 2.364 billion new shares to Dubai Holding, owned by the emirate's ruler, in exchange for land. It has yet to give details of the agreement, which would give the government a majority stake, including the extent, location and value of land.

"The lack of transparency is the main reason for the sliding stock. Investors are frustrated after four months and need information," said Rami Sidani, senior associate, asset management at Dubai-based Shuaa Capital.

Emaar shed no light on the transaction at a stormy conference call with analysts on Tuesday.

The deal could be concluded next month, Amit Jain, chief financial officer of Emaar Dubai, said on the call, holding out the possibility that talks could collapse if the terms were not good for shareholders.

Failure to clinch a deal could have implications for Emaar's credit rating, Moody's Investors Service said.

"If it doesn't happen we need to look at the smaller government ownership and smaller land bank as it could have implications for the rating," Phillip Lotter, senior credit analyst at the rating agency, said.

"At the moment the rating is stable and there was nothing to suggest it should change," he said.

Moody's assigned Emaar a long-term foreign and local currency rating of 'A3' in July, which the developer said it had obtained to prepare for borrowing by its subsidiaries.

Emaar operates in 16 countries but more than 80% of its revenue comes from Dubai.

The US was the second largest source of income, accounting for about 16% of revenue in the second quarter, but Jain warned on Tuesday the US operations could take a hit from the crisis triggered by mortgage defaults.

The slowing US housing market was one of the reasons Emaar missed analysts' second-quarter profit forecasts.

That was before the crisis in US subprime, or high-risk, mortgages spilled into global credit markets in July, driving up borrowing costs and triggering a flight from risky assets.

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