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Thu 17 Sep 2009 02:05 PM

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Dubai World shifts some property assets to Istithmar

UPDATE 1: Gov't conglomerate moves execs over from developer Nakheel in shake-up.

Dubai World shifts some property assets to Istithmar
DUBAI WORLD: Istithmar World said last week that its two co-chief investment officers will be leaving the firm. (Getty Images)

overnment conglomerate Dubai World shifted certain hotel and property assets, as well as executives, from developer Nakheel to its Istithmar World unit on Thursday, as part of its restructuring.

The conglomerate said the assets were mainly in international markets and would place Nakheel Hotels, which has properties in Asia, Europe and the United States, under Istithmar.

Analysts said the changes - including a new chief investment officer, after the announced departure of Istithmar's two co-chief investment officers last week -- sent a comforting signal to foreign investors, worried about Istithmar's prospects.

"The fact they have appointed a new team means that this vehicle is continuing," said Mohammed Yasin, chief executive of Shuaa Securities.

"They will have new objectives to try to arrange refinancing for investments, to refinance the leverage and maybe try to recoup as much as can be from some of those investments that were done."

There had been speculation that Istithmar, the investment arm of the Dubai government and owner of US luxury retailer Barneys New York, may be facing difficulties.

A media report last week said Istithmar is freezing investments as part of a restructuring that may result in the sale of the fund or its assets.

Dubai World said in its statement on Thursday that the changes were "part of an ongoing organisational operational restructuring process within the group."

The media report also said its chief executive's job was under review. In a statement last week, Istithmar said Chief Executive David Jackson's job was safe, but did not comment on the rest of the report.

"There was a widening opinion that Istithmar World was potentially being wound down, but this contradicts that opinion," said Fahd Iqbal, vice-president of research at EFG-Hermes.

Dubai World named Andy Watson as chief investment officer of Istithmar World and Binod Narasimhan as chief financial officer, from developer Nakheel and Nakheel Hotels, respectively.

It also appointed Sandesh Pandhare, who already worked at Istithmar, as managing director, private equity at the investment arm.

Hamza Mustafa was appointed managing director, real estate. He was formerly general manager of Nakheel's The World project, a series of man-made islands shaped like a map of the world.

Dubai World also said Joe Sita, chief executive of Nakheel Hotels had left the company.

Istithmar is one of the flagship companies of state-owned Dubai World, which has been hit hard by the global financial crisis. Its real estate unit Nakheel, famous for developing man-made islands shaped like palms, is being closely watched for its ability to refinance $3.52 billion of Islamic bonds, maturing in December.

Dubai World has $59 billion of liabilities, a large proportion of the Gulf emirate's total debt.

Istithmar, which hired an advisory firm in August to help it mull options to shore up Barneys' financial position, said last week that its two co-chief investment officers will be leaving the firm.

Nakheel Hotels, with hotels in New York, London, Bangkok as well as Mexico and Africa, acquired luxury liner Queen Elizabeth 2 in 2007 with plans to convert it into a luxury hotel, off one of its palm islands.

In July, the company said it was mulling moving the ship from the emirate to another location in the region or Africa. (Reuters)

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