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Sun 3 Jan 2016 10:16 AM

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Emaar says sees "no material impact" from hotel fire, as shares fall in opening trading

The developer's The Address Downtown hotel on New Year's Eve, which it says was covered by insurance

Emaar says sees "no material impact" from hotel fire, as shares fall in opening trading
(AFP/Getty Images)

Shares in Emaar Properties tumbled on Sunday after a large fire at one of its hotels, but the stock came off its lows as Dubai's leading real estate developer said it expected the disaster to have no material impact on its finances.

Emaar's shares were down 2.5 percent at AED5.55 after 45 minutes of unusually heavy trade, off a low of AED5.44.

The blaze engulfed Emaar's 63-storey Address Downtown luxury hotel and residential tower on New Year's Eve; authorities are still investigating the cause and the hotel is closed indefinitely. There were no fatalities at the flagship property.

In a brief statement on Sunday, Emaar said: "The building and risk of fire are covered by insurance so there should be no material impact on the company as a result of this incident."

In another statement late on Saturday, Emaar chairman Mohamed Alabbar said the hotel would be rebuilt but did not give a timeline or discuss the potential financial impact. The company's website lists five Address hotels.

Analysts said earnings lost due to the hotel closure would be small compared to Emaar's total business. Arqaam Capital lowered its estimate for the company's earnings per share in 2015 by 2 percent and reduced its forecast for 2016 revenues by 1 percent.

Emaar's hospitality division accounted for 12 percent of the firm's revenue in the nine months to Sept. 30, 2015, and 5 percent of its earnings before interest, taxes, depreciation and amortisation, its financial statements show.

The division's nine-month gross profit was 463 million dirhams ($126 million), down from 489 million dirhams a year earlier. Revenue was near-flat at 1.2 billion dirhams, while EBITDA fell 19 percent over the same period to 210 million dirhams.

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UKExpat 4 years ago

Surely the big question that should be on everyone's lips is not how it started or how much it will cost to repair but what materials were actually burning to cause such a large volatile blaze. Also how many other hotels/buildings contain such dangerious construction/decoration materials in Dubai. An urgent, independent, open and stringent investigation should be immediately started into this without interference from outside vested interests to discover if this is in fact a large scale problem or not. Failure to take this sort of action now will cause untold damage to Dubai's good name and reputation if another similar incident were to occur, particularly if fatalities happen.