Dubai real estate developer Union Properties said several investors are interested in its luxury Ritz Carlton hotel, which it could sell if offered around $400 million.
"There are at least three investors looking at it ... If the price is right, Union Properties will sell," chairman Khalid bin Kalban told Reuters.
The third-largest developer in the Gulf emirate has been left crippled by the global downturn, which has sent prices in Dubai's once-booming property sector tumbling some 50 percent from their peaks in 2008.
Earlier on Monday Union Properties said in a statement the hotel, which is situated in the Dubai International Financial Centre, could be sold for a sum close to AED1.5 billion ($408 million).
"Unfortunately it appears the company is being forced to sell one of its trophy assets at the wrong time in the cycle," said Chet Riley, equity research analyst at Nomura International in Dubai.
"But this gives them further breathing space having rescheduled some of their earlier debt."
Kalban said of the firm's AED6.5 billion of debt, AED2.8 billion had been rescheduled for payment to 2011 from 2009, adding the remainder was longer-maturing debt.
In January Credit Suisse slashed its price target for the stock to AED0.03 from AED0.80 and said even if Union Properties overcame its liquidity squeeze, there would not be much equity value left after meeting its debt obligations.
"Union Properties' big problem is liquidity, so if there is news about asset liquidation that might raise liquidity it will be positive for the share price," said Samer al-Jaouni, general manager of Middle East Financial Brokerage Co.
The firm's shares closed 3.9 percent higher at AED0.5 on Monday after issuing the statement on the sale value of the hotel.
"It is a wealthy asset and a high-end hotel ... If it materialises it will take care of a lot of the company's expenses," Union Properties' general manager, Khalid al-Jarwan told Reuters earlier on Monday.
The firm said it has 5,000 units that will be transferred to its rental portfolio, which will be worth AED500 million a year.
The Ritz Carlton hotel will be handed over to investors in May, Kalban said last month, adding he expected the firm's fourth-quarter operating profit to be about AED200 million before taking provisions and full-year about AED450 million.
The 15-storey hotel will be the second Ritz Carlton hotel in Dubai. (Reuters)For all the latest travel news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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