UP in talks over Ritz-Carlton DIFC

A view of DIFC entrance. Ritz-Carlton, housed in DIFC, is expected to be operational by Q2 2010. (EB FILE)

Two foreign investors from the US and Qatar have initiated talks with Union Properties, one of the country's leading developers, for buying its Ritz-Carlton hotel at the Dubai International Financial Centre (DIFC), a well placed industry source told Emirates Business.

"Of the two interested buyers, one is a non-resident Indian settled in the US who has a presence in hospitality business, while the second buyer is a firm from Qatar," said the senior executive at a reputed hospitality consultancy who wished to remain anonymous.

United Properties Chairman Khalid bin Kalban said the company was holding talks with several parties. "Our discussions are on with several parties," he told Emirates Business, refusing to comment on specific parties.

According to the source, negotiations are in an initial stage with both the buyers having displayed their willingness to buy the property.

"Many investors, who are often referred as maverick investors by the media, normally invest at lower valuations and then exit at much higher valuations at a better time, and hence, booking huge profits," the source said.

In February, the company, in a statement to the Dubai Financial Market, said the Ritz-Carlton DIFC might sell at a price close to Dh1.5 billion. The hotel is expected to become operational by the second quarter of 2010.

The industry source did not comment on the current price at which the deal may happen. However, speaking on the mode of payment, the executive said: "Mode of payment may depend on priorities of the buyer and the seller. Buyer may opt for tranche based payment or seller may choose to transfer the loans on the property to the buyer." According to the company's website, construction on the 2,000 square metre, 14-storied Ritz-Carlton DIFC is on track and the hotel will welcome its first guests in mid-2010.

The company has maintained that it would open the hotel anytime between March and May this year.

The new hotel will have 341 rooms with 124 serviced and managed apartments and boasts of a 10-storey waterfall cascading down the building directly into the courtyard.

Negotiations for the property may pick up after the hotel opens, said industry trackers.

Union Properties reported a net loss of Dh498 million for 2009, compared with a net profit of Dh763.1m the previous year. The company said 2009 revenues totalled Dh4.4bn and profits before provisions for contracting and property valuation were Dh373m. Total assets as at the end of December 2009 were Dh17.5bn.

The developer has already announced the rescheduling of debts totalling to $1.8bn from 2010 to 2011. According to a Reuters report, Union Properties last month reported its third consecutive quarterly loss on provisions for contracting and property valuation.

The third-largest developer by market value made a loss of Dh148m, which Reuters calculated from previous statements.

The company made a net loss of Dh498m for 2009, it said in a recent statement on the Dubai bourse's website, but did not provide a breakdown of its results, according to the Reuters report. (With inputs from Parag Deulgaonkar)

 

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