By: Andrew Torchia
DUBAI: Two major Abu Dhabi real estate developers, Eshraq Properties and Reem Investments, said on Wednesday they aimed to merge as an economic slowdown in the emirate puts the housing market under pressure.
The companies said discussions were at an advanced stage for Reem to receive new shares in Eshraq in exchange for Eshraq acquiring Reem’s entire business and assets. They said this would create Abu Dhabi’s second largest listed developer.
The deal remains subject to conditions, including a final agreement on the terms including price, as well as obtaining regulatory approvals, the companies added. Proposed terms were not disclosed.
Eshraq, which had assets of 1.46 billion dirhams ($398 million) at the end of June, reported a net profit of 636,000 dirhams for the second quarter compared to a year-earlier loss of 101.4 million dirhams. Its shares gained 2.4 percent early on Wednesday in response to the merger announcement.
Unlisted Reem had net assets of 5.3 billion dirhams at the end of last year, when its annual net profit edged up 2 percent to 216 million dirhams, according to its website.
Low oil prices are weighing on Abu Dhabi’s economy; average selling prices for prime apartments sank 11 percent from a year earlier in the second quarter of this year, according to consultants JLL.
Abu Dhabi’s two biggest property firms, Aldar Properties and Sorouh Real Estate, merged in 2013 to create a firm with about $15 billion in assets.
Eshraq is being advised in its merger talks by Shuaa Capital and Reem by First Abu Dhabi Bank. (Editing by Louise Heavens)
Source: reuters