DUBAI: A unit of Dubai World has sold its Atlantis resort, which sits at the head of a palm tree-shaped island in the emirate, as the state-owned group raises funds to meet huge debt repayments after a $25 billion restructuring in 2011.
Investment Corp. of Dubai (ICD), a holding company of some of the emirate’s top groups which is also state-owned, has bought the resort from the unit, Istithmar World, for an undisclosed sum, ICD said.
“Our acquisition of an asset that is a major contributor to the domestic tourist industry is in line with our overall strategy to support long-term sustainable growth for Dubai,” Khalifa Al Daboos, deputy chief executive officer of ICD, said in the statement.
A spokesman for Istithmar in Dubai declined to comment.
The sale adds to a series of disposals by Dubai World, which had promised to sell non-core assets under the debt-restructuring plan drawn up when the group fell victim to a property market crash in the emirate and the after-effects of the global financial crisis.
The firm needs to repay $4.4 billion in May 2015 under its restructuring terms.
Dubai’s economy is recovering due to renewed investor optimism in its trade, tourism and real estate sectors but the freewheeling emirate still faces debt repayments of about $50 billion over the next three years.
Economic recovery is bolstering finances of some state entities which are stepping in to reduce the debt burden. Dubai Electricity & Water Authority (DEWA), a state-owned utility, plans to buy Palm Utilities, a district cooling company owned by Dubai World, according to local media reports.
Dubai World’s restructuring plan envisaged that it would raise $1.3-$2.3 billion between 2010 and 2012, and a further $3.9-$5.3 billion in 2013-2015 through sales of holdings such as P&O Ferries and MGM Resorts International.
However, unfavorable conditions for selling assets and the fall in valuations since the global financial crisis meant Dubai World had to sit on its hands and began offloading bits of its portfolio only this year.
Atlantis was set up in 2008 as a joint venture between Istithmar World and Kerzner International. In April 2012, Istithmar acquired Kerzner’s 50 percent stake in the property for $250 million.
The Atlantis sale is Dubai World’s second disposal this year after selling British logistics warehouse developer Gazeley in June. It is close to selling The Fontainebleau hotel in Miami Beach, Florida.
State-owned ICD has holdings in some of the emirate’s most high-profile brands, including Emirates airline, Emaar Properties and lender Emirates NBD.
Istithmar World’s investment portfolio spans consumer, industrial and financial services, hotels and commercial property sectors. Among its assets are entertainment group Cirque du Soleil and the Mandarin Oriental hotel in New York.
The investment arm, which made a spate of overseas purchases during the early part of the decade, was hard hit by global financial crisis as asset values dropped sharply and access to credit dried up.
The firm named veteran banker Ziad Makkawi as its new chief executive in September.