Dubai developer Nakheel is looking to raise about 5 billion dirhams ($1.36 billion) of equity to finance housing and infrastructure projects via an initial public offering of two real estate investment trusts (REITs).
Nakheel, owned by the Dubai government, is in negotiations with banks about founding two REIT companies - to support finance infrastructure schemes and the other to finance residential projects, said Chief Financial Officer Kar Tung Quek.
Between them, the REITs would aim to hold assets worth between 8-10 billion dirhams, Quek said.
"We would sell assets into them," said Quek, whose Nakheel is developing about $60 billion of residential and commercial projects (mostly in Dubai)including three palm-tree shaped islands on the emirate's coast.
Nakheel aims to develop a business managing REITs, Quek said. "It's fee based and quite a gainful business," he said. Ordinarly, firms charge about 1 per cent of the value for managing a REIT, Quek said.
A REIT is a listed property company which usually does not pay tax on its earnings as long as these are mostly distributed to investors in the form of dividends. They are prevalent in several countries including the United States, Australia, Japan, France and Britain.
Nakheel said it would retain control of about 30 per cent of shares in each of the REITs, selling the rest to institutions and the public.
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