Emaar Properties PJSC (EMAAR)’s, the builder of the world’s tallest tower in Dubai, agreed to pay the first cash dividend since 2008 after a three-hour meeting that saw heated arguments between the shareholders and executives.
The real-estate developer will pay a 10 percent cash dividend for 2010, a total of about 600 million dirhams ($163.4 million), Chairman Mohamed Alabbar, who initially wasn’t proposing a dividend, said today in Dubai. Such payment may leave the company ill-prepared to face emergencies, he told shareholders at the general assembly meeting today in Dubai.
“Everyone knows that the real estate market is going through difficult times,” he said. “I know that most people think that this year is difficult and next year is difficult and the year after, maybe, God willing, easier.”
The company’s net income tumbled 62 percent in the fourth quarter to 274 million dirhams, compared with 720 million dirhams in the corresponding period a year earlier. Dubai home prices slumped 62 percent from their peak in mid-2008 after the global credit crisis caused mortgage lending to dry up and speculative demand waned, Deutsche Bank AG said on Feb. 14.
Emaar, which opened the 200-story Burj Khalifa in January 2010, handed over 770 units in the residential and commercial tower and 3,500 units in total. Buyers in Dubai pay for apartments based on how much work is completed, with a final amount due when keys are handed over.
Emaar shares rose 0.6 percent at to 3.18 dirhams at the 02:00 p.m. close in Dubai, the highest level since Feb. 15 according to data compiled by Bloomberg. The shares are down 10 percent this year.
Several shareholders complained during today’s meeting that their investments in the company haven’t paid out in years and demanded as much as a 30 percent dividend.
“If we pay what you are asking of us, we would be in automatic default and we would breach our covenants with banks, which stipulate the company’s needed cash position and other requirements” Alabbar said repeatedly. Shareholders rejected his proposal to pay a 500 million-dirham cash dividend and a 5 percent bonus share before agreeing to the 10 percent payout.
Emaar owns a 45 percent stake in Islamic mortgage provider Amlak PJSC and has outstanding loans of 772.6 million dirhams to the company, which was barred from trading in November 2008.
Emaar said in January that it sold $500 million in Islamic bonds, and the company raised the same amount in December to repay short-term loans. The developer plans to raise $2 billion in total.
To contact the editor responsible for this story: Andrew Blackman in Berlin at Ablackman@bloomberg.net