(Corrects currency conversion in second paragraph of story published on Feb. 17.)
Feb. 17 (Bloomberg) -- Emaar Properties PJSC, the Dubai developer that regained its investment grade this month, said annual profit climbed 21 percent, exceeding analyst estimates.
Net income rose to 2.57 billion dirhams ($700 million) from 2.12 billion dirhams a year earlier, the company said today in a statement. That beats 2.4 billion dirhams, the average of 13 analyst estimates compiled by Bloomberg. Moody’s Investors Service today upgraded Emaar’s debt by two levels to Ba1, one notch below investment grade.
“Emaar’s fundamental financial strength is underscored by our diversified growth model, with the shopping malls and hospitality business contributing significantly to the total revenue,” Chairman Mohamed Alabbar said in the statement.
Real estate companies in Dubai are benefiting from an economic recovery and a rebound in construction as the Gulf business hub prepares to host the 2020 World Expo with spending of $8 billion on infrastructure projects. Standard & Poor’s raised Emaar’s rating last week by one level to BBB-, the developer’s first investment grade since it was cut to junk in December 2009 amid a plunge in Dubai property prices following the global credit crisis.
“Emaar has been a clear beneficiary of the recovery in Dubai’s real estate market,” Moody’s analyst Rehan Akbar said in a statement today. Though Moody’s remains cautious about the property-market recovery, Emaar’s recurring income and new projects justify the upgrade, he said.
Emaar was up 1.2 percent at 8.55 dirhams at the close of trading in Dubai. The stock has gained 72 percent in the last 12 months, giving the developer a market value of 52.2 billion dirhams.
The company’s hospitality and shopping-mall business contributed 46 percent of annual revenue. Fourth-quarter profit climbed 48 percent to 756 million dirhams as costs fell by 19 percent. Group revenue rose 25 percent to 10.3 billion dirhams.
The developer of the world’s tallest tower plans to build Spanish-style villas and a leisure and shopping development near Dubai’s new airport and apartments near Burj Khalifa. Home prices this year may jump 35 percent to 40 percent, Land Department General Director Sultan Bin Mejren said last month.
Emaar’s rating improved following the presale of properties, an increase in recurring income the conversion of bonds valued at $475.7 million into shares, S&P said. The company has $2.5 billion of debt outstanding, including a $500 million Islamic bond due in August 2016.
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