Gone Fishin’

Launched by Minor Hotels seven years ago, AVANI Hotels & Resorts has announced the signing of its third Dubai property – AVANI Hotel Suites & Branded Residences, a 48-storey tower, due to open in 2020. It will comprise 527 units, with 264 serviced apartments and 263 residences. The hotel management company currently has a portfolio of 23 properties in fifteen international locations.

Emaar Hospitality has launched a 220-key Vida Za’abeel hotel which will form part of a twin tower (68 and 70 storeys) mixed-use development for Emaar and Meraas; it will also include 1-3 B/R serviced apartments, as well as various amenities, including 3k of retail space. No further details, including cost and timeframe, were made available.

The latest EY report confirms that the Dubai hospitality sector is still holding its own, even though some indicators are dipping. Although 2017 occupancy rates averaged 77.7% (falling 1.4%), average room rates of US$ 243 (down 4.4%) and revenue per available room of US$ 189 (down 6.2%) all declined, they are still the highest in the MENA.

As indicated in an earlier blog, and after a decade in Dubai, the QE2 has finally been moved to Dubai Drydocks for refurbishment that will see the famous ocean liner become a floating hotel as early as next month. The operator of the upcoming 5-star property will be PCFC Hotels.

Green Modelling Contracting has won a US$ 48 million contract to build Azizi Developments’ new HQ in Meydan Avenue, as the developer continues to expand its real estate portfolio at a rate of knots. The 520k sq ft building will have an apparent wave-shaped crystallised fabric exterior.

Enoc Group has opened the first of sixteen new service stations for 2018, located at Al Marmoum; over the next three years, it expects to add a further 54 stations. As with similar installations, the 72.7k sq ft station has a Zoom convenience store, Pronto, a drive-thru McDonalds, a drive-thru ATM, a cafeteria and a prayer room.

With the introduction of the Contingency Approach Control Room and other restructuring enhancements, costing US$ 16 million, capacity at Dubai International has increased by 25%. This has also resulted in a marked reduction in the number of delays, caused by planes having to wait for air traffic control clearance to land; it was estimated that in 2015 airline delays in the ME caused losses of US$ 2.5 billion. Last year, the airport dealt with 500k air traffic movements, set to rise by 20% to 600k over the next five years.

In the first two months of the year, Al Futtaim Motors – with government assistance – has confiscated a reported 179k fake car parts, valued at over US$ 1 million, in eight raids across the country.

GFH Capital is planning to sell its 70% stake in Dubai’s Philadelphia Private School, founded in 2006 and valued at US$ 35 million. No other details were readily available.

The UAE and Kazakhstan have signed six separate investment and business agreements, two of which involved DP World. The deals covered the acquisition, governance and management of Special Economic Zones in Aktau (the country’s main cargo and terminal hub) and Khorgos, with plans to acquire 49% and 51% stakes respectively. Both locations will play major trade roles along the New Silk Route.

With the country recently appointing a dedicated Minister of Artificial Intelligence, and with Dubai introducing a fully functional robot police, it is no surprise that the emirate will host the first edition of the World AI Show next month. This is just part of Dubai’s mission to become the world’s smartest location.

Government-controlled Dubai Aerospace Enterprise, which bought Dublin-based AWAS last year, is set to arrange a US$ 400 million syndicated loan. Last year, it also issued senior bonds of US$ 2.3 billion to partly pay for the acquisition. The leasing and maintenance company is now one of the biggest in the world, with about 400 aircraft, valued at US$ 14 billion.

April will see no change in Special 95 gas prices which remain at US$ 0.605 per litre but diesel will retail 1.2% lower than March prices, at US$ 0.654.

There are reports that Abraaj Group, founded in 2002, is to divest part of its fund management business, which oversees funds globally for institutional investors, to raise cash. At the same time, Dubai market regulators are discussing with Abraaj some investors’ concerns about improper allocation of capital in a healthcare fund. There has also been a raft of senior managers recently leaving their positions, including the global head of private equity, the global head of impact investing and the CFO.

It was announced that Drake & Scull International will issue a five-year convertible sukuk in Q2, with a probable value of US$ 122 million. Conversion, after expiry in 2023, will be at a set price of US$ 0.82 per share or at a 25% discount of the market price.

As expected, Emirates NBD shareholders have given the green light to the bank to increase its capital base, via a rights issue, to US$ 2.0 billion; some of the money raised could be used for a proposed purchase of Turkey’s Denizbank. At this week’s AGM, various other resolutions were passed including increasing the foreign ownership of shares to 20%, as well as agreeing to a US$ 12.5 billion euro medium term notes programme, a US$ 1 billion structured note programme and a US$ 1.5 billion Australian dollar debt issuance.

Last year, UK Export Finance financed an approximate US$ 2.8 billion of GCC projects, the government’s largest single regional allocation. The British government’s export agency is to open only its fourth dedicated global office in the country, following Brazil, Indonesia and Turkey. UKEF has indicated that it has up to US$ 7.0 billion available to project sponsors in the UAE, as well as an additional US$ 5.6 billion for Dubai projects. It has already supported a number of the emirate’s developments, including the US$ 308 million Dubai Arena, (a 17k-person multipurpose stadium contracted by British construction firm Kier), DWTC One Central and Bluewaters. Back in 2015, the UKEF helped Emirates purchase four Airbus 380s, becoming the first export credit agency to develop a guarantee for sharia-compliant sukuk in the debt capital markets.

With a US$ 327 million finance facility from its major 52.3% shareholder, Meraas, and a three-year moratorium on principal repayments on debt of US$ 1.1 billion, DXB Entertainments is confident that it will not have to make any further cost cuts. The theme park operator, with a set-up cost estimated at US$ 3.6 billion, has posted two successive losses – of US$ 132 million and US$ 300 million – since its 2016 opening and welcomed 2.3 million visitors last year. Next year, it will open both the Legoland Hotel and the US$ 708 million Six Flags theme park.

Since its 2014 launch, Marka has failed to post an annual profit, with the latest 2017 figures showing a US$ 66 million loss, on the back of lacklustre revenue of US$ 27 million. The company has been on an active cost cutting exercise and a restructuring programme that has seen a more efficient and leaner retailer, as well as the exiting of certain unprofitable units. On Thursday, its share value was at US$ 0.128, less than half of its September 2014 opening of US$ 0.272.

The DFM opened on Sunday (25 March), at 3150, and fell a further 41 points this week to close 1.3% lower at 3109 by Thursday, 29 March. Emaar Properties again disappointed, trading US$ 0.02 down at US$ 1.58, with Arabtec also US$ 0.02 lower at US$ 0.61. Volumes traded higher at 231 million shares on Thursday, valued at US$ 80 million, (compared to 144 million shares worth US$ 71 million the previous Thursday – 22 March). For the month of March, the market lost 135 points (4.2%) with both Emaar and Arabtec lower – by US$ 0.10 and US$ 0.05 respectively.

By Thursday, Brent Crude dipped over the week, shedding US$ 0.55 (0.8%) to US$ 68.91, with gold up US$ 3 at US$ 1,330 by 29 March 2018.

According to Saudi Crown Prince Mohammed bin Salman, his country and Russia, the two largest global oil producers, are discussing a longer-term pact to extend the January 2017 agreement to curb world crude supplies.

In a move to wean itself off oil dependency, Saudi has signed a US$ 200 billion MoU with Japan’s SoftBank Group to build the world’s biggest solar power development. It is estimated that the plant will reach full capacity by 2030 and could cost around US$ 1 billion a gigawatt, whilst cutting energy costs by US$ 40 billion. The massive project has the potential to create 100k jobs and will be a major factor in diversifying the oil-dependent Saudi economy. It is also expected to spend US$ 80 billion on building 16 nuclear reactors to meet the surging demand for electricity which has risen on average 9% per annum since the turn of the century.

The head of an organised crime ring, suspected of stealing US$ 1.2 billion over the past five years, by the use of Carbanak and Cobalt malware, has been arrested in Spain. Having infiltrated over 100 banks, its modus operandi was to siphon off cash via bank transfers or dispensed automatically through cash machines.

Asia’s largest company, Tencent Holdings, slumped 4.4% on Friday following its warning that it would sacrifice short-term margins to solidify future growth, by investing in content and technology.

Once planned to be the world’s biggest global player, Uber continues to retreat from the Asian market. After selling its Chinese and Russian businesses to Didi Chuxing in 2016 and to Yandex, it is now divesting its SE Asian ride share and food delivery company, covering eight countries, to Grab; it will however retain a 27.5% stake. No financial details were available but the deal – that could top US$ 6 billion – covered all of its operations, including Uber Eats. Last year, it has to be remembered that Uber did lose US$ 4.5 billion and it has to take steps to move into positive territory – one of which is to exit loss-making markets.

Having just pulled out a planned acquisition of Pfizer’s consumer healthcare unit, GSK is to pay Novartis US$ 12.9 billion for its 36.5% stake in the Consumer Healthcare Business, with US$ 10.9 billion sales in 2017. This will give the pharmaceutical giant full control of a JV which owns products such as Sensodyne, Panadol and Nicotinell patches. To help pay for this purchase, it plans to sell its Horlicks brand, as well as MaxiNutrition and other of its nutrition products.

The EU has approved Bayer to buy its US competitor, Monsanto, for US$ 62.5 billion which will see the enlarged entity control 25% of the world’s seeds and pesticides market. This is the third merger of its kind following the earlier Dow/DuPont and ChemChina/Syngenta consolidations. No wonder then that many are concerned about the power and potential misuse of assets these three mega companies may, or possibly will, bring to the global arena.

On Friday, Dropbox shares jumped 35% on its first day of trading, valuing the company at US$ 12.7 billion. The eleven-year old tech company has yet to post a profit, although its 2017 losses narrowed to just over US$ 100 million, whilst revenue was up 31.4% to US$ 1.1 billion.

The latest in a long list of struggling UK retailers is fashion chain Next, posting its second consecutive annual profit fall (of 8.0%) to US$ 1.1 billion, with more bad news on the horizon. Whilst actual stores sales fell by 9.1%, (leading to an expected closure of ten outlets this year), on-line revenue increased by 11.2%.

Yet another UK retailer in trouble seems to be the House of Fraser with the banks calling in EY to see whether it can be rescued, as the crisis extends along the country’s high streets. With 59 department stores, it is saddled with debt, including a US$ 490 million publicly traded bond. The major 51% shareholder is Nanjing Xinjiekou who is apparently keen to sell his controlling share to a Chinese tourism group – Wuji Wenhua. During the Christmas period, it reported a 2.9% decline in store sales and a more worrying 7.5% fall in online sales.

The UK’s biggest independent furniture retailer, DFS, has reported a 58% fall in H1 profits to US$ 10 million, although there was improvement noted in the last two months of the period; revenue was 4.0% higher at US$ 555 million. Despite the sluggish market conditions, the retailer did acquire smaller rivals Sofology for US$ 35 million and Multiyork.

Conviviality, which includes Bargain Booze, Wine Rack and Matthew Clark in its portfolio, is the fourth UK retailer to announce financial problems this week. The troubled company, which supplies 700 off-licences and 23k pubs, has drafted in PwC to help with a turnaround in fortunes as it looks for a US$ 175 million lifeline, from a share issue; the company is currently valued at US$ 260 million.

The problem is not confined to British shores, with the world’s second biggest clothing chain, Sweden’s H&M, posting a 61% profit decline to US$ 151 million, in its latest quarterly report. The retailer, with 4.7k stores employing 171k in 69 countries, also saw sales fall for the second successive quarter. Apart from its own H&M stores, the retailer has mid-market chains such as & Other Stories, Monki and Cos in its portfolio and expects to open a further 220 outlets this year. Weak sales have seen an increase in stock levels (by 7%) that will result in the need for further future discounting, which will again negatively impact future margins. (It seems highly probable that the local Dubai retail sector will be undergoing similar problems as are being experienced elsewhere).

No wonder Zambian President Edgar Lunga is keen to see First Quantum Minerals settle a massive US$ 7.9 billion tax bill (including US$ 5.7 billion in interest).  The Canadian miner derives 84% of its turnover in the African country and accounts for over 50% of the country’s copper production.

After successfully carrying out stipulated economic reforms, Greece will finally receive a US$ 8.0 billion loan installment as part of the third international rescue package to service public debt and clear domestic arrears. Greece has been reliant on massive loans since 2010 but if all goes to plan, it should exit the ESM programme in Q3. During that time, the country has witnessed its economy contracting by 25% and unemployment levels of between 20% – 30%.

For the first time since October 2016, Germany has posted a decline in import prices which fell 0.6%, year on year, in February, compared to a 0.7% rise a month earlier; excluding oil products, import prices fell by 1.0%. Over the same period, year on year export prices gained 0.5%, slightly lower than January’s 0.7% return.

On Friday the US President signed a US$ 1.3 trillion federal spending measure to maintain the running of government services. The finance package included additional spending on defence but did not fully pay for his planned Mexican border wall and did not extend protection from deportation to some 700k “Dreamer” immigrants. Earlier in the day, he had used one of his famous tweets to threaten a veto that would have resulted in a government shutdown.

The US current account deficit (the net sum of income flows from goods and services) moved 26.3% higher, quarter on quarter, in Q4 at US$ 128 million, equating to 2.6% of GDP. Most of the deficit in goods derives from non-oil trade, whilst the oil and gas trade balance is nearing zero, accounting for 4.1% of the country’s economy. In February, both exports and imports rose month on month – by US$ 2.9 billion to US$ 136.5 billion and US$ 3.0 billion to US$ 211.9 billion. Whether the recently introduced Trump trade tariffs (along with the massive tax cuts) have the effect of reducing the deficit remains to be seen but is likely to see the balance go in the other direction.

It can only be Dubai when you read that the first Happiness Platform has been built to allow visitors to fish in a “positive and stimulating atmosphere”. At 125 mt long, the distinctively-designed facility on the Jumeirah-3 Beach is equipped with solar-powered lighting poles (for 24-hour use) and houses a beach library for general use. No doubt April will see a lot more residents and visitors have Gone Fishin’.

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