DUBAI, March 15 (Reuters) - Dubai state developer Nakheel is considering the sale of its district cooling assets, three sources familiar with the matter told Reuters, as real estate companies in the United Arab Emirates offload non-core activities amid the coronavirus downturn.
Nakheel, the developer of the emirate’s palm-shaped islands, has hired financial advisory Synergy Consulting to manage the process, said two of the sources who declined to be named as the matter was not public.
Nakheel declined to comment and Synergy did not respond to a request for comment.
District cooling firms deliver chilled water through insulated pipes to offices, as well as industrial and residential buildings.
Nakheel’s planned sale comes after Dubai’s real estate sector, sluggish for most of the past decade, took a further hit from the COVID-19 pandemic, which led many foreign workers to leave and exacerbated oversupply problems.
Emaar Properties, Dubai’s largest developer, sold a stake of its downtown cooling business last year for $675 million, while Abu Dhabi’s Aldar Properties agreed to sell two district cooling assets in December.
Separately, Dubai is considering selling a stake in the cooling system operations of Dubai International Airport and has hired Standard Chartered to arrange the process, sources familiar with the matter told Reuters in November.
Dubai-listed National Central Cooling Co (Tabreed) and Emirates Central Cooling Systems Corp (Empower) have expressed interest in Nakheel’s deal, the sources said.
The two companies did not immediately respond to requests for comment.
One of the sources said the deal, which could be valued at around one billion dirhams ($272.27 million), is structured as a 30-year concession agreement.
Nakheel’s district cooling assets include 20 units around Dubai with a total capacity of 100,000 to 120,000 tonnes of refrigeration.
The developer, which was forced into a massive debt restructuring following the 2009-2010 real estate crash in Dubai, last year slashed salaries by as much as 50% as it tried to weather the coronavirus crisis. ($1 = 3.6728 UAE dirham) (Reporting by Davide Barbuscia and Hadeel Al Sayegh; Editing by Ramakrishnan M.)