Published reports say Dubai may sell its stake in MGM

Bloomberg News reported that Dubai World, the investment arm of the Persian Gulf emirate, believes it could raise up to $19.4 billion over the next eight years by selling assets.

What assets that might be placed on the market have not been determined. Bloomberg and Reuters cited a document Dubai World presented to its banks during a meeting in July.

“These values are quite aggressive even in eight years’ time,” Andre Andrijanovs, an emerging market credit analyst at Exotix Ltd. in London, told Bloomberg News. “I don’t see Dubai World raising this much from real estate.”

Dubai World officials declined comment on the reports.

Dubai World spent more than $5 billion in 2008 to acquire a 50 percent stake in CityCenter and roughly 9 percent of the outstanding share is MGM Resorts. The stock was valued about $80 a share at the time but the market collapse reduced the value by more than 90 percent at one point.

Shares of MGM Resorts have traded from a low of $7.60 to above $16 a share in past 52 weeks.

Dubai World’s ownership stake was surpassed recently by New York-based hedge fund Paulson & Co., which controls 9.5 percent of the company’s outstanding shares.

CityCenter, which was built at a cost of $8.5 billion, now has an equity value of $2.65 billion, placing the value of Dubai World’s stake at $1.325 billion.

According to the International Monetary Fund estimates, Dubai and its state-owned companies racked up $109.3 billion of debt through acquisitions and developments that made emirate a tourism, trade and financial-services hub. About $15.5 billion of that debt is due this year, the IMF said.

Among its U.S. holdings, Dubai World acquired New York luxury retailer Barneys in 2007 for $942.3 million. Barneys has a store at the Palazzo on the Strip.