ENBD Reit offers $4.4m semi-annual dividend

ENBD Reit, a Shariah-compliant real estate investment trust, said on Sunday that its net asset value declined by 17 per cent to $180 million or $0.72 per share during the financial year ended 31st March 2021.

The trust, managed by Emirates NBD Asset Management Limited, said the total value of the property portfolio of ENBD Reit’s dropped 12 per cent to $360 million on the previous year while loan-to-value (LTV) ratio stood at 52 per cent.

In a statement, the company said downward movement on valuations was driven by the dual pressures of a softening real estate market and pandemic-induced economic pressures that affected gross rental income. “Occupancy in the portfolio remained healthy, with management providing a range of solutions to support tenants in genuine financial distress in order to secure income. Meanwhile, in an effort to continue to reduce costs, management reduced fund and portfolio management expenses significantly, while the Fund benefited from lower finance costs due to a lower lending rate environment.”

ENBD Reit’s board of directors has proposed a final dividend of $4.4 million or $ 0.0176 per share – equivalent to 2.44 per cent of NAV and 4.10 per cent of the share price – for the six-month period ending March 31, 2021, subject to shareholder approval at the annual general meeting.

The total dividend payable to shareholders for the year is $9.25 million – equivalent to 5.13 per cent of the cum-dividend NAV and 8.62 per cent of the share price. “Following the AGM and subject to shareholders’ approval, the shares will trade ex-dividend on 7th July 2021, with the record date set as 8th July 2021 and the payment date on 27th July 2021,” said the statement.

Anthony Taylor, head of Real Estate at Emirates NBD Asset Management, said the 2020-21 financial year was challenging, with soft market conditions exacerbated by the Covid-19 pandemic. “During the year, we sought to safeguard occupancy rates to limit downward movement on rental income, while reducing fund and operating expenses throughout the portfolio. While occupancy rates were affected by a sustained softening of the real estate market and weak economic indicators, blended occupancy in the portfolio remained healthy, which can be attributed to our active and flexible leasing strategy.”

Taylor said the company also negotiated the renewal of its largest tenant, Oracle, at The Edge building, for a further five-year term. “This agile approach to leasing and cost management has seen net rental income from the portfolio increase 8.0 per cent year-on-year, excluding valuation movements.

“Earlier in the year, we took the decision to offer rental relief to tenants who most needed it, which proved important for securing occupancy and long-term income. As pressures in the market have continued to impact valuations, we have been using this as an opportunity to renegotiate contractual leases with tenants at lower rates that are in line with market benchmarks, while extending contractual lease terms further into the future,” said Taylor.

— issacjohn@khaleejtimes.com