ENBD Reit’s occupancy portfolio jumps to 80%

Anthony Taylor, head of real estate at Emirates NBD Asset Management.
Anthony Taylor, head of real estate at Emirates NBD Asset Management.

ENBD REIT also substantially reduced its operating, fund, and finance costs, negotiated revised lease terms, and increased the average length of its leases during an active 2022 financial year.



by

A Staff Reporter

Published: Thu 26 May 2022, 3:51 PM

Last updated: Thu 26 May 2022, 3:54 PM

ENBD REIT, the Shariah compliant real estate investment trust managed by Emirates NBD Asset Management Limited, announced its financial results for the year ended March 31, 2022, during which occupancy of its portfolio rose to 80 per cent from 76 per cent the year before.

The trust upgraded buildings and refinanced its debt during the period to prepare the portfolio, amid signs of stabilisation of the property market in the second half of the year.

ENBD REIT’s property portfolio value stood at $356 million, down 1.1 per cent year on year whilst net asset value (NAV) was $167 million or $0.67 per share at the end of the financial year, 7.4 per cent lower than the year before due to capital expenditure on the buildings, in particular the refurbishment to Al Thuraya Tower, and an accounting liability relating to the cross currency profit rate swap.

ENBD REIT also substantially reduced its operating, fund, and finance costs, negotiated revised lease terms, and increased the average length of its leases during an active 2022 financial year.

ENBD REIT’s board of directors has proposed a final dividend of $5,000,000 or $0.02 per share for the 6-month period ending March 31, 2022, a 13.6 per cent increase from the same period of 2021. This brings the total dividend payable to shareholders for the year at $9,500,000, a 2.7 per cent increase from previous year.

The total dividend return for the year is equivalent to 5.7 per cent of NAV and 8.8 per cent of the share price as at the March 31, 2022. Subject to shareholder approval of the dividend at the annual general meeting, the shares will trade ex-dividend on July 7, 2022, with the record date set as July 8, 2022 and the payment date on July 29, 2022.

“During 2021-22 we took many steps forward that strengthened ENBD REIT’s business and prepared it to prosper in the coming year and beyond. These included completion of a major upgrade of Al Thuraya Tower 1 in Dubai Media City, to create a modern and sophisticated office environment. Our flagship Edge building in Dubai Internet City received the prestigious LEED Gold sustainability certification. These measures reflect our commitment to providing desirable facilities of the highest quality across our portfolio to attract tenants at favourable rents. We also increased our Weighted Average Unexpired Lease Term from 4.1 years to 4.3 years primarily through the renegotiation of the long term lease on the Uninest student accommodation building,” Anthony Taylor, head of real estate at Emirates NBD Asset Management.

“With one of our finance facilities maturing in November 2021, we took advantage of the lower interest rate environment to refinance our entire debt facility with Emirates NBD and Commercial Bank of Dubai, on more favourable commercial terms which should result in considerable savings over its five-year term. Our loan-to-value ratio stood at 54 per cent at the end of 2021-22, up from 52 per cent the year before. Our focus on streamlining costs resulted in a 10.9 per cent fall in operating expenses due to active management of the properties, while fund expenses fell 19.3 per cent mainly on reduced management fees being charged on a lower NAV as well as no additional provisions having to be made in the year. Finance costs were also down 6.4 per cent from the previous year, resulting in a total expenses saving of 11.6 per cent year-on-year.”

Gross income fell 14.6 per cent from the previous year mainly due to the renegotiation of the Uninest lease and other leases throughout the portfolio being concluded at lower rates following on from the impact of the pandemic and soft market conditions remaining in the office and alternative sectors. This fall in gross income resulted in a decrease in net rental income of 19.7 per cent to $9.5 million despite management’s best efforts to reduce expenses.

“In the coming period we will strengthen our policy of securing reliable and predictable revenues in order to manage any market volatility, while ensuring lease terms contain covenants of appropriate strength. We will continue to implement cost saving initiatives and safeguard our financial position to maintain consistent dividend distributions. In addition, we will consider any attractive opportunities for asset disposal or acquisition in order to ensure an optimal mix of properties in our portfolio,” concluded Taylor. — business@khaleejtimes.com


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