ENBD REIT, the Sharia-compliant real estate investment trust managed by Emirates NBD Asset Management Limited, has announced its net asset value (NAV) as at September 30, 2022, reflecting a continued improvement to $172 million ($0.69 per share), up from $166 million the previous quarter and $164 million as of September 30, 2021.
The property portfolio value increased by $4.7 million from the previous quarter to $362 million, driven by a portfolio-wide improvement in occupancy rates reaching 84 per cent , from 75 per cent this time last year, thanks to a sustained momentum in leasing activity as the real estate market experiences strong growth.
As a result of a pickup in office rentals, Al Thuraya Tower 1, ENBD REIT’s flagship asset in Dubai Media City, recently achieved 50 per cent occupancy, following the completion of a major refurbishment in March 2022. In addition, Burj Daman, the REIT’s third-largest asset by value in DIFC, also achieved 80 per cent occupancy, marking another milestone as the highest occupancy this asset has achieved since its acquisition in 2015.
Anthony Taylor, Head of Real Estate at Emirates NBD Asset Management, said: “We are pleased to announce a robust performance across the portfolio for the first half of the year, building on the positive trajectory initiated in the first quarter. Occupancy rates and gross income continued to rise, driving the uptrend in portfolio valuations across all sectors. In a buoyant Dubai real estate market, we will maintain a cautious risk management strategy and prudent capital management approach to ensure that we continue to deliver reliable returns to our shareholders, especially in a rising interest rate environment which is set to offset some of the positive performance in our business in the upcoming quarters. As previously stated, we will also consider any attractive exit opportunities to ensure an optimal allocation of properties in our portfolio.”
Gross rental income
ENBD REIT achieved a robust gross rental income of $15 million, up 0.7 per cent from the same period last year, as occupancy improved despite the lower rent from Uninest following the renegotiation of the lease during Covid. The Weighted Average Unexpired Lease Term (WAULT) stands at 4.13 years for the portfolio, and the Loan-to-Value (LTV) ratio remains stable at 54 per cent .
Melanie Fernandes, Senior Portfolio Manager at Emirates NBD Asset Management, said:“Our focus on strategic asset upgrades and renovations has proven to be very beneficial, enabling us to enhance the attractiveness of our buildings, leading to higher occupancy rates across the portfolio. In particular, Al Thuraya Tower 1, our biggest refurbishment project to date, has recently risen above the 50 per cent occupancy, with leasing activity picking up following an extensive refurbishment to the ground floor lobby, toilet and changing room facilities, podium level facilities as well as a upgraded lift system. The combination of our active asset management strategy and strong focus on sustainable real estate to create comfortable, modern, and sophisticated spaces for tenants puts us in a favourable position to take advantage of the continued mprovements in the Dubai property market.”
Operating expenses went up by only 2.2 per cent from the same period last year, as ENBD REIT continued to invest in the maintenance and modernisation of its assets to drive occupancy across the portfolio. Fund expenses increased by 3.7 per cent from the same period last year, in line with the movement in valuations. Moreover, finance costs went up 5.5 per cent from the same period last year, mainly due to a challenging global macro-economic environment which has resulted in rising inflation and interest rates.
Adopting a prudent approach to maintain flexibility in a rising interest rate environment, the management team recommended to the Board of Directors an interim dividend of $4.5 million or $0.018 per share, in line with the first half of last year and generated from the net rental income. The shares will trade ex-dividend on 6 December 2022 with the payment date set for 21 December 2022.