Dubai, United Arab Emirates, 05 January 2022: ENBD REIT (CEIC) PLC (“ENBD REIT”), the Shari’a compliant real estate investment trust managed by Emirates NBD Asset Management Limited, is pleased to announce an update regarding the lease renegotiations with student accommodation operator, Uninest Real Estate Leasing & Management Services LLC (“Uninest”), on their Uninest Dubailand asset.
In an effort to continue safeguarding the integrity of the portfolio and the consistency of rental income from its assets, ENBD REIT’s management have successfully finalized revised lease terms with Uninest following extensive negotiations in respect of rent due. The two parties signed the terms of the new lease agreement, and the rental payments from lease commencement to 1 January 2022 have been settled. The completion of the new lease agreement with Uninest highlights ENBD REIT’s commitment to positively engaging with its tenants and finding suitable solutions to combat the adverse market conditions brought on by the COVID-19 pandemic.
The new 10-year lease agreement, which includes a break after 5 years, commenced from 1 September 2021, and is a combination of a lower fixed rent as well as a variable, turn-over based rent derived and calculated from the operator’s performance in the future. The terms and structure of the new agreement ensure that moving forward, regular rental payments will be received in line with current market conditions, and that additional rental should be received when the operator’s performance improves with market conditions in the future.
ENBD REIT’s management would like to highlight that the renegotiation of the new lease with Uninest removes the uncertainty of rental payments going forward, promoting a positive impact on cashflows while allowing Uninest to operate sustainably and in line with current market conditions. Whilst the conclusion of this new agreement with the operator should be viewed positively within the ENBD REIT portfolio, it is not expected to have an immediate impact on the valuation of the asset. Furthermore, ENBD REIT expects the revised agreement to have an initial negative impact on the FFO in the current financial year as receivables from the previous lease were provided as per IFRS but have not been 100% provisioned.
The Uninest property contributed 5.2% to the overall ENBD REIT property portfolio value as at 30 September 2021 Net Asset Value (“NAV”). This latest disclosure provides an update to the announcement made in October 2020 in relation to this matter.
