Dubai, United Arab Emirates, 24 November 2023: ENBD REIT (CEIC) PLC (“ENBD REIT”), the Shari’a compliant real estate investment trust managed by Emirates NBD Asset Management Limited, announces its Net Asset Value (“NAV”) as at 30 September 2023, reflecting a continued improvement to USD 189 million or USD 0.76 per share, up from USD 183 million the previous quarter and USD 172 million year-on-year (“Y-o-Y”).
The total value of the property portfolio rose to USD 379 million, up USD 3.1 million on the last quarter. The growth is attributed to a portfolio-wide boost in occupancy rates to 92% from 84% a year ago, marking the highest level since 2018 as the sustained positive momentum in leasing activities and the robust growth of the real estate market continues.
Significant improvements were seen in office space rentals, notably at Al Thuraya Tower 1 in Dubai Media City, ENBD REIT's flagship asset, which reached 70% occupancy post period end following the completion of a major refurbishment last year. Importantly, The Edge and Burj Daman, the second and third largest assets by value, reached full occupancy during the period.
Melanie Fernandes, Senior Portfolio Manager at Emirates NBD Asset Management, said:
"Our strategy of concentrating on key asset improvements and renovations is paying off and delivering results across many of our assets. Occupancies have achieved a five year high at 92% with Al Thuraya Tower 1, our largest renovation project so far, achieving over 70% occupancy recently whilst The Edge and Burj Daman are now fully let. We expect that these investments, with an emphasis on sustainable real estate, and the current positive trends in the market will support further improvements in our performance.”
ENBD REIT's gross rental income increased by 11.8% compared to last year. The portfolio's Weighted Average Unexpired Lease Term (WAULT) is at 3.97 years, and the Loan-to-Value (LTV) ratio improving slightly to 51%.
Asif Siddique, designated CFO for ENBD REIT, added, said:
“We are delighted to report strong results throughout our portfolio for the first half of the year, continuing the upward momentum experienced in recent quarters. The improving occupancy levels are driving income and positively impacting our valuations. We will continue to maintain a prudent financial management approach and the hedging put in place positively impacted finance costs and FFO whilst opportunities to further reduce our debt level are continually being explored."
Post year-end, 50% of the debt was successfully hedged to provide a lower cost in the years ahead and improved predictability during the current interest rate cycle.
Operating expenses have seen a 13.8% increase compared to the same period last year, reflecting higher direct expenses related to increased occupancies and the impact of inflation. Fund expenses rose by 6.4% in line with valuation changes. Moreover, finance costs have surged by 77% due to the global macro-economic challenges, including rising inflation and interest rates.
With a cautious stance in the context of escalating interest rates, the Board of Directors approved an interim dividend of USD 3.5 million or USD 0.014 per share, in line with the FFO during this period. The lower dividend distribution can be attributed predominantly to the higher financing costs in 2023.
Post period end, Samir Kazi was announced as the new Head of Real Estate effective 1 December 2023, effectively concluding the leadership transition initiated with the announcement in June 2023 of Anthony Taylor's intention to step down.
