ENBD REIT Announces Q1 NAV of USD 255 Million; Active Leasing Strategy Protects Occupancy
ENBD REIT (CEIC) PLC (“ENBD REIT”), the Shari’a compliant real estate investment trust managed by Emirates NBD Asset Management Limited, has announced its Net Asset Value for its first quarter ended 30th June 2019. ENBD REIT’s NAV stood at USD 255 million ex-dividend (USD 1.02 per share) at the close of the quarter, which translated into a cum-dividend NAV of USD 260 million prior to the approval and payment of a USD 5.4 million dividend. The dividend payment relates to the final dividend due to shareholders as at 31st March 2019, following shareholder approval at the recent AGM on 24th June 2019 and paid on 15th July 2019.
ENBD REIT’s property portfolio value stands at USD 437 million, compared to USD 450 million for the previous quarter, as a result of valuation losses resulting from the prevailing soft real estate market conditions and due to one of the portfolio’s largest tenants, Huawei, vacating from Al Thuraya Tower 1 in Dubai Media City, relocating to their own purpose built head office, during this period. The portfolio comprises diverse holdings totalling 11 properties across office, residential and alternative asset classes. Gross yield on the portfolio was strong at 14.3%, with leasing success at Burj Daman and Binghatti Terraces, where occupancy increased by 3% and 16% respectively. Occupancy across the portfolio currently stands at 82%, down just 4% despite the loss of Huawei. With the Weighted Average Unexpired Lease Term (WAULT) steady at 3.56 years.
During the quarter, ENBD REIT successfully concluded the refinancing of its existing debt, securing a USD 177 million facility with Mashreq Bank at favourable terms which management anticipates will generate significant savings going forward on the REIT’s single largest cost line. As at 30th June 2019, the REIT’s Gross Asset Value (GAV) stood at USD 435 million, with the Loan-to-Value (LTV) ratio at 41%. ENBD REIT intends to maintain growth and diversification of its portfolio by acquiring income generating assets in Dubai, with a focus on alternative assets carrying long-term leases.
Anthony Taylor, Head of Real Estate at Emirates NBD Asset Management, said:
"Headwinds have prevailed across the local real estate market, and these have put pressure on valuations. In addition, we saw valuation losses on our largest asset by value, Al Thuraya Tower – the result of a large tenant moving to a purpose-built head office. Despite these challenges, we have maintained strong occupancy levels, with robust growth in key assets including Burj Daman and Binghatti Terraces. These are thanks to a leasing strategy designed to maximise and subsequently maintain income generated by the portfolio in challenging market conditions.
In addition to building resilience in the portfolio, we have focused on reducing costs. Year-on-year, Q1 operating expenses are down 18% as a result of active asset management and lower building expenses. We’re also pleased to have finalised more favourable commercial terms on our debt facilities, a move that will be supportive of acquisitions to further diversify our portfolio.”
Emirates NBD, the leading banking group in the region, was formed on 19 June 1963, when H.H. Late Sheikh Rashid bin Saeed Al Maktoum signed the Charter of Incorporation of the National Bank of Dubai (NBD) which became the first National Bank established in Dubai and the United Arab Emirates (UAE). With the blessings of H.H. Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, NBD merged with Emirates Bank International (EBI) on 06 March 2007, to form Emirates NBD, the largest banking group in the region by assets. On 16 October 2007, the shares of Emirates NBD were officially listed on the Dubai Financial Market (DFM). The merger between EBI and NBD to create Emirates NBD, became a regional consolidation blueprint for the banking and finance sector as it combined the second and fourth largest banks in the UAE to form a banking champion capable of delivering enhanced value across corporate, retail, private, Islamic and investment banking throughout the region.