Emirates Reit 6-month net profit up 194% to Dh125m

Emirates Reit (CEIC) Limited (REIT), the first Shariah compliant regulated real estate investment trust incorporated in the Dubai International Financial Centre (DIFC), on Wednesday reported net profit for the six month up 194 per cent to Dh125.33 million from Dh42.60 million for the same period in 2013.

The portfolio value increased by 73 per cent to Dh2.06 billion from Dh1.19 billion at the end of 2013. The net asset value per share rose to $1.3939. This represents a total return of 6.8 per cent for the first six months of 2014, which equates to an annualised total return of 13.6 per cent.

Reduction in ongoing borrowing rates by 42 per cent, from 5.5 per cent to a current rate of 3.21 per cent.

During the first half of 2014, Emirates REIT’s ordinary shares were admitted to the Official List of Securities of the Dubai Financial Services Authority and to trading on NASDAQ Dubai Limited under the ticker symbol “REIT”. The admission followed a successful international IPO, which was 3.5 times over-subscribed, raising $201 million.

Since the listing in April, Emirates REIT used the net proceeds of the IPO to fund two successful acquisitions.

 In May, the REIT acquired Le Grande Community Mall for Dh118.2 million. Le Grande consists of 22 individual retail and food and beverage units on the ground and podium floors, as well as 161 basement car park spaces. Located in the Marina area, one of the most popular areas of new Dubai, the retail units have good occupancy rates and strong yields.

In June, the REIT entered into an agreement with Emirates NBD Properties to acquire 15.64 office floors and 706 car parking spaces in the DIFC’s Index Tower, for a cash consideration of approximately Dh613.4 million. This, our largest acquisition to date, raises the REIT's ownership of the office floors in this Grade A building to 67 per cent.

 With these acquisitions, Emirates REIT’s property portfolio grew to 11 properties within Dubai. Excluding the Index Tower assets, the overall occupancy increased from 93 per cent as at 31 December 2013 to 97 per cent as at end of June 2014 and the total passing income increased from Dh110 million to Dh129 million.

 The average weighted unexpired lease term across the portfolio is now at 8.8 years.

Emirates REIT has also successfully secured a significant reduction in borrowing rates on all its financing facilities. The new rate is 3 month EIBOR +2.5 per cent (which currently equates to 3.21 per cent) which is down by 42 per cent from the previous cost of 5.5 per cent.

Overall debt levels at 30 June 2014 remain healthy at 23 per cent of gross assets.

Abdulla Al Hamli, Chairman of the REIT Manager, said: “Since Emirates REIT became a public listed entity in April, I am pleased to report strong progress at both a financial and operational level. In just a few months we delivered what we have promised our shareholders; using the net proceeds to increase the size of the portfolio.

“The two acquisitions demonstrate that there are still significant opportunities within the Dubai market to invest at attractive prices in prime buildings, which offer substantial growth. We will continue to work on our sizeable acquisition pipeline, located mainly in Dubai and across all commercial sectors.”

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