Emirates Reit reports 23% rise in property operating income

May 24, 2018
Increase attributed to active management of Reit’s Dh3.2 billion portfolio

Emirates Reit, the UAE’s largest real estate investment trust, reported a 23 per cent annual rise in property operating income in the first quarter of 2018, reflecting parent company Equitativa’s active management strategy and “selective” approach to asset acquisitions, it said.

Property operating income rose to $13.2 million (Dh48.6m) in the first three months of the year, while earnings before interest, taxes, depreciation and amortisation (Ebitda) grew 21 per cent to $8.5m over the same period, Equitativa said in a filing to Nasdaq Dubai, where the Reit is listed.The company didn't provide figures for net income.

In its unaudited results for the quarter, the group proposed a final 2017 dividend to shareholders of $0.04 per share, to be distributed by 30 June 2019. It brings the total dividend for 2017 to $0.08 per share.

“Despite a challenging real estate market, Emirates Reit achieved significant year-on-year growth in total property operating income, which included strong organic growth of 12 per cent from the existing portfolio,” said Sylvain Vieujot, group chairman of Equitativa.

Reits are listed funds that own income-producing commercial real estate and are legally obliged to distribute a proportion of their income, usually 80 or 90 per cent, as dividends to shareholders. They are becoming increasingly popular in the Arabian Gulf as investors seek more liquid real estate assets than standalone buildings.

Emirates Reit’s total portfolio value increased to $870m in the three months to 31 March 2018, from $763.5m in the year-earlier period which was reported in US dollars by Equitativa last May.

The Reit attributed its results to “high performance” of the European Business Center in Dubai Investment Park, acquired in the third quarter of 2017. Average rents at the centre increased by 7 per cent year-on-year due to “active management since the acquisition, focusing on improving and repositioning the building.”

Leasing was completed at Index Mall during the quarter, as well as additional fit-outs at the Index Tower offices in DIFC, which achieved 38 per cent year-on-year growth in rental income.

Equitativa’s circa-$300m sukuk issuance in December 2017 has protected the Reit from rising interest rates for the next five years, it said. Some of the funds raised were used to acquire the Lycée Français Jean Mermoz in Dubai for Dh75m this month, on a sale-and-leaseback for 27 years. The acquisition increases the Reit’s exposure to the education sector’s high yields and stable income, Equitativa said.