ENBD REIT announces Q1 NAV of USD 174 million (USD 0.70 per share)

3 Min | 24 August 2021

Movement in valuations continues to put pressure on NAV

Movement in valuations continues to put pressure on NAV
Portfolio occupancy remains steady at 75%
Annual final dividend of USD 0.0176 per share was paid on 27th July 2021
Expenses down 16.9% following proactive cost management initiatives

Dubai, United Arab Emirates, 24th August 2021: 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 (“NAV”) for the first quarter ended 30th June 2021. ENBD REIT’s NAV stood at USD 174 million, as compared to USD 180 million for the previous quarter. The decline in NAV, decreasing by 1%, is predominantly due to sustained valuation pressures and softening real estate market conditions as the regional macroeconomic conditions remain in the early stages of post-pandemic recovery.

The management team have successfully reduced expenses by 16.9%, following a year of actively managing down operating costs in the portfolio. Occupancy in the portfolio remains stable at 75% for the period ending 30th June 2021 compared to 76% as at 31st March 2021, and 75% for the same period in the previous year. The active leasing strategy catering to tenants’ needs continues to play a significant role in protecting occupancy rates, but challenging real estate market conditions subdued further recovery. The Weighted Average Unexpired Least Term (“WAULT”) has increased from 3.2 years to 3.97 years as 30th June 2021 compared to the previous year.

Anthony Taylor, Head of Real Estate at Emirates NBD Asset Management, said:

“In light of adverse conditions, our net rental income and occupancy rates for the first quarter have held up well – the result of active portfolio management. Meanwhile, NAV remains under pressure, declining by 1% from the previous quarter. Our priority in recent quarters has been to ensure stable occupancy, which we have achieved through a range of initiatives, including support for struggling tenants and focusing on asset upgrades. Total expenses have been reduced by almost 17% compared to 30th June 2020, the result of the management team’s proactive cost management initiatives, including renegotiating our contracts with service providers, lower financing costs from our Shari’a-compliant debt facilities which account for the lion’s share of the REIT’s costs and reduced management fees due to a lower NAV.

In terms of the portfolio, we are looking at new ways to bring further value to existing tenants through a series of strategic upgrades currently in progress. Most notably, at Al Thuraya Tower 1, where we are taking advantage of lower occupancy rates to make significant upgrades to improve the look and feel of the building. We also recently completed sub-division works at Burj Daman to create units that cater to smaller businesses and corporates looking to downsize, by reducing both costs and office space requirements, given that flexible working is becoming a more normal practice. We continue to take a pragmatic approach to potential asset disposals, with a number of assets in the portfolio being considered for sale, where we believe that fair value can be achieved.”

The total dividend paid to shareholders for the year ended 31st March 2021 was USD 9.25 million, equivalent to 8.6% annualised dividend return of ENBD REIT’s share price. ENBD REIT’s gross rental income for the period stood at USD 7.48 million, declining by 11% from USD 8.44 million for the same period last year.

The Loan-to-Value (“LTV”) ratio has increased to 52.7% as a result of valuation pressures in the property portfolio, and the management team is in the process of refinancing an important debt facility with Standard Chartered bank, amounting to USD 45 million. The REIT maintains a regular dialogue with all lenders to ensure that covenants are maintained at manageable levels.

more app