Higher returns from key property assets helped Emirates Reit (real estate investment trust) report a net asset value of $520 million at the end of the first quarter 2018. The portfolio weighed at the $870 million mark.
The European Business Center, which the Reit acquired in the third quarter of 2017, had a 7 per cent rent increase during the first quarter of 2018, “mainly due to the active management since acquisition, focusing on improving and repositioning the building, which has started to align the rents with the market rates”, the Reit’s manager Equitativa said in a statement.
Its other flagship asset, the Index Tower achieved 38 per cent growth in rental income compared to the first quarter of 2017, while tenants at the Index Mall are now starting on their fitout programme.
According to Sylvain Vieujot, Group Chairman of Equitativa: “Despite a challenging real estate market, Emirates Reit achieved a significant 23 per cent year-on-year growth in total property operating income, which included strong organic growth of 12 per cent from the existing portfolio.”
The property operating income increased by 23 per cent, reflecting “Equitativa’s active management and selective approach to asset acquisitions”.
On the financing side, the issuance of a sukuk in December last has “protected the Reit from the rising interest rate environment for the next five years,” it added in a statement. Equitativa deployed part of the additional funds from the sukuk issuance to acquire the Lycée Français Jean Mermoz school this month. This has started contributing to income and “expected to deliver a high yield and stable cash flow”. The deal was transacted at Dh75 million, under a sale and leaseback agreement for 27 years.
“We continue to drive rental growth and in the current market we see significant upside in acquisitions,” said Vieujot. “We are therefore confident of continuing to deliver growing returns and benefit from the current environment to grow Emirates Reit’s portfolio with the acquisition of quality high-yielding assets.”
The distribution of the final dividend for 2017, of $0.04 a share, has been proposed, which should be distributed by June 30. In total, shareholders will have received a dividend of $0.08 per share for the financial year 2017.
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