Dubai, United Arab Emirates, 26 May 2022: ENBD REIT (CEIC) PLC (“ENBD REIT”), the the Shari’a compliant real estate investment trust managed by Emirates NBD Asset Management Limited, has announced its financial results for the year ended 31st March 2022, in which occupancy of its portfolio rose to 80% from 76% the year before. ENBD REIT upgraded buildings and refinanced its debt during the period to prepare the portfolio, amid signs of stabilisation of the property market in the second half of the year.
ENBD REIT’s property portfolio value stood at USD 356 million, down 1.1% year-on-year whilst Net Asset Value (NAV) was USD 167 million or USD 0.67 per share at the end of the financial year, 7.4% lower than the year before due to capital expenditure on the buildings, in particular the refurbishment to Al Thuraya Tower, and an accounting liability relating to the cross currency profit rate swap.
ENBD REIT also substantially reduced its operating, fund, and finance costs, negotiated revised lease terms, and increased the average length of its leases during an active 2022 financial year.
ENBD REIT’s Board of Directors has proposed a final dividend of USD 5,000,000 or USD 0.02 per share for the 6-month period ending 31st March 2022, a 13.6% increase from the same period of 2021. This brings the total dividend payable to shareholders for the year to USD 9,500,000, a 2.7% increase from previous year. The total dividend return for the year is equivalent to 5.7% of NAV and 8.8% of the share price as at the 31st March 2022. Subject to shareholder approval of the dividend at the Annual General Meeting, the shares will trade ex-dividend on 7th July 2022, with the record date set as 8th July 2022 and the payment date on 29thJuly 2022.
Anthony Taylor, Head of Real Estate at Emirates NBD Asset Management, said:
“During 2021-22 we took many steps forward that strengthened ENBD REIT’s business and prepared it to prosper in the coming year and beyond. These included completion of a major upgrade of Al Thuraya Tower 1 in Dubai Media City, to create a modern and sophisticated office environment. Our flagship Edge building in Dubai Internet City received the prestigious LEED Gold sustainability certification. These measures reflect our commitment to providing desirable facilities of the highest quality across our portfolio to attract tenants at favourable rents. We also increased our Weighted Average Unexpired Lease Term from 4.1 years to 4.3 years primarily through the renegotiation of the long term lease on the Uninest student accommodation building.
With one of our finance facilities maturing in November 2021, we took advantage of the lower interest rate environment to refinance our entire debt facility with Emirates NBD and Commercial Bank of Dubai, on more favourable commercial terms which should result in considerable savings over its five-year term. Our loan-to-value ratio stood at 54% at the end of 2021-22, up from 52% the year before.
Our focus on streamlining costs resulted in a 10.9% fall in operating expenses due to active management of the properties, while fund expenses fell 19.3% mainly on reduced management fees being charged on a lower NAV as well as no additional provisions having to be made in the year. Finance costs were also down 6.4% from the previous year, resulting in a total expenses saving of 11.6% year-on-year”
Gross income fell 14.6% from the previous year mainly due to the renegotiation of the Uninest lease and other leases throughout the portfolio being concluded at lower rates following on from the impact of the pandemic and soft market conditions remaining in the office and alternative sectors. This fall in gross income resulted in a decrease in net rental income of 19.7% to USD 9.5 million despite management’s best efforts to reduce expenses.
Taylor continued: “In the coming period we will strengthen our policy of securing reliable and predictable revenues in order to manage any market volatility, while ensuring lease terms contain covenants of appropriate strength. We will continue to implement cost saving initiatives and safeguard our financial position to maintain consistent dividend distributions. In addition, we will consider any attractive opportunities for asset disposal or acquisition in order to ensure an optimal mix of properties in our portfolio.”
ENBD REIT’s financial results were prepared in accordance with International Financial Reporting Standards (IFRS) and audited by Deloitte.