Emirates REIT is the world’s largest Shari'a compliant Real Estate Investment Trust, and is based in Dubai. It currently owns freehold or leasehold properties comprising commercial, retail and education assets with an exclusive Ruler's Decree’s permitting it to purchase properties in onshore Dubai and Ras Al Khaimah. The portfolio includes Le Grande Community Mall, Building 24, The Loft Offices, Office Park, Indigo 7, GWAD, Jebel Ali School and Index Tower. Emirates REIT has reported its unaudited financial results for the nine month’s period ending 30 September 2017.

At a glance:

• Emirates REIT’s portfolio value crossed AED 3 billion mark (USD 845 million) in Q3 2017
• This follows the acquisition of the European Business Centre in Dubai Investments Park
• The portfolio value increased 13.9% to USD 844.6 million from a year earlier
• NAV stands at USD 1.73 per share at period end
• Annualised rental income AED 221.3 million (USD 60 million)
• 32% YTD increase in net rental income to USD 33.3 million
• 58% YTD growth in FFO to USD 12.3 million

Emirates REIT’s portfolio value crossed the AED 3 billion mark during the third quarter of 2017, following the acquisition of the European Business Centre in Dubai Investments Park. As at 30 September 2017, the portfolio value was USD 844.6 million, a 13.9% increase from USD 741.6 million a year earlier. The net asset value increased to USD 1.73 per share, or USD 519.4 million (30 September 2016: USD 1.60 per share or USD 480.7 million). Revaluation gains in the first nine months of 2017 were USD 37.6 million, a 38% increase from USD 27.4 million in the same period last year, reflecting the increase in the value of the properties.

Rental income for the first nine months of 2017 saw a 21.5% increase to USD 39.3 million, from USD 32.4 million reported in the same period last year. This was mainly driven by incremental leasing of office units at Index Tower, as well as income from Jebel Ali School and British Columbia Canadian School. Service fees and other income also increased during the period to USD 4.6 million from USD 4.0 million in the same period in 2016.

In Q3 2017, rental income rose 21.4% to USD 13.9 million (Q3 2016: USD 11.4 million), and service fees and other income were up 35% to USD 1.7 million, leading to USD 15.6 million in property income (Q3 2016: USD 12.7 million). Net profit for the first nine months of 2017 was USD 49.9 million, a year-on-year increase of 42.2%. In Q3 2017, Emirates REIT reported a steep increase in net profit, which was up 178.8% to USD 31.6 million (Q3 2016: USD 11.3 million).

Total occupancy across the portfolio reached 84% as at 30 September 2017, and the weighted average unexpired lease term was 7.7 years. The steady growth in occupancy, rental rates and rental income, together with the ongoing proactive optimisation of the REIT’s portfolio, continues to drive improvement of the FFO (funds from operations). During the first nine months of 2017, the REIT was able to convert most of its additional rental income to FFO, resulting in a 58% increase in FFO, or cash profit, to USD 12.3 million, from USD 7.8 million during the same period last year. FFO in Q3 2017 was up 43% to USD 4.0 million (Q3 2016: USD 2.8 million).

Operational Updates

• British Columbia Canadian School delivered on budget and in less than a year
• Acquisition of European Business Centre for USD 35.4 million
• Index Mall fit out is progressing per schedule
• Trident Mall in Dubai Marina saw occupancy increase

The British Columbia Canadian School (‘BCCS’) phase 1 was delivered in September 2017, on budget and in less than a year. The school is now fully operational. This is the third school in the Emirates REIT portfolio, adding to its growing track record of investing in the UAE education sector. The estimated un-levered IRR on this project is expected to exceed 12%.
In August 2017, Emirates REIT signed the acquisition of the European Business Centre in Dubai Investments Park, at a purchase price of USD 35.4 million (AED 130 million). The acquisition is expected to generate an estimated un-levered IRR in excess of 10%. Fit out work at the 73,650 sq ft Index Mall is progressing per schedule. Upon completion, the Mall is expected to be a prime destination featuring a variety of shops, food and beverage outlets and amenities, connected to DIFC’s Gate Avenue. General occupancy of the building is stable, in line with seasonal cycles. Trident Mall in Dubai Marina saw occupancy increase with three units leased during the quarter, and fit out work on its Choithrams supermarket is underway.

Total debt as at 30 September 2017 was USD 337.4 million. The LTV ratio of the REIT stood at 38%, well below the REIT’s regulatory maximum LTV of 50%. Sylvain Vieujot, CEO of Equitativa Dubai, the REIT Manager, commented,“The positive results we continue to see at Emirates REIT are a true testament to the strong fundamentals of the prime assets we own. With our recent acquisition of the European Business Centre, we saw our portfolio value cross AED 3 billion – another important milestone in the growth of the REIT. The period also marked the delivery of British Columbia Canadian School, on budget and in less than a year, strengthening our track record in the education sector. We remain focused on maintaining the momentum across the business as we continue to explore acquisition opportunities that would further strengthen our portfolio to deliver maximum value for our shareholders.”

If you would like to read the full report, visit the Emirates REIT website.

If you have specific enquiries, email Emirates REIT via the contact details below.

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