Property

Emirates REIT registers 21% growth in rental income in Q1

Figures reflect stronger leasing at Index Tower, income from the Jebel Ali School and the first rental payments from the British Columbia Canadian School

Union Properties website

Emirates REIT, the UAE’s first regulated sharia compliant real estate investment trust, has registered a 21% growth in its rental income for the first quarter of 2017, which has grown to $12.6 million from $10.4 million last year.

These figures primarily reflect stronger leasing at the Index Tower, income from the Jebel Ali School and the first rental payments from the British Columbia Canadian School, according to a statement from Equitativa Dubai, the firm managing the Emirates REIT.

Total occupancy across the portfolio reached 81% in Q1 2017, while the weighted average unexpired lease term was up to eight years from 6.4 years in Q1 2016, it added.

Listed on Nasdaq Dubai, REIT was able to convert most of its additional rental income to funds from operations (FFO), resulting in a 90% increase in (cash profit) to $4.2 million for the quarter compared to $2.2 million last year.

“Emirates REIT has had a strong start to 2017, headlined by year-on-year growth in rental income and increased cash flow conversion. The major improvement we achieved in funds from operations shows that we are on track to achieve our goal of paying out a higher dividend to the owners of the REIT,” said Sylvain Vieujot, CEO of Equitativa Dubai.

According to him, the REIT benefited from its portfolio management strategy, which includes fitting out and upgrading commercial properties as well as developing schools. He added that Equitativa’s hands-on property management and proactive tenant management continued to show improved financial performance for the existing portfolio.

Consequently, this combined strategy significantly improved the flow-through of income to FFO, he explained.

Vieujot said that the pace of leasing at Index Tower picked up during Q1 2017, following an increase in marketing across a wider range of brokers. This resulted in 20 new office leases being signed.

“Office Park in Dubai Internet City saw an active period of leasing with the renewal of nearly all leases, demonstrating the value tenants continue to see in the quality of the building and in its strong location,” he noted.

After the period end, the REIT manager awarded the remodelling contract for Index Mall, the retail space at Index Tower, to BW Interiors, one of the most respected fit-out specialists in the UAE. The 73,650 sq ft Index Mall will be a prime destination featuring a variety of shops, food and beverage outlets and amenities, Equitativa Dubai stated.

According to Vieujot, the first phase of the new British Columbia Canadian School is on schedule to be handed over in Q3 this year.

“This is a leasehold plot in Dubai Investments Park that the REIT acquired and immediately leased back to the school. The overall investment is estimated to be $24 million, and the estimated IRR on this project is expected to exceed 12%,” he explained.

“We are pleased to see increased interest from tenants wanting to rent commercial space in Index Tower and are confident that the launch of Index Mall will further accelerate this positive trend,” he concluded.

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