Dubai – The value of its real estate portfolio has been adjusted to $ 377 million.
ENBD Reit’s loan-to-value ratio (LTV) rose to 49.6 percent.
ENBD Reit, the Sharia-compliant real estate investment trust managed by Emirates NBD Asset Management, announced that its net asset value (NAV) as of September 30 was $ 198 million ($ 0.79 per share), compared to $ 230 million. dollars compared to the six-month period ended March 31, mainly due to valuation pressures.
The value of its real estate portfolio has been adjusted to $ 377 million (compared to $ 410 million as of March 31, 2020) in light of the weakness of the real estate market and the drop in rental income resulting from the Covid-19 pandemic.
Anthony Taylor, Head of Real Estate at Emirates NBD Asset Management, said: âAs we face significant pressure on valuations and rental income – resulting directly from the impact of the pandemic on the local business environment – we remain focused on managing operating costs while at the same time upgrading our assets to improve leasing, especially in the office portfolio.
âOf note are the cost-effective upgrades we are making to Al Thuraya Tower 1, Burj Daman and our two Healthcare City assets, where we are proactive in our rental efforts. Management continues to work with tenants across the portfolio to mitigate the impact of the pandemic, with the goal of protecting both WAULT and occupancy. The strategy has so far proven to be effective and we are pleased to be able to pay an interim dividend of 80% of net rental income, subject to the approval of a capital reduction by the relevant authorities. Taylor added.
Funds from operations for the interim period were $ 7 million, up $ 1.05 million (17.6%) from the six-month period ended March 31. system, Yardi.
The accounting adjustment is a one-off and non-recurring event and has therefore not been considered as part of recurring net rental income or distributable FFOs. Excluding the accounting adjustment, the FFO remained fairly stable over the period due to the implementation of cost saving initiatives, which mitigated the impact of the rent deferrals offered to tenants and the non-payment of defaulting tenants. .
The portfolio occupancy rate remains stable at 76 as of September 30, 2020, compared to 82% as of March 31, 2020. The lower mixed occupancy rate reflects lower occupancy of the REIT’s residential assets – in particular Binghatti Terraces and Arabian Oryx House – which was partially offset by the positive rental performance of the assets in the office portfolio, including Dubai Healthcare City 25 and Dubai Healthcare City 49. The weighted average duration of unexpired leases (WAULT) of the portfolio increased from 3.24 years in March 2020 to 4.05 years in September 2020, due to the proactive rental efforts and renewals of a number of major tenants during this period, including Oracle who renewed for 5 years at The Edge in Dubai Internet City.
The Board of Directors approved an interim dividend of $ 4.85 million or $ 0.0194 per share on the net rental income generated during the 6 month period, which is 4.9% less than the dividend paid to shareholders for the previous 6-month period ended in March. 31 2020. The dividend represents 80% of the net rental income in order to build up a cash reserve to cope with unfavorable market conditions as well as planned investment projects throughout the portfolio with the aim of improving the occupancy and rental income in the future. The proposed interim dividend is subject to a reduction in share capital which was approved by the shareholders at the last AGM in July 2020 and is awaiting approval by the courts of the Dubai International Financial Center (DIFC). The dates of ex-dividend, registration and payment of the proposed interim dividend will be confirmed by ENBD Reit in due course, after the approval by the court of the DIFC of the reduction of the share capital and the confirmation by the registrar. of DIFC companies.
Gross rental income for the 6-month period was $ 17.12 million, while accounts receivable increased by $ 606,098 (23.1%), due to non-payment of rent, including l Uninest student accommodation asset in the Dubailand residential complex from July 2020. Management achieved a 21.7% cost reduction compared to September 30, 2019 and a 7.6% reduction in costs compared to the 6-month period ending March 31, 2020, in all areas of the portfolio, including operating expenses, fund management fees and finance charges.
ENBD Reit’s Loan-to-Value (LTV) ratio increased to 49.6 percent due to valuation write-downs in the real estate portfolio and the $ 13.6 million levy on available facilities during the year. 6 month period in anticipation of capital to asset upgrades and the potential need for additional rent relief for tenants. The management of the REIT is in regular contact with the lenders to ensure that all covenants are met.