Emirates REIT rental income up 21pc in Q1

Emirates REIT, the UAE’s first regulated shari'a-compliant real estate investment trust, has registered a 21 per cent growth in its rental income for the first quarter which soared to $12.6 million from $10.4 million last year. This primarily reflects stronger leasing at Index Tower, income from Jebel Ali School and the first rental payments from British Columbia Canadian School, said a statement from Equitativa (Dubai), which is managing the Emirates REIT. Total occupancy across the portfolio reached 81 per cent in Q1 2017 and the weighted average unexpired lease term was up to eight years from 6.4 years in Q1 2016, it stated. The Nasdaq Dubai-listed REIT was able to convert most of its additional rental income to funds from operations (FFO), resulting in a 90 per cent increase in (cash profit) to $4.2 million for the quarter over $2.2 million last year. Announcing the results, Sylvain Vieujot, CEO of Equitativa Dubai, said: “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." According to him, the REIT benefited from its portfolio management strategy, which includes fitting out and upgrading commercial properties as well as developing schools. In addition, Equitativa’s hands-on property management and proactive tenant management continues to improve the financial performance of the existing portfolio, he remarked. Consequently, this combined strategy significantly improved the flow-through of income to FFO, he added. On its strong operational achievements for the quarter, Vieujot said the pace of leasing at Index Tower picked up during Q1 2017, following increased marketing across a wider range of brokers that resulted in signing 20 new office leases. "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 remodeling 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, it stated. According to him, 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 Dh88 million ($24 million), and the estimated IRR on this project is expected to exceed 12 per cent," he explained. Vieujot pointed out that from an operational perspective, the REIT was making good progress on the development of the British Columbia Canadian School and now pressing ahead with the remodeling of Index Mall. "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,"