Dubai real estate trust eyes Saudi after $400m refinancing

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• Dubai-based REIT keen to launch investment trusts in Saudi and Africa
• $400 million sukuk due to conclude refinancing this year

Equitativa, the manager of Emirates REIT real estate investment trust, is looking to expand beyond Dubai once it concludes the refinancing of its $400 million sukuk within the next two months.

The firm is also keen to launch new real estate trusts outside the UAE, in Saudi Arabia and Africa.

Founded in 2010, the Emirates REIT became the first real estate investment trust (REIT) in the Middle East.

The largest listed Shariah-compliant REIT in the UAE, it was backed by early seed funding from investors such as Dubai Islamic Bank, Tecom and Dubai Properties, and listed on Nasdaq Dubai in April 2014.

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Equitativa announced last month that Emirates REIT’s profits rose 20.9 percent year-on-year to $61.5m.

The value of its assets under management grew 4.7 percent year-on-year to $758.6m over the six months, consisting of 2.4 million square feet of space across 11 properties.

“If I look at Emirates REIT today, 100 percent of our assets are Dubai. But, as the name would suggest, our limit would be the Emirates,” Thierry Leleu, chief executive officer of Equitativa, told AGBI.

“Yes, as we position the REIT for growth, as soon as the refinancing is complete, I think that we will certainly look at opportunities in other areas [of the UAE].”

Emirates REIT raised $400m through a sukuk in December 2017, and this is due to mature in December this year.

A restructuring of the sukuk was proposed last year, but this was cancelled, as Equitativa confirmed that only 57 percent of debtholders had voted in favour of the deal, short of the 75 percent required for it to proceed.

Leleu told AGBI the sukuk was “at the forefront” of his priorities and he was confident it’s refinancing would be completed in the coming months.

“To refinance the market is obviously not the best one today, with the interest rate hikes, with the extreme volatility that you see. But, nonetheless our partners, lending partners and also the current sukuk holders, we’re having very constructive conversations to finalise this over the next six to eight weeks.”

Equitativa also manages the UAE’s first Shariah-compliant Residential REIT, which is incorporated in the Abu Dhabi Global Market and has a portfolio valued at around AED 1.2 billion ($330m) across 1,069 villas and apartments in Abu Dhabi, Dubai and Ras Al Khaimah.

Once the $400m sukuk plans have been completed, Leleu said Equitativa would also start looking at opportunities outside the UAE, as he believed there was a lack of independent institutional players in the region.

“If you look at Europe, there are plenty of institutional players. If you look at the independent institutional players in the GCC, there’s not that many. We’re the leading independent investment managers in real estate,” he said.

“Saudi is 38 million people, a booming economy, reforms, so obviously it is of interest. 

“But, beyond that, you could look at the entire African continent, which is completely under institutionalised from a real estate example, and Africa over the next 50 years would be the booming continent.”

His views echo those of a senior executive at the Swiss global wealth manager UBS, who told AGBI in July that investments in the Middle East by ultra-high-net-worth family offices will increase by at least 50 percent over the next decade.

Family offices, or privately held companies that handle investment management and wealth management for a family, seek to effectively grow and transfer wealth across generations.

The latest UBS Global Family Office Report 2022 surveyed 221 family offices around the world, which collectively oversee wealth of $493bn and have average assets under management of $2.2bn.

The study found the Middle East accounts for just four percent of family offices’ global asset allocations due to a lack of opportunities, according to Josef Stadler, executive vice chairman of UBS Global Wealth Management, who manages some of the bank’s wealthiest clients.

“There are limited opportunities to invest locally and domestically simply because the liquidity in the domestic market is not there,” Stadler said.

“The amount of money chasing domestic asset opportunities exceeds the supply. So if you’re a big investor you naturally have to find alternative places to invest your money.”

With Qatar investing billions in the World Cup, Saudi Arabia unveiling a roll call of mega projects as part of its Vision 2030 to diversify its economy, and the UAE continuing to make it easier for foreign investors to enter the market, Stadler believes the Middle Eastern demand and supply dynamic is changing.

“I think that four percent [of global allocation] will go up and it’ll take about 10 years to get there,” he predicted.