Emirates REIT in profit after revaluation gain

Alamy via Reuters

• Profit up 55%
• Portfolio value up $133m
• $6m operating loss

Dubai’s Emirates REIT reported a 55 percent rise in annual profit after making a nine-figure revaluation gain on its property portfolio.

A REIT – a real estate investment trust – is a company that owns income-producing assets related to real estate such as buildings, land and real estate securities. 

Through REITs investors can have fractional ownership of major office buildings, shopping malls, hotels, apartment buildings and other forms of commercial real estate.

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Emirates REIT owns 10 properties spanning commercial, retail and education facilities. It reported a profit of $127 million in 2023, up from $82 million a year earlier, its annual report shows.

The profit growth was a result of the trust recording a net gain of $133 million on its portfolio value, more than offsetting an annual operating loss of nearly $6 million.

The fund’s operating profit was $44 million but its finance costs and charges were almost $50 million.

Thierry Delvaux, chief executive of parent company Equitativa, said Emirates REIT’s results were “built on a strategy based on asset performance optimisation”.

Emirates REIT’s property income rose 10 percent year on year to $74 million.

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Occupancy levels across the fund’s portfolio were at 86 percent, while average rents across its commercial and retail properties rose 10 percent to AED1,809 per square metre.

“We signed a significant number of leases at lower rates during the Covid crisis, which are now coming to maturity,” said Delvaux.

“This should yield substantial additional rental growth in the next few years across the entire portfolio as those are renewed at the current rates.”

Emirates REIT raised $175 million in an April 2014 initial public offering that was priced at $1.36 a share.

The trust owns seven office and retail properties and three education facilities. Its net asset value – the value of its properties minus its debt – was close to $500 million, up 34 percent year on year.

Yet its market capitalisation is only $66.6 million, according to Bloomberg data.

Its shares were priced at $0.21 on Wednesday, down 85 percent on its IPO prices. It last traded on March 26.

Vijay Valecha, chief investment officer at Century Financial, remained bullish on the future of the REIT market.

“The outlook on UAE’s REITs is steadily improving on the back of the government’s economic diversification initiatives as well as heightened property investment activity amidst an influx of expats taking advantage of growing employment opportunities and new visa categories,” he told AGBI.