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Emirates Reit swings back to profit, makes $63.1m net in FY2021

April 28, 2022

Emirates Reit, a Dubai-based real estate investment trust under Equitativa Limited, has swung back to profit making a full year (FY) 2021 net of AED232 million ($63.1 miliion), compared to a net loss of AED892 million in 2020.

Emirates Reit reported a 59.3% increase in operating profit to $46.6 million in 2021 compared to the previous year.

Overall growth in 2021 was driven by an increase in total property income to $68.6 million, up 3.9% compared to the same period in the previous year, as occupancy across the Reit’s portfolio grew by 2.8 percentage points to 71.8% as at December 31, 2021.

Increased occupancy

Subsequent to the year end, the successful conclusion of ongoing lease negotiations has led to a further increase in occupancy to 81.0% as at March 31, 2022. Net property income increased 7.7% as the Reit continued to focus on cost optimisation.

The Reit booked a net unrealised gain on revaluation of $44.7 million in 2021 compared to a loss of $243.4 million in 2020, as its independent valuers CBRE and Cushman & Wakefield considered the improving market sentiment in the UAE’s commercial and retail real estate markets.

The Reit’s portfolio has been valued at $762.1 million in 2021, a 7.5% increase compared to the previous year. The Reit’s net asset value (NAV) at the end of 2021 was $289.8 million, equating to a NAV per share of $0.95, up 28.3% compared to the previous year.

New opportunities

Following the positive close to 2021, and the emergence of significant new opportunities in the UAE and broader GCC’s real estate markets, Equitativa is expanding its management team and governance structures and the Board has appointed Thierry Leleu as CEO of Equitativa (Dubai) Limited, Dr Faisal Alayyan to the Reit’s Investment Board, and Simon Townsend to the Reit’s Oversight Board.

Commenting on Emirates Reit’s FY 2021 performance and welcoming Leleu as CEO, Sylvain Vieujot, Executive Deputy Chairman of Equitativa, said: “We delivered a strong set of improved results in 2021, following a difficult year in 2020, as the world tackled the Covid-19 pandemic. The swift and decisive actions taken by the UAE’s leadership supported a sustained recovery and renewed confidence in the local real estate market in 2021, which drove our improved performance during the year.

“Our operating income increased 59.3% year on year, and we recorded a net unrealised gain on revaluation of $44.7 million during the year, as a more positive sentiment returned to the UAE commercial real estate market.

Ideally positioned

“Our portfolio of high-quality commercial assets is ideally positioned to benefit from the continued momentum in the market, as demonstrated by our increasing occupancy rate which continued to grow following the year end increasing to 81.0% in March 2022 from 71.8% at the end of 2021. We also made considerable progress tackling legacy issues during the year, including the DIFC-LCIA award in favour of the Reit with regards to outstanding rent payments by the Jebel Ali School.”

Commenting on his appointment, Leleu said: “2022 will be a pivotal year for Emirates Reit. The performance of the business has been strong and resilient despite the previous difficulties presented by the global pandemic. My new role as CEO will see me focused on further improving the operational efficiencies of the Reit and partnering with our stakeholders to enhance its capital structure with the aim to deliver sustainable growth in income and value to our shareholders. With our strong base of investors and balanced portfolio of very high-quality assets, we are well placed to take advantage of the upturn we’re seeing in the Dubai property market currently.”

Leleu, who joined Equitativa as Deputy CEO in November 2021, has a strong track record of building and managing Reits. Until September 2020, he was the Chief Investment Officer of Cromwell European Reit, a trust that listed in Singapore in late 2017. During his tenure there, he grew the portfolio by 50% to about three times the size of Emirates Reit’s portfolio and drove outperformance for 8 consecutive quarters.

Vieujot will shift his focus on the growth of Equitativa as Executive Deputy Chairman of Equitativa (Dubai) Limited and will continue to play a critical role in the Reit’s strategic oversight and direction as part of the management board.