Dubai: Schools are proving a good resource for Emirates Reit’s financials, with the asset manager recording a 31 per cent gain in net rental income in the first half of 2017 to $21.5 million (Dh78.9 million).

The growth was led by incremental leasing of office units at the high-profile Index Tower, as well as income from Jebel Ali School and rental payments from British Columbia Canadian School. As of end June, total occupancy across its leasing portfolio reached 83 per cent, with the weighted average unexpired lease term inching up to 8.2 years from 6.2 years in the first half of 2016.

The annualised rental income continues to grow and passed the Dh200 million mark as of August, Emirates Reit said in a statement on Wednesday. “The first-half was marked by strong operating cash flow conversion to profits and demonstrates the efficiency of our property and tenant management,” said Sylvain Vieujot, CEO of Equitativa Dubai, the Reit’s manager.

“Our defensive portfolio of prime assets and the doubling of our team helped us continue to grow rents and identify strong acquisition opportunities.”

But it is those education assets that are adding heft to the numbers. The first phase of the British Columbia Canadian School is being delivered. The opening of the school — located in Dubai Investments Park — is pending inspections by authorities. The estimated IRR (internal rate of return) on the project is expected to be over 12 per cent.

Index Mall

Meanwhile, the fitout and leasing of Index Mall — connected to DIFC’s Gate Avenue — is underway. The 73,650 square feet mall is due to open in the first half of 2018.

“We continue to strengthen Emirates Reit’s track record in the education sector and pleased to be handing over BCCS on budget and in less than a year,” Vieujot said.

Total portfolio value as of June 30 was $772.1 million, a year-on-year increase of 6.9 per cent. Valuation gains were $10 million against $18.8 million same time last year, “reflecting the increase in contracted cash flow”, the statement added.

Total debt at the end of the first six months was $300.2 million.