ENBD REIT, the real estate investment trust managed by Emirates NBD, announced its acquisition of a community retail centre in Dubai Silicon Oasis for Dh210 million.
In a statement on Tuesday, ENBD REIT said it acquired the centre from property developer and manager Souq Extra, with phase one closing at Dh84 million. The acquisition will diversify the trust’s alternative portfolio and enhance its rental income return profile, it said.
Following the acquisition of phase one, ENBD Reit’s total property portfolio value is at $466 million.
“This acquisition diversifies ENBD Reit’s asset mix into retail, and will enhance the rental income return profile of the portfolio. Both phases of this well-located development are being purchased using our existing finance facility at an 8 per cent net yield on cash, offering shareholders a net leveraged return of 11 per cent on equity,” said Anthony Taylor, fund manager of real estate at Emirates NBD Asset Management.
Phase one of the community centre has 36,000 square feet of gross leasable area comprising 42 retail units fully let to tenants that include Carrefour Market, KFC, McDonalds’s, and Starbucks. ENBD REIT said all rental income is guaranteed for two years.
ENBD REIT said it has also agreed to terms to acquire phase two of the development on completion in the last quarter of 2018, also at an 8 per cent net yield.
Ankit Gupta, vice president of investment management at Shuaa Capital, described the deal as being “value-accretive” for shareholders. He added that the transaction would imply that ENBD Reit’s capital structure will be close to optimal, further boosting potential shareholder returns.
“Having said that, the details on phase two of the acquisition are scarce, specifically pertaining to potential impact of delays in construction as well as the nature of the tenants, and we seek more clarity to gauge potential long-term benefits from this transaction to shareholders,” he said.