Emirates REIT's portfolio of commercial property in Dubai is feeling the big lift from value gains. Image Credit: Supplied

Dubai: The Emirate REIT operator Equitativa recorded a net profit of Dh253.4 million from a 40 per cent gain for the first nine months of 2022. The boost was provided by higher rental income, at Dh189.8 million, up 13.2 per cent.

Of equal significance is the 30.5 per cent gain in net asset value to Dh1.32 billion, as Emirates REIT feels the benefits of value gains for its property portfolio, which includes offices, school campuses and other commercial assets in Dubai.

The company is also simultaneously going through a financial restructure, winning investor approval for an exchange of its unsecured $400 million certificates that are due to mature December 12. New certificates will be issued in their stead.

Occupancy and rental gains
Continued demand for premium office space enabled Emirates REIT to increase occupancy across its portfolio to 81.9% as at September 30, which is a 13.6 percentage increase year-on-year. Average rents across the commercial and educational portfolio continued to increase quarter-on-quarter, by 2.8% and 2.3% respectively.

The fund manager had won backing from an Ad Hoc Group comprising institutional investors holding the certificates. On Wednesday (November 23), the fund confirmed 84 per cent of certificate-holders had cast their vote before the early participation deadline. And that more than 99 per cent were in favour. "The 75 per cent threshold requirement for certificate-holder approval is therefore exceeded and we look forward to the formality of the meeting of certificate-holders on 6 December to approve the consent solicitation," it stated. 

Equitativa and Emirates REIT had passed through some trying times in recent years, with the fund underperforming and then some of its main investors pushing for major changes in operations and management. “Emirates REIT maintained its robust growth trajectory during the first nine months of 2022, demonstrating the quality of our assets and our ability to generate value from the continued positive market conditions in the UAE," said Thierry Leleu, CEO of Equitativa.

What will the new certificates entail?
• Exchange of each $1,000 in face value of existing certificates for $950 in new secured certificates and $50 in cash.
• Profit rate of 9.5 per cent yearly with a 'ratcheted structure' to incentivise the REIT to redeem the new certificates in full prior to the 2024 maturity.
• Collateral to be granted to the new issue with assets providing coverage of at least 150% of the outstanding amount of these certificates.
• Maturity date of December 2024, with a one-year extension option.