ENBD REIT has seen a drop in occupancy at some of its flagship properties, and which it now hopes to rectify. Image Credit: Gulf News Archive

Dubai: Despite a decline in value of its property portfolio, ENBD REIT, the real estate fund, has proposed a $5.1 million dividend to shareholders. The disbursal of dividends is now awaiting approval.

For the 12 months ended March 31, the fund saw the property portfolio shed 8.9 per cent to $410 million.

There was a “negative valuation effect” of around $19.1 million between January and end March.

According to Anthony Taylor, Head of Real Estate at Emirates NBD Asset Management, “This was a challenging year, made more challenging by the pandemic that struck the market in March.

“We have therefore seen material pressure on valuations but have acted quickly and decisively to manage costs while adding value wherever possible.

“We have taken advantage of a lower interest rate environment to bring down our current and future cost of debt, and have rolled out initiatives across our portfolio that will safeguard occupancy and rental income while pressure remains on valuations and yields.”

We have taken advantage of a lower interest rate environment to bring down our current and future cost of debt

- Anthony Taylor of Emirates NBD Asset Management

Shareholder rewards

For investors in the fund, the combined dividend payout for the 12 months will be $10 million. Payment date is set for July 28, subject to shareholder approval.

“While the dividend for FY 2019-20 remains off target, and the improved dividend yield is a result of a discount to NAV (net asset value) on the share price, management remains committed to managing the portfolio efficiently and to delivering on a range of cost saving initiatives,” the company said in a statement.

“ENBD REIT intends to continue paying dividends on a semi-annual basis.”

Counter measures

Given the virus overhang on businesses, the fund is giving tenants opportunity to “renegotiate or postpone payments to a later date”.

But ENBD REIT’s management expects to sustain longer lease agreements in the medium- to long-term.

But occupancy has been hurt at certain properties, such as Al Thuraya Tower in Dubai Media City.

“The portfolio management team is seeking to make material upgrades that will increase the attractiveness of the property while causing minimal disruption to existing tenants,” the statement added.