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www.enbdreit.com
ENBD REIT and Institutional Real Estate in the UAE
Cityscape Talks: 11th September 2017
Tim Rose, Head of Real Estate
Emirates NBD Asset Management
http://www.enbdreit.com/
www.enbdreit.com
• A real estate investment trust (REIT) formed by Emirates NBD Asset Management
• Invests in a diversified portfolio of Shari'a compliant real estate, with a primary focus on the United Arab Emirates
• Listed on Nasdaq Dubai under ticker symbol ‘ENBDREIT’ and regulated by the Dubai Financial Services Authority (DFSA)
• Previously Emirates Real Estate Fund, a Jersey based open-ended fund
• Since inception in 2005, provided investors with a regular and stable source of income by paying a dividend semi-annually
• Achieved long-term capital appreciation in net asset value per unit
What is ENBD REIT?A long and consistent track record
2
Sector Fund of the YearMENA Fund Manager Performance Awards 2017
‘Best Real Estate Fund UAE’
Best Real Estate Fund UAEInternational Finance Magazine 2015
Real Estate Fund of the YearMENA Fund Manager Performance Awards 2016
Best Real Estate FundIslamic Business& Finance Awards 2013
www.enbdreit.com 3
SnapshotENBD REIT (CEIC) Limited
Portfolio property value
USD 352mProperties
8
Offices: 62%
Residential: 28%
Gross yield*
8.7%Loan-to-Value
29%Occupancy
86%
Al Thuraya 1
Burj Daman
DHCC 49
DHCC 25
Binghatti Terraces
Arabian Oryx House
Remraam
WAULT
2.3 years
Uninest
Alternative: 10%
*on property portfolio (gross rental revenue / portfolio value)
www.enbdreit.com 4
Portfolio characteristics
18.17 18.34
8.56 9.49
0.26 2.67
0.00
10.00
20.00
30.00
40.00
YE June 2017* Annual Contractual Rental
Growing annual income by sector (USDm)
62%
28%
10%
Diversified asset class (% by value)
ResidentialOffice Alternative
91%
56%
83%
85%
100%
98%
100%
100%
0% 20% 40% 60% 80% 100%
Al Thuraya 1
Burj Daman
DHCC49
DHCC25
Binghatti Terraces
Arabian Oryx House
Remraam
Uninest
Strong Occupancy
ResidentialOffice Alternative
*excludes sold assets in this period
www.enbdreit.com
Which areas are we focusing on?
Dubai Abu Dhabi Other Emirates
Development
Development to holdLimited to up to 30% of NAV
5
Investment strategy
Which sectors are we focusing on?
Office Residential Alternative
Focus is on good quality properties in the following sectors:
Office 50-60%Residential 25-35%Alternative 20-30%
Key focus points
Freehold or long-term leasehold titles
USD 30m+Aim to lengthen tenant lease termsTarget off-market, relationship driven transactions
The portfolio aims to be diversified across the UAE:
Dubai 50-75%
Abu Dhabi 10-20%
Other Emirates
www.enbdreit.com 6
REIT regulations
The objective of a REIT is to generate a regular dividend income stream for investors, typically derived from income from investment properties, usually in the form of rent, with the additional opportunity for capital appreciation of the underlying assets and increases in the value of the equity.
Key elements of our regulations:
• ENBD REIT is required to distribute a minimum of 80% of audited net income
• LTV is limited to up to 50% of GAV
• Development projects are limited to up to 30% of NAV
• ENBD REIT would require a majority stake in all joint ventures
• Independence, both in terms of committees and related parties
• An external Fund Manager needs to be appointed
Establishing a REIT in the UAE
www.enbdreit.com 7
The UAE needs more REITs
The UAE needs more listed REITs
ENBD REIT (Nasdaq Dubai)
Market cap: USD 257m
Emirates REIT (Nasdaq Dubai)
Market cap: USD 285m
Why?
Saudi Arabia leads the field
Riyad REIT Fund (Tadawul)
Market cap: USD 605m
Aljazira Mawten REIT Fund (Tadawul)
Market cap: USD 274m
Jadwa REIT Alharamain Fund (Tadawul)
Market cap: USD 806m
Taleem REIT (Tadawul)
Market cap: USD 425m
Al Maather REIT Fund (Tadawul)
Bahrain has one REIT
Eskan Bank REIT (Bahrain Bourse)
Saudi REITs are entitled to hold up to 30% of their assets outside of the Kingdom. If more REITs in the UAE are not established, attractive institutional real estate assets will be acquired by Saudi REITs
www.enbdreit.com 8
What makes REITs attractive?
Opening real estate to investors
Equity opportunities previously available only to large investors capable of acquiring whole assets
Bringing greater liquidity to the real estate and development sector by widening the spectrum of potential investors
Key benefits
Bringing liquidity to the sector
REITs offer real estate companies access to investors via capital markets, to fund acquisitions and projects
REITs offer liquidity to investors: buying into a portfolio at a lower price than directly acquiring assets
Diverse portfolios mitigate investment risk and investors can exit or shorten a position at the time of their choosing
Governance and regulation
REITs provide a stricter regulatory framework than direct investment in a real estate asset or fund
REITs are obliged to adhere to minimum dividend payment requirements
A defined governance structure (Eg. Board of Directors; Investment Committee, etc.) mean diligent and scrupulous deployment of capital
www.enbdreit.com 9
In summary
• The UAE has established a regulatory environment that is ripe for the growth of REITs
• REITs deliver a regular dividend income stream, the opportunity of capital appreciation on underlying assets and increases in value of equity
• Saudi Arabia is currently leading the charge in the development of a REIT market
• REITs open the real estate market to investors who previously had difficulty accessing it, while also bringing liquidity into sector
• Governance and regulation of REITs mitigates risk associated with direct real estate investment or investment through funds
www.enbdreit.com
Thank you
http://www.enbdreit.com/