ENBD REIT acquires $57m retail centre

Shariah compliant real estate investment trust ENBD REIT has announced the acquisition of a retail community centre in Dubai for Dhs210m ($57.2m) as it looks to diversify its portfolio.

The trust, managed by Emirates NBD Asset Management, bought the centre in Dubai Silicon Oasis from Souq Extra, it said in a statement on Nasdaq Dubai, where the trust is listed. The first phase of the centre was launched in January this year, comprised of a 36,000 square foot gross leasable area including 42 retail units, and guaranteed rental income for two years. The  first phase closed at Dhs84m ($22m).

Tenants include Carrefour Market, KFC, McDonald’s and Starbucks, among others.

The second phase of the centre will include a 55,000 square foot expansion, centred around a European-style public piazza. A regional medical centre, children’s nursery and a fitness centre will be added, as well as entertainment and F&B outlets.

Anthony Taylor, fund manager for real estate at Emirates NBD Asset Management, said: “This acquisition diversifies ENBD REIT’s asset mix into retail and will enhance the rental income return profile of the portfolio.

“In just nine months, we have completed the full allocation of the capital raised at listing and fully committed our existing finance facility in line with our growth strategy to acquire assets that are 100 per cent occupied.”

Both phases of the development are being purchased using the company’s existing finance facility at an 8 per cent yield on cash, offering shareholders a net leveraged return of 11 per cent on equity, added Taylor.

Since launching in March, ENBD REIT has acquired Uninest student accommodation in Dubailand, South View School in Remraam Community, and The Edge office building in Dubai Internet City. Following the acquisition of Phase 1 of Souq Extra DSO, the trust’s property portfolio is valued at Dhs1.7bn ($466m).