ENBD REIT (CEIC) Limited (Nasdaq Dubai: “ENBDREIT”), the Shari’a-compliant real estate investment trust managed by Emirates NBD Asset Management, has announced its acquisition of The Edge office building in Dubai Internet City from developer SWEID & SWEID at a transaction value of AED 280 million (USD 76.2 million).
The premier 92,000-square foot office building, is home to global tech outfit Oracle, social media giant Snapchat, and American education publisher McGraw Hill. As a prime grade ‘A’ property, The Edge’s tenants enjoy a central and easily accessible address, high-end interior design, sustainable credentials, impeccable building infrastructure and quality facility management.
The seven storey development also boasts 233 parking bays distributed over the ground floor and three levels of basement parking, offering tenants one of the highest parking-to-office ratios in the area.
The acquisition utilizes ENBD REIT’s existing Islamic debt facility, meaning that the property portfolio is running at an efficient Loan-to-Value (LTV) ratio of 32%. The entire asset will deliver a gross yield of 7.4% and a net yield of 6.6%.
Commenting on the acquisition, Tim Rose, Head of Real Estate at Emirates NBD Asset Management, said:
“We’re pleased to announce our third acquisition since listing on Nasdaq Dubai in March, and it is fitting that The Edge is a fully-leased, prime grade ‘A’ asset. With a levered return of 9% on equity, this is a strategic acquisition of a flagship building that will provide income and growth in the coming years, thereby providing us with flexibility to engage in a wider range of future investment opportunities, while at the same time delivering strong and consistent returns to shareholders.”
Maher Sweid, Founder and Managing Partner of the Dubai-based firm, added:
“Since launching The Edge in 2014, we have received incredible interest in the development. This announcement clearly demonstrates our ability to deliver contemporary commercial buildings of the utmost quality within the exact parameters of what tenants are looking for. This unique skill has enabled us to deliver excellent returns for our investors.”
The transaction follows the recent acquisition of a number of alternative assets by ENBD REIT, including the under-construction South View School in Dubai’s Remraam Community at a total value of AED 55 million (USD 15 million) and the Uninest Dubailand student accommodation building for AED 120 million (USD 33 million). ENBD REIT’s total property portfolio value now stands at USD 447 million.
Following the acquisition of The Edge on the 5th October 2017, ENBD REIT now has a total of 10 assets across Dubai, with a property portfolio value of USD 447m. The portfolio now has a 32% loan-to-value (LTV) ratio on gross asset value (GAV), with occupancy at 89%. The portfolio’s weighted average unexpired lease term (WAULT) is 3.5 years, with offices accounting for 67% of the portfolio, residential accounting for 22% and alternative assets (including education) making up the remaining 11%. ENBD REIT’s last reported NAV was USD 292 million, or USD 1.15 per share, as at 30th June 2017.