Emirates Reit profit falls 63 per cent on low investment valuations

Profits at the UAE’s only quoted real estate investment trust fell in the second quarter of 2016 as capital values for Dubai offices slowed.

Emirates Reit’’s profits for the three months to the end of June fell 63 per cent to US$9.4 million, down from the $26m it made during the same period a year earlier.

For the first half of the year profits fell by just over a quarter to $23.7m from $31.1m.

The Nasdaq Dubai quoted real estate trust said that the profits slump had come as a result of a reduction in unrealised revaluation gains on its portfolio of investment properties which fell 40 per cent to $18.8m from US$31.5m.

At the same time rental income from Emirates Reit’’s offices, shops and schools in Dubai for the first half of the year grew 28 per cent to stand at $20.9m, up from $16.3m a year earlier.

“This is a result of the Reit’’s strategy which targets under-performing properties and uses its expertise to improve underlying cash generation,” Emirates Reit’ said in a statement. “As the existing properties mature, this trend is expected to continue as previous valuation gains are converted into cash returns.”

Total property income from rent, service fees and other income climbed by $4.5m to $23.6 million.

Total occupancy levels at the reit’s portfolio of eight Dubai properties, which includes Le Grande Community Mall in Dubai Marina, Gems World Academy in Al Barsha South, the Office Park commercial building in Knowledge Village, as well as a cluster of three loft offices in Media City, increased to 77 per cent at the end of June from 67 per cent a year ago.

The company said that occupancy levels at its recently refurbished Index Tower complex in Dubai increased to 16.3 per cent from being completely empty the previous year.

Emirates Reit’ said that the total value of its portfolio grew 7.2 per cent to $721.9m, up from $673.2m a year earlier.

At the same time total debt at the company increased 6.8 per cent to $274.7m, up from $257.2m a year ago as the company made additional funds available for new acquisitions. Finance costs nearly doubled, growing to $4.2m from $2.8m.

Shares for Reit’ were up 1.08 per cent at $1.1 at 11am on August 16.


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Lucy Barnard

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