Emirates Reit buys Le Grande community mall in Dubai Marina

Emirates Reit, the country’s first real estate investment trust, made its first real estate purchase since the company floated last month.

Emirates Reit has spent Dh118.2 million on a community mall in Dubai Marina – its first purchase since the company floated last month.

The Nasdaq Dubai-listed Sharia-compliant trust has bought the 86,396 square metre Le Grande community mall on the ground and podium floors of Trident Grand Residence, a luxury 45-storey tower block close to JBR Walk.

The indoor shopping parade comprises 22 shops and cafes, 19 of which are let to stores including the soft play specialist Cheeky Monkeys, Beauty Secret Ladies Salon and Reem Al Bawadi and Hako Sushi restaurants. It also includes 161 basement car park spaces, Emirates Reit said yesterday.

The country’s first real estate investment trust, which raised US$201m, said that it planned to increase the current annual rent of Dh11m by letting the empty stores, reconfiguring shopping areas to increase the amount of leasable space and charging for car parking.

The purchase increases the value of Emirates Reit’s total property portfolio to more than Dh1.3 billion.

“Le Grande is a high-quality property that is located in one of the most popular areas of new Dubai,” said Sylvain Vieujot, Emirates Reit Management’s executive deputy chairman.

“The retail units have good occupancy rates and strong yields, which we believe our asset management team can improve further over time. Importantly the acquisition will enhance the diversity of the Reit’s portfolio both with respect to location and asset type. This is the first transaction since going public and one of a number of potential short-listed property acquisitions which we are looking at closely.”

Reits are common in other parts of the world, where they are often sold to investors as a way of putting money into the property market without the difficulties of direct investment. Reits buy properties such as large office buildings and shopping centres, manage them and distribute the rental yield to investors. Many are publicly traded.

Emirates Reit was created in the 2010 trough of the Dubai property market and became the first Sharia-compliant Reit to be incorporated at the Dubai International Financial Centre. Its first purchase was Building 24 in Dubai Internet City.

Since then it has acquired a portfolio of 10 properties in Dubai, comprising a total 1.2 million square feet and valued at more than $323.1m. It includes Loft Offices (Loft 1, Loft 2 and Loft 3) in Dubai Media City, Office Park in Knowledge Village and the Gems World Academy Dubai building in Al Barsha South.

Despite a strong appetite from investors to put cash into Dubai’s property market, the Reit sector in Dubai, and indeed institutional property investment in the UAE, has struggled to take off. It has been held back by a shortage of investment grade office space and an unwillingness to sell assets from large private landlords.

Nonetheless, prompted by recent booming values in Dubai, over the past year a number of other large institutions have started to invest in major real estate assets. These include the asset manager PineBridge Investments, which struck a sale and leaseback deal with Gems in November to buy a school campus. And this month GFH Capital, a unit of Bahrain-based Gulf Finance House, bought a Dubai school building for $34m.

“It makes sense for Emirates Reit to balance their portfolio by investing in a community mall,” said Stuart Gissing, the regional director for the Middle East at Colliers International. “The retail market in Dubai is currently very buoyant and Emirates Reit will want to be a part of that.”

lbarnard@thenational.ae

Follow us on Twitter @Ind_Insights

Published: May 19, 2014 04:00 AM

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