ENBD Reit, the real estate investment trust run by Emirates NBD Asset Management, has revealed plans to restructure its fund and to delist from the Nasdaq Dubai, where its shares trade.
The fund became only the second listed real estate investment trust in the UAE when it listed on the exchange in 2017, but the tough real estate market in Dubai, where its entire portfolio of assets is based, and a lack of liquidity in its stock has meant its share price has regularly traded below the value of its net assets.
“With the share price representing a significant discount to [net asset value] and current market conditions expected to prevail, we have undertaken a comprehensive review of strategic alternatives to maximise long-term value for shareholders," Anthony Taylor, head of real estate for ENBD Reit, said in a statement. "This process has led to the decision to proceed with a formal restructuring of the REIT, transitioning to a privately held investment vehicle, subject to shareholders’ approval."
ENBD Reit's portfolio contains 11 main assets, which are a mix of commercial and residential units. These include The Edge office building in Dubai Media City, the Souq Extra community retail mall and Binghatti Terraces apartment complex at Dubai Silicon Oasis, the Uninest student property building at Dubai Academic City and South View School in Dubailand.
Last month, the company said that its net asset value stood at $254m as of September 30, with the total value of its portfolio at $435m, which was only marginally lower than the $437m it was valued at in June.
Yet despite measures taken to improve liquidity, including a cancellation of $84.5 million worth of shares last year to create a "distributable reserve" that was used to embark on a seven month-long buyback programme, its share price continued to trade at a hefty discount to the fund's value. The company said on November 27 that its NAV per share at the end of September was $1.02, but its share price closed last Thursday at $0.50, a discount of more than 50 per cent.
"We believe that the decision [to delist] is in the best interest of shareholders who stand to realise greater value from holding equity in the REIT – valued according to NAV – on a fixed-term basis. To date, the portfolio has shown considerable resilience to market conditions, so we think that as we come out of the current cycle there will be value to be realised from our real estate holdings,” Mr Taylor said.
The company will put forward its proposals to restructure and delist the Reit to shareholders ahead of a forthcoming extraordinary general meeting.