ENBD Reit to reposition its portfolio by focusing on 'alternative' assets

Logistics and healthcare properties should offer longer leases and more stable revenue streams, manager says

ENBD Reit owns more than 87,000 square feet of commercial office space at Burj Daman in Dubai International Financial Centre. Currently, 64 per cent of its portfolio is in commercial office property. Courtesy of ENBD ReitShow less

ENBD Reit, a publicly-traded real estate investment trust managed by ENBD Asset Management, is to reposition its portfolio by “increasing the diversity of its holdings”.

The Reit, whose recent proposal to delist from Nasdaq Dubai did not secure the required approval from the three-quarters of shareholders, said that in the short-term it will focus on “agile solutions” allowing it to maintain healthy levels of occupancy during the Covid-19 pandemic. In the longer term, it will reposition its portfolio towards “alternative” assets in sectors such as logistics/warehousing and healthcare that offer longer lease agreements and more stable income streams.

“Our priorities this year and next will be to continue to build on diversity in the portfolio – thereby de-risking our position in the context of the market – while taking advantage of lower interest rates to bring down costs,” Anthony Taylor, head of real estate at Emirates NBD Asset Management, said in a statement.

ENBD Reit posted a net loss of $13.3m (Dh61.04m) for the nine months to December 31, 2019 on property income of $26.9m, which was mainly due to a $21m unrealised loss on the value of its portfolio.

ENBD Asset Management proposed a take-private of the Reit in January as its shares continue to trade at a discount of more than 50 per cent of its net asset value, which was $0.98 per share, or $246m at the end of last year.

“Our portfolio came under pressure during 2019 as a result of soft real estate market conditions, and in the short-term these conditions have been exaggerated by the Covid-19 pandemic and a return to low and volatile oil prices. We do, however, remain agile and well-positioned to navigate headwinds and are engaging with tenants across the portfolio with the intention to assist those in genuine financial difficulty,” said Mr Taylor.

“We recognise that a gradual uptick in the real estate market cycle is probably delayed, but we have the diversity and the resilience in our portfolio to maintain occupancy and rental income, with sufficient cashflow to maintain dividend payments to shareholders.”