Emirates REIT (REIT) Q3 2024 TU earnings summary

Leadership and strategy

• New and experienced leadership team is focused on optimizing rental income, strategic asset sales, and refinancing to reduce leverage and costs.

• Three-pillar strategy: maximize rental income, sell non-core assets at a premium, and refinance expensive debt.

• Achieved 93% occupancy, up from 84% in 2023, and reduced LTV to 25.9% after asset sales.

• Strong governance supported by proprietary AI-driven asset management software.

Financial update and capital structure

• Issued new AED 205 million sukuk, rated BB+ by Fitch, secured by Index Tower, with proceeds used to retire old sukuk and for working capital.

• New sukuk profit rate is 7.5% for three years, stepping up by 75bps in year four, a 33% reduction from previous sukuk costs.

• Debt to EBITDA projected at 4x; minimum cash balance covenant of $10 million, with all covenants expected to be met.

• Gross Islamic financing expected to close 2024 at AED 253 million, a 40% reduction from Q3.

Portfolio and market performance

• Portfolio consists of eight Dubai properties: five office (73% of NPI) and three education assets (27% of NPI).

• Weighted average lease term is 6.6 years; proactive strategy to increase lease duration and tenant retention.

• Index Tower, the flagship asset, is in DIFC and commands high rental rates with strong demand.

• Office market in Dubai is robust, with prime rents up 11.3% and limited new supply expected until 2028.