ENBD REIT unveils strategy to combat Covid, low oil challenges
ENBD REIT, a leading shari’a-compliant real estate investment trust in the UAE, will be focusing on flexible solutions for combating the market challenges created by the Covid-19 pandemic and low oil price as part of its 2020-21 strategy.
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ENBD REIT, the shari’a-compliant real estate investment trust managed by Emirates NBD Asset Management Limited, has announced its strategic priorities for 2020-21.
In March, shareholders voted in favour of maintaining the current structure of the fund, which will remain as a listed real estate investment trust on Nasdaq Dubai.
In 2020, ENBD REIT’s management will focus on flexible solutions for combating the market challenges created by the Covid-19 pandemic and a low oil price environment, while taking advantage of lower interest rates and hedging opportunities.
The REIT’s medium-term objectives are to reposition the real estate portfolio by increasing the diversity of its holdings, and to act opportunistically on disposals and acquisitions that will deliver competitive shareholder value, said the statement from the company.
With the current structure of the Fund and its portfolio remaining in place, the REIT’s management will focus on agile solutions for the portfolio that will enable it to maintain robust occupancy levels and stable rental income during a period of market volatility, in light of the Covid-19 pandemic and low oil prices.
The Emirati fund is already rolling out a series of flexible initiatives for occupants throughout its portfolio, which will assist tenants facing genuine financial difficulty, as well as bolster occupancy and encourage longer-term lease agreements.
At the same time, management will take advantage of low interest rates via Shari’a compliant hedging arrangements to fix financing covenants at the lowest possible cost for the future, it stated.
Throughout 2020-21, ENBD REIT intends to reposition its property portfolio by increasing its diversification, and in particular by growing the weighting of the ‘alternative’ assets segment, which currently accounts for 19 per cent of the portfolio’s total value.
Preferred asset classes for potential acquisitions include industrial facilities, logistics/warehousing, and healthcare, with longer lease terms a common feature of such properties, making them attractive for achieving stable rental income, extended unexpired lease terms and resilient long-term valuations in a challenging macroeconomic environment, said ENBD REIT.
Management will take an opportunistic view on potential disposals from the portfolio, on the basis that they offer fair value in the life cycle of the property and that there are suitable opportunities to utilise excess capital, it added.
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