Emirates NBD’s sharia-compliant real estate fund, ENBD REIT, has announced that its net asset value (NAV) dropped from US$230 million to $215 million in the last quarter.
The decline was attributed to the pressure on portfolio valuations as a result of a softening property market and macroeconomic uncertainty.
A leasing strategy to cater for tenants’ demands during the pandemic has helped to safeguard occupancy but not entirely mitigate market conditions, ENBD Reit said. As a result of the valuation losses, the fund’s loan to value ratio has increased to 48% from 44% in the previous quarter.
The fund has also executed a sharia-complaint profit rate swap with Mashreq Bank on its $109 million facility which will hedge 56% of its outstanding debt.
“Our priority this year is to manage down costs, and maintain them at optimal levels. This has already been achieved in a number of areas, in both our property portfolio and at fund level, having announced earlier this year the reduction of our management fees and discounts on Board and Committee remuneration,” said Anthony Taylor, head of real estate at Emirates NBD Asset Management.
“Given a lower interest rate environment, we have a compelling opportunity to reduce our finance costs – the Reit’s single largest expense – into the future. We have taken that opportunity by agreeing a profit rate swap with Mashreq Bank, which will hedge more than half of our total outstanding debt until June 2023,” added Taylor.
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