The first phase of the project closed at $22 million
ENBD REIT, the Sharia compliant real estate investment trust managed by Emirates NBD Asset Management Limited, has acquired a community retail centre in Dubai Silicon Oasis from Souq Extra LLC for AED 210 million ($57 million).
According to the company, the first phase – with 36,000-square feet of gross leasable area comprising 42 retail units - closed at AED 84 million ($22 million).
Among the tenants are Carrefour Market, KFC, McDonald’s and Starbucks, with rental income guaranteed for two years.
“This acquisition diversifies ENBD REIT’s asset mix into retail and will enhance the rental income return profile of the portfolio,” said Anthony Taylor, fund manager, real estate at Emirates NBD Asset Management.
Taylor added that both phases of the development are being purchased using the company’s existing finance facility at an 8 percent yield on cash, offering shareholders a net leveraged return of 11 percent on equity.
Phase two of the Souq Extra DSO comprises a 55,000-square foot expansion, centred around a cobblestone public piazza “with a European character”. The expansion will include a regional medical centre, a children’s nursery and a fitness centre, in addition to entertainment and F&B options.
“Our transaction with ENBD REIT is a strong endorsement of Souq Extra’s unique model, whereby institutional grade assets are developed, pre-leased and immediately delivered to institutional investors seeking sustainable cashflows,” said Ben Ganley, CEO of Souq Extra. “The DSO Phase I asset sale and the Phase II forward sale are notable highlights of a successful 10-year track record for Souq Extra and its prominent individual and sovereign investors.”
Other acquisitions completed by ENBD REIT this year include Uninest student accommodation in Dubailand, South View School in the Remraam area, and the Edge office building in Dubai’s Internet City.
As of September, ENBD REIT’s net asset value totaled $295 million, and in October the company announced that it had fully invested $105 million in proceeds from being listed on Nasdaq Dubai in March.
Following the acquisition of Phase 1 of Souq Extra DSO, the total property portfolio value is $466 million (AED 1.7 billion).