Emirates REIT is the UAE’s first DFSA regulated real estate investment trust (REIT) and is listed on Nasdaq Dubai. With offices based in the Dubai International Financial Centre (DIFC), Emirates REIT is an ever-expanding entity, with a portfolio value of AED2.7bn ($742m) spanning over nine properties located in prestigious areas, such as Dubai Marina, DIFC, Sheikh Zayed Road and Dubai Media City. Unique to Emirates REIT is the exclusive access to the UAE real estate market that it provides to investors. This was made possible by a decree issued by His Highness Sheikh Mohammed bin Rashid Al Maktoum, enabling Emirates REIT to invest throughout the Emirate of Dubai. Recently, Emirates REIT was granted another Ruler’s Decree that enables it to invest anywhere in Ras Al Khaimah. With these prestigious federal decrees Emirates REIT can explore acquisition opportunities that are in line with its specific long-term goals.
The European caught up with CEO Sylvain Vieujot to discover more about the company’s performance and the service REIT offers its clients.
Please outline how Emirates REIT became the UAE’s first DFSA regulated real estate investment trust.
Sylvain Vieujot: Emirates REIT was established in November 2010 by the group now known as Equitativa. At the time, the real estate market in the UAE was going through a rough phase, and this presented a good opportunity for long-term investors. A local founding investor, the Dubai Islamic Bank, provided the seed assets and for three years, the REIT grew its portfolio with a very disciplined approach. Emirates REIT then listed on Nasdaq Dubai in April 2014 enabling both institutional and retail investors to buy shares in the REIT and benefit from its growth and attractive dividend policy.
Today, Emirates REIT is the largest publicly Shariah-compliant REIT in the world with a portfolio value of $742m.
What services do you provide to your clients?
SV: In broad terms, REITs invest in real estate assets, collect rent, and pay attractive dividends to shareholders. They essentially provide a simple and safe way to invest in real estate via purchasing shares on the stock market. Similarly, Emirates REIT selects and acquires assets to build an attractive and diversified portfolio. It manages the real estate portfolio, thus relieving shareholders from the administrative burden of managing, maintaining, and marketing the various properties. Ultimately, it pays a dividend to the shareholders that reflects the portfolio performance.
Tell us about the company’s performance over the last 10 years.
SV: Since the launch of Emirates REIT six years ago, the total return encompassing dividends and capital appreciation has exceeded 9% every year, with an average of about 16%. In 2016, we distributed $0.08 per share for the financial year 2015, which corresponds to a dividend yield of 7% at a share price of $1.13.
Why would REIT be the first choice for investment rather than actually buying properties?
SV: The main challenges with investing in real estate are availability of capital, management of the properties, and liquidity of the assets. Indeed, to buy a prime property, you first have to find it, have the financial resources to buy it, and then manage it. But then you have a very illiquid asset that is not easy to sell. A REIT solves all those issues. A professional team constantly monitors the market and finds the best investment opportunities. As a REIT is usually quite large, it has the financial resources to acquire those properties. The REIT then manages the portfolio on your behalf and pays you a regular dividend. Finally, you can easily buy and sell your REIT shares on the stock market, which is not so easy to do with physical real estate assets.
So ultimately, a REIT provides the same advantages as investing in physical real estate, but makes this investment much easier. It has also the added benefit of providing access to a large diversified portfolio, which is difficult to build for an investor. Most importantly, a REIT provides all these advantages to any type of investor, from individual investors to large institutions.
Do you have any plans for expansion or development in 2017?
SV: Emirates REIT currently still has significant cash availability and we aim to benefit from the softer real estate market in the UAE to acquire new properties and expand the portfolio. After completing the development of the Jebel Ali School in August of this year, we are currently building the British Columbia Canadian School, also in Dubai.