Emirates REIT - Investor Update
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Agenda
- Transaction Overview
-
Company Overview
3 Market Overview
- Performance
- Financial Projections
- Corporate Governance and Risk Management
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Transaction Overview l Sources & Uses, Capital Structure
New Senior Secured Sukuk financing reflects company's conservative capital structure, BB+ bond credit rating and the prime nature of the assets and collateral (e.g.: Index Tower DIFC)
Total Sources | $m | Total Uses | $m | |
Sources | New Secured Bond Sukuk | 205 | Secured Sukuk | 200 |
& Uses | Working capital / expenses | 5 | ||
Total Sources | 205 | Total Uses | 205 |
$m | As at Dec-24 (Pre) | Adj. | As at Dec-24 (Post) | |||||||
Amt. | x EBITDA | Profit | Maturity | Amt. | Amt. | x EBITDA | Profit / YTM | Maturity | ||
Ajman Ijarah | 48 | 0.9x | E + 2.75% | Mar 33 | 48 | 0.9x | E + 2.75% | Mar 33 | ||
Capital | Secured Sukuk | 200 | 9.50% | Dec 25 | (200) | |||||
Structure | New Secured Sukuk | 3.8x | 205 | 205 | 3.8x | 7.9% | Dec-28 | |||
Gross Debt | 248 | 4.6x | 253 | 4.7x | ||||||
Cash & equivalents - PF | (33-37) | (33-37) | ||||||||
Net Debt | 211-215 | 3.9x | 216-220 | 4.0x | ||||||
FY24F EBITDA | 52-56 |
This slide includes forward-looking information that involves risks and uncertainties, many of which are beyond our control and all of which are based on our management's current beliefs and expectations about future events. These financial projections represent our estimates only and should not be relied upon to predict or forecast actual results or other future events. No assurance can be given that such future results will be achieved, and actual results could differ materially from those projected on this slide. The information on this slide is qualified in its entirety by reference to the cautionary statements set forth in the disclaimer on the last slide of this deck. Accordingly, you should not place any reliance on the forward-looking information contained on this slide.
The Information does not constitute an offer to sell (nor a solicitation of an offer to buy, nor a recommendation to buy, sell or otherwise participate in) any investment or security or to engage in any other transaction. The Information does not constitute investment, legal, tax or accounting advice and is provided for information purposes only. Past performance is not indicative of future results and nothing contained in this presentation should be deemed a prediction, projection, representation or warranty of future outcomes. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the Information or any opinions expressed herein.
Source: Term Sheet, Company Information | RESTRICTED | 3 |
Transaction Overview l Key Terms
Senior Secured Bond Sukuk | |
Issuer | Emirates REIT (CEIC) PLC |
Use of proceeds | Refinance existing sukuk |
Ranking | 1L senior secured bond sukuk |
Bond Rating | BB+ |
ISIN / Common Code | XS2952510340 / 295251034 |
Format | Sukuk Al-Wakala |
Clearing | Euroclear and Clearstream, Luxembourg |
Maturity | Dec-2028 |
Security | First Mortgage Over Index Tower (~36% Day 1 LTV); Negative pledge on European Business Centre (~USD50m day 1 value) |
Bond Amount | 205m |
Currency | USD |
Profit Rate / IRR | IRR/YTM of 7.9%; 7.5% paid quarterly, with a step-up in year 4 to 8.25% paid quarterly |
Amortization | None. Bullet |
Call Protection | Call at 103 in year 1, 102 in year 2, 100 in year 3 and year 4 |
Group LTV =< 40%, stepping down to 35% in Y4, tested quarterly | |
Selected Covenants | Collateral LTV =< 40%, tested quarterly |
Group Cash Flow Coverage Ratio >= 1.75X, stepping up to 2.25x in Y4, tested quarterly | |
Minimum cash on hand of $10m, tested quarterly | |
Documentation | Bond shall be governed by Sharia approved structure |
Governing Law | English Law / DIFC |
Mandated Lead Arranger | HSBC Bank Plc |
Paying, Security Agent, Delegate | HSBC Bank Plc |
Source: Term Sheet
- Years 1-3: 7.5%, targeted to be lower, depending on final investor demand, paid quarterly in arrears. Year 4: 75bps profit rate step up
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Agenda
-
Transaction Overview
2 Company Overview
- Market Overview
- Performance
- Financial Projections
- Corporate Governance and Risk Management
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Company Overview l REIT Overview
Established 14 years ago, Emirates REIT has a unique exposure to the Dubai property market with a primary objective to invest in income-
producing assets with attractive fundamentals
Business Overview
- Emirates REIT is the first Shari'a compliant REIT in the Middle East
- Established in 2010, it became the first REIT to be listed on Nasdaq Dubai in 2014
- The REIT manages c. $991m(1) in assets (in investment properties), with portfolio valuations conducted quarterly by independent international third parties.
- Its portfolio comprises a diverse range of commercial properties, including office, retail, and educational assets.
- In FY23, the portfolio generated $62.1m in Net Property Income (NPI)(2) and is expected to generate $68-75m in FY24 on a projected basis (~ +15% YoY)
- As of Jun-24,the portfolio attained c. 91% occupancy (86% in December 2023), with all schools reporting 100% occupancy.
Leadership
Portfolio
Index Mall(3)Index TowerLoft Offices
/ Retail | |||
Commercial | Building 24 | Indigo 7 | European Business |
Centre | |||
Lycée Français | GEMS World | Durham School | |
Education | Jean Mermoz | Academy | Dubai |
Abdulla Al Hamli | Thierry Delvaux | Mike Davis | Ross Mclaughlin |
Chairman | Chief Executive | Chief Financial | Head of Real |
Officer | Officer | Estate | |
>30 years experience | 30 years experience | 20 years experience | 18 years experience |
Source: Company Presentation
- As of Jun-24
- As of Dec-23
- Emirates REIT considers and reports Index Mall within one single asset - Index Tower
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Company Overview l Business Overview and Strategy
Description
- The REIT only focuses on income-producingassets with attractive investment fundamentals.
- The REIT uses an integrated software platform which allows the Management to have a great degree of visibility on historical, existing, and projected performance of the portfolio, along with the ability to identify growth and improvement opportunities.
- Equitativa (Dubai) ("Asset Manager" of Emirates REIT) is one of the leading real estate fund managers in UAE with detailed knowledge of the UAE real estate sector with over 1,600 deals reviewed over the years.
- The REIT has a mix of local and international tenants, all with activities across diversified sectors including education, financial / professional services, healthcare, technology, FMCG, etc.
- The REIT had a strong track record of managing leasehold and optimizing tenant mix to enable price, margin and occupancy improvements.
Tenants
Source: Company Information
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Company Overview l Real Estate Portfolio Overview
Index Tower
DIFC
Acquisition Year: 2013-2014(1)
Ownership: Freehold
NL Office Area: 352,130 sq. ft
NL Retail Area: 64.937 sq. ft
H1-24 Valuation: $542.4m
Loft Offices
Dubai Media City (DMC)
Acquisition Year: 2011
Ownership: Freehold
NL Area: 163,867 sq. ft
H1-24 Valuation: $62.8m
Building 24
Dubai Media City (DMC)
Acquisition Year: 2011
Ownership: Freehold
NL Area: 57,335 sq. ft
H1-24 Valuation: $18.2m
GEMS World Academy
Al Barsha South
Acquisition Year: 2013
Ownership: Leasehold
NL Area: 459,629 sq. ft
H1-24 Valuation: $95.8m
Durham School (DIP)
Dubai Investments Park
Acquisition Year: 2016
Ownership: Leasehold
NL Area: 207,900 sq. ft
H1-24 Valuation: $28.1m
Lycée Français Jean Mermoz (LFJM)
Al Quoz
Acquisition Year: 2018
Ownership: Leasehold
NL Area: 247.854 sq. ft
H1-24 Valuation: $49.3m
Indigo 7
Sheikh Zayed Road
Acquisition Year: 2011
Ownership: Leasehold
NL Area: 20,477 sq. ft
H1-24 Valuation: $5.6m
European Business Center
Dubai Investments Park (DIP)
Acquisition Year: 2017
Ownership: Leasehold
NL Area: 275,081 sq. ft
H1-24 Valuation: $48.1m
Allocation Based on 1H24 NPIs
24%Legend
Commercial / Retail
Education
76%
Source: Company Information, valuation reports dated 30-Jun-2024 | 8 |
1) Extra floors purchased in 2018 | |
Company Overview l Asset Location Map
Commercial | Retail | Education | |||
1. | Index Tower | 7. | Index Mall | 9. | Lycée Français Jean Mermoz |
2. | Office Park(1) | 8. | Trident Grand Mall(2) | 10. | Gems World Academy |
3. | Loft Offices | 11. | Durham School Dubai |
- Building 24
- Indigo 7
- European Business Centre
Al Maktoum International Airport
- Sold in Oct-24
- Sold in Jul-24
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Company Overview l Financial Policies and Risk Management
Leverage
- We target consistently conservative LTV <=30% through-the-cycle
M&A
- No current plans for further sales or acquisitions
Risk management and liquidity
- New Sukuk is fixed rate i.e. no profit rate risk on ~80% of financing
- FX risk negligible. All revenues and operating cost are AED. Sukuk is USD but AED/USD is fixed
- We seek to maintain $15m of minimum liquidity at all times, for working capital purposes
- Shareholder returns
- Cash dividend is determined based on proforma modelling and conservative cash coverage ratios
Source: Company policy
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