Emirates REIT invests $56m for Akoya school plot
The Shari'a compliant real estate investment trust acquired the freehold land plot from Damac Crescent Properties for $26.8m
Nasdaq Dubai listed Emirates REIT has acquired a freehold land plot and will fund the development of a new school in the Akoya development.
The Shari'a compliant real estate investment trust acquired the freehold land plot from Damac Crescent Properties for $26.8m (AED98.5m) (including acquisition costs), and leased it to Jebel Ali School, providing an initial net income in excess of 10% of the acquisition costs of the plot.
Emirates REIT simultaneously entered into an Istisna agreement with Jebel Ali School, to build their new facility.
The construction of the school facilities is estimated to cost approximately $29.8m (AED109.8m), bringing the total invested to $56.6m (AED208.3m). Upon completion, the school will account for approximately 9.2% of today's portfolio value of $598m (AED2.2bn).
Sylvain Vieujot, executive deputy chairman of Emirates REIT, said: “This is our second transaction in the education sector and we are delighted to partner with Jebel Ali School, one of Dubai’s most respected schools. This is a unique opportunity in an exciting and upcoming area of the city and we recognise the long term strength of the sector and its importance to the overall economy. The transaction will enhance rental income from day one and provide long term secure cash flows.”
The new educational facility will include a foundation, primary and secondary school, as well as a sports centre and an auditorium, constructed to the operator’s specifications over a built up area of approximately 2.08ha.
The internal rate of return for this project should exceed 11%, and Emirates REIT will account for an immediate valuation gain of $1.6m (AED6m).