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ENBD REIT looks to nearly double non-residential, non-office assets

The firm wants to grow alternative assets by value in ENBD Real Estate Investment Trust's (REIT) from 16% to 30% of the portfolio's total value

ENBD REIT bought Oracle-branded property The Edge for $76.2m in October 2017.
ENBD REIT bought Oracle-branded property The Edge for $76.2m in October 2017.

Emirates NBD Asset Management wants to nearly double the percentage of assets in ENBD REIT’S portfolio that are not office or residential investments, a member of its senior management has revealed.

"Our strategy at the moment is definitely aligned to the alternative asset space," Anthony Taylor, head of real estate at Emirates NBD Asset Management, which manages real estate investment fund ENBD REIT, told Construction Week.

"We hold 16% alternative assets by value in our portfolio, and we are looking to grow that to about 30% whilst keeping the same level of our office and residential assets in terms of portfolio value," he said.

READ: ENBD REIT completes deployment of $105m raised on Nasdaq Dubai

Alternative assets, Taylor added, are simply any assets that are not office or residential.

"Most of the assets in the alternative space have long term leases – traditionally over five years, but ideally over 10 years. That is very attractive to us, especially given the current market with volatility, because it guarantees rental revenue over a longer period."

The value of ENBD REIT’s current portfolio currently stands $463m (AED1.7bn), with total net asset value standing at $289m (AED1bn).

The residential sector makes up 20% of the portfolio’s current value – a level Taylor said he wants to keep steady for the time being.

"This sector has seen a substantial move downwards over the last couple of months," he explained. "That’s largely driven by the fact that there is supply coming on which means there is more competition with other landlords."

READ: ENBD REIT appoints senior portfolio manager

"What we’re finding is that is very easy for tenants in the residential space to up and move to another unit without too much disruption. This is why we’re seeing the volatility in that space, more so than in the office sector."

The office sector makes up the lion’s share of ENBD REIT’s portfolio, contributing 64% of its total value.

"It has actually held up quite well in the current market conditions," Taylor noted. "When you look at those who occupy office space, it is more difficult for them to move and change accommodation so typically the rentals are quite sticky."

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Construction Week - Issue 747
Aug 03, 2019