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ENBD REIT Acquires First Education Asset in Dubai

Sunday, August 6, 2017/ Editor -  

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  • ENBD REIT to develop South View School for AED 55 million 
  • The acquisition grows ENBD REIT’s total portfolio value to USD 367 million 
  • The school will be Interstar Education’s fifth Dubai campus
Dubai, United Arab Emirates, 6th August 2017:  ENBD REIT (CEIC) Limited (“ENBD REIT”), the Nasdaq Dubai-listed Shari’a compliant real estate investment trust managed by Emirates NBD Asset Management, announces that it has acquired South View School in Dubai’s Remraam Community. South View School will be Interstar Education’s fifth Dubai campus and its second British curriculum school, which is in line with the firm’s vision of developing high quality, affordable schools in Dubai. ENBD REIT signed a Musataha of the plot, and will construct the school at a total transaction value of AED 55 million (USD 15 million). The deal marks ENBD REIT’s first acquisition of an education asset, as part of its strategy for diversifying its property portfolio into alternative real estate. In May, the REIT acquired the Uninest Dubailand student accommodation building for AED 120 million (USD 33 million).
 
South View School, once complete, will be operated by Interstar Education, part of Interstar Advisory Services, which currently runs the successful and well-established Victory Heights Primary School in Dubai Sports City. The total ground floor area of the school will be 132,000 sq. ft. on a plot covering 183,504 sq. ft. The total project of approximately AED 55 million will return an initial rental yield of 9% on project costs, with a fixed escalation of 4% every two years throughout the lease term of 9 years with further options to renew. The school pays additional rent during the construction period, equivalent to 5% on drawdown. 
Commenting on the acquisition, Tim Rose, Head of Real Estate at Emirates NBD Asset Management, said:
 
“We’re pleased to announce our second acquisition since listing on Nasdaq Dubai in March. This is our first education asset, and an important step in the ongoing diversification of our portfolio away from purely office and residential properties. It is a pleasure to be working with Interstar Education, a renowned and established schools operator in Dubai, and we look forward to a long and fruitful relationship. The UAE’s education sector continues to prosper and grow, and we are very proud to have become a part of that journey.”
 
South View School’s rental agreement is based on a FRI (Future Rent Increase) triple net lease, with the tenant covering all OPEX, CAPEX, ground rent and associated property and community charges. The school will open to pupils, to whom it will teach the British curriculum, in September 2018, with works already underway on site. 
 
Following acquisition and completion of the development, the ENBD REIT property portfolio’s total value will be USD 367 million, with a net asset valuation (NAV) of USD 292 million, or USD 1.15 per share. Loan-to-value (LTV) ratio on gross asset value (GAV) is 29%, with occupancy of 87% across the portfolio. The portfolio’s weighted average unexpired lease term (WAULT) increases to 3.63 years, with offices accounting for 59% of the portfolio, residential accounting for 27% and alternative assets (including education) making up the remaining 13%. ENBD REIT has a total of 9 properties across Dubai. 
 
Amit Kothari, Executive Director of Interstar Education, commented:
“We are delighted to be working with ENBD REIT on the development of South View School, our first K-12 British curriculum school in Dubai. The school is in line with our vision of developing high quality, affordable schools in the UAE. The REIT has a long track record for acquiring and managing high quality assets in strategic locations, and an experienced and dedicated management team, with whom it is our pleasure to partner and develop a long-term relationship. We are very much looking forward to opening the doors of our school to pupils in September 2018, and are now hard at work on delivering another first class educational institution in Dubai.”
 
Since its establishment in 2000, Interstar Education has provided schooling to 15,000 children across five campuses in the UAE and India. The Group runs two Delhi Private Schools in the UAE, and first entered the British curriculum with Wonder Years Nursery in Dubai Sports City. It has since established Victory Heights Primary School, which has enjoyed considerable success. South View School will be Interstar’s fifth UAE campus. ENBD REIT is a leading Shari’a compliant Real Estate Investment Trust, invested in properties across Dubai’s office, residential and alternative real estate asset classes. In March 2017, the Company successfully raised USD 105 million when it listed on Nasdaq Dubai. 

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