Emirates REIT (REIT) Q4 2023 earnings summary

Executive summary

• FY 2022 net profit rose 29.9% to $82.0m, driven largely by a $78.8m unrealized gain on property revaluation; EPS increased 29.8% to $0.257.

• Portfolio occupancy reached 84.5%, up 13 percentage points YoY; like-for-like occupancy improved 16 percentage points despite the Jebel Ali School disposal.

• Reported total property income fell 1.8% to $67.3m, while like-for-like income grew 10.8%; higher refinancing-related expenses contributed to a 30.9% decline in operating profit.

Financial highlights

• Rental, fee and other income increased 10.8% to $68.8m; property operating expenses declined 4.3% to $12.0m.

• Net property income was $55.3m, down 1.3% reported; excluding disposal effects and one-off disposal gains/losses, NPI increased 14.6% YoY.

• Operating profit declined 30.9% to $32.2m; fund expenses rose 48.3% to $21.7m, including $6.8m of one-off sukuk refinancing costs.

• Net finance costs were $29.1m versus $28.2m; net profit reached $82.0m versus $63.1m in FY 2021.

• Total assets increased 8.9% to $929.6m; total liabilities fell 1.3% to $557.0m and equity rose 28.6% to $372.6m.

Outlook and guidance

• 2023 net profit before investment-property revaluation expected to face pressure from high profit rates and refinancing costs amortized over coming years.

• FY 2023 priorities include longer-term refinancing, lowering FTV through non-core asset disposals, leasing up vacant space, improving NPI margin and completing asset enhancements.

• Management expected the portfolio recovery to continue in 2023, supported by leasing opportunities and asset enhancement initiatives.