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ENBD REIT announces rent relief measures to help tenants overcome impact of Covid-19

• Flexible solutions introduced to combat Covid-19 across portfolio • Management has begun identifying eligible tenants for rent relief on a case-by-case basis • Portfolio resilience remains strong, despite market headwinds

Anthony Taylor, Head of Real Estate at Emirates NBD Asset Management

ENBD REIT, the Shari’a compliant real estate investment trust managed by Emirates NBD Asset Management Limited, has announced a relief initiative for tenants that have been severely affected by the outbreak of Covid-19. The initiative is aimed at tenants who are in genuine need of rent relief, taking the form of rent free periods, postponement of cheques or rescheduling rental payment plans, depending on their financial situation.

ENBD REIT remains in a healthy financial position with positive rental income and sufficient cash to meet all foreseeable obligations, largely due to measures taken previously to minimise costs and bring down expenses on debt in a lower interest rate environment. In line with its strategy to deliver value to shareholders, the REIT’s management has negotiated down a number of service contracts to mitigate the impact of sustained softening in the real estate market.

Anthony Taylor, Head of Real Estate at Emirates NBD Asset Management, said:

Our priority right now is identifying those in genuine need of financial assistance to weather the sustained impact of Covid-19 across businesses in Dubai. While we are in a strong financial position having met our objectives to build resilience into the portfolio, we are not in a position to offer blanket relief to all tenants. If ENBD REIT were to share the cost savings it has achieved with all tenants equally, it would be a reasonably small percentage reduction and immaterial to any one tenant facing significant financial challenges. For this reason, we assess the financial position of each tenant who is requesting relief before agreeing to a rental payment structure that meets their requirements.”

In order for ENBD REIT to provide tenants with adequate rental relief, we will require the following documents to be provided by tenants. For businesses, including office and alternative tenants, this includes:

  • Trading figures for the last 12 months, demonstrating the impact of Covid-19 on revenue
  • Bank account statements for the last 12-month period
  • Evidence of ongoing fixed costs, including a detailed breakdown with supporting documentation
  • Audited financial information for the past 3 years

For individuals, including residential tenants, the following is required:

  • Documentation demonstrating loss of income, such as a salary reduction or termination letter from their employer
  • Bank account statements for the last 12-month period

Taylor continued: “No sector in the region is unaffected by the pandemic. We want to focus on the tenants who are in critical need of our support, identifying them as soon as possible to create solutions that will have a tangible impact. Our intention is to build long-term relationships with our tenants, rather than see them vacate our assets in the case of business closure, because in current market conditions occupancy and rental income are a top priority. Our approach will help tenants to keep their business viable, while affording the REIT the opportunity to realise sustained rental income during the coming months.”

ENBD REIT is in the process of rolling out a series of flexible solutions for occupants throughout its portfolio. By giving tenants the opportunity to renegotiate or postpone payments to a later date, management expect to sustain and encourage longer lease agreements in the medium- to long-term. At the same time, ENBD REIT is taking advantage of a lower interest rate environment to fix future financing agreements at the lowest possible costs, better enabling it to support tenants throughout this challenging period.