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Dubai Residential REIT Prices IPO Range, Seeks $487 Million

Prime Highlights:

  • Dubai Residential REIT prices unit between AED 1.07 and AED 1.10.
  • The sale will raise up to $487 million (AED 1.79 billion).

Key Facts:

  • The REIT portfolio comprises 21 best residential communities in Dubai.
  • The IPO distributes 10% of units to retail investors and 90% to institutions.
  • Dividends are expected to be at least AED 1.1 billion for 2025.

Key Background:

Dubai Holding, the significant investment arm of the ruler of Dubai, is taking the initial public offering (IPO) of Dubai Residential REIT to the Dubai Financial Market (DFM). The issue sets a price band for the units between AED 1.07 and AED 1.10, while the market capitalization of the REIT is estimated between AED 13.9 billion and AED 14.3 billion (about $3.8 billion to $3.9 billion). This IPO is seen as Dubai’s first since December and the UAE’s second this year.

The REIT will provide 12.5% equity to the public and issue for subscription around 1.63 billion units. Retail investors will be eligible for a minimum of 2,000 units under certain conditions outlined in the prospectus. Institutional book-building for the IPO will close on May 20, and listing is expected to happen on or about May 28.

Dubai Residential REIT boasts 21 of the city’s top residential neighborhoods, such as high-demand Nakheel properties, which are famous for the world-renowned Palm Jumeirah. Rental income growth in the properties has been strong, on the verge of double-digit growth, reflecting Dubai’s residential property demand that shows no signs of slowing.

The REIT will pay a minimum of 80% of the earnings to the shareholders prior to adjustment for variation in fair value of investment properties. The initial dividend of at least AED 1.1 billion is anticipated to be in 2025. Future dividends are to be paid in the same way, where board approvals will be necessary.

Citi, Emirates NBD, and Morgan Stanley are running the IPO and acting in joint global coordinator and bookrunner capacities. It is a time of strong post-pandemic recovery for Dubai’s real estate market, driven by foreign capital and visa reforms. All this, coupled with strategic efforts to shore up the real estate market, has given this historic IPO a sound basis to be an attractive proposition for retail and institutional investors.

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