Dubai Holding Expands Residential REIT IPO Amid Surging Investor Demand

(MENAFN- The Arabian Post)

Dubai Holding has increased the size of its Dubai Residential REIT initial public offering to 15% of the entity's capital, up from the previously announced 12.5%, in response to robust investor interest. The offering now comprises 1.875 billion units, with the institutional tranche expanded to 1.7875 billion units, while the retail tranche remains unchanged.

Based on the price range of AED 1.07 to AED 1.10 per unit, the IPO is expected to raise between AED 2.08 billion and AED 2.14 billion . This implies a market capitalisation at listing of between AED 13.9 billion and AED 14.3 billion. Upon listing, DHAM Investments LLC, a subsidiary of Dubai Holding, will retain an 85% stake in the REIT.

The Dubai Residential REIT is set to be the Gulf Cooperation Council's first pure-play listed residential leasing-focused real estate investment trust and is anticipated to be the region's largest listed REIT at the time of listing. The REIT manages a diversified portfolio valued at AED 21.63 billion, comprising 35,700 residential units across 21 communities in Dubai. These properties cater to various market segments, including premium, community, affordable, and corporate housing.

The REIT's portfolio boasts an average occupancy rate of over 96.8% and a tenant retention rate of 87%, reflecting strong demand and satisfaction among residents. The tenant mix is well-balanced, with 57% individual tenants and 43% corporate tenants.

Dubai Residential REIT intends to adopt a semi-annual dividend distribution policy, with payments in April and September each year, starting from September 2025. The first two dividend payments are expected to total at least AED 1.1 billion or 80% of profit before changes in fair value of investment property, subject to board approval.

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The IPO's subscription period runs from May 13 to May 20, 2025, with the final offer price announcement scheduled for May 21. Trading is anticipated to commence on or around May 28, 2025, on the Dubai Financial Market under the symbol“RESI”.

The offering is being conducted to provide trading liquidity in the units and raise Dubai Residential REIT's profile with the international investment community. The selling unitholder will receive all net proceeds from the offering, and no transaction costs will be borne by Dubai Residential REIT.

Joint global coordinators for the offering include Citigroup Global Markets Limited, Emirates NBD Capital PSC, and Morgan Stanley & Co. International plc. Additional joint bookrunners are Abu Dhabi Commercial Bank PJSC, Arqaam Capital Limited, and First Abu Dhabi Bank PJSC. Emirates NBD Bank PJSC has been appointed as the lead receiving bank.

In connection with the offering, the selling unitholder will allocate proceeds from the sale of up to 243.75 million of the offer units to xCube LLC, a duly authorised price stabilisation manager by the Dubai Financial Market, which may be used for stabilisation purposes, to effect stabilising transactions on the market.

The REIT and the offering have been confirmed as compliant with Shariah principles by both the Shariah Supervision Committee of Dubai Residential REIT and the Internal Shariah Supervision Committee of Emirates NBD Bank.

The launch of Dubai Residential REIT marks a significant expansion of Dubai Holding's investment offerings, enabling a broader segment of investors to participate in Dubai's dynamic real estate growth story. The integration of Nakheel and Meydan's residential portfolios under Dubai Holding last year enhanced the REIT's status as one of the region's largest residential leasing platforms.

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The IPO comes amid a robust performance in Dubai's residential market, with rental rates and sales values rising compared to the previous year. An active development pipeline, particularly in waterfront areas and affordable communities, has contributed to this growth, with over 25,000 new units launched. Despite the increase in launches, slower project deliveries have led to higher rental rates, averaging nearly 11% for apartments and 9% for villas. Transactional property values have also risen by over 16%, reflecting consistent quarter-on-quarter increases.

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