Dubai Residential REIT lifts profit and dividend

Dubai Residential REIT posted a 15.1% increase in first-half net profit before property valuation changes and approved an interim cash dividend of AED573.2 million, supported by higher rents, near-full occupancy and additions to its housing portfolio.

Net profit before changes in the fair value of investment property reached AED716.5 million for the six months ended June 30, up from AED622.3 million in the same period last year. Revenue climbed 8.1% to AED1.04 billion from AED957.8 million as the landlord secured positive rental reversions across its communities.

The dividend, equivalent to 4.4 fils per unit, represents 80% of first-half net profit before valuation movements. The payment implies an annualised yield of about 8% against the REIT’s initial public offering price and 7.1% against its closing market price on June 30.

The distribution is AED23.2 million higher than the AED550 million paid for the first half of 2025. Dubai Residential REIT follows a semi-annual payment policy, with distributions scheduled for April and September. Its two payments covering 2025 totalled AED1.1 billion.

Average revenue per leased residential unit increased 7.7% to AED56,638 from AED52,594. Revenue per leased square foot rose 7.5% to AED59.70, indicating that lease renewals and new contracts continued to capture higher prevailing rental rates.

Adjusted earnings before interest, taxes, depreciation and amortisation increased 14.6% to AED822.6 million. The adjusted EBITDA margin widened to 79.4% from 74.9%, reflecting the operating leverage available from managing a large residential platform with centralised leasing, maintenance and community services.

Free cash flow conversion improved to 94.8% from 92.6%, strengthening the REIT’s ability to fund distributions while pursuing portfolio expansion. The high conversion rate is important for income-focused investors because property valuation gains do not generate cash available for immediate dividends.

Average portfolio occupancy stood at 98.6%, compared with 98.1% a year earlier. Tenant retention edged up to 94.1% from 93.8%, helping limit vacancy periods and costs linked to preparing and remarketing homes between occupants.

The REIT owned 35,976 residential units at the end of June, an increase of 275 from the corresponding period last year. Its portfolio extends across more than 20 communities and includes apartments, villas and townhouses serving a broad range of income segments.

Expansion during the half included 56 Garden View Villas and the acquisition of 220 townhouses in Jebel Ali Village. The Jebel Ali transaction increased exposure to a community benefiting from transport links, employment centres and the wider development of southern Dubai.

Gross asset value rose 6.9% to AED25.2 billion from AED23.5 billion at the end of December. Excluding acquisitions, the portfolio gained about 1.4% on a like-for-like basis, demonstrating continued underlying asset appreciation without relying solely on new purchases.

Net asset value advanced 2.4% to AED22.6 billion, while net asset value per unit increased to AED1.74 from AED1.70 at the end of 2025. The figures provide a benchmark for investors assessing the traded unit price against the independently valued property portfolio.

The net finance-to-value ratio rose to 6.8% from 3.3% in the first half of last year, largely because of funding connected with acquisitions. The level remains comparatively modest, leaving the REIT with borrowing capacity for suitable investments while limiting its exposure to financing-cost volatility.

Management has submitted expressions of interest for three medium-term residential projects comprising 448 premium homes and 107 community units. It is also evaluating opportunities emerging from the development pipelines of Dubai Holding and Dubai Holding Asset Management.

The potential additions could broaden the portfolio’s tenant base and support future income growth, although acquisitions will be assessed against expected rental yields, financing costs and their effect on distributions per unit.

Dubai’s leasing market remained supported by population growth, business expansion and demand for professionally managed housing during the first half. Strong occupancy has allowed major landlords to implement higher rents when contracts are renewed, though affordability pressures and an expanding supply pipeline could moderate rental growth across some districts.

Dubai Residential REIT listed on the Dubai Financial Market in May 2025 after an offering that raised AED2.145 billion. The transaction placed 15% of its issued units with investors and valued the trust at AED14.3 billion at the AED1.10 offer price.