In a significant move reflecting increasing interest from both local and international investors, Dubai Holding has announced an expansion of its Dubai Residential REIT IPO. The newly adjusted offering now represents 15% of its total issued share capital, equating to 1,950,000,000 shares, up from the initially planned 12.5%, or 1,625,000,000 shares. This increase comes in light of robust demand and oversubscription for the residential real estate investment trust.
Through its wholly owned subsidiary, DHAM REIT Management, Dubai Holding has obtained the necessary approvals from the UAE Securities and Commodities Authority (SCA) to proceed with the adjusted offering.
Expansion of the Dubai REIT IPO
The Dubai Residential REIT’s offering is structured into two distinct tranches. The First Tranche, allocated for UAE retail investors, remains at 162,500,000 units. However, the Second Tranche, aimed at qualified institutional investors, has been increased from 1,462,500,000 units to an impressive 1,787,500,000 units.
The IPO was launched on May 13 and is scheduled to close on May 20, adhering to the initial timeline. The final Offer Price will be established through a book-building process, with an anticipated announcement on May 21.
The Offer Price Range remains unchanged, holding steady between AED 1.07 and AED 1.10 per share. The revised offering size is expected to yield between AED 2,087 million (approximately US$568 million) and AED 2,145 million (roughly US$584 million). This adjustment implies a market capitalization for Dubai Residential REIT in the range of AED 13.9 billion (about US$3.8 billion) to AED 14.3 billion (approximately US$3.9 billion) upon listing.
Dividend Strategy
Dubai Residential REIT aims to establish a semi-annual dividend distribution policy, with planned payments in April and September, commencing in September of this year.
Conditional on Board approval, the REIT anticipates dividend distributions to exceed AED 1,100 million, representing 80% of its profit prior to any changes in the fair value of investment properties for the financial year ending December 31, 2025.
From the financial year ending December 31, 2026, and subsequent years, Dubai Residential REIT intends to maintain a minimum distribution of 80% of profits, subject to the same Board approval. The current Offer Price Range indicates a gross dividend yield of 7.9% at the lower end and 7.7% at the top end for the fiscal year concluding December 31, 2025.
As a Shariah-compliant, income-generating entity, Dubai Residential REIT is recognized as one of the major operators and owners of residential real estate in the region. Following its listing on the Dubai Financial Market (DFM), DHAM Investments, a subsidiary of Dubai Holding, will retain an 85% majority stake in the company.
Dubai Residential REIT boasts a highly diversified real estate portfolio under the management of Dubai Holding Asset Management. Its offerings range from high-end residences at Bluewaters and City Walk to family-centric communities like The Gardens, Garden View Villas, Remraam, Layan, Shorooq, and Nad Al Sheba Villas. Collectively, these communities account for over 35,000 homes across 21 developments.