GCC's largest REIT starts work on $7mln second-phase of French school in Dubai

Equitativa and Lycee Francais Jean Mermoz break ground on second phase of school construction in Dubai

  
Image used for illustrative purpose. A Chinese construction labourer works at the site of Iconic Tower skyscraper, at its foundations in the business district, being built by China State Construction Engineering Corp (CSCEC) in the New Administrative Capital (NAC) east of Cairo, Egypt May 2, 2019. Picture taken May 2, 2019.

Image used for illustrative purpose. A Chinese construction labourer works at the site of Iconic Tower skyscraper, at its foundations in the business district, being built by China State Construction Engineering Corp (CSCEC) in the New Administrative Capital (NAC) east of Cairo, Egypt May 2, 2019. Picture taken May 2, 2019.

REUTERS/Amr Abdallah Dalsh

28 October 2019
Equitativa, the largest REIT [Real Estate Investment Trust] manager in the Gulf Cooperation Council (GCC) and manager of Emirates REIT broke the ground for the second phase of Lycée Français Jean Mermoz school in Dubai.

The 25 million UAE dirhams ($7 million) second phase of the school in Al Quoz will add a secondary-level education to Lycee's current programme, Equitativa said in a statement.

Lycée Français Jean Mermoz currently offers a French Curriculum programme taught in conjunction with English and Arabic for pre-school, elementary and middle school students with secondary level slated to start in the next academic year 2020-2021.

The new building, owned by Emirates REIT, would be leased back to the Lycée upon completion for a 25-year period, the statement said, adding that the new extension, together with the existing school, is expected to generate an estimated Internal Rate of Return (IRR) in excess of 11 percent.

It pointed out that the acquisition and immediate lease-back agreement between the two parties was signed last year with a simultaneous second Istisna agreement signed by the Lycée to fund the construction of the extension in two phases, with second phase being the secondary school construction.

Istisna, according to islamicfinance.com portal, is a contract of exchange, whereby the funding party agrees to deliver a commodity or an asset at a pre-determined future time at an agreed price.

The cost of developing the two extensions that would accommodate up to 1,250 students, is expected to reach 120 million dirhams ($33 million), the statement noted.

According to Emirates REIT Chairman Abdullah Al Hamli the secondary school building would be developed over a 60,000 square feet area and house 24 additional classrooms and modern ancillary services, such as laboratories, gymnasium and an auditorium.

"We anticipate this to be fully completed in less than 12 months and believe this new project will strengthen Emirates REIT's rental income, offering substantial upside valuation and securing long-term cash flows," he said.

Emirates REIT CEO Sylvain Vieujot said the project is part of the REIT's acquisition strategy and expansion plans for 2020, and "a typical example of a successful partnership with school operators."

Lycée Chairman Sultan Bin Obaid added that the secondary school wing would "offer continuity for students coming out of our elementary and intermediate school and give peace of mind to their parents."

Equitativa is the largest REIT manager in the GCC region and has about $2 billion of assets under management in the UAE.

(Writing by Anoop Menon; Editing by Seban Scaria)

(anoop.menon@refinitiv.com)

© ZAWYA 2019

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