Q2 2026 Dubai Residential REIT Earnings Call
Speaker #1: Good afternoon, everyone, and welcome to Dubai Residential REIT's H1 2026 earnings call. My name is Dana Khelaf, and I manage Investor Relations at Dubai Residential REIT.
Speaker #1: Today, we will review the current market environment, then give you an update on the REIT's operating and financial performance for the six-month period ending 30 June 2026.
Speaker #1: We will update you on the medium-term growth pipeline, and end with the interim dividend before opening the floor for questions. Before we begin, please note the disclaimer shown on screen now.
Speaker #1: Today's discussion may contain forward-looking statements. Based on current expectations and assumptions, these statements are subject to risks and uncertainties, and actual outcomes may differ materially.
Speaker #1: Please consider today's presentation alongside the REIT's financial statements and other regulatory disclosures released through the official market channels. With me today—do we have the next slide?
Speaker #1: Thank you. With me today are Ahmed Suweidi, our Managing Director, and Girish Kumar, our VP of Finance. I will now hand over to Ahmed, who will take you through the presentation.
Speaker #1: Thank you.
Speaker #2: Thank you, Dana, and good afternoon, everyone. To start, the Dubai residential market remained resilient during the first half of the year. It was supported by the emirate’s economic and demographic fundamentals. Also, population growth continues to be an important source of housing demand.
Speaker #2: Dubai remained on track toward its population target of 5.8 million residents by 2040, supporting the long-term requirements for residential accommodation across different price points. The supply pipeline is expected to increase over the coming years.
Speaker #2: In 2027 and 2028, Dubai Residential REIT's scale, diversified exposure across residential segments, and established communities provided a strong operating base as the market improved.
Speaker #2: The market performance during the period reflects a combination of longer-term growth and more recent moderation. Furthermore, the new rental rates recorded an annual growth rate of 10.5% between Q2 2023 and Q2 2026.
Speaker #2: In Q2 2026, however, the new rental rates were 2.6% lower year-on-year, including declines of 2.4% for apartments and 3.4% for the builders. Sales prices remained resilient, with the Dubai sales rate index increasing by 1.8% year-on-year in Q2 2026.
Speaker #2: Despite this market backdrop, our portfolio continued to capture positive rental growth. Average revenue per leased GLA increased by 7.5% year-on-year, while our average occupancy reached 98.6%, and tenant retention improved to 94.1%.
Speaker #2: These results benefit from operating a diversified portfolio of establishments. Our communities are professionally managed and supported by active leasing and asset management. With that, I will hand over to my colleague Girish to take you through the operating and financial performance in more detail.
Speaker #3: Thank you, Ahmed. Thank you, Dana. And good afternoon, everyone. Just to give you a financial snapshot of Dubai Residential REIT, we have a great set of results for H1 2026.
Speaker #3: If I start with the financial hindsight, I'll take you through on the right side of the slide. You can see the total revenue growing by 8.1%, reaching $1.04 billion.
Speaker #3: Adjusted EBITDA stands at $823 million, which is around 15% higher compared to the same period last year. Adjusted EBITDA margin reached 79.4%, which is about 4.5% higher than last year.
Speaker #3: If you see free cash flow conversion showing the strength of the portfolio, it's around 95%, which is about 2.2% higher than last year. Gross asset value is touching $25 billion, and the net implied yield is at 6.5%.
Speaker #3: This is on the backdrop of strong operational performance, which Ahmed just indicated. The total number of residential units stands at 35,976 units. We have added 276 units in H1 2026, based on the disclosure that we had given earlier as well.
Speaker #3: And the number of communities—you can see it's around 22 key residential communities. The average occupancy is a very healthy 99%. The average rent per square foot has grown at 7.5% compared to the previous year, standing at 60 per square foot.
Speaker #3: Average rent per square foot is around 60. Retention rate is very healthy at 94%, and the collection rate is near 100%. So as you all know, this is Dubai Residential REIT's—DCC's largest real estate investment trust in the Schengen-compliant fund.
Speaker #3: It's a diversified residential portfolio across premium, community, affordable, and corporate housing segments. During H1 2026, Dubai Residential REIT was also added to the FTSE IFRS Emerging Index.
Speaker #3: In June 2026, it was also awarded the Best IPO Community Lease for 2025 from Emir Finance. And as you all know, it's anchored by Dubai Holding.
Speaker #3: It's a real estate investor and developer having a large private land bank in Dubai. We'll go to the next slide, please. On H1 2026 at a glance, if you look at the segments which we highlighted in the previous slide, you still have the—we have the segments broken down into premium community, affordable, corporate housing, and the others.
Speaker #3: Others being the retail spaces within the residential properties. If you see the total number of residential units at 35,976, total GLA stands at 36.5 million square feet.
Speaker #3: Average occupancy is a very healthy 99%. As you can see, in community affordable—which are the growth engines of Dubai Residential REIT—we're standing at around 99%, and corporate housing is near to full occupancy.
Speaker #3: We've seen a slight dip in premium, which is around 92%. If you look at the revenues, revenue stands at 1.04 billion dirhams, which is around 8% higher compared to the same period last year.
Speaker #3: And you see the community and affordable segments contributing more than 80% of the revenues, whereas corporate housing and the other segment contribute 10%, and premium contributes around 8%.
Speaker #3: If you look at EBITDA, EBITDA stands at $823 million for H1 2026, with a 79% EBITDA margin. And if you see across modal segments, the EBITDA margin stands high at 79% to 80%, except for corporate housing.
Speaker #3: And corporate housing also has—if you noticed—improved a lot compared to what it was in the previous year. It's around 65%. We'll go to the next slide, please.
Speaker #3: If you look at Dubai Residential REIT's robust cash generation and attractive dividend policy, the portfolio continues to demonstrate strong pricing power with rental growth and sustained occupancy, which is translating into higher earnings and cash flows.
Speaker #3: So, if you see robust top-line growth, you can see revenues growing at 8%, moving from $958 million in H1 2025 to $1.04 billion in H1 2026.
Speaker #3: That's an 8% growth. This is on the backdrop of rising rental rates, ERV catching up on renewal, and the re-rating of the term.
Speaker #3: As I said in the previous slide, our retention is close to 94%. So, the churn is also helping us to increase the top line. On the backdrop of the increased top line, you can see improved EBITDA margins.
Speaker #3: So, EBITDA margins have grown from 75% to 79% in H1 2026. And also, from an absolute EBITDA number, it is $823 million versus $718 million from the previous year.
Speaker #3: That is almost a 15% increase. So, EBITDA growth is outpacing revenue growth, on the backdrop of active asset management, current cost management, and disciplined allocation of funds to operational capex as well.
Speaker #3: So, this has resulted in improved EBITDA margins. On the backdrop of higher margins, you can see higher free cash flow conversions. So, the portfolio continues to print high cash flows.
Speaker #3: You can see cash flows currently standing at 95%, compared to 93% in H1, predominantly due to active portfolio management driving cash flow conversions, catch-up of capex programs, and refurbishment in Gardens and Gardens New Glass, which has also helped to increase the revenues and EBITDAs.
Speaker #3: And as you see, the portfolio continues to have a prudent capital structure, with adequate leverage to optimize the cost of capital.
Speaker #3: And this has got a conservative leverage policy, providing strategic optionality in down cycles as well. So if you see the net finance-to-value ratio, the loan-to-value ratio, it stands at 6.8% in H1 2026, and the dividend payout for H1 2026 is 80%, which is static valuation.
Speaker #3: We can go to the next slide, please. So here, I will dwell more into the segment-wise KPIs. You can see the segment-wise KPIs; you can see premium, community, affordable, and corporate housing.
Speaker #3: You can see occupancies in very healthy 90-plus. Only you can see a slight dip in the premium segment; this is predominantly due to the addition of Garden New Glass and Jebel Ali Village Townhouses, which were acquired in H1 2026.
Speaker #3: Garden New Villas are being acquired in June 2026. If you strip out those additional assets that we had acquired in H1 2026, on a like-for-like basis, the occupancy has remained stable, even in premium.
Speaker #3: If you've seen, community affordable and corporate housing has exceeded occupancy and has remained resilient despite the regional conflict that has been impacting the UAE as a whole since February 28.
Speaker #3: So, you can see the backbone of Dubai Residential REIT is the community and affordable segment. There is strong demand for corporate housing as well.
Speaker #3: And successful rate optimization also in corporate housing has contributed to even higher revenue per leased GLA in corporate housing. You can see the corporate housing segment having the highest revenue per GLA, at 12.3% compared to the previous year.
Speaker #3: The affordable and community segment has also contributed to a 7.5% to 5.6% increase in revenue per lease GLA. And premium, despite remaining in line with last year’s occupancy, if you were to strip out the new assets, has also contributed to a 9.1% increase in revenue per lease GLA.
Speaker #3: This is on account of positive rental reversions on churn units and sustainable renewal increases under the REIT framework, which has helped us to improve the revenue per leased GLA.
Speaker #3: You can go to the next slide, please. So here we present the segment-wise financial summary. You can see that at each segment level, total revenues have grown by 8%.
Speaker #3: You can see, overall, on all segments, the revenue growth compared to the previous year has been in the high—sorry—10% in premium, whereas community and affordable are at 9.1% and 5.9%, respectively, and corporate housing is growing at 12.5%.
Speaker #3: Whereas the other segments also contributed to, sorry, 7.3%. On an adjusted EBITDA front, you see the adjusted EBITDA has grown, or outpaced the revenue growth, increasing by 15% year-on-year.
Speaker #3: This is primarily driven by operating leverage, certain energy efficiency measures due to the ESG initiatives that we have carried out, lower legal costs, and better collections and lower receivables positioning.
Speaker #3: This has helped drive the adjusted EBITDA in 2026 compared to 2025. You will see the adjusted EBITDA margin standing at a very healthy 79.4%, compared to 75% in H1 2025.
Speaker #3: You can go to the next slide, please. So if you delve more into the income statement, you can see the income statement, where I've highlighted the revenue, has grown at 8.4%.
Speaker #3: The cost has actually decreased by 11.3% compared to the previous year. So, direct cost has been—direct cost has reduced by 9.7%, and opex has reduced by 22%.
Speaker #3: How has this—how did we achieve this? If you see, the direct cost is lower because also of portfolio-wide efficiency initiatives, reducing utility costs, and lower legal costs.
Speaker #3: Opex has remained tightly controlled, reflecting disciplined spending, and improved receivable performance has helped the opex savings as well. If you see, adjusted EBITDA has grown by 14.6% compared to the previous year for H1 2025.
Speaker #3: So, on the back of all this, the EBITDA has grown post-management fee, which is nothing but, as you all remember, it is 10% of net profit before change in fair value of investment property.
Speaker #3: So that corporate cost has been $80 million compared to $67 million in H1 2025. And if you look at also the financing cost, despite the capital allocated for the growth projects—which is the forward purchase agreements of Garden New Villas and Jebel Ali Village Townhouses—the financing cost has remained flat compared to the previous year.
Speaker #3: This is on back of lower keyboard rates, which has helped the cushioning of net financing cost in H1 2026. It's around 6% lower than last year.
Speaker #3: And if you see, earnings per unit before change in fair value of investment properties has grown by 15.1%, in line with the change—in line with profit before fair value gains.
Speaker #3: If you can go to the next slide, please. So, on the balance sheet side, the balance sheet remains very robust, and it's a very strengthy—a very resilient balance sheet.
Speaker #3: If you can see, the total assets as of June 2026 are around $26 billion, liabilities are $3.4 billion, and net assets stand at $23 billion.
Speaker #3: If you see the main items in the balance sheet, you'll notice that investment properties have grown by 6.9%. Investment property increased from 23.5 billion to 25 billion.
Speaker #3: This is the back of maintaining strategic acquisitions that we had signed up based on the forward purchase agreements, allocating capital for those strategic acquisitions, capital investments into the refurbishment projects, and the valuation uplift as well in H1 2026.
Speaker #3: On cash and bank balance, you can see the cash balance is still healthy at $746 million. This has primarily decreased from December 25, on the back of the dividend payouts for H2 '25, which was declared—this was paid out in April 2026.
Speaker #3: And the acquisition of Garden New Villas for $242 million in March 2026. This is also offset by an increase in cash flow during the normal operating cash flow cycle for H1 2026.
Speaker #3: The borrowing cost has increased primarily due to allocation of leverage to fund growth for Jebel Ali Village Townhouses in June 2026, and trade and other payables have slightly increased due to the project payables pertaining to refurbishment projects in Gardens and Gardens New Villas.
Speaker #3: And overall, if you see net asset value per unit, it has moved from 1.70 to 1.74, which is close to around a 28% discount while it's trading today.
Speaker #3: Or at trading as of 30 June 2026. If you can go to the next slide, please. So on the back of higher EBITDA, as you already collect, the free cash flow conversion, which I pointed out in the initial slide, the free cash flow conversion stands at 95% compared to 93% in H1 2025.
Speaker #3: If you look at the EBITDA, which is around $743 million compared to $651 million in H1 2025, this is on the back of top-line growth as well as the savings that have come in from disciplined spending on opex, which has resulted in these higher EBITDA and EBITDA margins.
Speaker #3: If you see, the finance cost also has lowered compared to the previous year. So, the funds from operations are close to—are around $716 million, which translates to a margin of 69%.
Speaker #3: If you were to strip out the maintenance capex, which is around $38 million that we had spent during H1 2026— which is in line with the guidance that we had provided of up 4 to 5%— once you reduce the EBITDA by the maintenance capex, you can see recurring FFO at around $678 million, and the free cash flow is around $705 million.
Speaker #3: So, on an overall basis, the movement from EBITDA to free cash flow is nothing but EBITDA less the maintenance capex, and that stands at a healthy 95% compared to the previous year.
Speaker #3: If you can go to the next slide, please. If you look at the financing structure of Dubai Residential Q2, it is a very conservative leverage profile that we have currently.
Speaker #3: The total debt stands at $2.5 billion. As you all recollect, there was—it has a $3.7 billion unsecured revolving credit facility. Before the IPO that we had announced, this funding facility was available to the REIT.
Speaker #3: And on a net debt basis, the finance-to-value ratio stands at 6.8%, which is a very conservative leverage profile. You see, the REIT has also got ample covenant headroom.
Speaker #3: You can see the times EBITDA as well as the interest coverage ratio are very healthy. And you see $2 billion of available liquidity is available to the REIT, which is the dry powder left in the REIT for funding future growth.
Speaker #3: Also, if you see, there's no debt amortization, and this maturity is a bullet in November 2029. The pricing is also very attractive, which is 3-months LIBOR plus 80 bps.
Speaker #3: Overall, the REIT can leverage its balance sheet further for acquisitions, as well as value-added acquisitions that could come into play in the future. If you can go to the next slide, please.
Speaker #3: So, here we are presenting the overall overview of the appraisal valuation asset explained. The gross asset value had improved—had increased—from $23.5 billion in December 2025 to $25 billion, which is a 6.5% implied net yield.
Speaker #3: The growth is around 6.9%. If you just were to strip out the acquisitions which had been carried out during H1 2026, on a like-for-like basis, the valuation had improved by 1.4%.
Speaker #3: Versus December 2025. So, if you see across all segments, the portfolio valuation has increased from 1% to almost 3.4%, except for a slight dip in the premium segment.
Speaker #3: So, overall, the portfolio continues to benefit from the residential market fundamentals and the valuation growth supported by rental growth, higher occupancy, and the targeted capital investment initiative that the REIT is currently undergoing.
Speaker #3: If you go to the next slide, please. This slide shows the IPRA measures. As you can see, the IPRA measures are more or less in line with the IFRS net asset value per unit, at 1.74.
Speaker #3: The number of units is currently at 13 billion units, and IPRA earnings are at $0.011 per unit, with IPRA net asset at $1.74. If you can go to the next slide, please.
Speaker #3: I would love now—I would like to hand over to Ahmad to take us through the update on the committed projects. Ahmad, go ahead. Over to you.
Speaker #2: Thank you. Thank you, Girish. During the first half, we completed two additions to the portfolio. The transfer of 56 additional 4-bedroom units at Garden View Villas was completed in March, and leasing started in April.
Speaker #2: Therefore, also in June, we completed the acquisition of 223 three- and four-bedroom townhouses at Jebel Ali Village. Leasing started in July. Together, these two assets increased the residential portfolio to 335,976 units.
Speaker #2: And our exposure to high-quality family accommodation within established gated communities—Garden View Villas and Jebel Ali Village—are expected to contribute approximately $75 million in incremental annual revenue.
Speaker #2: These additions reflect our approach to grow the portfolio with capital directed towards residential assets, so that it will fit the existing portfolio, have clear income potential, and meet our investment criteria.
Speaker #2: Beyond the two completed additions, Dubai Residential REIT submitted interest for the potential acquisition of three medium-term residential projects, with 448 units in the premium and community segments.
Speaker #2: Related to the total units of 448, it is in Lantana Hills—390 townhouses within the gated community—and is expected to complete in 2027.
Speaker #2: A cluster of 58 premium villas within the Acres development is expected to be completed in 2028. Also, Dubai Wharf will add 107 apartments through the conversion of existing retail assets.
Speaker #2: Expected to complete it in 2028. These opportunities provide visibility on the REIT's medium-term growth, and we will continue to evaluate them against our investment return and capital allocation criteria.
Speaker #1: Thanks, Ahmad. We'll go to the next slide, please.
Speaker #2: Next.
Speaker #1: Yeah, so thanks, Ahmad, once again. The board of directors—I'm pleased to announce that the board of directors for Dubai Residential REIT has approved an interim cash dividend for H1 2026, which translates to around 573 million.
Speaker #1: It's approximately 4.4 fils per unit for H1 2026. This dividend represents 80% of net profits before changes in fair value of reimbursable properties, and is also consistent with the REIT's stated dividend distribution framework and in line with regulations.
Speaker #1: And also in line with the regulations. If you can also see the key matrices—what you can see on the slide—this dividend of 573 million translates to an 8% annualized yield on the IPO price.
Speaker #1: And on a closing price for June 2026 at 7.1%. So, the REIT is distributing a very healthy annualized yield at 573 million, which is almost 4% higher than what we had declared in H1 2025.
Speaker #1: If you already collect in H1 2025, we had declared 550 million as dividend. So the REIT's dividend capacity can also be seen from the healthy balance sheet and the healthy cash flows that the REIT generates.
Speaker #1: And with that, we come to the conclusion of our earnings call. We'll open the floor now to questions and answers. So, Dana, please take over for the Q&A session.
Speaker #2: Thank you for joining us and for your continued interest in Dubai Residential REIT. We will now take your questions.
Speaker #3: Thank you, Girish. Thank you, Ahmad. Okay. Do you want me to read the questions out?
Speaker #1: Yeah.
Speaker #3: Okay, so Rahul from Citi. On average, where are your rents versus market rents? Since the conflict began, have you seen pressure on rents or customer behavior from those who are coming up for repricing?
Speaker #3: Which segment do you expect pressure in, if any?
Speaker #1: Okay. You can answer all these questions together. Question one is a very good question. The question is, on average, where are rents versus market?
Speaker #1: So the portfolio currently is under-rented by around 14% on a weighted average. And the next question: since the conflict began, have you seen pressure on rents or customer behavior coming up from repricing?
Speaker #1: So the short answer is, we have seen some slight pressure on the rents, not on the rents and customer behavior, when the conflict began, but that has actually slightly gone away now, post the ceasefire announcement.
Speaker #1: So, if you see from the portfolio as well, what we have announced—which we are currently showing—the revenue has grown by 8.1%, right, compared to the previous year.
Speaker #1: So, what has happened is customer behavior is predominantly coming up, not for repricing, because repricing on renewal is based on the RERA Index, and for the new renters, it's based on market.
Speaker #1: As I explained, currently the portfolio is around 14% under-rented on average. So, we are not seeing much pressure on the community affordable and the corporate housing segments.
Speaker #1: We have seen some softening in the premium segment. If your question—
Speaker #2: Wait. To add to Girish, as you can see, our average occupancy is 98.6%, and we see, especially when it comes to the community and affordable segments, we have a waiting list of people who are interested in moving to our assets and communities.
Speaker #1: Yeah. Thanks, Ahmad. On question two, CapEx planned in H1 2026, and you drew down on loans. Net derivatives are around 6.9%. It's still healthy.
Speaker #1: So, if you see, most of the drawdown on the loans had gone to acquire Garden—sorry, Jabal Ali Village townhouses, based on the forward purchase agreement of 894 million.
Speaker #1: The balance CapEx that had gone during H1 2026 was predominantly for the gardens' refurbishment. As you can see, gardens' refurbishment has also contributed to the top-line improvement in the community segment.
Speaker #1: And then the third question is on EBITDA margin improving as costs were lean. Will this continue? What do you see for EBITDA margins over one to two years' time?
Speaker #1: So, EBITDA margins have definitely improved in H1 2026 on the back of all those initiatives that I explained during the slide that I presented. Will this continue—will this trend continue?
Speaker #1: We'll be disciplined in allocation of capital for these operating expenditures. Where do you see EBITDA margins in one to two years' time? We would stick to the guidance that we had given during the time of the IPO and continue to stick to that in the medium term.
Speaker #1: Okay, next question. So, among the four categories of premium, community, corporate, and retail, which category do you think would grow at a faster rate?
Speaker #1: Do you have any guidance on what the category mix will be—approximately, as a percentage—two to five years from now? So, if you see what I explained in the segment-wise analysis, you can see that community affordable contributes to more than 82% of the revenues, whereas corporate and retail contribute 5% each, and premium is at 8%.
Speaker #1: Which category do you think would grow at a faster rate? We can see community and affordable being the cornerstones of the portfolio, and actually, we see a lot of demand for corporate housing, which is growing at the fastest rate.
Speaker #1: Do you have any guidance on what the category mix percentage will be two to five years from now? We don't see the portfolio mix changing drastically in the medium term.
Speaker #1: It will continue to be community and affordable, which is the strength of the portfolio. So, given where the stock currently trades relative to its net asset value, is management considering a share buyback program to enhance dividend per share and optimize capital allocation?
Speaker #1: Not at the moment. If you already collect, it was first listed on 28 May 2020, at 25. Even though the unit trades currently lower to its net asset value by approximately 28%, there is no active discussion or management considering any share buyback program, I think, at the moment.
Speaker #1: It's still an attractive dividend play currently. Next question: Do you forecast any impact on the expected dividend distribution in H2 2026 or H1 2027 due to the regional conflict situation?
Speaker #1: As you all know, it's a regulatory requirement for each to distribute 80% of its net profit before changing fair value of investment property, and in H1 2026, we're distributing exactly 80% of net profits before changing fair value of investment property.
Speaker #1: So, do you see any impact on dividend distribution? We don't see any current impact on dividend distribution. As you can see, it's a healthy free cash flow conversion, and we have sufficient buffers within the balance sheet as well as the cash flows.
Speaker #1: And the cash flow conversion is helping us to distribute the dividend, for H1 2026 and beyond as well. We'll go to the next question, please.
Speaker #1: How is leasing progressing at Garden View Village? Is it taking longer than expected to fill up GLA? Ahmad, do you want to answer this question?
Speaker #1: Okay, I'll take that question. So leasing is progressing quite well. As you know, we had acquired Garden View Village—56 units—in Q1 2026, and currently, as we speak, it's almost 47–48% leased up. We are seeing a good pipeline of tenants wanting to lease Garden View Village.
Speaker #1: It's not taking longer than expected. It's in line with what our expectations are. So, what does forward guidance look like for H2 2026 and beyond?
Speaker #1: As I stated in the previous question, which was raised earlier, our guidance remains the same as we provided during the IPO. So, we will stick to that guidance, the one we had given at the time of the IPO.
Speaker #1: As you can see, it's a healthy set of numbers that we have printed for H1 2026. So, this question is from ADCB: What was the average rental uplift from renewals and new leases in H1?
Speaker #1: How did it evolve from Q1 to Q2 and July? And finally, what rental growth do you expect for the remainder of 2026? So, the rental uplift that you see first on renewals and leases is approximately the same as what you see in the revenue growth, which is predominantly coming in from renewals rather than new leases, because you can see the churn is close to—or the retention is close to—94%.
Speaker #1: The churn is around 6%. So, predominantly, this renewal is helping increase the rental uplift. We are catching up to ERV. As I said, the portfolio is currently underrented by around 14% on a weighted average basis.
Speaker #1: Whether it is for Q1 or Q2, it has remained the same. It has remained flat. And finally, with regard to rental growth expected for the remainder of 2026, this is in line with what the previous question referenced based on guidance.
Speaker #1: We would continue to stick to the guidance that we had provided earlier. So this question is twofold. First of all, thank you for your congratulatory messages for H1 2026.
Speaker #1: On Garden View Villas and Jebel Ali Village, when do you expect those 276 units to be fully stabilized? And what have you actually been signing leases at?
Speaker #1: On the cost base, you had about $23 million of payroll in direct losses gone this year. Where has that landed? Is it inside the DHM property management FINO?
Speaker #1: And we saw how much the 111 was—that fee. So, on the first question on Garden View Villas and Jebel Ali Village, in the medium term we expect these 276 units to be fully stabilized.
Speaker #1: And what we have been actually seeing on signing these leases is that we are signing these leases at slightly higher or in line with, based on, or in line with the forward purchase agreement that we had signed. The yields are based on the forward purchase agreements that we had signed at the time of the IPO, and those rates are still holding.
Speaker #1: On the cost base, the $23 million of payroll in direct cost last year is gone this year—that's correct. In H1 2025, for the first five months, we had payroll that was replaced by the new structure in June.
Speaker #1: 2025, and that has been replaced with 10% of net profits as the property management fee for 2026. So that is nothing but 10% of net profit before changing fair value of investment property, and that is shown as a separate line as management fee.
Speaker #1: Can you go to the next slide, or next question, please? How does that come? So, this question is: occupancy and representation have been calculated excluding the units under refurbishment.
Speaker #1: Could you please share the number of units under refurbishment? What would be the occupancy percentage including such units? How does this compare to the previous year?
Speaker #1: So as you know, this is the number of units that are under refurbishment goes through different business case. So we do a prudent prudently deploy capital for refurbishment based on what is available from the customer side, and the demand from the customer side.
Speaker #1: So we actually manage those refurbishment programs as we speak. We are facing those refurbishment programs, and as you also can see, that is also translating into the top line.
Speaker #1: I can't specifically provide—also, to add, Garish—we are doing the refurbishment based on the plan. It is actually on a phased basis, so that there will not be a big impact when it comes to occupancy, especially for the refurbished units. Because as soon as the project is completed, it comes in for leasing, and then we start doing the other buildings and units as a full refurbishment.
Speaker #1: So the number of units that have gone into refurbishment is not material currently. We are doing it on a phased basis. As you know, for refurbishment, we have to give a one-year notice to tenants before we can even start the refurbishment program.
Speaker #1: Next question, please.
Speaker #2: Garish, this is the last question we're going to take.
Speaker #1: Yeah. So this question is: could management elaborate on the key factors behind the lower fair value gains? How should investors think about future fair value movements?
Speaker #1: So, if you look at fair value gains for H1 2026, you can see almost all fair value gains coming into play from the previous year.
Speaker #1: It's like it is lower because all those fair value gains that had happened from 2024 to 2025 have already been caught up. So, you could see stabilization in fair value gains and map it as maturing as well.
Speaker #1: And if you see, the REIT's portfolio has grown around 15% on an EBITDA basis. So I would say future fair value movements will be driven by the market.
Speaker #1: And the market dynamics will decide or contribute to the future fair value movements. But I would definitely look at the REIT's operational performance, which will drive the fair value gains.
Speaker #1: And as I said earlier as well, the REIT on a weighted average basis is close to around 14% under-rented compared to the market rate.
Speaker #2: Okay, I think we can close here. Thank you, everyone, for attending and for your questions. If you have any more questions, please email ir@dubairesidential.ae.
Speaker #2: I have it in the chat as well.
Speaker #1: Thank you, everyone, and I look forward.
Speaker #3: Thank you, everyone.
