The Manrre Real-Estate Fund, managed by Dalma Capital, saw strong yield and capital appreciation on its AED 215 million portfolio in stark contrast to market sentiment and the performance of Dubai’s other real-estate funds, largely as a result of the e-com boom.
The fund, which focuses on the logistics and industrial sector, launched in 2018 amidst doubt and skepticism about the market, but has generated a total annualized return of 12.5%, including an 11.9% coupon paid to shareholders and a 0.6% increase in NAV per share.
“The logistics and industrial real-estate sectors are benefiting from the regional e-commerce boom underpinned by the launch of Noon and Amazon.ae,” says Zachary Cefaratti, CEO of Dalma Capital. “As we have seen in other markets, when retail spending behaviour shifts to online shopping, real-estate demand shifts from retail centres to warehouses.”
Other trends in the burgeoning tech sector also create opportunities for industrial real-estate, such as the proliferation of datacentres and mass-adoption of apps such as Deliveroo – a tenant of the Manrre Fund.
“Deliveroo’s delivery-only super-kitchens bring new, exciting restaurant brands to different areas,” said Yousef Al-Barqawi, head of Deliveroo Editions. “Our Editions Kitchens provide restaurants with the infrastructure to set up their brands efficiently.”
Continued growing demand from Manrre’s tenants for warehouses, logistics facilities and centralized kitchens on the back of the ecommerce and tech boom has helped contribute to the outperformance of the fund.
Whilst bright spots have emerged in these specific sectors, the overall market remains troubled.
“Cash is king in the market today,” says Kunal Lahori, a director of Manrre. “We have turned the current state of the market to our advantage as corporates seek to free up capital through sale and leaseback or distressed sales.”
The focus of the Manrre fund remains in logistics and industrial assets, but the fund acquires assets opportunistically in other segments of the commercial real-estate market with a focus on creditworthy, stable tenants.
“Robust tenant due diligence is of heightened importance in a challenging economic environment,” added Shiv Kumar, a member of Manrre’s advisory board.
High quality assets, attractive terms and robust tenants have been critical to the success of the fund, epitomized by its acquisition of Arabtec’s staff accommodation facility in Dubai Investments Park on a sale and leaseback structure, with a 10-year lease.
The apparent bottoming and turnaround of logistics and industrial real-estate is an optimistic sign for Dubai real-estate and could be a leading indicator that market conditions are improving broadly.
Concerns about oversupply of residential developments has led investors to remain cautious about how their real-estate portfolio is allocated.
Unfortunately for most investors, the logistics and industrial real-estate market is difficult to access, requires specialized expertise and has high barriers to entry – a problem which Manrre was established to help address.