Emirates REIT has acquired Lycée Français Jean Mermoz for $20.5m (AED75m), raising the value of its education sector portfolio to $238m (AED875m).
They deal was signed by Equitativa, the manager of Emirates REIT.
Under the agreement, Equitativa acquires on behalf of Emirates REIT the Lycée Français Jean Mermoz premises in Al Quoz, Dubai, and immediately lease it back for an initial period of 27 years.
According to Equitativa, the transaction is expected to generate an estimated internal rate of return (IRR) in excess of 12% and provide an initial net yield of 9.75%.
Inaugurated in September 2017, Lycée Français Jean Mermoz provides French curriculum education.
With plans to extend its facilities, the school assigned the interest on the land leasehold plot to Emirates REIT and entered into an Istisna agreement to fund the implementation of the extension project in two phases.
Construction of the first phase of the extension “will start immediately”, Equitativa said in a statement, adding that it will be implemented according to the school operator’s specifications, with the having a final built-up area of more 21,000m2.
The overall investment, including the extension, will amount to $37.6m (AED138m) and is expected to generate more than 12% of IRR.
Equitativa Dubai CEO Sylvain Vieujot commented: “We are pleased to enter [into] this new partnership with the Lycée Français Jean Mermoz, the fourth educational facility in Emirates REIT’s portfolio.
“This agreement is similar to the ones completed previously with The Jebel Ali School and British Columbian Canadian School. Our successful track record in managing both schools will be replicated […] in the Lycée Français.
“With this new acquisition, we are immediately strengthening Emirates REIT’s rental income, offering substantial upside valuation and securing long-term cash flows,” Vieujot added.