Dubai Residential REIT

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Investment Objective

The investment objective of Dubai Residential is to provide an increasing level of sustainable income and potential for capital growth by investing in a portfolio of fully developed, diversified single and multi-family residential built-to-lease real estate assets across the UAE (the "Investment Objective").

Any amendments to the Investment Objective will require a special resolution by the Unitholders of Dubai Residential as a Material Change to this Prospectus

In order to achieve the Investment Objective, the Fund Manager will manage Dubai Residential in accordance with its Investment Policy detailed below, as may be amended from time to time in the manner also set out below.

Investment Policy

Investment Strategies

The Fund Manager shall seek to meet Dubai Residential's Investment Objective by actively managing and growing Dubai Residential's portfolio of residential real estate assets in a Shariah-compliant manner.

The Fund Manager plans to achieve the Investment Objective through, among others, the following key strategies:

Performance optimisation of existing assets: Identify initiatives to optimise the returns from Dubai Residential's property portfolio. Such measures could include active leasing and marketing of any vacancies, re-gearing of lease rates, structured programmes for the regular maintenance of buildings, and focused asset refurbishment and enhancement projects to maintain the competitive positioning of the assets;
Growth through new developments: Explore opportunities for Dubai Residential to acquire select residential built-to-lease assets comprising existing and upcoming pipeline of masterplan communities, including those within DHAM's ecosystem by exercising its right of first offer under its relationship agreement with DHAM, the Selling Unitholder and the Fund Manager or from third parties;
Growth through acquisitions and strategic partnerships: Monitor and explore the market for asset acquisition opportunities to capture growing demand in underserved price segments and high-growth areas, and strategic tie-ups with corporates;
Build and maintain strong customer advocacy: Provide high quality asset management services to maintain high retention rates, continue to enhance community offerings, undertake periodic reviews of the facility management services, ensure maintenance of service standards and introduce digitisation initiatives – in each case aimed at enhancing the customer experience; and
Diversification and opportunistic disposals: Seek to optimise Dubai Residential's portfolio by diversifying it across price points through the acquisition of new assets (as described above), and the opportunistic disposal of properties within its portfolio.

The Shariah Supervisory Committee's prior approval shall be sought by the Fund Manager before investments are made by Dubai Residential.

Initial Portfolio

The initial real estate portfolio of Dubai Residential comprises 35,700 residential units and is segmented across representative current rental price points into Premium (High-end)¹², Community (Mid-tier to High-end)¹³, Affordable (Budget to Mid-tier)¹⁴ and Corporate Housing (Budget).¹⁵ The initial real estate portfolio also contains 1,731 retail units embedded across the portfolio, comprising the Other segment.

Target Customers

Dubai Residential will primarily target individual tenants but will also continue to build and grow relationships with both existing and new corporate tenants. The Fund Manager will aim to diversify Dubai Residential's portfolio by increasing its market share in the Premium and Community price segments.

Asset Allocation and Market

The Fund Manager's primary geographical focus will be on the UAE, targeting assets in underserved sub-segments and high-growth areas. Additionally, the Fund Manager may selectively explore expansion into new geographies on a strategic, opportunistic and high conviction basis. The Fund Manager will primarily focus on the following:

Single-family properties: investments will include the entire community or a cluster within a master-planned community; and
Multi-family properties: investments will involve a majority or all properties within a building complex, located either in the entirety of a master-planned community or within a specific cluster of it.

Acquisition of New Assets

The Fund Manager will pursue opportunities for asset acquisitions to deliver attractive risk adjusted returns and grow assets under management. In evaluating future acquisition opportunities, the Fund Manager will primarily seek acquisitions in underserved sub-segments and high-growth areas, as well as optimise risk-adjusted returns to unitholders. The Fund Manager will seek to optimise Dubai Residential's residential real estate assets by diversifying the portfolio across price points through acquisition of new assets in the strategically shortlisted sub-segments (being Premium, Community, Affordable and Corporate Housing).

Investment Restrictions

The following restrictions are to apply to real estate investments made by Dubai Residential's, pursuant to applicable Funds Regulations, REIT exemption requirements under the UAE Corporate Tax law as well as the Investment Policy: With respect to real estate assets, Dubai Residential shall be required to:

obtain the required approvals of the official authorities in the state in which the real estate asset is located at the time of any acquisition or disposal of the real estate assets;
provide evidence to the CMA, upon CMA's request, of Dubai Residential's ownership in the owned properties, its beneficial and usufruct rights, any other contributions to real estate development projects, or its indirect rights through ownership in a company that owns any of these rights, based on contracts, agreements, or documents proving said ownership, contribution, or benefit. This evidence must be authenticated or issued by the official authorities in the state in which the property is located. For the avoidance of doubt, valid title deeds issued by the Dubai Land Department (DLD) in the name of the relevant Dubai Residential entity shall comprise sufficient evidence of Dubai Residential's ownership insofar as concerns the properties it owns in Dubai;
ensure that the real estate assets are not burdened with any restrictions, rights or conditions that affect the acquired rights of Dubai Residential in the assets or real estate projects, except that the Fund Manager may mortgage, pledge, assign, novate or otherwise contractually secure any of the assets of Dubai Residential for the purpose of securing financing from third party banks or financial institutions;
ensure that the real estate assets, in their entirety, meet the approval of the relevant official competent authorities to plan, develop or build them. The relevant official competent authority shall release a formal statement stating that the real estate assets of the fund in question have been approved and are fully authorised.
ensure that all of Dubai Residential's real estate assets have been appraised and evaluated upon purchase by and/or contribution to Dubai Residential.
register its real estate assets in the name of Dubai Residential or submit evidence, to the CMA upon request, that Dubai Residential owns its real estate assets in order to protect the rights of the Unitholders in Dubai Residential; and
Dubai Residential shall have a board of directors in accordance with the terms and conditions regulating this.

With respect to its investments, Dubai Residential is required to:

ensure that the remaining period of any usufructs shall not be less than seven years;
ensure that Dubai Residential's investment in usufructs – the remaining period of which is less than 20 years – shall not exceed 25 per cent. of the total value of its assets when the usufruct is transferred to it;
ensure that the acquisition price of real estate shall not exceed 5 per cent. above the average appraisals obtained by the Fund Manager from the property appraisers;
without prejudice to the previous bullet, and except as set out under "Description of Unit Capital—Related Party Transactions", ensure that the approval of the general assembly of the Unitholders is obtained by virtue of a special resolution and the approval of the CMA is obtained when purchasing property from or selling property to related parties of Dubai Residential in accordance with the CMA Funds Regulations;
ensure that the percentage of investment in other real estate funds and/or money market funds licensed by the CMA or subject to a similar regulatory authority shall not exceed a maximum of 25% of the NAV of Dubai Residential, provided that the following is adhered to:
- investments in one fund shall not exceed a maximum of 10% of the total value of its assets;
- investments in private funds shall not exceed a maximum of 10% of the total value of its assets; and
- investments in funds managed by one manager shall not exceed 10% of the total value of its assets;
maintain a specified percentage of liquidity to pay its operating expenses or the requirements for developing, maintaining or equipping properties, and investing that liquidity in bank deposits and money market instruments that generate returns;
ensure that investments in real estate-related securities are traded and offered for public subscription;
ensure that real estate income-generating assets shall not be less than 70% of the total value of Dubai Residential's assets;
ensure that no less than 75%. of the total value of Dubai Residential's assets comprise real estate assets for development, refurbishment, sale, lease, management or disposal, aiming to build a stable and profitable property portfolio;
distributing a percentage of not less than (80%) of the annual net profits¹⁶, with the possibility of making more than one dividend distribution during the year;
ensure that any investment made in relation to real estate under development, whether on its own or in a joint venture, shall be made only when Dubai Residential intends to retain its percentage in the developed property upon completion, provided that the total percentage of properties under development in Dubai Residential's investment portfolio does not exceed 30%. of its NAV;
ensure that the value of real estate assets, excluding land, under the management or ownership of Dubai Residential exceeds AED 100 million; and
ensure that Dubai Residential complies with any other restrictions as may be imposed by the CMA pursuant to any amendments to the applicable CMA Funds Regulations from time to time.

In order to remain Shariah-compliant, future leverage and financing availed by Dubai Residential shall be taken out after prior consultation with and the approval of the Shariah

Supervisory Committee.

Amendments to this Investment Policy

Any amendments to Dubai Residential's Investment Objective will require a special resolution of the Unitholders of Dubai Residential as a Material Change to the UAE Prospectus. As part of the Fund Manager's responsibilities to Dubai Residential, it will monitor and explore opportunities across various segments in line with Dubai Residential's Investment Objective.

Through its Investment Committee, the Fund Manager will, from time to time, issue supplementary clarifications or provisions to the Investment Policy, provided that these do not conflict with the applicable CMA regulations or the Investment Policy.

¹² Premium: current starting annual rent for individual tenants ranging from AED 150,000 for a one-bedroom apartment to AED 265,000 for a four-bedroom villa.

¹³ Community: current starting annual rent for individual tenants ranging from AED 40,000 for a studio to AED 90,000 for a two bedroom townhouse.

¹⁴ Affordable: current annual rent for individual tenants starting at AED 21,000 for a studio apartment.

¹⁵ Corporate Accommodation: current annual rent starting at AED 10,000 per unit, accommodating two to eight occupants in each unit.

¹⁶ To satisfy this requirement, Dubai Residential intends to distribute at least 80 %. of profit for the period before changes in fair value of investment property to Unitholders.

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