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BAHRAIN: A major boost
for the Islamic investment market of Bahrain is anticipated as the
Kingdom’s bourse prepares to welcome its first-ever Shariah compliant REIT,
also the stock exchange’s maiden REIT of any kind.
To be launched later this year via an IPO, the impending REIT by Eskan Bank
will be the Gulf region’s second Shariah compliant listed REIT. “The
introduction of this new alternative investment asset class will contribute
in adding depth to the Kingdom’s real estate sector, while helping to
improve liquidity on the Bahrain Bourse,” commented Najla M Al Shirawi, CEO
of Securities & Investment Company, the lead arranger for the REIT in a
statement.
REITs as an alternative investment instrument have been gaining popularity
in recent years; however, it is still relatively sparse in the Islamic
space with Malaysia, which pioneered the development of Islamic REITs,
accounting for the bulk of listed Shariah REITs globally. However, the
momentum is growing in the Gulf region as more jurisdictions are
considering new regulatory infrastructure to support this asset class.
Bahrain only recently introduced new listing rules for REITs and Saudi
Arabia’s Capital Market Authority is reportedly mulling over issuing
similar rules while the Qatari bourse is expected to launch new REITs this
year.
Bahrain is currently home to two Islamic REITs: Inovest REIT launched in
2009 and the Al Salam Asia REIT rolled out last year; and the stock exchange
is committed to developing this asset class further. “[The planned listing
of Eskan Bank’s REIT] underlines the keen interest we have witnessed from
property developers and managers in REIT as an alternative investment
option, and also among investors who would benefit from investing in
property as an asset without directly owning and managing the property,”
shared Shaikh Khalifa Ebrahim Al Khalifa, CEO of the Bahrain Bourse.
Eskan Bank’s REIT will comprise of two income-generating and unleveraged properties
by Bahrain Property Musharaka Trust: Segaya Plaza and Danaat Al Madina and
is expected to have a total value of BHD20 million (US$52.66 million).
Central bank regulations dictate that the dividend payout ratio of a REIT
must be a minimum of 90% of its net realized income.
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