Dubai-based real estate development and hospitality group Five Holdings, previously known as SKAI Holdings, has launched a $570m (AED2.10bn) real estate investment trust (REIT).
The region’s first hospitality focused REIT, to be regulated by the Abu Dhabi Global Market and Financial Services Regulatory Authority, will include Five Holdings’ $1.17bn (AED4.3bn) Viceroy Dubai Palm Jumeirah, and all future projects subject to compliance with regulatory requirements.
REITs, a type of publicly listed fund that originated in the US in the 1960s, are typically own income-producing commercial real estate and are legally obliged to distribute a proportion of their income as dividends to shareholders.
Previously known as SKAI Holdings, Five Holdings’ new name is based on the five elements and reflects the group’s continued ambition to grow its current property portfolio of $2bn, according to Kabir Mulchandani, chairman and CEO, Five Holdings.
“Real estate is major contributor to the UAE economy and Five Holdings continuously looks at new ways to innovate and ensure that our investors have more avenues to investing their money,” said Mulchandani.
He said owning units in a REIT instead of holding the title to a physical asset means investors will be able to buy and sell at a lower cost and with more flexibility. Investors will be able to monetise faster in a public offer by owning units within a REIT as opposed to a physical asset.
“REITs offer a compelling investment vehicle where risk is spread across a number of real estate propositions under one portfolio. This is the beginning of a wave and I envision the UAE REIT industry to be hundreds of billions of Dirhams over the next 10 years,” he added.
In addition to Five Holdings’ Viceroy Dubai Palm Jumeirah, the REIT is expected to include its $349m (AED1.28bn) Viceroy Dubai Jumeirah Village, which is now 40% complete and on track to open in Q3 of 2018. Additional projects will be added as they are announced or acquired.
“The launch of FIVE REIT demonstrates our commitment to ensuring our investors continue to share in the success of FIVE and its entrepreneurial approach to real estate development, hospitality, restructuring and investment. In addition to the FIVE Holdings’ owned areas of the Viceroy Dubai Palm Jumeirah, around 60 investors have committed to contribute their property into the REIT, which we expect will continue to grow as we add more real estate into the portfolio,” said Dhananjai Cadambi, CEO, Five Capital Limited.
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