MENA's first Islamic REIT could list by Sept - CEO

Bahraini asset manager Inovest could list the first Islamic REIT in the MENA region as early as September, the company’s CEO has said.

Inovest is currently raising funds to buy at least $79.5m (BD30m) of property.

Speaking to Arabian Business, Inovest CEO Khalid Abdulla said: “It will be listed soon after we complete raising the funds and allocating the funds. We hope sometime around September.”

The size of the fund could be increased by 50 percent if investor interest is high, he added.

“The size of the fund is BD30m and should the appetite be strong, we can go up by 50 percent,” said Abdulla.

Last week, the Central Bank of Bahrain (CBB), authorised and approved the IREIT.

A REIT (Real Estate Investment Trust) is a company which buys, sells and manages property. They are exempt from corporate tax if they give back 90 percent of taxable income to investors each year.

Inovest’s REIT is Sharia compliant, meaning income derived from interest is forbidden, together with revenue produced by prohibited activities or businesses.

These include: gambling, manufacture or sale of non halal meat or related products, arms manufacturing, the adult entertainment business, nightclubs, hotels and resorts, tobacco and alcohol.

Abdulla said Inovest was in fund raising talks with pension funds, insurance companies and other financial institutions in the Europe as well as the US.

The IREIT, with an estimated annual return of 8.5 percent, will buy up a mixture of residential, commercial and industrial real estate across the GCC to take advantage of the slump in capital values.

‘We are trying to capitalise on the significant correction that has taken place in the real estate market over the last few months,” said Abdulla. Values have fallen 30 percent in Bahrain’s capital Manama since the downturn hit last year, he estimated. “We would like to acquire property through buy and leaseback. There are many firms that because of the current situation have a growing need for cash and who are willing to sell their properties and lease them back,” Abdulla said.

Inovest may list the REIT in Kuwait and Saudi Arabia after Bahrain, Abdulla said.