Al Rajhi Capital launches latest Saudi REIT IPO

Six other REITs have been listed since the Saudi stock market opened to them in 2016
Saudi Arabia’s Al Rajhi Capital has launched the largest real-estate investment fund (REIT) IPO in the region, which will have a fund size of SR 1.62 billion ($431.6 million).
By Bernd Debusmann Jr
Tue 02 Jan 2018 10:12 AM

Saudi Arabia’s Al Rajhi Capital has launched the largest real-estate investment fund (REIT) IPO in the region, which will have a fund size of SR 1.62 billion ($431.6 million).

Public subscriptions will continue until January 14, with the fund manager offering 42.67 million units at SR 10 ($2.67) each. Subscriptions are available through the Al Rajhi bank website and Al Rajhi Capital investment centres with a minimum value of SR1,000 ($267).

According to Al Rajhi, the fund will acquire and invest in commercial, office and education assets, as well as in warehouses throughout Saudi Arabia, with a targeted yield of 6.1 percent in 2018.

“The fund’s investment target is to invest in developed, income-generating assets, and to lease and distribute at least 90 percent of the fund’s annual net income in cash over the fund term on a semi-annual basis,” the company said in a statement.

The REIT’s preliminary portfolio is comprised of 13 assets that generate income at the end of January and July, which are spread across the retail sector (54 percent), warehouses (12 percent), offices (26 percent) and the education sector (8 percent).

According to a December report from Ernst & Young, Saudi Arabia continues to lead the way for IPO activity in the region, with an increasing trend of REITs being listed on the Saudi stock market.

Since opening its stock market to REIT funds in 2016, Saudi Arabia has seen six REIT listing, with two REIT funds in the third quarter of 2017 raising $144.8 million.

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