UAE's first residential REIT eyes listing in 2018

Equitativa chairman Sylvain Vieujot says planning industrial and other REITs

(ITP Images)

(ITP Images)

The UAE’s first residential real estate investment trust (REIT) will aim for a public listing in 2018, according to its founder.

The Residential REIT launched in February – the latest fund from the company behind the UAE’s first ever REIT, which launched in 2010.

Equitativa floated Emirates Reit in 2014 and the trust has since grown its portfolio of offices, retail and industrial property to report 21 percent year-on-year growth in rental income to $12.6m in the first quarter of 2017.

In an interview with Arabian Business, Sylvain Vieujot said Equitativa was planning a string of new REITs, including the Residential REIT and a trust specialising in industrial real estate.

“The residential REIT is still in incubation at present but we think we’ll go for IPO [initial public offering] in 2018.

“You want roughly one year of incubation, to accumulate assets and create a seed portfolio with the critical mass required to list.

“It is difficult to do an IPO without at least $200 million-$300 million [of assets],” he said, declining to reveal the current value of the Residential REIT’s portfolio.

Vieujot added the aim was to grow Equitativa’s portfolio of REITs to specialise in different sub-sectors of real estate.

“We don’t want to mix asset classes. It’s better to keep them separate as some investors only want to invest in one segment, while different real estate types have different yields and market cycles and you do not want to lower a REIT’s overall performance,” he said.

Meanwhile, another of the UAE’s emerging REITs, Abu Dhabi-based Etihad REIT, is also in incubation with plans to list by the end of this year, according to one of its advisers.

REITs are listed trusts that own and/or manage income-producing commercial real estate, either the properties themselves or the mortgages on those properties.

They provide investors with often more stable, higher returns than direct real estate investment, greater diversification and lower overall risk – particularly as a counterbalance to stocks, bonds and cash.

Vieujot told Arabian Business REITs were becoming increasingly popular in the Gulf. Eight new REITs have been established across the GCC in 2017 alone.

“REITs are nascent here but I am convinced they will at some point be favoured over direct real estate investment,” he said.

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