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Mon 18 May 2015 04:11 PM

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Bahrain set to list first real estate investment trust

Bourse boss says has seen interest in REITs from property developers as an alternative financing option

Bahrain set to list first real estate investment trust
Bahrain World Trade Centre, Bahrain economy, Bahrain skyline, Bahrain business

Bahrain’s first real estate investment trust (REIT) is expected to list on the Bahrain bourse next month.

Bourse chief executive Sheikh Khalifa bin Ebrahim Al Khalifa made the announcement at a press conference on Sunday, Gulf Daily News reported.

A REIT, or real estate investment trust, is an investment vehicle that invests in real estate through properties or mortgages and sells interests in those properties like a stock on exchanges.

REIT listing rules reportedly came into effect on Sunday, enabling the development of a new market for Bahrainis and foreign investors.

Sheikh Khalifa did not reveal specific details of the trust that would list next month, according to the newspaper.

However, he said the bourse has seen interest in REITs from property developers and managers as an alternative financing option and also among investors who want to invest in property as an asset without directly owning and managing the property.

“The real estate sector contributes significantly to the GDP of the country, and hence the continuous regulation of the sector will benefit all involved stakeholders,” he was quoted as saying.

REITs will be regulated by the Central Bank of Bahrain, he said, and must be authorised before they can be listed.

They must have a minimum value of $20 million, Sheikh Khalifa said, and the dividend payout ratio must be at least 90 per cent of the trust’s net realised income.

REITs are a growing market in more than 37 jurisdictions, including in the UAE, whose Emirates REIT listed just over one year ago. In an interview with Arabian Business last month, executive deputy chairman Sylvain Vieujot said: “A REIT is halfway between a stock and a bond. It’s like a bond because it has to distribute a dividend, and it’s like a stock because you expect to pick up the right building that will improve in value and cashflows.”

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