Derayah REIT’s initial public offering (IPO), which is run by fund manager Derayah Financial Corporation Company, starts today in preparation for trading on the Saudi Stock Market (Tadawul).
The shariah-compliant fund offers SAR 361.7 million worth of assets to the public at SAR 10 per unit, with the minimum subscription of SAR 10,000.
Subscription will be available through Riyad Bank, National Commercial Bank (NCB), and Derayah Financial’s headquarters and branches across the Kingdom, in addition to its web portal, from today until January 7, 2018.
Earlier this month, the Saudi Capital Market Authority (CMA) approved Derayah Financial’s request to offer Derayah REIT as a closed investment fund on Tadawul.
The fund aims to distribute net returns of 7.22 percent over the next year, which represents the biggest return on equity (RoE) compared to the other REIT funds currently trading.
Derayah REIT will achieve this RoE by acquiring 15 properties that include offices, residential units, warehouses, hotels, and retail units across Riyadh, Jeddah, Dammam, Khobar, Jubail, and Al-Ahsa.
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Derayah REIT Fund - Details |
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Fund name |
Derayah REIT |
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Offering period |
Dec. 27, 2017 to Jan. 7, 2018 |
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Investment Goals |
Invest in income-generating properties across the Kingdom to achieve annual returns for the fund’s investors. |
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Fund size |
SAR 1.172 bln |
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Subscription fees |
A one-time fee of 2% of subscription value to be paid to the fund manager in advance |
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Management fees |
Annual rate of 0.85% of the net asset value to be paid semi-annually to the fund manager in advance |
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Financing |
All bank facilities obtained to fund the acquisition of properties will be shariah-compliant. A maximum of 50 of the total assets can be funded. |
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Minimum Subscription |
SAR 10,000 |
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Maximum Subscription |
SAR 50 million |
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Maximum Subscription of Fund Manager |
SAR 16.6 million |
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Fund manager |
Derayah Financial Corporation Company |
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Fund Duration |
99 years as of trading date on Tadawul, and renewable for an equal period after regulatory approvals. |
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Dividend distribution |
Fund manager plans to distribute dividends semi-annually to unit holders of 90 percent of the net profit on March 31 and September 30 of each year except for the first year, when dividends will be distributed only on September 30, 2018. |
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Trading |
As other traded REIT funds on Tadawul. |
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