Al Rajhi REIT Fund’s initial public offering (IPO) has started today, and will run until Jan. 14.
Last month, Saudi Arabia’s Capital Market Authority (CMA) approved Al Rajhi Capital's request to offer, register and list units of Al-Rajhi REIT Fund on the Saudi Stock Exchange (Tadawul).
The fund manager is offering 42.67 million units at SAR 10 each.
The close ended, Sharia-compliant REIT Fund will be listed as the ninth REIT on the Saudi bourse.
Al Rajhi REIT's investment in real estate development projects is subject to certain conditions, mainly investing no less than 75 percent of the fund's total assets in income-generating developed real estate units.
The fund, however, is not allowed to invest in white lands, as its preliminary asset portfolio comprises 13 fully-developed, incoming generating real estate units.
The fund seeks to generate regular rental income by primarily investing in developed real estate assets.
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Al Rajhi REIT Fund - Details |
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Fund structure |
Close ended, Sharia-compliant REIT Fund |
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Offering period |
Ten business days |
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Investment Objective |
Invest in developed properties that generate regular income |
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IPO amount |
SAR 426.7 mln |
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Fund’s target size |
SAR 1.621 bln |
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Value of in-kind subscriptions |
SAR 795.3 mln |
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Total number of units following IPO |
122.2 mln |
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Total assets following IPO |
13 |
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Weighted average of lease expiry period |
7.2 years |
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Properties’ occupancy level |
98.93 percent |
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Target net yield in 2018 |
6.16 percent |
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Lock-up Period |
Al-Rajhi Capital (The Fund manager) owns 9.75 percent shareholding into the fund’s capital. This shareholding is subject to a two-year lock-up period from the date of listing (i.e. the Company cannot sell out this stake during the said period). |
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Management fee |
0.80 percent annually of fund’s total value after expenses |
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Subscription fee |
2 percent of the investment value (charged at the time of subscription) |
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Custody service fee |
The fund will pay SAR 100,000 to the custodian on a quarterly basis |
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Financing |
The fund manager can on behalf of the fund secure Sharia-compliant financing at 50 percent maximum of the total value of the fund’s assets |
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Minimum investment |
SAR 1,000 |
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Maximum investment |
SAR 60 mln |
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Fund manager |
Al Rajhi Capital |
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Custodian |
KASB Capital |
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Fund term |
99 years from the listing date, renewable upon the CMA approval |
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Dividends |
90 percent of the fund’s income on a semi-annual basis |
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Fund trading |
The trading method applicable on Tadawul |
The fund will use its proceeds, amounting to SAR 1.62 billion as follows:
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IPO Proceeds |
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Use |
Amount |
Percentage of Total |
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Acquisition of ARC Real Estate Income Fund |
1005.2 |
62.0% |
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Acquisition of GCC Real Estate Fund |
190.0 |
11.7% |
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Acquisition of Blue Tower (Al-Khobar) and Lulu’ah Warehouse (Riyadh) |
425.7 |
26.2% |
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Cash in hand |
1.0 |
0.1% |
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Total |
1621.9 |
100.0% |
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Asset Breakdown |
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Asset |
Location |
Sector |
Annual Targeted Rent 2018 (SAR mln) |
Mode of acquisition in REIT |
Acquisition Value |
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Panda |
Rawda Dist., Jeddah |
Retail |
2.41 |
In Kind Subscription |
67.44 |
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Panda |
Madain Al Fahad Dist., Jeddah |
Retail |
2.52 |
In Kind Subscription |
48.59 |
|
Panda |
Khamis Mushait |
Retail |
2.74 |
In Kind Subscription |
47.99 |
|
Panda |
Marwa Dist., Jeddah |
Retail |
9.92 |
In Kind Subscription |
217.60 |
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Lulu |
Riyadh |
Retail |
15.27 |
In Kind Subscription |
225.63 |
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Anwar Plaza |
Riyadh |
Retail |
4.42 |
In Kind Subscription |
62.24 |
|
Narjis Plaza |
Riyadh |
Retail |
4.28 |
In Kind Subscription |
61.28 |
|
Rama Plaza |
Riyadh |
Retail |
4.69 |
In Kind Subscription |
69.40 |
|
Jarir Al Ahsa |
Riyadh |
Retail |
5.23 |
In Kind Subscription |
72.17 |
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Al Faris Intl. School |
Riyadh |
Education |
10.00 |
In Kind Subscription |
132.82 |
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Al Andalus |
Jeddah |
Offices/showrooms |
11.17 |
In Kind Subscription |
190.00 |
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Blue Tower |
Al Khobar |
Offices/showrooms |
18.31 |
IPO Funding |
227.00 |
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Lulu’ah Warehouse |
Riyadh |
Warehouses |
13.61 |
IPO Funding |
198.70 |
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