Al Rajhi REIT Fund will start trading today on Saudi Stock Exchange (Tadawul) (Ticker: 4340) with a daily price fluctuation limit of 10 percent per unit.
In January, the fund’s initial public offering (IPO) was 174 percent oversubscribed, raising SAR 740 million; with 90,561 individual and institutional investors subscribed.
Each subscriber was allocated a minimum of 100 units, while remaining units were allocated on a pro-rata basis at a rate of 52 percent to those who have subscribed for more than 100 units.
The REIT is a sharia-compliant, close-ended fund with a target size of SAR 1.62 billion.
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Fund Details |
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Fund structure |
Close ended, Sharia-compliant REIT Fund |
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Investment targets |
Invests in developed properties that generate regular income |
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Target size |
SAR 1.621 bln |
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Value of in-kind subscriptions |
SAR 795.3 mln |
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Number of Units post-IPO |
122.2 mln |
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Total assets post-IPO |
13 |
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Weighted Average of Lease Durations |
7.2 years |
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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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Occupancy percentage of constituent property |
98.93 percent |
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Target Net Yield (2018) |
6.16 percent |
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Subscription fee |
2 percent of the investment value (charged at the time of subscription) |
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Management fee |
0.80 percent annually of fund’s total value after expenses |
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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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Fund manager |
Al Rajhi Capital |
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Custodian |
KASB Capital |
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Fund term |
99 years from the date of listing, renewable upon regulatory approval. |
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Cash distributions |
90 percent of the fund’s income on a semi-annual basis |
The Fund will use the IPO proceeds as follows:
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IPO Proceeds |
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Use |
Amount |
Percentage of Total |
|
Acquisition of ARC Real Estate Income Fund |
1,005.2 |
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 |
1,621.9 |
100.0% |
The fund encompasses assets in the retail, education, offices and logistics sectors, as shown in the following table:
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Fund's Assets by Sector |
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Asset |
Location |
Sector |
Annual Targeted Rent 2018 (SAR mln) |
Mode of Acquisition |
Acquisition Value |
|
Panda |
Rawda Dist., Jeddah |
Retail |
2.41 |
In Kind Subscription |
67.44 |
|
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 |
|
Anwar Plaza |
Riyadh |
Retail |
4.42 |
In Kind Subscription |
62.24 |
|
Narjis Plaza |
Riyadh |
Retail |
4.28 |
In Kind Subscription |
61.28 |
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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 |
* Expected to acquire post IPO.
Performance wise, the eight Tadawul-listed REIT Funds saw a decline compared to the listing price, led by Mulkia Gulf REIT and AlMasha’ar REIT which dropped by 15 percent.
Meanwhile, Aljazira REIT and Taleem REIT posted gains of 60 percent and 9 percent, respectively.
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Comparative Performance of Peers |
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REIT |
Fund Size (SAR mn) |
Listing Price (SAR) |
Closing as of March 19, 2018 (SAR) |
Variation |
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Aljazira REIT |
118.0 |
10.00 |
16.02 |
+60% |
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Taleem REIT |
285.0 |
10.00 |
10.92 |
+9% |
|
Jadwa REIT |
1580.0 |
10.00 |
9.92 |
(1%) |
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Jadwa REIT Al Haramin |
660.0 |
10.00 |
9.08 |
(9%) |
|
Musharaka REIT |
880.0 |
10.00 |
9.08 |
(9%) |
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Riyad REIT |
1,633.0* |
10.00 |
9.01 |
(10%) |
|
AlAhli REIT (1) |
1,375.0 |
10.00 |
8.91 |
(11%) |
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Al Ma’athar REIT |
613.7 |
10.00 |
8.84 |
(12%) |
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Al Masha’ar REIT |
572.4 |
10.00 |
8.52 |
(15%) |
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Mulkia Gulf REIT |
600.0 |
10.00 |
8.50 |
(15%) |
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Al Rajhi REIT |
1,621.9 |
10.00 |
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* Unitholders approved the fund's capital increase from SAR 500 mln to SAR 1.63 bln on March 18.
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