Muscat: Aman Real Estate Investment Fund (REIF) has announced the launch of its IPO, commencing from Thursday, from January 2, 2020, for a period of 15 days, till January 16.
This announcement was revealed during a press conference held on December 31 at Grand Millenium Muscat Hotel, in the presence of several Fund officials.
Abdul Samad al Maskari, CEO of Thara Global Business- the Financial Advisor and Investment Manager of the Fund, said that the Fund’s capital amounts to 20 million Omani Riyals with 50 per cent of the fund being offered in a private offer while the other 50 per cent will be offered via a public offer of 10 million Omani Riyals.
Al Maskari stated that the fund would comprise of 200,000,000 units with 50 percent of the units offered to Sandan as part of the proposed consideration for Sandan Development selling the premises to the Fund, at an offer price of 100 Baizas per Unit. Al Maskari added that the number of units offered to the public through this IPO is 100,000,000 units. On completion of the IPO, the public ownership will stand at 100,000,000 Units with a value of 100 Baizas per Unit to represent 50% of the Fund’s total issued capital. The units will be offered to investors in the IPO at an offer price of 102 Baizas per Unit.
Al Maskari said that the private offer price is 100 Baizas per Unit. As for the public offer price of 102 Baizas per Unit, it comprises an offer price of 100 Baizas per Unit and Offer expenses of 2 Baizas per Unit.
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Al-Maskari confirmed that the IPO is open to Omani and non-Omani individuals and juristic persons. He also noted that investors are divided into two categories; the first includes Omani and non-Omani individuals, who apply for 1,000 Units as a minimum, and in multiples of 100 Units thereafter up to a maximum of 10,000,000 Units.
Whereas, the second category includes Omani and non-Omani individuals and juristic persons who apply for 10,000,100 Units as a minimum, and in multiples of 100 Units thereafter up to a maximum of 20,000,000 Units.
Maskari added that the fund would distribute at least 90 per cent of annual net profit as dividends to the unitholders which will translate to an annual dividend yield of 7 per cent dividends will be paid out to unitholders semi-annually.
During the conference, Al Maskari mentioned about the promising prospects of investing in the real estate sector in Oman and generate stable and sustainable returns for the investors as well as support the Government efforts to promote economic diversification. The CEO of Thara Company thanked and praised the regulatory bodies, at the forefront of which is the Capital Market Authority (CMA). He also commended the investment laws in the Sultanate, which is playing a key role in attracting local and foreign investment.
The investment in this fund aims to provide recurring income through rental income and capital growth on the back of growth in the industrial sector in the Sultanate. The objective of the fund’s IPO is to provide an excellent opportunity to invest in a developed real estate light industry asset. The recent years have witnessed a demand for investment in real estate investment funds in the Middle East, supported by legislation that encourages investments in this promising sector.
Among these legislations is the Capital Market Authority issued Decision Number 2 of 2018, the issuing regulations for Real Estate Investment Trusts (the REITS Regulation). The REITS Regulation follows Ministerial Decision 95 of 2017 issued by the Ministry of Housing on 15 November 2017 which also specifically focuses on REIFs / REITs. Together, these laws demonstrate the Oman Government's intention to provide a clear regulatory framework for the operation of REIFs / REITs in the Sultanate. The significance and potential of REIFs / REITS as a vehicle for driving investment and liquidity in the real estate industry was also underlined by Tanfeedh — The National Programme for Enhancing Economic Diversification — as one of the nearly 100 economic initiatives for implementation over the short term.
Real estate investment funds contribute to achieving a number of positive economic effects, in the forefront of which is their ability to contribute significantly to growth, accountability, and transparency in the real estate sector. In addition to the potential to provide less risky investment options in real estate to small and big investors, and to provide regular income to the unitholders, it is an effective hedge against inflation.
The establishment of real estate investment funds would attract foreign direct investment in this vital sector, as well as increase the participation of the private sector, which in turn will help stimulate the process of development in vacant lands and increase the contribution of the real estate sector to the overall GDP.
According to an extensive study conducted by Cambridge Associates on 16 August 2017 based on data compiled across a total of 942 real estate funds, REITs have outperformed private equity funds by nearly 4% per year for the last 25 years.
AMAN REIF is established in accordance with the principles of the Islamic sharia, as a closed public fund in the Sultanate. The registered office of the fund is in the Governorate of Muscat.
The goals of the Fund, according to the articles of the Fund’s statute, are to provide an opportunity to invest in developed real estate light industry asset, which will also provide recurring income through rental income and capital growth on the back of growth in the industrial sector in the Sultanate. This will be accomplished through investing in real estate and assets related to, and special purpose companies that own real estate and assets related to. The whole process including cash, deposits and money market instruments is compatible with Islamic principles.
It has been decided that the Fund will own 708 units, which comprise of 276 stores that include 269 shops and 7 cars showrooms, in addition to 432 apartments. All of these units represent 26.6% of the first phase of the Sandan City Project, where 73.4% were sold in the first phase of the project to different investors. The real estates are located within the Sandan Industrial Complex in the Halban area, Wilaya Nakhal, which is about 45 km from Muscat International Airport. This reflects the strategic location of Sandan, as it is easy access to multiple geographical locations, whether in Muscat, the capital city or the two governorates of Al Batinah via the Muscat Highway and the Al Batinah Highway which was newly opened.
The Fund intends to develop a diversified portfolio of real estate, in accordance with the Islamic Sharia and related assets in the light industry sector, by acquiring real estate assets in the Sultanate and MENA region. The form of financing the fund’s growth can be through financing that is compatible with Islamic law, up to a maximum of 60% of the value of the fund’s net assets, or by issuing the right of preference by issuing more units to unitholders or combining financing that is compatible with Islamic law and issuing the right of preference in relation to unitholders. A decision will be made on the way of financing the Fund’s growth, after the investment manager’s proposal, in line with the Fund’s strategy.
It is noted that the Shariah Supervisory Board to the Fund is Amanie Advisors Sdn Bhd , the Property Evaluator is Tibiaan Properties LLC, and the Legal Advisor is Trowers & Hamlins,while the Issue Manger is Sohar International Bank SAOG. The Financial Advisor and Investment Manager is Thara Global Business LLC. The Collecting banks are Bank Muscat, Oman Arab Bank, National Bank of Oman and Sohar International Bank.
The term of the fund is 99 years from the date of the Fund's registration in the funds register of the CMA or until the date the Fund is liquidated. The first Financial Year of the Fund shall start on the date of registration of the Fund in the CMA register and shall end on December 31, 2020. Subsequent Financial Years of the Fund shall start on January 1 and end on December 31 of the same Calendar year.
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