Equitativa Limited on Sunday launched the first Sharia-compliant residential real estate investment trust (Reit) in the UAE with a seed portfolio of $113.89 million (AED418 million).
The company floated Emirates Reit, the first Reit in the country, in 2014. It is listed on Nasdaq Dubai with $763m (AED2.8 billion) portfolio of office buildings, schools and retail assets.
The founding shareholders of the Sharia-compliant residential Reit are Al Hamra Real Estate Development and National Bonds Corporation. The Reit, established and managed by Equitativa, has been incorporated in the Abu Dhabi Global Market (ADGM) and regulated by the Financial Services Regulatory Authority.
The Reit includes 371 residential units in Al Hamra Village, Ras Al Khaimah, comprising 472,250 square feet of net leasable area, and 112 units in Barton House project in Dubai’s Motor City, consisting of 86,239 square feet of net leasable area.
The company said that the properties have 95 percent occupancy. It has secured additional property worth $27m (AED99m), taking the total portfolio value to $140.87m (AED517m). No details were given on the new property.
Equitativa said it expects to raise “further funds” to build up a large portfolio for the Reit to prepare for an initial public offering.
The residential Reit will distribute at least 80 percent of its net income to shareholders.
Sylvain Vieujot, chairman, Equitativa, said: “We believe this is the right time to enter the residential market and launch the residential Reit. Residential yields are attractive in the current environment and are expected to provide medium term upside. There continues to be significant interest in Reits across the region from both institutional and private investors.”
Ahmed Ali Al Sayegh, chairman, Abu Dhabi Global Market, said: “The development of the Reit industry in the UAE facilitates equity financing in real-estate and unlocks value in the underlying real estate investments.
We welcome more innovative issuers like Equitativa to join the ADGM family and take advantage of the benefits of our investment offerings and the vibrancy of our financial centre,” he added.