Eskan names SICO as lead REIT arranger

Manama

Eskan Bank has appointed Securities & Investment Company (SICO) as lead arranger for the first real estate investment trust (REIT) on the Bahrain Bourse, and only the second Sharia-compliant listed REIT in the Gulf region.

Eskan Bank General Manager Dr. Khalid Abdulla said that through the REIT, the bank expected to “offer a financial instrument that will add to the breadth of investment opportunities and position the institution as an innovative bank”.

“This has been made possible by the proactive roles of the Central Bank of Bahrain and the Bahrain Bourse. Both are further developing the regulations concerning investing activities that will lead to capital market growth,” added Abdulla.

SICO Chief Executive Officer Najla M Al Shirawi expressed her delight to manage the “historic REIT listing in Bahrain.”

She said the introduction of the new alternative investment asset class would add depth to the Kingdom’s real estate sector and help improve liquidity on the Bahrain Bourse.

Bahrain Bourse Chief Executive Shaikh Khalifa bin Ebrahim Al Khalifa welcomed the planned listing of Eskan Bank’s REIT. “The introduction of the REIT listing rules will facilitate investment in productive assets and benefit all involved stakeholders,” he added.

A listed REIT is a regulated investment vehicle that invests directly in real estate with its units traded like a stock on exchanges. REITs generally provide investors with access to real estate, a regular and stable income stream, diversification, and enhance the liquidity of their portfolios.

New listing rules for REITs issued by the Bahrain Bourse (BHB) came into effect on 17 May 2015, with requirements including a minimum of two properties with a combined asset value of no less than $20 million. REITs are regulated by the Central Bank of Bahrain (CBB), and must be authorised by the CBB before they can be listed.  According to CBB regulations, the dividend payout ratio of a REIT has to be at least 90 per cent of its net realised income.

Eskan Bank’s REIT will consist of two income-generating and unleveraged properties currently owned by Bahrain Property Musharaka Trust (BPMT) which was formed in May 2011 in collaboration with institutional investors and high net-worth individuals. The REIT properties consist of Segaya Plaza and Danaat Al Madina.  Segaya is a mixed retail and residential property located in Segaya which is currently completely occupied.

As arranger, SICO would be responsible for managing the entire process, which includes internal property valuations along with independent real estate valuers, legal structure, regulatory submissions, and the initial public offering. The Sharia-compliant REIT is expected to have a total value of BD 20 million, with a tranche that will be offered to the public through the IPO that is planned to take place later this year.