AMAN REIF (Real Estate Investment Fund), which is under formation, has announced the launch of its IPO, commencing from January 2, for a period of 15 days, until January 16, 2020.
Abdul Samad Al Maskari, CEO of “Thara Global Business LLC”- the Financial Adviser and Investment Manager of the Fund, said the Fund’s capital amounts to RO20 mn with 50% of the fund being offered in a private offer while the other 50% will be offered via a public offer of RO10 million. AMAN REIF is established in accordance with the principles of the Islamic sharia, as a closed public fund in the Sultanate.
Al Maskari stated that the fund would comprise of 200,000,000 units with 50% of the units offered to Sandan as part of the proposed consideration for “Sandan Development LLC” 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 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. The private offer price is 100 Baizas per Unit. As for the public offer price of 102 Baizas per Unit, it comprises offer price of 100 Baizas per Unit and Offer expenses of 2 Baizas per Unit.
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. 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.
Al Maskari added that the fund would distribute at least 90% of annual net profit as dividends to the unit holders which will translate to an annual dividend yield of 7%. The dividends will be paid out to unit holders semi annually. Investment in the real estate sector in Oman will 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 objective of the fund’s IPO is to provide an excellent opportunity to invest in a developed real estate light industry asset. Recent years have witnessed a demand for investment in real estate investment funds in the Middle East, supported by legislations that encourage investments. 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 follow 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.
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 August 16, 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.
It has been decided that the Fund will own 708 units, which comprise of 276 stores that includes 269 shops and 7 cars showrooms, in addition to 432 apartments. All of these units represent 26.6% of the first phase of 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 Halban area, Wilaya Nakhal, which is about 45 km from Muscat International Airport. This reflects the strategic location of Sandan, as it is an 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 estates, 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 unit holders or combining financing that is compatible with Islamic law and issuing the right of preference in relation to unit holders. A decision will be made on the way of financing the Fund’s growth, after the investment manager’s proposal, in line with Fund’s strategy.
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 SAOG, Oman Arab Bank SAOC, National Bank of Oman SAOG and Sohar International Bank SAOG. 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.
