Asset management firm Al Mal Capital, a subsidiary of Dubai Investments, received regulatory approval to float its real estate investment trust (Reit) on the Dubai Financial Market (DFM), marking the first Reit offering on the bourse.
Al Mal Capital Reit is targeting to raise Dh500 million from the initial public offering (IPO) and will use the proceeds to invest in a diversified portfolio of income-generating real estate assets backed by secure long-term lease agreements, Al Mal Capital said on Monday in a statement to the DFM.
It plans to list its shares in January following the IPO.
The investment firm's IPO subscription period will run from November 8-19 with a subscription price of Dh1 and investors can subscribe through First Abu Dhabi Bank and the DFM's eIPO platform.
"In the current environment, investors are looking for secure long-term attractive returns," Khalid Bin Kalban, chairman of Al Mal Capital, said. "Al Mal Capital is confident that the Reit and DFM listing will meet investors’ needs, providing a liquid vehicle to access a sector with strong fundamentals.”
There are already two real estate investment trusts listed in Dubai – Emirates Reit and ENBD Reit – both of which trade on the Nasdaq Dubai exchange. ENBD Reit proposed a delisting late last year, but the move was voted down by shareholders in March. Emirates Reit said in July that it is considering a delisting as part of a strategic review. The chief executive of Abu Dhabi's exchange told The National in July that several Reits were also also weighing up a listing on its exchange.
Dubai's real estate market has slowed in the wake of a drop in oil prices that began in 2014 and concerns about an oversupply of properties. The Covid-19 pandemic has further deepened the sector's woes. However, with the economy re-opening and commercial activity picking up pace, the volume of transactions has increased in recent months, according to property consultancy firms.
The UAE Securities and Commodities Authority's "approval on Al Mal Capital Reit IPO is a breakthrough, Naser Al Nabulsi, vice chairman and chief executive of Al Mal Capital, said.
The fund plans to acquire real estate properties in the UAE and abroad with a focus on sectors including healthcare, education and industrials, according to the statement. It plans to invest in Sharia-compliant assets through Islamic financing structures.
The fund is targeting an annual return of 7 per cent from the first year and will distribute at least 80 per cent of its net income to investors, it said.
"The aim is to acquire strategic single-let, anchor assets preferably in the healthcare and education sectors that provide stable income, low volatility and long-term capital appreciation," Sanjay Vig, managing director at Al Mal Capital, said.
Al Mal Capital Reit is managed by Al Mal Capital, which is regulated by the SCA and Central Bank of the UAE.