Alkhabeer REIT offers 'highest return' in Saudi market, says CEO

Alkhabeer REIT offers the highest return among peers in Saudi Arabia at over 9 percent, Ahmed Ghouth, chief executive officer of Alkhabeer Capital, told Argaam in an exclusive on Wednesday.

Other distinct privileges include its focus on asset quality and the value-addition it offers to investors, he said.

Alkhabeer REIT is marked by being the Kingdom’s first fund that offers equal privileges to the fund manager and investors in terms of lease collection efficiency, as it deducts administrative fees from collected lease values.

The Saudi market should have almost 32 REITs to meet investor demand, and these funds are also required to boost their assets and investments, he added.

Here’s the full interview with Ahmed Ghouth:

Q: What is the reason behind floating Alkhabeer REIT in an initial public offering (IPO)? Do you think the current economic conditions are favorable for the offering?

A: Alkhabeer REIT is distinguished by various distinct privileges, when compared to peers in the Saudi market. We rely on our broad experience in the alternative industries and in-depth market knowledge. The fund’s IPO, which began on Nov. 11, will close tomorrow, Nov. 29.

To develop Alkhabeer REIT, we focused on the quality of assets and the value-addition it offers to investors.

Alkhabeer REIT targets an annual return of over 9 percent, compared to other funds which offered returns between 6 to 7 percent.

The high return is likely to protect the fund from market fluctuations, as other REITs are currently trading below offering prices.

Q: What are the competitive advantages that Alkhabeer REIT offers to attract investors?

A: Alkhabeer REIT targets an annual return of over 9 percent, one of the highest quarterly returns in the local market.

It also invests in seven income-generating real estate assets at prime locations in Riyadh, Jeddah and Tabuk.

Alkhabeer REIT is marked by being the Kingdom’s first fund that offers equal privileges to the fund manager and investors in terms of lease collection efficiency, as it deducts administrative fees from collected lease values. In other REITs, administrative fees are based on the fund size.

Meanwhile, the fund invests in diversified, high-quality assets. Its binding agreements have an average leasing period of ten years.

Alkhabeer REIT has taken into account the market conditions, future opportunities and investors’ target returns. Therefore, the fund targets attractive returns and exempts subscribers from subscription fees.

Q: Can you provide more details about the current trading volumes of Tadawul-listed REITs? Are the current REITs sufficient to meet investor demand?

A: The current 16 REITs are not sufficient to meet the various demands of investors, especially as the combined size of those funds stand at SAR 12.1 billion. The average weight of Saudi REITs stands at just 0.6 percent of the benchmark index – a relatively low weight when compared to the global ratio of 2.1 percent.

The Saudi market should have almost 32 REITs to meet investor demand. Such funds are also required to boost their assets and investments. The number of Saudi REITs is expected to increase going forward.