SHUAA Capital Saudi Arabia launches real estate investment fund

SHUAA Capital Saudi Arabia announced on Monday the launch of SHUAA REIT (The Fund), a closed-ended publicly traded real estate investment fund.

Approved by the Capital Market Authority (CMA) of Saudi Arabia, the subscription period for SHUAA REIT commenced from March 25, 2019 and will continue until April 7 2019 inclusive.

The fund will offer 30,515,000 units to the public at a price of SAR 10 per unit, equivalent to SAR 305,150,000, which accounts for 51.5 percent of the REIT’s total size of SAR 591,500,000.

“The launch of SHUAA REIT is a significant milestone for SHUAA Capital Saudi Arabia. REITs are not considered speculative high growth instruments that generate high capital returns. We remain focused on offering our clients and investors distinctive financial solutions within Saudi Arabia,” SHUAA Capital Saudi Arabia’s CEO, Omar Al Jaroudi, said.

The fund intends to acquire six income-generating real estate assets in four key sectors and in vital areas of Riyadh, the statement said.

Some of the key differentiating factors of SHUAA REIT are:

- Independency of the REIT Manager from all assets and property owners

- Alignment of interest between the investors and the REIT Manager by having the management fees structured in a way whereby the bulk of the fees are based on a percentage of the rental pool generated from the underlying assets

- Considerably high returns for high quality assets in comparison with the competitive set of assets of the same category located in major cities around the Kingdom, whereby the targeted return is approximately 7 percent per annum based on freehold ownership structures and excludes lease-interest contracts

The updated regulations also include a newly introduced 12-month lock-up period for majority unitholders that begins from the start of unit trading in the Saudi stock market, which ultimately contributes to a more stable market price for the unit.