Reit is targeted for listing around the second half of next year
ARA Asset Management has partnered a Qatar- based property group to list a Syariah compliant real estate investment trust (Reit) in Singapore – possibly the first for the country.
The Reit – targeted for listing around the second half of next year – could hold some $1 billion worth of properties largely from the hospitality sector in Qatar.
ARA, an affiliate of Li Ka-shing’s Cheung Kong group, said yesterday that it inked a memorandum of understanding with Regency Group chairman and founder Ibrahim H Al-Asmakh to jointly manage the Reit.
Regency is a real estate developer and investor with a portfolio of hospitality, residential, commercial and retail properties in Qatar. It will sponsor the Reit and inject mainly hospitality assets – including hotels and service apartments – into the trust. Total gross floor area in the initial portfolio could come up to around 164,000 square metres.
ARA group CEO John Lim told BT that Regency will maintain a stake of around 30-40 per cent in the Reit, with the balance to be floated on the market. The eventual amount to be raised would depend on market conditions.
The partners chose to list the Reit in Singapore because of the large and deep Reit market here, Mr Lim said. Singapore also has ‘the most established guidelines in the region’, while the Middle East has yet to draw up a code for Reits, he added.
Mr Lim is positive on Qatar’s potential. As a member of the Gulf Cooperation Council, Qatar is the world’s largest exporter of liquefied natural gas and third largest holder of natural gas reserves.
Dubai’s recent debt woes have introduced doubts to the region’s stability but Mr Lim believes that Qatar may benefit. ‘Given the Dubai situation, we sense that there is an opportunity, that in fact a lot of expatriates are actually moving from Dubai to Doha.’ Doha is the capital of Qatar.
CB Richard Ellis Middle East managing director Nicholas Maclean also told Reuters: ‘Qatar sees an opportunity to take some of the market share from Dubai’.
He noted that Qatar has been building offices and hotels to draw firms building a presence in the Middle East.
According to CIMB analyst Janice Ding, the Syariah compliant Reit could see fairly good interest from investors in the Middle East and Malaysia because there are few such investment vehicles around.
But she added that some investors might also be more cautious because they are less familiar with the property market in Qatar.
ARA gained one cent yesterday to close at 87 cents. According to Mr Lim, the real estate fund manager will continue to build on its Syariah compliant product offerings.
Source: Business Times, 15 Dec 2009
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