RIYADH — Jadwa Investment, a leading investment management and advisory firm, announced Tuesday the offering of its second Shariah-compliant real estate investment traded fund, “Jadwa REIT Saudi Fund”.
The new REIT fund will aim to invest in a diversified manner across the Kingdom, and comes on the back of the successful launch of Jadwa’s geographically focused “Jadwa REIT Al Haramain Fund”, which specializes in investing in real estate properties within the two holy cities of Makkah and Madinah.
The REIT has an initial size of SR1.58 billion, of which 30%, or SR474 million, will be offered to the general public through an initial public offer during the period of Jan. 3 to Jan. 23. Jadwa Investment will additionally invest SR89.4 million into the fund.
The equity-financed REIT will offer an initial net dividend yield of 7.3% in the form of quarterly distributions. The fund will acquire an initial portfolio of five freehold real estate assets in the Central and Eastern Provinces of Saudi Arabia, diversified across the educational, commercial, industrial and residential sectors.
Subscription will be available across the Kingdom through Banque Saudi Fransi, National Commercial Bank, Al Rajhi Bank, Riyad Bank, and Jadwa Investment offices and website for the duration of the offering period.
Commenting on the launch of Jadwa’s second REIT offering, Tariq Al Sudairy, managing director and CEO of Jadwa Investment, said “Jadwa REIT Saudi Fund is expected to generate an initial unlevered dividend yield of 7.3%, net of all fees and expenses, offering investors the highest dividend yield amongst all REITs. The fund offers investors the ability to access to compelling real estate investment opportunities and generate attractive returns through a liquid investment vehicle.”
Describing the REIT, Haitham Al Ghannam, head of real estate investments at Jadwa, stated, “The REIT’s initial portfolio will comprise of five freehold assets, diversified across the educational, commercial, industrial and residential sectors.
“The properties generally occupy prominent locations in the major cities Riyadh, Dammam, and Khobar, all within proximity to key demand drivers that are expected to ensure organic income growth. The fund’s assets are all fully leased on a long-term basis of 5 to 20 years to highly reputable counterparties.
Additionally, all lease agreements are supported by various rental protection mechanisms, including promissory notes, revolving bank guarantees, pledge of units in the REIT, assignment of dividends, and corporate guarantees. The initial portfolio has been acquired at an average discount of 9% to independent third-party valuations.”
Al Ghannam added, “The REIT intends to expand through the acquisition of additional assets over time, with the aim to grow the fund’s dividends and net asset value. Jadwa has the experience and capability to deliver on this growth aspiration, as demonstrated by our REIT track record in the Saudi market. In fact, Jadwa’s existing REIT fund, Jadwa REIT Al-Haramain, has already secured bank debt and executed accretive acquisitions since its recent launch in April 2017.”
Jadwa Investment offers a wide range of investment services that support the financial objectives of its individual and institutional clients. With a proven track record in asset management, private equity, real estate, fixed income investments, investment banking advisory, and investment management advisory, Jadwa Investment is a comprehensive financial services firm.