Saudi SEDCO Capital launches REIT Fund

Reuters Images/Faisal Al Nasser
Subscription available through NCB, Al Rajhi Bank, and Samba Financial Group
Saudi Arabia - SEDCO Capital, a leading Saudi asset management firm, has announced Wednesday the offering of its first Shariah-compliant real estate investment traded fund, “SEDCO Capital REIT”, following Saudi Arabia’s Capital Market Authority (CMA) approval to offer, register and list units of SEDCO Capital REIT on the Saudi Stock Exchange (Tadawul). The fund will be offered to the general public through an initial public offer during the period of Jan. 24 to Feb. 6, giving potential investors the opportunity to own a variety of properties across different geographical regions starting from SR500, with an aim of periodic returns through the listing of the SEDCO Capital REIT Fund.

Commenting on the launch, Hasan Al-Jabri, chief executive officer of SEDCO Capital, said: “This offering is in line with the 2018 record state budget, the largest in the Kingdom’s history, and the increasing expenditure on development which has exceeded expectations. With a large youth population and a healthy economic outlook, we are witnessing increased appetite and demand across various income generating real estate products and assets.”

With an occupancy rate of over 92%, SEDCO Capital’s real estate portfolio has grown to include seven assets under the SEDCO Capital Real Estate Income Fund across various geographical regions.

“In the next 3 years, SEDCO Capital Real Estate Income Fund targets to generate an initial net yield of 7%, through the acquisition of additional assets and by utilizing capital, given that current annual return of the portfolio stands at approximately 6.1% before financing. We are aiming to distribute at least 90% of the fund’s annual net income over the fund term, in addition to any capital gains that have resulted from real estate transactions,” he added.

The listing of the SEDCO Capital Real Estate Income Fund coincides with the promising opportunities that the Saudi market is witnessing in light of the optimistic outlook of Vision 2030, which aims at increasing the size of the national economy and sustain its growth, through diversification of economic base, which in its turn also includes boosting local real estate investment development in the Kingdom.

“Over the past seven years, the SEDCO Capital Real Estate Strategy has demonstrated an impressive track record of adding value for our clients. Our REIT portfolio has been managed by SEDCO Capital’s highly seasoned members of the real estate team, who will continue to manage and oversee the fund after the listing,” Al Jabri added.

NCB Capital, financial adviser and exclusive bookrunner, has confirmed the completion of the evaluation of the seven properties managed under SCREIT in an independent manner. NCB Capital's decision to act as an exclusive bookrunner and issue manager stems out of SEDCO Capital’s leading position in the market, offering investment solutions in a wide scope of geographies and diverse range of asset classes, whilst it has established a strong track record of advisory services and investment management.

To facilitate the offering period, three receiving entities were appointed for investors to subscribe, these include; NCB, Al Rajhi Bank and Samba Financial Group, for the duration of the offering period.

SEDCO Capital REIT Fund is a Shariah-compliant, close-ended investment fund with a capital of SR650 million after completion of the IPO, which represents 100% of the fund's capital. The fund has acquired seven various properties over the last six years which included residential complexes, government offices and commercial centers including Al Jazira Residential Complex, Hyper Panda Riyadh, Al Hayat Furnished Apartments in Riyadh, Jeddah Public Prosecution building, Hyper Panda Jeddah, Khalidiya Business Center and Al Rawdah Business Center. The occupancy rate of these properties is 92% and includes 39% long- term lease contracts, and 61% leased by various tenancy contracts with potential for growth.

Founded in 2009 and member of SEDCO Holding Group, SEDCO Capital grew on solid foundations rooted since 1976 in local and international real estate investment and international REIT funds. Over the years the firm has won several prestigious awards, which included Best Shariah-compliant real estate fund, Best Islamic Fund Manager and Best Asset Manager of the year in 2015 for three consecutive years.

SEDCO Capital is a leader in the implementation, development and delivery of a wide spectrum of Shariah-compliant investments. — SG

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