|17 January, 2019

Belt and Road REIT could eventually float in UAE or China, says Equitativa chairman

Sylvain Vieujot says new vehicle could invest in a collection of REITs eyeing property in markets from the UAE to Japan

United Arab Emirates, Dubai, road signs Sheikh Zayed Road. Image for illustrative purposes.

United Arab Emirates, Dubai, road signs Sheikh Zayed Road. Image for illustrative purposes.


The new Belt and Road real estate investment trust (REIT) launched by Dubai-based manager Equitativa and Hong Kong-based investment firm Affluent Partners is targeting an initial asset base of between $200 million-$500 million before taking the vehicle towards a listing on a public market either in the United Arab Emirates or China, Equitativa's chairman, Sylvain Vieujot, has said.

Speaking at a signing ceremony in Dubai marking the REIT's launch in Dubai on Tuesday, Vieujot said: "The REIT will start, as all our REITs, as a private vehicle until we get a significant critical size and track record to list it either in the UAE, or in China."

In an interview with Zawya on the sidelines of the event, Affluent Partners' chairman Stephen Yuen said that it was looking to build a vehicle with assets of up to $1 billion, “depending on the viability of projects”.


“The idea is that we start with a bit more than $200 million, but a REIT is a perpetual vehicle, so ultimately the goal is to go to a few billion (dollars),” Vieujot added. “We think as soon as we reach $500 million, it starts to be viable to look at outside investors, to look at listings and so on. That's why the initial target is around this, but the medium and long term target is significantly larger.”

A deal between the two sides to build a REIT containing assets in Eurasian countries along corridors considered to be important to China's Belt and Road Initiative was agreed in October last year.

Yuen said that Affluent Partners had experience of conducting real estate deals in China and South East Asia, and would “source purchases we think are viable for consideration”, with Equitativa then handling due diligence, as well as REIT and asset management. He added that Affluent Partners would help to source funding and be a co-investor in REIT vehicles.

Vieujot said that "in every new emerging market, especially, you need someone to hold your hand in the beginning, to help you find the right sources, to help you avoid mistakes, and that's the role of Affluent Partners".

Although Yueh mentioned several countries in South East Asia as potential target markets, Viuejot said that its remit "goes from Japan to the UAE".

"We don't want to be too specific because as I said in the beginning we need to be opportunistic." he added. "So, we are not trying to pick countries. We are really trying to create a good, stable, long term vehicle that will have growth."

He also said that it may set up several country-specific REITs within each market, as some countries require locally-domiciled vehicles, or a certain percentage of local investors, for REITs. The Belt and Road REIT could then invest in each of these individual REITs.

"Belt and Road might have 10, 20 or 50 percent of one of those REITs, maybe the majority, or invest directly," Vieujot said.

Equitativa currently manages two REITs in Dubai - an unlisted residential REIT and the Nasdaq Dubai-listed Emirates REIT. It also recently set up a REIT in India, and last week launched a REIT in Pakistan.

Equitativa chairman Sylvain Vieujot (left) and Aflluent Partners chairman Stephen Yuen complete the signing of a deal to launch a Belt and Road REIT in Dubai

The company also last week announced the appointment of Al Ramz Capital as a liquidity provider for Emirates REIT's shares, which have been trading at a significant discount to its net asset value in recent months. Emirates REIT had a net asset value of $1.77 per share by November 30, last year, but its shares closed at $0.929 on Wednesday.

"Having more liquidity is a positive thing,” Vieujot said. “The market is challenging in the UAE at the moment. Our stock, still, relative to the market, is one of the top performers for last year but we're still not fully happy about the performance, we think there is still room for improvement.”

He said that a REIT is “about the quality of the asset and it is about liquidity, and we believe this is going to help us”.

Although Emirates REIT's value declined by around 10.6 percent during 2018, this was a better performance than a Thomson Reuters index of UAE real estate stocks, which declined in value by 38 percent last year.

(Reporting by Michael Fahy; Editing by Shane McGinley)


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