(An incorrect reference to when Palmon Group was founded was changed in the last paragraph).

The chairman of United Arab Emirates-based Palmon Group has said that his company plans to float a newly-launched private real estate investment fund (REIT) on the stockmarket within two years, after raising a total of 330 million UAE dirhams ($89.84 million) from investors.

The REIT, Mannrre, will comprise mainly industrial properties, alongside some other commercial properties such as offices and staff accommodation.

“We intend to raise 330 million dirhams from qualified investors… we are planning to go public after two years. That is why we want to gain momentum in the next two years and then list it on the stock market,” Manohar Lahori, Palmon Group chairman and a director of the new Mannrre REIT told Zawya in a phone interview on Thursday. He said qualified investors are those with knowledge and experience of real estate products and investments, as defined on the Dubai Financial Services Authority (DFSA) website.

The REIT will initially comprise a portfolio 19 mainly industrial properties owned by Palmon Group with a value of just over 215 million UAE dirhams ($58.7 million). Some 62 percent of the 726,566 square feet of property in the portfolio is made up of logistics space, 23 percent industrial 8 percent offices and 7 percent staff accommodation. The properties have a  94.4 percent occupancy rate.

The REIT has a target return of 8 percent for investors, and 80 percent of its rental income will be distributed as dividends. It can also borrow against up to 50 percent of the gross value of its assets in order to finance further deals.

“We will go public at a level (of) 500 million dirhams,” Lahori said. He added that he has not yet picked which stock market in the UAE the REIT will eventually be listed on.

Lahori said the recent announcement made by UAE vice president and ruler of Dubai, Sheikh Mohammed Bin Rasid Al Maktoum to cut the bank guarantee scheme for private sector employees from the current amount of 3,000 dirhams per employee to 60 dirhams, will encourage more investment in businesses, making industrial properties more attractive. 

“This (the announcement) makes it very beneficial for industries,” Lahori said.

The UAE’s first real estate investment trust, Emirates REIT, went public in 2014, raising around 500 million dirhams ($135 million) on the Nasdaq Dubai bourse. It was formed in 2010. ENBD REIT, a vehicle created by Emirates NBD Asset Management, was the second REIT to float in March last year, raising $105 million. It is also listed on Nasdaq Dubai.

A number of private REITs also exist, though, including the Etihad REIT set up by Abu Dhabi Financial Group. In December, it revealed plans to raise up to $200 million from a stock market listing of its Etihad REIT.

Lahori founded Palmon Group more than 30 years ago, in 1985. The company started out manufacturing clothes, but now has 12 different business units employing more than 1,000 staff, according to its website. Business units include divisions manufacturing contract furniture and kitchens, warehousing and logistics companies, a facilities management firm and a real estate arm that owns retail units by Dubai Marina.

(Reporting by Yasmine Saleh; Editing by Michael Fahy)

(yasmine.saleh@thomsonreuters.com)

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