DFM inaugurates Reits trading with the listing of Al Mal Capital Reit

Dubai Financial Market (DFM) achieved a key milestone in its journey by introducing Reit trading at the exchange to diversify product offering and asset classes, broadening the scope of opportunities offered to its vast investor base of local and international investors.

DFM, which hosted a bell ringing ceremony to celebrate the commencement of Real Estate Investment Trusts (Reits) trading on Monday, said the listing culminates the successful floating of the new fund by Al Mal Capital, a subsidiary of Dubai Investments, in November 2020.

In a statement, DFM said the Dh350 million proceeds of Al Mal Capital fund will be invested by the company in a Shariah-compliant diversified portfolio of income generating properties that serve different sectors such as healthcare, education and industrial assets, with a target annual return of seven per cent.

Al Mal Capital is a diversified, multi-line investment institution headquartered in Dubai, and licenced and regulated by the UAE Securities and Commodities Authority (SCA). Dubai Investments owns 66.61 per cent stake in Al Mal Capital.

Khalid Bin Kalban, vice-chairman and CEO of Dubai Investments and chairman of Al Mal Capital, rang the market opening bell in the presence of Essa Kazim, chairman of DFM; Hassan Al Serkal, CEO of DFM; Naser Al Nabulsi, vice-chairman and CEO of Al Mal Capital and Hamed Ali, CEO of Nasdaq Dubai and deputy CEO of DFM.

Essa Kazim said the commencement of Reits trading through the listing of Al Mal Capital REIT reinforces DFM’s product offering diversification strategy, providing investors with new opportunities.

“Today’s listing is a key foundation for this new asset class and we are looking forward to see it gaining momentum during the coming period in line with Reit’s strong presence globally and to truly reflect the magnitude, quality and expansion of the real estate sector in Dubai by encouraging the establishment and listing of more Reits in the future,” Kazim said.

The comprehensive framework for listing and trading of Reits on DFM is the outcome of a wide-ranging cooperation between DFM, the SCA and Dubai Land Department (DLD). These regulations streamline property companies’ accessibility to the market by founding and listing Reits. The DFM has signed an MoU with the DLD as a general framework for their collaboration as well as drafting attractive rules for creation, listing and trading of Reits in collaboration with the SCA.

“We are excited to bring to the market and celebrate the successful listing of the first Reit IPO on DFM. The listing on DFM is pivotal to Al Mal Capital Reit, as the exchange is strategically located in the heart of the GCC. This provides us with the opportunity to better serve investors across local and regional markets, while allowing them to capitalise on the various investment prospects available in the UAE’s diverse sectors,” Khalid bin Kalban said.

Anita Yadav, chief executive of Global Credit Advisory Limited, said real estate tends to be capital intensive requiring substantial investments.

“Listing and trading of Reits is a great steps towards providing flexibility and liquidity to real estate investors, particularly to retail investors who want exposure to real estate but may not have access to large capital pool,” Yadav told Khaleej Times on Monday.

Statistics show that Reit markets around the globe have been registering strong growth in recent years. The cumulative market capitalisation of Reits is approaching $2 trillion, as 35 countries now have active Reits legislation. Reits provide investors, mainly those who aren’t able to directly invest in the real estate sector, with the suitable vehicle to participate in the opportunities and returns of this sector by acquiring units of a Reit fund.

"Reit’s allow investors an opportunity to access the sector without the need to acquire or own an asset. The current environment is very ripe for Reit investments as new class of investors look for alternate asset class with an attractive yield in a robust regulatory framework," Narayanan Sambasivan, head of Regulatory & Compliance Advisory at Amicorp Group, told Khaleej Times.

The DFM, which commenced operations on March 26, 2000, operates as a secondary market for the trading of securities issued by public shareholding companies, bonds issued by the federal government or any of the local governments and public institutions in the country, units of investment funds and any other financial instruments, local or foreign, which are accepted by the market.

— muzaffarrizvi@khaleejtimes.com