KINGDOM OF SAUDI ARABIA REITS M A R K E T R E P O R T Research & Advisory Department
2 CENTURY21 SAUDI The Reit Market Report REITs - Introduction Real Estate Investment Trusts (REITs) is a company that owns and operates income generating real estate assets. REITs are a financial tool that allow pooling of investors funds for participation in real estate ownership. It s a way for investors to earn a share of the income generated through real estate assets without actually having to go and buy them. The income generating real estate assets owned by a REIT may include Residential, Commercial & Industrial Properties. The key difference between REITs and other real estate companies is that a REIT must acquire and develop its real estate properties primarily to operate them as part of its own investment portfolio, as opposed to reselling those properties after they have been developed.
3 CENTURY21 SAUDI The Reit Market Report REITs in KSA The KSA s stock market, Tadawul is currently hosting eight (8) listed REITs which are as follows: RIYAD REIT. ALJAZIRA REIT. JADWA REIT ALHARAMAIN. TALEEM REIT. AL MAATHER REIT. MUSHARAKA REIT MULKIA REIT. AL MASHA AR REIT. Fund Legal Type Number of Investors *Initial Offer Nominal Value per Unit Assets Ownership Distributions Leverage Investment Vacant Lands Real Estate Development Real Estate Outside the Kingdom *Public Ownership REITs Listing Requirements Closed ended fund Minimum 50 investors Minimum SAR 100 Million SAR 10 per unit The assets must be registered under the name of third party (custodian) and owned by the unit holders At least 90% of the fund s net profits must be distributed annually to the unit holders The borrowing of the fund s must not exceed 50% of the total assets value of the fund At least 75% of the fund's total assets value according to the last audited financial statements must be invested in constructed developed real estate qualified to generate periodic and rental income The fund manager is prohibited from investing in vacant lands The fund manager is allowed to invest up to a maximum of 25% of the fund s total assets value according to the last audited financial statements in real estate development whether on real estates owned by the fund manager or not, and to renovate or redevelop these properties The fund manager shall not invest more than 25% of the fund s total assets value according to the last audited financial statements in properties outside the Kingdom At least 30% of the total REIT units are owned by unit holders from the public *Regulations Under-consideration by CMA Public Ownership which is currently 30% of the total REIT units. This is under review to be increased to 50%. Minimum Initial Offer for the REIT must be at least SAR 100 million. This is under review to be raised to SAR 500 Million *Note: The above two points are unofficial statements and for information only.
4 CENTURY21 SAUDI The Reit Market Report Structure of a REIT and its related Stakeholders
5 CENTURY21 SAUDI The Reit Market Report Yields and Yields Summary - Listed REITs Listed REIT Asset Class Gross Rental Yield Gross Yield on Net Asset Value (NAV) Net Dividend Yield RIYAD REIT Office + Retail + Hospitality 7.01% 6.61% 2.06% ALJAZIRA Mawten REIT Warehouses 8.43% 9.00% 1.26% JADWA REIT ALHARAMAIN Hospitality + Retail 6.52% 5.92% 1.00% TALEEM REIT Education 7.37% 6.31% 1.00% AL Maather REIT Residential +Office + Retail + Warehouses 8.65% N/A N/A MUSHARAKA REIT Residential + Warehouses + Hospitality 8.84% N/A N/A Mulkia Gulf Real Estate REIT Residential +Industrial + Office + Retail 8.05% N/A N/A Al Masha ar REIT Hospitality + Retail 6.20% N/A N/A Key Important Notes: The calculations for both Net Dividend Yield and Gross Yield on NAV has been done using data published on Tawadwul Website. We have annualized the figures using the assumption that profits follow evenly throughout the year. There is no financial data published as yet for Al Maather, Musharaka, Mulkia and Al Masha ar REIT as these were recently listed on Tadawul. Limitations & Factors Affecting Yields Type of Sector each asset belongs Type of Each Asset Class Comparing Apples & Oranges Cost of the Assets in a REIT Location of Assets or properties in a REIT Yields are directly linked to the different sector each asset belongs too. The overall weightage of REIT investment in a particular sector affects the portfolios overall performance. Within each asset there are sub-classes or types. For Example in Residential sector generally the market is divided into two main types: Villas and Apartments. Now further in Apartments there are sub-classes which will provide different returns and yields. So the choice of Asset in a REIT is directly related to the overall yields. The Yields on different REITs can not be directly compared as each REIT consists of different asset types and classes. Hence comparing their performance to each other might not be justifiable. The market seasonality affects the performance of a particular asset and hence its going to impact the yield it will generate over a period of time. The overall investment required in order to transform or develop a REIT is a crucial point that should be kept in mind when assessing the yields. The location in which Income generating assets are based in is an important consideration when it comes to yields. For example: a four-star Holiday Inn located in Riyadh will generate a different income than the one located in Jeddah. *Note: REITs are a new developing area in Kingdom of Saudi Arabia. Hence it is too pre-mature to benchmark a particular Yield to a particular REIT. Once this sector develops further the market is more likely to see industry standard and benchmarks.
6 CENTURY21 SAUDI The Reit Market Report Listing Type Authroised Capital (SAR) RIYAD REIT Tadawul close ended 500,000,000 No. of Units 500,000,000 Paid Capital (SAR) 500,000,000 PAR Value per unit 10 Paid Up Value per unit 10 Investment Limits Term No. of Properties Avg. portfolio Occupancy Asset Class Portfolio value Fund Manager Custodian No Limits 99 years 5 + 1 (Under development) 93% Office Retail Hospitality SR 500.3 Milion Riyadh Capital KASB Capital SR Riyadh REIT is the 6th largest fund to be listed on Tadawul 500 MILLION Riyadh REIT got approval by CMA as public offering on 08/11/2016. The fund focuses on commercial sector which incudes assets falling under office, retail & hospitality. This REIT is the 6th largest fund to be listed on Tadawul with an authorized capital and paid-up capital of SAR 500,000,000. RIYADH REIT Asset Portfolio - Summary Property Name Type Acquisition Date Location Net leasable Area (sqm) ALTAMAYIZ CENTER Office + Retail August - 2015 Riyadh 6,416 IZDHAR CENTER Office + Retail December - 2015 Riyadh 4,410 ALFURSAN TOWERS Office + Retail March - 2016 Riyadh 8,055 ALSHATI TOWERS Office + Retail + Hospitality February - 2016 Dammam 13,356 ASCOTT Tahlia JEDDAH Retail + Hospitality August - 2016 Jeddah 14,300 **ASCOTT AL KHOBAR CORNICHE Office + Retail + Hospitality June - 2015 AlKhobar 24,453 **under construction and its expected completion in 2018
7 CENTURY21 SAUDI The Reit Market Report Market Performance Highest Price SAR 16.55 per unit **Recorded on 27/02/2017 Lowest Price SAR 10.58 per unit **Recorded on 10/10/2017 Highest Volume Traded= 41,279,063 **Recorded on 02/03/2017 Lowest Volume Traded = 136,145 **Recorded on 01/01/2017
8 CENTURY21 SAUDI The Reit Market Report ALJAZIRA Mawten REIT Listing Type Authroised Capital (SAR) Tadawul close ended 118,000,000 No. of Units 11,800,000 Paid Capital (SAR) 118,000,000 PAR Value per unit 10 Paid Up Value per unit 10 Investment Limits Term No Limits 99 years No. of Properties 1 Avg. portfolio Occupancy Asset Class 100% Warehouses Portfolio value 118,000,000 ALJAZIRA Mawten REIT got approval by CMA as public offering on 02/01/2017. The fund focuses on Industrial sector which incudes assets falling under warehouses. This REIT is the smallest fund to be listed on Tadawul with an authorized capital and paid-up capital of SAR 118,000,000. Fund Manager Custodian AlJazirah Capital Alinma Investment Company ALJAZIRA Mawten REIT Asset Portfolio - Summary Property Name Type Acquisition Date Location Net leasable Area (sqm) AlKhumrah Warehouses Industrial n/a Jeddah 53,000
9 CENTURY21 SAUDI The Reit Market Report Market Performance Highest Price SAR 23.86 per unit **Recorded on 23/08/2017 Lowest Price SAR 11.00 per unit **Recorded on 15/02/2017 Highest Volume Traded= 19,137,064 **Recorded on 27/02/2017 Lowest Volume Traded = 17,190 **Recorded on 15/02/2017
10 CENTURY21 SAUDI The Reit Market Report JADWA REIT ALHARAMAIN Listing Type Authroised Capital (SAR) Tadawul close ended 660,000,000 No. of Units 66,000,000 Paid Capital (SAR) 660,000,000 PAR Value per unit 10 Paid Up Value per unit 10 Investment Limits Term No Limits 99 years No. of Properties 2 Avg. portfolio Occupancy Asset Class Portfolio value Fund Manager Custodian seasonal Hospitality Retail SAR 701 Million Jadwa Investment Company AlBilad Investment Company JADWA REIT ALHARAMAIN got approval by CMA as public offering on 27/03/2017. The fund focuses on Commercial sector which incudes assets falling under hospitality and retail. This REIT is the 2nd largest fund to be listed on Tadawul with an authorized capital and paid-up capital of SAR 660,000,000. JADWA REIT ALHARAMAIN Asset Portfolio - Summary Property Name Type Acquisition Date Location BUA (sqm) No. of Rooms Tharawt Al Andalusia Hotel Hospitality + Retail April - 2016 Makkah 7,573 294 Tharawat Al Taqwa Hotel Hospitality + Retail April - 2016 Makkah 32,901 690
11 CENTURY21 SAUDI The Reit Market Report Market Performance Highest Price SAR 15.90 per unit **Recorded on 04/05/2017 Lowest Price SAR 10.94 per unit **Recorded on 08/10/2017 Highest Volume Traded= 44,912,734 **Recorded on 04/05/2017 Lowest Volume Traded = 1,352 **Recorded on 01/05/2017
12 CENTURY21 SAUDI The Reit Market Report TALEEM REIT Listing Type Authroised Capital (SAR) Tadawul close ended 285,000,000 No. of Units 28,500,000 Paid Capital (SAR) 285,000,000 PAR Value per unit 10 Paid Up Value per unit 10 Investment Limits No Limits Term 99 years No. of Properties 1 Avg. portfolio Occupancy Asset Class 100% Education Portfolio value SAR 285,000,000 Fund Manager Custodian Saudi Fransi Capital KASB Capital TALEEM REIT got approval by CMA as public offering on 08/05/2017. The fund focuses on Education sector which incudes assets falling under school. This REIT is the 7th largest fund to be listed on Tadawul with an authorized capital and paid-up capital of SAR 285,000,000. TALEEM REIT Asset Portfolio - Summary Property Name Type Acquisition Date Location BUA (sqm) Al Tarbeah Al Islamiah School Limited Company Education n/a Riyadh 30,122
13 CENTURY21 SAUDI The Reit Market Report Market Performance Highest Price SAR 17.50 per unit **Recorded on 06/06/2017 Lowest Price SAR 11.00 per unit **Recorded on 30/05/2017 Highest Volume Traded= 14,570,202 **Recorded on 06/06/2017 Lowest Volume Traded = 1,381 **Recorded on 30/05/2017
14 CENTURY21 SAUDI The Reit Market Report AL Maather REIT Listing Tadawul Type close ended Authroised Capital (SAR) 613,700,000 No. of Units 61,370,000 Paid Capital (SAR) 613,700,000 AL Maather REIT got approval by CMA as public offering on 12/06/2017 The fund focuses on Residential, Commercial & Industrial sector which incudes assets falling under Residential Apartments, Office, Retail and Warehouses. PAR Value per unit 10 Paid Up Value per unit 10 Investment Limits Term No Limits 99 years No. of Properties 12 Avg. portfolio Occupancy 99% Asset Class Residential Office Retail Warehouse Portfolio value SAR 613,700,000 Fund Manager Custodian Osool & Bakheet Investment Company Saudi Kuwaiti financial House This REIT is the 3rd largest fund to be listed on Tadawul with an authorized capital and paid-up capital UP TO 613 MILLION SR AL Maather REIT Asset Portfolio - Summary Property Name Type Acquisition Date Location Plot Area Al Maather Residential + Office + Retail n/a Riyadh 22,707.37 Al Rabie Office + Retail n/a Riyadh 8,589.53 Al Mohammadia Office + Retail n/a Riyadh 15,582.92 Al Tkahssusi Retail n/a Riyadh 6,610.61 Al Sahafa building 1 Office n/a Riyadh 11,340.00 Al Sahafa building 2 Retail n/a Riyadh 10,880.00 Hair warehouses Warehouses n/a Riyadh 11,970.00 Sulai warehouses Warehouses n/a Riyadh 46,158.00 Rabie Agreement Retail n/a Riyadh 1,413.26 Qudus Agreement Office + Retail n/a Riyadh 1,257.84 Wadi laban Agreement Residential + Retail n/a Riyadh 1,645.02 Dabbab Agreement Office + Retail n/a Riyadh 3,060.48
15 CENTURY21 SAUDI The Reit Market Report Market Performance Highest Price SAR 13.30 per unit **Recorded on 24/08/2017 Lowest Price SAR 10.08 per unit **Recorded on 10/10/2017 Highest Volume Traded= 33,863,307 **Recorded on 24/08/2017 Lowest Volume Traded = 5,616 **Recorded on 23/08/2017
16 CENTURY21 SAUDI The Reit Market Report MUSHARAKA REIT Listing Tadawul Type close ended Authroised Capital (SAR) 880,000,000 No. of Units 88,000,000 Paid Capital (SAR) 880,000,000 PAR Value per unit 10 Paid Up Value per unit 10 Investment Limits No Limits Term 99 years No. of Properties 5 MUSHARAKA REIT got approval by CMA as public offering on 12/07/2017. The fund focuses on Residential, Commercial & Industrial sector which incudes assets falling under Residential Compounds, Hospitality and Warehouses. This REIT is the largest fund to be listed on Tadawul with an authorized capital and paid-up capital of SAR 880,000,000. Avg. portfolio Occupancy 100% Residential Asset Class Industrial Hospitality Portfolio value SAR 872.4 Million Fund Manager Musharaka Capital Company Custodian Alinma Investment Co. AL Musharaka REIT Asset Portfolio - Summary Property Name Type Acquisition Date Location BUA (sqm) Ejzala Compound Residential n/a Al Khobar 29,486.73 Al-Baraka Warehouses Industrial n/a Riyadh 29,955.49 Radisson Blu Hotel Apartments Hospitality n/a Al Khobar 3,798.08 Seashore Residential Compound Residential n/a Al Khobar 38,121.50 Pearl Residential Compound Residential n/a Al Khobar 22,500.00
17 CENTURY21 SAUDI The Reit Market Report Market Performance Highest Price SAR 11.10 per unit **Recorded on 02/10/2017 Lowest Price SAR 10.00 per unit **Recorded on 10/10/2017 Highest Volume Traded= 16,343,175 **Recorded on 02/10/2017 Lowest Volume Traded = 1,357,874 **Recorded on 10/10/2017
18 CENTURY21 SAUDI The Reit Market Report Mulkia Gulf Real Estate REIT Listing Type Tadawul close ended Authroised Capital (SAR) 600,000,000 No. of Units 60,000,000 Paid Capital (SAR) 600,000,000 PAR Value per unit 10 Paid Up Value per unit 10 Investment Limits Term No Limits 99 years No. of Properties 4 Avg. portfolio Occupancy 100% Asset Class Portfolio value Fund Manager Residential Industrial Office Retail SAR 600 Million Mulkia Investment Company Mulkia Gulf Real Estate REIT got approval by CMA as public offering on 09/08/2017 The fund focuses on Residential, Commercial & Industrial sector which incudes assets falling under Residential Apartment Building, Industrial complex, Retail mall, showrooms & offices. This REIT is the 4th largest fund to be listed on Tadawul with an authorized capital and paid-up capital of SAR 600,000,000. Custodian Albilad Capital Mulkia Gulf Real Estate REIT Asset Portfolio - Summary Property Name Type Acquisition Date Location BUA (sqm) West Avenue Mall Retail n/a Dammam 56,000.00 Alteqnya Commercial and Industrial Complex Industrial n/a Riyadh 36,554.00 Alyasmeen Residential Building Residential n/a Al Khobar 5,303.00 Dinar Building Retail + Offices n/a Jeddah 14,900.00
19 CENTURY21 SAUDI The Reit Market Report Al Masha ar REIT Listing Tadawul Type close ended Authroised Capital (SAR) 572,400,000 No. of Units 57,240,000 Paid Capital (SAR) 572,400,000 PAR Value per unit 10 Paid Up Value per unit 10 Investment Limits No Limits Term 99 years No. of Properties 3 Al Masha ar REIT got approval by CMA as public offering on 16/10/2017 The fund focuses on Hospitality & Retail sector which incudes assets falling under Residential accommodation for pilgrims. This REIT is the 5th largest fund to be listed on Tadawul with an authorized capital and paid-up capital of SAR 572,400,000. Avg. portfolio Occupancy 100% Asset Class Portfolio value Fund Manager Custodian Hospitality Retail SAR 572.4 Million Muscat Capital NOMW Capital Al Masha ar REIT Asset Portfolio - Summary Property Name Type Acquisition Date Location BUA (sqm) ESKAN Tower - 4 Hospitality + Retail n/a Makkah 18,053.00 ESKAN Tower - 5 Hospitality n/a Makkah 19,905.00 ESKAN Tower - 6 Hospitality + Retail n/a Makkah 15,314.00
20 CENTURY21 SAUDI The Reit Market Report Listed REITs Outlook in GCC In GCC the Listed REITs Market is in the growth stage. In the UAE there are currently two listed REITs on Nasdaq Dubai, the Emitates REIT and The ENBD REIT respectively. Bahrain established the new laws related to REITs in November 2016 and the market witnessed the listing of its first REIT called Eskan REIT which listed on Bahrain Bourse. REITs structure is regulated by the Central Bank of Bahrain. Saudi Arabia currently leads the market with officially eight (8) listed REITs on its stock market called the Tadawul. The country officially established the listed REITs legal framework in October 2016. While the legal framework and regulations for trading of REITs on stock exchanges are not yet brought in by Kuwait and Qatar. GCC LISTED REITS SUMMARY TABLE Country Emirates REIT ENBD REIT Eskan REIT UAE UAE Bahrain Listing Nasdaq Dubai Nasdaq Dubai Bahrain Bourse No. of Properties 10 8 2 Portfolio Index tower, Jebel Ali School, Le Grande, Building 24, Office park, The Loft Offices, Indigo 7, GMES World Academy, British Columbia Canadian School Binbhatti Terraces, Arabian Oryx House, AlThuraya tower 1, Burj Daman, Remraam Residential, Uniest, DHCC 25, DHCC 49 Danaat Al Madina and Segaya Plaza Occupancy 83% 86% 80% Commercial 47.30% Office 67% Office Asset Class Education 38.3% Residential 28% Retail Retail 10.3% Alternative 10% Residential Portfolio value USD 845 Million USD 352 Million USD 52.7 Million Fund Manager Equitativa (Dubai) Limited Emirates NBD Asset Management Limited Eskan Bank B.S.C. (c) Net Dividend 7.7% 7.1% 6% *Note: The data contained in the above table is sourced from Emirates REIT, ENBD REIT and Bahrain Bourse website.
21 CENTURY21 SAUDI The Reit Market Report About Century21 Century21 is one of the most recognized name in Real Estate Market with approximately 7,600 independently owned and operated franchised brokerage offices in 71 countries and territories worldwide and represented by more than 112,000 real estate experts. Century21 Saudi is official representative of Century21 in the Kingdom of Saudi Arabia since 2005; specialized in Real Estate Evaluation (Appraisal), Marketing and Leasing Services, Real Estate Research & Advisory and Property Management. Century21 Saudi s Research & Advisory Department (CRA) has been established in 2009 and has a proven track record of providing a variety of research-based services to the business arena all over KSA market. Services Equipped with highly qualified analysts & researchers, Century21 Saudi is capable of responding all major segments of Real Estate market (Residential, Commercial, Industrial and Hospitality) with professional decorum. Our offered services are: Feasibility Studies Highest and Best Use Studies Strategy & Planning Advisory Pricing Strategies Market Research Analysis Studies Development Solutions Site Assessment Market Forecast Real Estate Market Review Contacts For Assistance in development & marketing decisions please contact: Al Waleed Hamd Binzouman General Manager alwaleed@century21saudi.com Mobile: 0555 194 919 Asif Iqbal Head of Research and Advisory asif@century21saudi.com Mobile: 0555 177 076 Muath A. Alsaawi Marketing Manager muath@century21saudi.com Mobile: 055 4000 134 Naveed Iqbal Senior Consultant naveed@century21saudi.com Mobile: 0530763063 Disclaimer In order to prepare this report, Century21 Saudi research team collected the data from outside sources. Century21 Saudi is confident about the reliability of published data. However, we do not guarantee the completeness and accuracy of the data. This report is prepared for information only. The assessments and values articulated in this report are subject to change without any notice. Therefore, no investment decision should be made based on the information presented in this report. Century21 Saudi will not be responsible for any loss that may be sustained as a result of the information enclosed in this report. Past performance is not a guarantee of future returns. The value of units, the income from them, the prices and currencies of the funds, can go down as well as up. Investors may get back less than he or she originally invested. Additionally fees shall apply on the fund. Changes in currency rates may have an adverse effect on the value, price or income of the security. To ensure proper understanding of the fund and its suitability for you according to your risk tolerance, we recommend that you seek a specialized investment advisor. The data contained in this research is sourced from Tadawul and Capital Market Authority, unless otherwise stated. It is not the intention of the article to be used or deemed as recommendation, option or advice for any action(s) that may take place in future.