Oman REIT Fund set to launch IPO
Oman REIT Fund is all set to launch its initial public offering (IPO), in the biggest-ever listing of a property trust in the Sultanate, for 15 days from January 17 to 31, 2021. The REIT, managed by Shumookh Fund Management LLC, is offering RO 26.19 million worth of units at an issue price of 102 baiza per unit comprising 100 baiza as unit value plus 2 baiza towards issue expenses and can accept up to 39.29 million representing 60 per cent of the fund size.
Oman REIT Fund is the first Omani real estate investment trust with a diversified assets portfolio, established with the principal investment strategy of investing in a diversified portfolio of income-producing real estate assets in Oman. Speaking exclusively to Oman Daily Observer, Jasser Saleh al Aulaqi (pictured), CEO of Shumookh Fund Management LLC said that the public offering is to provide an opportunity to investors in the Sultanate to participate in developed real estate and realise recurring and growing income.
“Oman REIT Fund’s key strategic objectives are to provide investors with a diversified, stable and sustainable income stream, while also benefiting from organic growth and value-add opportunities aiming to maximise unitholder returns”, he said.
The offering for the public subscription represents 40 per cent of the fund’s total issued capital at RO 65 million, and there is a potential for increasing the public offer percentage to 60 per cent, he said. “The offer is open to everyone in the Sultanate. Both Omani and non-Omani individuals as well as juristic persons can apply”, he said.
Before placing the application, said Al Aulaqi, “all investors should examine and carefully review the prospectus in order to decide whether it would be appropriate to invest in the Fund.” He revealed that the REIT would pay a quarterly dividend, which will provide a yield of more than seven per cent plus, per annum.
Oman REIT Fund’s initial public offering would be the largest REIT IPO in the Sultanate since the Capital Market Authority issued regulations to list real estate investment funds, in 2018. Speaking about the initial portfolio of Oman REIT, Al Aulaqi said it consists of 20 properties located at various locations in Oman, with an aggregate built-up area of approximately 196,000 square metres with around 488 leases. The IPO portfolio’s appraised value is approximately RO 65 million at the end of August 2020 based on the aggregate of independent valuations for each property.
“As a Fund Management company, we have already chalked out a five-year plan, according to which, the value of the assets under our management will exceed RO 1 billion at the end of the plan”, he said. The IPO portfolio primarily consists of good quality residential cum commercial buildings located in Oman’s strategic areas. According to the IPO prospectus, the properties have good accessibility and have a diverse tenant base comprising corporates and individuals. The Omani real estate market is going through challenging market conditions induced by the COVID-19 pandemic and ensuing economic conditions. However, Oman has shown more resilience to the spread of COVID-19 than its global peers. Therefore, we expect the economic activities to start gaining momentum leading to improved business sentiments. Government expenditure has already been focused on the infrastructure that will further support the real estate market. The supply of good quality labour accommodation facilities is limited in Oman. These quality buildings can only ensure that employee health and safety norms are adhered, both comfortably and conveniently. “Properties which are currently or are expected to be a part of future REIT holdings belong to this category and hence the outlook for REITs continue to remain favourable in the country”, he said. High-quality office assets located at strategic places in Muscat have high occupancy rates in excess of 90 per cent and is leased by technology and SME clients. The office portfolio assets include one building in Oman’s leading Technology Park, Knowledge Oasis Muscat with 121 tenants.
With regard to the retail assets, they are spread across Muscat and Salalah, with a total built-up area in excess of 10,000 square metres. Oman’s retail sector may currently be under pressure with the store closures and social distancing measures induced by the COVID-19 situation.
However, over the longer term, innovative retail concepts and online shopping are expected to drive growth in the sector. Similar to trends in other regional markets, e-commerce continues to grow at a rapid pace, despite in-store retail dominating the landscape.
One of the highest mobile penetration rates in the world coupled with a growing youth population that is tech-savvy has helped enhance the popularity and growth potential of the retail sector in Oman. The light industrial/logistics properties are located in Rusail Industrial Area, and in Misfa. These assets have a strong tenant base with long lease expiry.
The REIT funds provide options for investors to invest in real estate and own investment units. In addition, REIT funds also allow foreign investor to own investment units in the fund and attract foreign capital.