Shares & Derivatives
Sabana Shari’ah Compliant REIT
By Bully The Bear  •  November 12, 2010
[caption id="attachment_2289" align="alignright" width="150" caption="Photo by aussiegall"][/caption] There's more IPO coming up and more REIT type of IPO, right after the launch of the mega one by MIT. Unfortunately, though I bidded for that in the offer period, I didn't get a single lot at all. Let's hope this one - Sabana Shari'ah Compliant REIT works out well for me. This is actually an industrial reit managed in a manner compliant with Shari'ah investment principles and they can only invest in Shari'ah compliant real estate and real estate related assets. It holds 15 industrial properties across Singapore and is the only Shari'ah compliant reit listed in Singapore - possibly the largest in the world by total assets. What's interesting about Shari'ah compliant reit is that muslims can apply into this. Strictly according to their religion, there are certain investments (even insurance) that does not sit too well with their religious teachings and principles, hence they are not allowed to invest in them. By setting up this reit, it opens up a new instrument for them to put their money in. Sort of to tap the Middle eastern market, so to speak. Shari'ah guidelines state that non-permissible activities cannot exceed 5% pa of the gross revenue of the reit. Non-permissible activities include activities like conventional financial and insurances services, gaming, non halal production, tobacco related products, non-permitted entertainment activities and stock broking in non-complaint securities. Takaful insurance coverage have to be sought where available and financing, investment and deposit facilities have to be shari'ah compliant, if not, after seeking approval, the conventional kinds will do. Go on and google about Takaful and Shari'ah. It's a very elegant way to do ethical investing. They should be doing road shows to entice institutional investors to get into their placement tranche before deciding on the IPO price. The minimum and maximum offer price is $1.00 and $1.10 respectively. Based on the minimum offer price, the forecasted yield for the reit in 2011 and 2012 is 8.45% and 8.48% respectively. NAV value is 0.94, so obviously the IPO price is above the NAV by around 6.4% to 17%, depending on the offer price. Gearing, defined as total liabilities to total assets stands at 33%, which is pretty okay. AIMS and CIT, both industrial reits, have gearing at 34% and 39% respectively, so this sabana one is quite normal I suppose. Read more...
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By Bully The Bear
La papillion is french for butterfly. This blog chronicles my journey from an amateur in the stock market to where I am today. Have I turned into a beautiful butterfly? I don't know, but I think my metamorphosis is still on-going now :)
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