AI Global Excellence Awards 2016

10 Acquisition International - Global Excellence Awards 2016 In short, a REIT is a Real Estate Investment Trust. It is a company that owns real estate, manages it, and distribute the profits (rents less expenses) to the shareholders. It is a form of mutual real estate investment, more of which Sylvain Vieujot, CEO of Emirates REIT reveals as he talks about his firm who recently won the Most Outstanding Shari’a Compliant REIT 2016 award. irst of all, can you tell us how did Emirates REIT become the UAE’s first DFSA regulated Real Estate Investment Trust? There is a very large real estate market in the Emirates, which is quite a new thing for this country. In 2008-2010 many investors were investing directly into real estate, and at this time there was a good opportunity to start a professional investment agency to take care of this. REIT is a Real Estate Investment Trust, and it is very common in America, Europe and Asia. Having managed the holding of the French REIT, we thought there was a good opportunity to take some of the best assets you find in this type of market, which is very high quality real estate. Why should people invest in a REIT rather than in a property fund or in actual properties? You would invest in a REIT for the same reason you would invest in property. It’s a good possession for your capital, the price is good due to inflation and it provides a regular income. With a REIT, you get the same advantage in that you invest in real estate, but you are assured that: • You don’t have the manage the asset yourself, or find the property and; • In terms of liquidity, you are essentially trading on the stock market When you invest in a property directly, you have to go through the agent, find the property, and you would normally need to invest 100’s of millions to invest in and buy a property. If you are in an apartment, you know that it will take a few months at best to sell it. Here, you can buy a property on the Shari’a stock market as long as you have authorisation that you have the pro-rata of the total rent. If you want to sell the shares, or invest more then you just move It’s a Good Time to Invest in Real Estate F your portfolio. With REIT, you get better quality real estate, it is self-managed and it has liquidity. What are REIT shares? Are they different to normal shares? Shares in a REIT are typically categorised ‘between a bond and a stock’. They are usually priced between 150 and 250 basis points more than a government bond. They will also have potential for capital appreciation according to the adjustment in value of the underlying assets. This can however lead to volatility in the share price in the short term. The underlying quality of such an investment is the security of the dividend payment based on a recurring cash-flow generated by the long leases on the properties. You can trade REIT shares just like normal shares. How important is it to your shareholders to be a Shari’a compliant business? In terms of Shari’a compliant investors, anybody can buy a share of the market, but here are local institutions who invest in Shari’a compliant investors and banks. While there is liquidity, we manage Shari’a compliance because real estate is very naturally Shari’a compliant for a pool of investors. How do you measure Emirates REIT’s success since its inception? It is measured by the number of investors and performance, and whether cash flow is increasing which is a good sign. We also measure the success by if the investor recognises us and chooses to invest with us. Do you have any plans for expansion or development for 2017? A lot of things are coming up, but we are regulated so I cannot disclose future plans. However, I can say that now is a good time to invest in real estate facilities in the UAE and we are working on that. There are a lot of new developments here in the UAE, in terms of new properties and they have a very attractive rent, as we distribute 7% per year. There is a high potential for depreciation, because the apartment is not at its best in terms of capital management. Name: Sylvain Vieujot, CEO Company: Emirates REIT Management (Private) Limited Email: [email protected] Address: DIFC, Index Tower, Level 23, Dubai UAE Phone: +971 4 405 73 48 “There are a lot of new developments here in the UAE, in terms of new properties and they have a very attractive rent, as we distribute 7% per year.” 1701AI47