Dubai: It’s turning out to be the year for “real estate investments trusts” in the UAE, with Five Holdings (formerly Skai) launching one dedicated to hospitality assets. The Dh2.1 billion Reit will club Five’s existing hotel developments, such as the Viceroy Dubai on the Palm.
The new fund is to be regulated by Abu Dhabi Global Market and Financial Services Regulatory Authority. “Owning units in a REIT instead of holding the title to a physical asset means investors will be able to buy and sell at a lower cost and with more flexibility,” said Kabir Mulchandani, Chairman and CEO. “Investors will be able to monetise faster in a public offer by owning units within a REIT as opposed to a physical asset.”
Apart from the Palm property, built at a cost of Dh4 billion plus, the new Reit “is expected to include” Five’s Dh1.28 billion Viceroy Dubai Jumeirah Village, which is now 40 per cent complete and on track to open in the third quarter of 2018. Additional projects will be added as they are announced or acquired, a statement said.
Underlying stake
Reits issue securities in the form of shares that invest in income-generating real estate (including mortgages) and may be traded like a stock when offered to the public. REITs allow investors to have an underlying stake in real estate, in turn allowing them to diversify their exposures as well as benefit from long-term capital appreciation.
“The launch of Five Reit demonstrates our commitment to ensuring our investors continue to share in the success of Five and its entrepreneurial approach to real estate development,” said Dhananjai Cadambi, CEO, FIVE Capital Ltd.
“In addition to Five Holdings’ owned areas of the Viceroy Dubai Palm Jumeirah, around 60 investors have committed to contribute their property into the Reit, which we expect will continue to grow as we add more real estate into the portfolio.”
Five Holdings plans to grow its current property portfolio of $2 billion (Dh7.34 billion) further.
“Reits offer a compelling investment vehicle where risk is spread across a number of real estate propositions under one portfolio,” said Mylchandani. “This is the beginning of a wave.”
