Eskan Bank Realty Income Trust

Manama : Bahrain and GCC nationals will have the chance to explore a unique investment opportunity in the Kingdom as the initial public offering (IPO) of Eskan Bank Realty Income Trust (REIT) opens for subscription today for a period of two weeks.

Currently two properties - Danaat Al Madina in Isa Town and Segaya Plaza in Manama - are under the Eskan REIT. Although, additional properties could be added later. 

The issue size is BD14.4 million and has a target of 6.5 per cent in net distributable income payable semi-annually. Securities & Investment Company (SICO) is the mandated lead manager, and also the sub-investment manager and dedicated market maker; while Bahrain Islamic Bank (BisB) has been appointed as the receiving bank.

The minimum subscription amount is BD500 and allotment priority will be given to individual Bahraini applicants and thereafter all other investor categories on a pro rata basis.

REIT, an investment vehicle that allows investors to receive income from investment in real estate sector without having to directly purchase individual properties, was first established in the US in 1960 but is relatively new in the Middle East. 

Speaking during a press conference at Bahrain Bourse premises in Manama yesterday, Dr. Khalid Abdulla, General Manager of Eskan Bank, said the initial two Bahraini properties comprising the REIT are wholly owned by the Trust.  

“The Eskan Bank REIT offers diversification within the real estate sector with primary exposure to retail, office and residential segments, thereby spreading the risk of owning individual properties. The properties currently have an occupancy rate of over 85pc, and the Trust intends to increase its Sharia-compliant property portfolio as and when attractive opportunities arise,” he said

“While the occupancy rate continues to gain momentum, we have structured a performance supplement into the Trust, enhancing its attractiveness to investors, and providing an intention by the investment manager to supplement the actual return of the Trust should it be below 6pc as the occupancy increases,” he added

Najla Al Shirawi, Chief Executive Officer of SICO, provided additional details of the offering. 

“The Trust intends to provide unit holders with steady, recurring distributions equating to a minimum of 90pc of net distributable income of the Trust; and increased unit holder value through the potential appreciation in the price of units derived from improved property upkeep stemming from a reserve fund dedicated to the Trust,” she said.

“Investors will have the flexibility to trade their units upon listing on the Bahrain Bourse, with a dedicated market maker providing additional liquidity on an ongoing basis,” she
added.

Copies of the offering prospectus and application form can be collected from BisB’s financial malls at Budaiya, Arad and Riffa, or the head office branch in the Diplomatic Area; as well as from the Bahrain Bourse at Bahrain Financial Harbour. The participating BisB outlets will receive completed application forms. Full details and further information regarding the Eskan Bank Realty Income Trust can be obtained by calling (+973) 17 515 200 or visiting www.eskanreit.com.