REITs:
REIT is a traded fund that owns and operates income-generating real estate and real estate related assets. REITs pools the capital of numerous investors, which allows individual investors to earn a share of the income generated from real estate ownership, without having to buy or finance property or assets.
The income generated from the properties relies primarily on rent and profits are then distributed to unit holders on a quarterly, semi-annual or annual basis; depending the on real estate portfolio. In order to be categorized as REITs, 90% of the operational profits must be distributed among unit holders.
Who is the target audience for REITs:
Investors with small capitals willing to invest in real estate since REITs require a low entry cost
Investors who are not interested in managing the property itself
Investors interested in receiving periodical income from real estate investment
| Kuwait | Bahrain | Remarks |
Minimum Capital | Public Placement: KD 5,000,000 Private Placement: CMA specifies a minimum capital for certain types of funds. Funds Articles
of Association should specify the minimum
capital for the fund. | Public Placement : USD 20,000,000 (~KWD 6,044,000) Private Placement: Not specified | Comparatively lesser
capital required and more flexibility in Kuwait |
Distribution Requirements | REITs are required to distribute at least 90% of the fund’s net
profit at least once annually. | REITs must distribute annual dividends of not less than 90% of its
audited Net Income within six months from the end of its financial year. | Same in both countries. |
Leverage Ratio | Maximum leverage ratio is 50% of the fund’s assets. | Maximum leverage ratio is 50% of its NAV for investment purposes. | Same in both |
Asset Restrictions | To satisfy stock listing requirements: REITS can only invest in developed Real Estate that generates income in Kuwait.
(No securities, Funds, Development Projects or vacant lands) | REITs must invest in the following assets only: (a) Real estate properties; (b) Development of existing owned property; (c) Other REITs, subject to a maximum of 20% of the REIT NAV; and (d) Other assets of the B-REIT must be held in cash and cash
equivalents. | More flexibility in
Bahrain, as in Kuwait only income generating properties are allowed. Also in
Bahrain they allow listing of REITS own properties outside Bahrain. |
Asset Concentration | The REITs investments may not exceed directly or indirectly 30% of
the fund’s net assets value upon contracting. In a single real estate in
order to qualify as a Single Property REIT, the minimum property value has to
exceed KD 30 million. | The Bahraini REIT must hold a minimum of 2 real estate properties,
comprising of at least 80% of its NAV; (b) A maximum of 20% of the REIT’s NAV may be invested in the development
of existing owned property. (c) A maximum of 20% of the REIT’s NAV may be invested in other
REITs, subject to 10% investment per REIT; and (d) Other assets of the B-REIT must be held in cash and cash
equivalents. | Single Property REIT not
allowed in Bahrain. Higher limits allowed per
property in Kuwait, but investing in other REITs not specified. |
Exchange related Fees | Trading fee: 10 bps Listing fee: KD 2000 Annual Subscription fee: KD 2000 | Trading fee: n.a. Listing fee: BD 2100 Annual Subscription fee: BD
5,250 (for units amounting up to USD 250 Million) BD 10,500
(for units amounting above USD 250 Million) | Fees seem more favorable
in Kuwait in comparison to Bahrain. |
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