صناديق الإستثمار العقارى (دراسة مقارنة بين الكويت و البحرين) _ Kuwaiti and Bahraini Real estate Investment Trusts



REITS Regulations in Kuwait and Bahrain – Comparative Analysis
 
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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