Muscat: In line with Oman Vision 2040, the government has been pursuing several initiatives toward economic diversification through enhancing investment opportunities and creating a robust investment ecosystem that nurtures financial stability and sustainability for all investors.
Earlier this year, Oman Investment Authority (OIA), the government-owned entity that manages and develops the Sultanate’s funds and assets, and Omantel, Oman’s leading integrated telecommunications services provider, together announced the formation of The Pearl REIF, a real-estate investment fund approved by the Capital Market Authority (CMA) aimed at offering a unique opportunity to invest in large-scale, income-producing real estate. Sohar International Bank (Sohar International) is providing financial advisory, investment management and placement services of The Pearl REIF.
A REIF is a fund that owns and typically operates income-producing real estate or related assets. These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans. REIFs provide a way for institutional and individual investors to earn a share of the income produced through commercial real estate ownership – without actually having to go out and buy commercial real estate.
Speaking on the investment opportunity, Wahbi Sulaiman Al Riyami, Chairman, The Pearl REIF said, “OIA and Omantel jointly have formed The Pearl REIF, demonstrating the collaboration and synergy underlining their shared passion for contributing to the continued progress and success of Oman’s economy. As an investment vehicle, The Pearl REIF is a compelling and rare opportunity for investors considering real estate to diversify their portfolios. We are confident that the strong promoters and marquee tenants of these properties will demonstrate the strength of the offering.”
“The Pearl REIF will play an important part in contributing to achieving economic and social goals, whilst within an investment portfolio they can offer a strong, stable annual dividend and the potential for long-term capital appreciation,” he added.
Commenting on the mandate, Ahmed Al Musalmi, Chief Executive Officer of Sohar International said, “Sohar international has demonstrated an unwavering commitment to the realisation of the objectives outlined in Oman Vision 2040 and the country’s revenue diversification agenda. Our bank has developed over the years unique capabilities in advising our clients. Our bank is proud to be associated with one of the most important milestone in the history of privatization and monetisation of government assets. We would like to thank Oman Investment Authority and Omantel for their strong and firm partnership with Sohar International Bank. We are keen and prepared to play more instrumental roles in the creation of structures such as Pearl REIF. In every step the bank has received support and guidance from the Capital market authority of Oman, Muscat Clearing &Depository and Muscat Securities Market. The launch and successful public issue of the REIF will be a stepping stone towards achieving the Vision of the country.”
Why The Pearl REIF?
The Pearl REIF will be established as a closed-ended Sharia-compliant REIF in Oman. The objectives of the Fund are to generate income from long-term real estate rentals and capital growth from investment in real estate, compliant with Sharia principles.
The Fund expects to generate a consistent dividend to unitholders, based on the estimated revenue and expenses, and also to distribute at least 90% of its distributable profits.
The Pearl REIF is Oman’s largest and first REIF that avails the Islamic Ijara financial facility.
What makes The Pearl REIF a unique investment opportunity is that it's backed by two of the largest institutions of Oman, respected and reputed – Oman Investment Authority and Omantel. Oman Investment Authority is the Sultanate’s investment arm that has been mandated to manage and invest the state’s funds and assets, maximise returns, and contribute to the realisation of Oman’s Vision 2040 toward a more sustainable and prosperous future for the people of Oman and the future generations. As the sovereign wealth fund of Oman, OIA brings the backing of the government and investment experience spanning 40+ countries around the world.
Omantel is an established name in global capital markets, with a history of value creation for shareholders and building long-term investor partnerships. Over the years, Omantel’s strong performance, perseverance, and innovation have made it a trusted investment choice. The company continues to remain an integral part of Oman’s future growth.
The Pearl REIF benefits from two tenants with impeccable track records: Omantel and Lulu.
Omantel has already confirmed a definitive agreement with The Pearl REIF for the sale and leaseback of its iconic headquarters building located in Madinat Al Irfan. A long-term lease agreement, advance rental payments, and in-built rent escalations make the investments more attractive. The company operates its headquarters in the building, making it a strategic part of its operations. The company has also demonstrated strong financials and is BB Rated by Fitch.
Lulu Hypermarket is a strong retail chain with over 235 locations across the globe, strong and well-diversified parentage, and a 60,000-strong workforce. Lulu Hypermarket Salalah has also a long-term lease agreement for the property. Advance annual rent payments, and in-build rent escalation and the strategic location in the heart of the city reinforce the investment.
Robust financial facility
The Pearl REIF is capitalised to maximise the benefits to shareholders.
The fund is optimally financed to allow high possible returns without taking on aggressive risks. The facility is availed under the Islamic Ijarah financial facility which is an effective and practical financing tool.
Limited covenants which are to be tested on an annual basis and attractive pricing add further strength to the financing strategy.
Active fund management strategy
The Pearl REIF envisages becoming one of the largest REIFs in the region adding heft to any negotiations with potential counterparties. The Fund will actively scout for yield accretive investment opportunities, and continually optimize the transaction structure through an appropriate mix of debt, equity, and cash to maximize shareholder return.
Investment manager: Sohar International
As the trusted investment manager of The Pearl REIF, Sohar International brings to the table its years of industry experience, market knowledge, and skilled team of professionals. Working closely with the Fund Management Body, the bank will ensure all operations are in synergy with the strategy, objectives, and overall vision of the fund. Driven by innovation, agility, and excellence, Sohar International is strongly positioned to deliver optimum solutions that will be customised to align with the fund’s unique demands ensuring that all processes are carried out in a seamless, secure, and safe manner.
The Pearl REIF IPO
Institutional and individual investors will soon have the opportunity to invest in The Pearl REIF IPO through the secondary sale of units. The promoters intend to sell 49% of their stake through the IPO and on the successful completion of the transaction. The Pearl REIF will be listed on the Muscat Stock Exchange (MSX).