GLOBAL: Making its mark in history, Al Salam Bank — Bahrain (ASBB) launched Al Salam Asia REIT Fund yesterday, the first Asian real estate investment trust (REIT) fund which invests according to Shariah principles. The fund’s portfolio will consist of 15-35 positions, diversified through active country and sub-sector allocation within the Asian REIT asset class. Each position will be equally-weighted, rebalanced and reviewed as part of its risk management process.
According to Dr Anwar Khalifa Al Sada, the deputy CEO of ASBB, the fund is aimed at providing investors a long-term, superior risk-adjusted total return, through a combination of high, stable, and growing dividends as well as a significant opportunity for capital appreciation. “The fund aims to deliver benefits of diversified real estate ownership in Asia while avoiding many of the pitfalls of holding physical property and real estate developer equities,” said Dr Anwar.
REITs are said to possess lower volatility, superior returns and low correlation compared to equities. They also provides some hedge against inflation. Commenting on this, Talal Abdul Aziz Al Mulla, the head of investment at ASBB, explained: “The strong demographics and growth potential in Asia have resulted in Asian REITs providing a return of 12% higher than developed country REITs, over the last 10 years. We believe that Al Salam Asia REIT Fund will provide an optimum investment solution for accessing the growing Asian real estate market in a diversified and a Shariah compliant approach.”
ASBB will be the sponsor and seed investor to the fund, with Zurich-based B&I Capital acting as the fund manager. Expressing his confidence towards the success of the Al Salam Asia REIT Fund, Christian Bernasconi, the managing partner for B&I Capital, said: “Demographics and growth combined with pro-REIT regulation in many Asian countries will continue to support the demand for products like this one.”
Ohad Trust (Bahrain) is the fund’s custodian and administrator, while Herbert Smith provided legal advice and Maples Secretaries acts as its corporate secretary.