GLOBAL: Switzerland-based B&I Capital has partnered with IdealRatings to provide investment solutions for asset owners seeking to tap into Shariah compliant listed REIT companies.
The amalgamation demonstrates both companies’ commitment to the Islamic finance industry by creating a new investment sector into Islamic REITs. This was a difficult area a few years ago as fund managers were unable to identify the non-permissible income from the tenants in the REITs due to data issues and an acceptable financial modeling by Shariah scholars for non-permissible income.
With this solution Shariah compliant investors are now able to have equities, Sukuk and REITs in their overall investment portfolio which is 70% of the investment quadrant, with the final quadrant on commodities.
In a statement to Islamic Finance news, Mohammad Donia, CEO of IdealRatings, said: “B&I Capital will be able to use the IdealRatings solution for their data on the listed REITs and the non-permissible income for their selection of the REITs universe. The front and mid-office solution provides a market level information for the fund manager decisions to buy/sell/hold their investments.”
Donia added: “We foresee a huge growth of the Shariah compliant REITs investment globally since it is now possible to have an exposure in this sector which was not possible a few years ago. Instead of buying a property and managing the property to deliver the returns, investors are finding REITs an easier vehicle to have an exposure into the property sector and annual getting annual dividend returns.”
B&I will begin managing the Al Salam REITs Fund that has an exposure to a selected number of countries in Asia — a region which has risen in prominence in the last few years, as Middle Eastern investors show keenness to diversify their investments and gain exposure to this asset class and Asia itself.
Given that the IdealRatings screening solutions are also able to screen for global Islamic REITs, the exposure can be further extended to Global REITs.