UPDATE 1-Emirates Tarian plans S'pore Islamic REIT - sources

Tue Jun 1, 2010 6:42am EDT

Related Topics

* HSBC, UOB to manage Sabana REIT IPO - sources

* REIT to have assets of at least S$500 mln

* Ex-Cambridge REIT staff involved in Sabana REIT - source (Adds details of plan)

By Kevin Lim

SINGAPORE, June 1 (Reuters) - Emirates Tarian, a firm with Middle East links, is planning to list an Islamic REIT in Singapore with assets of at least S$500 million ($355.4 million) that it hopes will appeal to Arab investors, three sources said on Tuesday.

The listing of the sharia-compliant real estate investment trust, called Sabana REIT, will be managed by United Overseas Bank (UOBH.SI) and HSBC (HSBA.L), with the initial public offering slated for late 2010 or early 2011.

Sabana is in the process of acquiring warehouses and factory buildings in Singapore, and on Tuesday signed an option to buy an industrial property in the eastern part of the city-state for S$46.3 million from construction firm Sim Lian Group (SIML.SI).

When listed, it will likely be Singapore's second Islamic REIT after a hotel and serviced residences property trust that ARA Asset Management (ARAM.SI) and Qatar's Regency Group plan to launch in the second half of 2010. [ID:nSGE5BD09A]

"It's (Sabana REIT) still very much work in progress and the amount is not finalised... The market is not helping either," a banking source said.

Emirates Tarian, set up as a joint venture in 2006 between UAE-based Emirates Investments Group and Singapore investors, declined to provide details about the REIT when contacted.

UOB also declined comment, while HSBC could not immediately be reached.

Sharia, or Islamic law, prohibits the leasing of real estate for purposes such as alcohol production or pornography, making warehouses and industrial buildings suitable for Islamic investors.

U.S. fund manager Invesco said in a report last week that Middle East investors are looking to put more money into emerging markets in search of higher returns. [ID:nLDE64P0VI]

A second source said the people putting together Sabana's property portfolio included a group that had previously been with Singapore-listed Cambridge Industrial Trust (CMIT.SI).

The REIT's portfolio will be in excess of S$500 million, which is the minimum amount needed to attract institutional investors, the second source added.

REITs are funds that invest in property and pay most of the rent to shareholders as dividends to enjoy various tax breaks. They cater to investors who want regular dividends that are higher than the yield on safer government bonds, while also offering potential capital gains if property prices increase. ($1=1.407 Singapore Dollar) (Editing by Muralikumar Anantharaman)

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