REITs-Asset Classes

A Real Estate Investment Trust (REIT) is an investment vehicle structured as a Trust, the objective of which is acquiring, holding, administering, managing and selling income generating local and foreign real estate assets, either directly or indirectly. REITs provide an unparalleled investment opportunity and access to an alternative asset class usually considered to be illiquid and only accessible at high ticket sizes. REITs may appeal to investors looking to diversify their portfolio into property with potential to receive a regular and consistent income stream. REITs are designed to generate wealth in two ways: capital growth as well as income return.

According to existing CBB regulations, the dividend payout ratio of a REIT has to be at least 90% of its net realized income, unitholders can expect to receive stable distributions. REIT structures are regulated by the Central Bank of Bahrain (‘CBB’) and must be authorized by the CBB before they can be listed on Bahrain Bourse. A CBB-authorized REIT is governed by the Financial Trust Law No. (23) of the Year 2006, Volume 7 of the CBB Rulebook, as well as REIT Listing Rules issued by Bahrain Bourse. REITs that are listed on a stock exchange trade just like a stock. While each REIT will have its own of characteristics, the properties selected are usually diversified across regions, lease lengths and tenant types.