Dolmen City Real Estate Investment Trust (REIT) scheme, the first of its kind in Pakistan, has raked in commendable maiden earnings after its first public listing in June. The REIT’s management company announced a net profit of PKR 169.9 million for the period ending June 30, signaling great success.
Dolmen City REIT, run by Arif Habib Dolmen REIT Management, began trading on the Karachi Stock Exchange on June 26, although the profit announced is for the period starting on January 20 and ending June 30. The current profit announcement also came with the good tidings of a final cash dividend worth PKR 0.08 per unit for the same period.
According to a news source, Arif Habib Dolmen REIT Management CEO Muhammad Ejaz said that although the trust had been registered on January 20, the rental income was generated starting June 1. Therefore, rental income of PKR 193.6 million, which resulted in a PKR 169.9 million net profit, was exclusively generated in June. Impressive, indeed!
What is a REIT?
For those of you who are wondering what REITs are, don’t worry, you’re not alone. This is because the concept, although fairly simple, is rather novel in Pakistan right now.
Real estate investment is usually capital intensive and illiquid at times, because of which small investors are often prevented from participating in the real estate market. As REITs are collective investment schemes that pool investor funds, they ensure small investors don’t miss the boat.
In this manner, these trusts provide immense benefit to small investors who can make the most of lucrative real estate markets by investing in REIT units. Operating like closed-end funds, REITs use pooled capital to invest in real estate. Units are listed on the stock exchange in the same manner as ordinary stocks and can be bought and sold every day.
However, there are currently very few publicly listed developers in Pakistan and REITs have just been introduced, so we have a long way to go before everyone understands how to use these trusts to their advantage.
Breaking ground in Pakistan
Dolmen City REIT is not only the first REIT in the country, it is also the first publicly listed trust of its kind in South Asia. The trust owns two underlying assets which are part of the Dolmen City Project – Dolmen Mall Clifton and the Harbor Front building right on the Karachi seafront. The property was originally owned by the International Complex Project (ICP), with the Arif Habib Group controlling 20% shares in ICP. The remaining 80% ownership remained with the Dolmen Group before the public listing.
How’s the money distributed?
Currently, the total monetary value of Dolmen City REIT is PKR 22.2 billion. Properties belonging to the trust generate rental income and this is distributed to REIT investors in the form of dividends.
Before the initial public offering, Mr. Ejaz said that unit investors should expect a 9.25% dividend yield in the first year of operation. Considering the returns provided in just one month, it seems like good things are on the horizon. Certainly, the performance of Dolmen City REIT has been commendable thus far.
Hopefully, the novelty of high returns will not wear off in the future and the scheme will continue to flourish. If it continues to perform exceptionally well, the market can expect similar schemes to be offered by other developers in the future.
What do you think about Dolmen City REIT, and REITs in general? Let me know in the comments below.
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Really informative post , still need to know whether it is halaal to invest in it ??