KARACHI: Javedan Corporation Ltd plans to list the Globe Residency REIT, a wholly owned subsidiary, on the Pakistan Stock Exchange (PSX) within the “next eight to 10 weeks”.

Real estate investment trusts (REITs) are investment schemes that collect money from investors and deploy it in real estate projects.

Speaking to Dawn in an interview on Thursday, Javedan Corporation Direc­tor Muhammad Ejaz said 10 per cent shares in the REIT will be offered to the general public. Real estate consultants and the shareholders of Javedan Corporation will be offered 5pc and 85pc units, respectively, at the same price.

The scheme that’s going to be listed on the stock exchange is based on Globe Residency, an apartment project comprising two- and three-bed residential units in Naya Nazimabad housing colony located on the outskirts of Karachi. The total number of apartments in the project is 1,304.

“The REIT fund size is Rs2.8 billion,” said Mr Ejaz, who’s also the CEO of Arif Habib Dolmen REIT Management Ltd, the company that’s going to launch as many as four REITs in the next few months.

“Preparations for the listing are underway. Arif Habib Ltd has been app­ointed as the transaction adviser,” he said. He noted that REIT units will be offered to the shareholders of Javedan Corporation on a pro-rata basis, a method that allocates a share volume to a stakeholder according to its share of the whole.

The board of Javedan Corporation will decide the future course of action if its shareholders or real estate consultants decide not to purchase the units, Mr Ejaz added. Arif Habib Dolmen REIT Management has already launched nine REITs, including two rental ones that aim to generate rental income for their shareholders.

REITs operate like any other company but offer a higher degree of transparency to investors because trustees — not developers — control all assets.

After the first REIT-based transaction that securitised and sold Dolmen Mall Clifton and the adjoining Harbor Front building for Rs22.2bn in 2015, the REIT sector remained dormant for nearly six years. REIT managers blamed the absence of transactions on unfavourable changes in the tax and regulatory regimes that discouraged investors from taking part in REITs. But the SBP, FBRand the SECP changed gear in the last year or so, making it attractive for investors, particularly banks, to put money in the real estate sector through REIT-based transactions.

Published in Dawn, September 23rd, 2022

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