Sedco Capital REIT Fund offering surges 64pc to $479m
RIYADH, December 22, 2021
Sedco Capital, a global shariah-compliant and ethically led asset management and investment advisory firm, has announced that it has successfully completed the additional offering of Sedco Capital real estate investment traded (REIT) fund.
Launched in 2018, the Sedco Capital REIT Fund is a closed-ended, shariah-compliant REIT, which aims to achieve periodic cash distribution for unitholders by investing in high quality income-generating real estate assets across various sectors, including hospitality, commercial, office, residential and education. Investments are mainly focused in the main Saudi cities of Jeddah, Riyadh, and Dammam.
Through this additional offering, Sedco Capital is increasing the fund’s total asset value by 64% to SR1.8 billion ($479 million) across in-kind and cash subscriptions and additional Shariah-compliant financing.
According to Sedco Capital, the Fund received 78,231 subscription requests from 227,192 individual and institutional investors. In addition, it offered up to SR325 million through in-kind subscriptions.
The successful offering resulted in a 339% oversubscription with a total value of SR 848 million.
The units will be allocated to the unitholders within a maximum of 15 business days from the closing date of the additional offering period in accordance with the allocation mechanism disclosed in the supplementary appendix of the Fund’s terms & conditions.
The proceeds from the additional capital raise will be used to acquire eight properties in the Education and Commercial sectors, located across Riyadh and Dammam.
Sedco Capital REIT Fund post acquisition portfolio is expected to generate a gross rental income of SAR 49.4 million per annum, which translates into a rental yield of 7.5%. The net targeted return in total asset value is expected to exceed 7.0%.
On the additional REIT offering, CEO Samer Abu Aker said: "We are very pleased with the result of the additional offering, reflecting the strong participation demand in the Sedco Capital REIT Fund. This oversubscribed offering represents a robust vote of confidence by existing and new subscribers in our Saudi real estate investment strategy."
Chief Business Development Officer Abdulwahhab Abed said: "Since its inception, we have always managed the SEDCO Capital REIT Fund in a manner that provides investors with access to compelling real estate assets across key cities in Saudi Arabia."
"This additional offering increases the Fund’s exposure to income-generating properties in more diverse sectors across the Kingdom, including the Education sector. The Fund also aims to increase the percentage of long-term lease contracts with escalation in rents with credible tenants, which in our view contributes to achieving stability and growth and will enhance the Fund’s long-term risk-return profile, overall. We believe the oversubscription illustrates the appreciation that investors have for our investment approach," he added.
