Swicorp Wabel REIT’s IPO starts today

Swicorp Wabel REIT’s initial public offering (IPO) will start today on the Saudi Stock Exchange (Tadawul), with subscription for 15 working days until April 8.

Subscription will be available through Swicorp Co.’s website and receiving entities namely Bank Albilad, Banque Saudi Fransi, Al Rajhi Bank, NCB, and Aljazira Capital, with a minimum subscription of SAR 500.

With a target size of SAR 1.18 billion, the fund will offer 35.4 million units at SAR 10 per unit, totaling SAR 354 million. This represents 30 percent of the fund size.

The asset base of the sharia-compliant fund includes four fully developed and income-generating shopping malls, namely the Al Makan Malls located in Riyadh, Tabuk, Hafr Al-Batin, and Dawadmi.

Swicorp said that most assets are located in cities with high demand for commercial and entertainment properties, mainly due to weak supply. The shopping malls in the fund’s portfolio are newly built, with the oldest mall constructed in 2015.

Key features of the Swicorp Wabel REIT are as follows:

- During the offering, the fund gives a targeted net yield to investors of 7.7percent.

- The properties are anchored by 423 major local and international retailers, with 50 percent of the contracts’ duration ranging between five and 20 years.

- There is an annual rent increase clause in more than 50 percent of the existing contracts.

- Property sellers and the fund manager will invest 70 percent of the fund size.

- Wabel Al Arabia, the main owner of the fund’s assets, has agreed to a 6-month lock-up period during which it will not reduce its shareholding below 50 percent in the fund.

- The fund is debt free during the IPO, which is positive for its future expansion plans.

- Wabel Al Arabia has issued an Order Note of SAR 18 million guaranteeing any rental shortfall for two years.

- Although all assets are newly built and operated, their current average occupancy rate is 96.38 percent.