KARACHI: In its maiden earnings announcement following the public listing in June, the management company of Pakistan’s first real estate investment trust (REIT) scheme said on Monday its net profit amounted to Rs169.9 million for the period ending on June 30.
Trading of the units of Dolmen City REIT, which is run by Arif Habib Dolmen REIT Management, began on the Karachi Stock Exchange on June 26, although the announced profit is for the period starting on January 20 and ending on June 30.
REITs are collective investment schemes that pool investors’ funds for onward investment in real estate.
No year-on-year comparison of Dolmen City REIT can be made because of the unavailability of comparable data.
Traditionally, small investors have been unable to take part in real estate investments in Pakistan, as the property market is considered highly illiquid and capital intensive. There are few publicly listed property developers in Pakistan while REITs had practically been non-existent so far.
However, as the first-of-its-kind investment avenue in Pakistan, Dolmen City REIT offers small investors the opportunity to take advantage of a booming real estate market by trading in REIT units.
Besides being the first REIT in Pakistan, Dolmen City REIT is also the first publicly listed trust of its kind in South Asia.
REITs operate like close-end funds, as pooled capital is invested in real estate and its units are listed on the stock exchange that investors can buy and sell every day just like ordinary stocks.
The underlying assets of Dolmen City REIT are the two components of the Dolmen City project: Dolmen Mall Clifton and the Harbor Front building, which are located on the Karachi seafront.
The property was originally owned by International Complex Project (ICP). The Arif Habib Group controlled 20% shares in ICP while 80% ownership rested with the Dolmen Group before the public listing. The monetary value of the total fund of Dolmen City REIT is Rs22.2 billion.
The property generates rental income that is distributed by the REIT scheme among unit holders in the shape of dividends. The first profit announcement was accompanied with a final cash dividend of Rs0.08 per unit for the period ended June 30.
Speaking to The Express Tribune, Arif Habib Dolmen REIT Management CEO Muhammad Ejaz said the trust was registered on January 20, but the rental income started accruing to Dolmen City REIT from June 1. Therefore, the rental income of Rs193.6 million, which resulted in the net profit of Rs169.9 million, was generated in the month of June alone, Ejaz said.
In a pre-IPO interview, Ejaz had said unit subscribers should expect a 9.25% dividend yield in the first year of operation.
Published in The Express Tribune, September 22nd, 2015.