Bonyan REIT Fund, Managing Growth

Al Rashid Mall, Bonyan REIT Fund

With robust performance, well planned management of its portfolio and operating in an upwardly mobile market, the Bonyan REIT Fund is in an advantageous position to provide solid investment opportunities

Tell us about Bonyan REIT

The Bonyan REIT Fund is a Shariah-compliant real estate investment fund, established in 2018, with an initial size of SAR1.63b, and is one of the largest REIT listed on The Saudi Exchange

The fund owns and operates 12 revenue-generating properties across a wide range of sectors, including commercial centers (65%), residential compounds (20%), hotels (10%) and office towers (5%).

What distinguishes Bonyan REIT in this market sector.

Bonyan REIT Fund assets are pioneers in bringing in new experiences for end-consumers. The diverse mix of assets gives Bonyan REIT exposure to Tier I and Tier II cities and provides a balanced mix of sectoral exposure focused on vibrant segments of the Saudi economy. The award-winning entertainment, dining and leisure components, plus the latest technology, are elements that enrich retail centers and incentivise customers to go to malls. The malls offer a robust menu of lifestyle and entertainment choices, spanning health and wellness centers to spaces for arts and music events, creating a brand that more shoppers want to frequent. 1. We design the “wow!” factor into the mall’s brand. Today, a mall is

not complete without some form of entertainment and leisure. Its renowned leisure centers feature leading kids’ entertainment areas and wellness facilities. 2. We expand common spaces, creating more points of convergence and grandeur. Common spaces are big draws for Al-Rashid malls, actively utilised to create public awareness campaigns such as Breast Cancer

Awareness, World Diabetes Day,

National Day Celebration, Flu

Vaccine Drive and other community engagement events 3. Al-Rashid malls are combining shopping with live/work components.

For example, Al-Rashid Mega

Mall, a mixed-use development in

Madinah, started as a remodel that transformed into a sizable 115,795 m2 plaza including restaurants, shopping and a hotel. 4. We do not count on retail or anchors alone to drive traffic. Our malls feature a space that offers hands-on activities for children as well as dining and leisure.

Balancing the design of the malls with dedicated spaces other than retail is an important and successful component of Al-Rashid malls. 5. Digitisation is providing more ways for shopping centers to connect meaningfully with tech savvy customers. Robust, free Wi-Fi is

“a bare minimum” for all our malls that are becoming relevant to tech savvy shoppers. Charging stations for mobile devices and interactive kiosks are also commonplace in our commercial centers. Bonyan REIT’s assets are integral to the social fabric of that city and are considered as landmarks in their respective cities. Having strong brands such as AlRashid Malls, Citywalk, and Marriott enhances the sustainability and longevity of our assets.

How has the fund performed?

Since inception, the fund has paid dividends amounting to SAR382.6m, and as of 30 June 2022, the fair value of its properties stands at SAR2.2b. As of 31 December 2021, the Fund has generated a total return of 21.96% since inception. In 2021, the REIT’s revenue increased to SAR219.65m and annual dividends rose by 60% from 2020 levels.

Even in today’s challenging times, Bonyan REIT continues performing well due to its exceptional fund management and robust strategy. Fund’s revenues exceeded pre-pandemic levels in 2021, and H1 2022 has seen a further increase of 13% YoY due to strong economic tailwinds. Bonyan REIT has consistently outperformed the Saudi REIT Index and as of 30 September 2022, has outperformed TASI as well. This demonstrates the efficacy of Bonyan REITs strategy, which is constantly refined and improved.

Bonyan REIT’s dividend yield is one of the highest in the Saudi Arabian REIT market and it creates significant value for shareholders as its assets boast high occupancy rates with all the Mall assets having over 90% occupancy and Offices having 100% occupancy. Bonyan REIT’s low LTV of 20%, which is one of the lowest in the Saudi Arabian REIT market, shields it from the ill effects of rising interest rates.

What opportunities and benefits do REITS offer Investors?

REITs offer a way to tap into the real estate market with ease and without many of the headaches that go along with it. They offer liquidity, high dividend yields, and the ability to increase portfolio diversification.

The investment characteristics of income-generating real estate have historically provided REIT investors with competitive long-term returns. A REIT must return at least 90% of its taxable income to shareholders in the form of dividends each year. The industry′s dividend yields, on average, are significantly higher than other stocks and have historically generated a steady stream of income in a variety of market conditions. A REIT’s reliable income comes from rent payments to commercial property owners who often have longterm lease agreements with their tenants and derive interest payments on the financing of these properties. Additionally, the business model of REITs is easy to understand for most investors.

REITs can also act as an inflation hedge because of asset appreciation and accelerating cash flow growth from rapidly rising tenant rent payments. Although REIT share prices are not immune to the current market volatility, REITs with strong property-level fundamentals and increasing dividends can provide stability to an investment portfolio’s income.

What is the growth potential of the Saudi Arabia REIT sector?

The REIT sector in Saudi Arabia is yet to reach its maturity and, accordingly, is ripe for growth. Strong GDP projections and increased tourism will lead to additional institutional-grade capital and assets becoming available, in addition to more individuals investing in REITs.

The Fund is well placed to capitalise on these trends. All the assets are designed with a lifestyle mindset and core values aligned with Vision 2030 – promoting culture and entertainment. The malls and hotels we invest in contribute to the enrichment of communities at large by providing an interactive place to visit, play or stay.

How does Bonyan REIT mitigate against the risk of rising inflation and interest rates?

With inflation and the prospects for a global recession rising, investors are scrambling for recession-resistant investments. Real estate is one sector that tends to offer protection against inflation.

While REITs are traditionally viewed as being sensitive to interest rates, it is also about the growth and kind of environment that is leading to rising rates. Since Bonyan REIT has strategically focused on shorter-lease property sectors, such as malls, hotels and apartments, we can easily raise rental rates in an inflationary environment. For their part, mall REITs have fared well during periods of rising interest rates, as an improving economic backdrop buoys sectors that are more discretionary.

Demand for discretionary products tends to fall during recession, affecting retail sales and retailers’ ability to meet financial obligations such as rental payments. We mitigate such risks by offering the best-in-class exposure, both in terms of geography and sector diversification. Our properties balance exposure between Tier I and Tier II cities with multiple sectors such as commercial, residential, hospitality, and offices.

WEALTH MANAGEMENT

AS INDIVIDUAL AS YOU

At OCS International Finance Ltd we pride ourselves on the personal care of our clients. As a competent and reliable partner, we offer bespoke financial solutions, built on truly personalized relationships and a solid foundation of financial expertise.

OUR EXPERIENCE - YOUR FINANCIAL SUCCESS

OCS International Finance Ltd +971 4 525 0600 | info@ocs-finance.net | ocs-finance.net Regulated by the DFSA

Your personalized investment and financial services provider

OCS International Finance is a boutique financial and investment services provider located in Dubai’s prestigious International Financial Centre (“DIFC”). OCS International Finance Ltd (“OCS”) is licensed and regulated by the Dubai Financial Services Authority (“DFSA”).

Through its team of experienced advisors, OCS provides personalized and highly specialized asset and investment management services to ensure the optimal financial welfare of clients.

OCS caters to high-net-worth individuals, institutional investors, family offices, corporate entities and investment structures – including trusts and special purpose companies.

With extensive and wide-ranging experience in structuring customized financial solutions, the OCS team is focused on establishing long-term client relationships. We leverage our professional expertise to derive maximum investment value for our clients and advise on proven wealth management strategies.

OCS strives to ensure the success of our clients’ financial goals by understanding their investment needs and assessing their risk tolerance, liquidity requirements and investment objectives to structure an optimal solution to fit their investment needs.

Our services include:

• Arranging Trade Solutions • Asset Management • Arranging and Advising • Corporate Finance • Non-Discretionary Custodial Advisory Services

Our experience – your financial success.

OCS International Finance Ltd +971 4 525 0600 info@ocs-finance.net ocs-finance.net