IFR 6.11 IFR 6.11 Islamic Real Estate Investment Trusts (Islamic REITs)
IFR 6.11.1(1) A
Fund Managermust ensure that it does not call, or otherwise hold out, a Fundas being an Islamic Real Estate Investment Trustor as being an Islamic REITunless it is a Public Property Fundwhich is constituted in accordance with (2).(2) An Islamic REITis a Public Property Fundwhich:(a) is constituted either as an Investment Companyor as an Investment Trust;(b) is primarily aimed at investments in income generating Real Propertywhich complies with Shari'a principles; and(c) distributes to the Unitholdersat least 80% of its audited annual net income.
IFR 6.11.2(1) A
Fund Managerof an Islamic REITmust ensure that it distributes to the Unitholdersas dividends each year an amount not less than 80% of its audited annual net income.(2) The Personsproviding oversight functions in respect of the Fundmust determine if any;(a) revaluation surplus credited to income, or(b) gains on disposal of Real Property,shall form part of net income for distribution to Unitholders.
Islamic REITholds any Real Propertyvia one or more Special Purpose Vehicles, the Fund Managermust ensure that each Special Purpose Vehicledistributes to the Fundall of its income as permitted by the laws and regulations of the jurisdiction where the Special Purpose Vehicleis established.
IFR 6.11.4 IFR 6.11.4(1) A
Fund Managerof an Islamic REITmust ensure, subject to (2), that any investment made in respect of property under development whether on its own or in a joint venture is undertaken only where the REITintends to hold the developed property upon completion.(2) The total contract value of the property under development in (1) must not exceed 30% of the net asset value of the Fund Propertyof the Islamic REIT.
IFR 6.11.4 Guidance
For the purposes of this Rule, the DFSA would not consider property development activities to include refurbishment, retrofitting and renovation.Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
IFR 6.11.5 IFR 6.11.5
Fund Managerof an Islamic REITmay borrow either directly or through its Special Purpose Vehicleup to 65% of the gross asset value of the Fundprovided that such borrowings are Shari'a compliant.
IFR 6.11.5 Guidance1. The gross asset value of a
Fundshould be calculated as the total value of the Fund Propertybased on the most recent valuation under CIR Rule 8.4.1(1), but without making the deductions provided for in the other paragraphs of that Rule.2. As there are no specific risks that arise by virtue of a Fundbeing an Islamic Fund, the prudential requirements that apply to a Category 3 firm as set out in the PIB module apply to such Fund Managers. However, if the underlying assets of the Fundare invested in financial products or instruments that are Islamic and have certain features which would raise any prudential risks, it is the responsibility of the Fund Managerto address such risks. The DFSA would provide any additional clarifications regarding such matters upon request.