KUALA LUMPUR: Johor Corp’s new Islamic real estate investment trust (REIT) Al-Salam, which is en route to Bursa Malaysia listing in the third quarter of this year, is expected to offer an annual dividend yield of 6% to 6.3% upon the first year of its listing, according to its president and chief executive Datuk Kamaruzzaman Abu Kassim (pic).

Speaking at the memorandum of understanding (MoU) signing ceremony between Johor Corp and Amanahraya Trustees Bhd for Al-Salam yesterday, Kamaruzzaman said Al-Salam is the second syariah-compliant REIT by Johor Corp after Al-’Aqar Healthcare REIT.

According to Bloomberg data, the other two Islamic REITs on Bursa Malaysia namely Axis REIT and Al-‘Aqar Healthcare REIT have a yield of 5.6% and 5.5% respectively for the financial year ended Dec 31, 2014 (FY14).

Yield for non-Islamic REITs, on the other hand, are comparatively higher, such as YTL Hospitality REIT’s yield is at 8.08%, the highest among the other 13 REITs, followed by Quill Capita Trust and AmanahRaya REIT that registered 7.16% and 7.07% yield respectively.

According to Kamaruzzaman, the REIT has set a target to achieve asset size of RM2 billion within three years of its listing. It intends to have an additional RM500 million worth of assets within 12 months of its listing. Al-Salam will be acquiring 31 assets worth about RM900 million from Damansara Assets Sdn Bhd and QSR Brands (M) Holdings Sdn Bhd (QSR), as its initial portfolio.

This confirmed a report by The Edge weekly, in its April 6-12 issue, which said that Johor Corp was about to list its second trust comprising retail, office and education assets.

Properties to be acquired from Damansara Assets include Menara Komtar, @Mart hypermarket, KFCH International College and Komtar JBCC which is a retail mall in Johor Baru, according to Kamaruzzaman.

Assets from QSR include the KFC and Pizza Hut chain of restaurants and selected industrial assets.

Kamaruzzaman also said 580 million units would be available for Initial public offering. However, the composition for public subscription is not finalised yet.

“The establishment of Al-Salam REIT is another commitment by Johor Corp in playing its part in the world of Islamic REIT and Islamic Capital Market. Johor Corp believes that Islamic REITs have the potential to be the preferred investment instruments among investors in the capital market,” Kamaruzzaman said.

Under the MoU, AmanahRaya will be Al-Salam’s trustee while Damansara REIT Managers Sdn Bhd will be the REIT’s manager.

Kamaruzzaman also said Al-Salam has obtained the approval for its establishment from the Securities Commission Malaysia (SC) on Feb 18, and was subsequently established on March 30 with the registration of the trust deed with the SC. The REIT’s prospectus is expected to be released by June this year.

Damansara REIT Managers is a wholly-owned subsidiary of Damansara Assets which is in turn a wholly-owned unit of Johor Corp.

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This article first appeared in The Edge Financial Daily, on April 29, 2015.