Beruflich Dokumente
Kultur Dokumente
Islamic
Financial
System
Islamic
Financial
Market
Surplus
Sector
Direct
Financial
Market
Islamic
Money
Market
CAPITAL MARKET
Islamic
Bond
Market
Deficit
Sector
Islamic
Equity
Market
Indirect
Financial
Market
Commercial
Banks
Takaful
Unit
Trusts
Finance
Companies
Merchant banks
Islamic REITS
ISLAMIC
ECONOMICS
LIMITED RESOURCES
Scarcity requires
man to be efficient
in utilizing resources
We cannot afford to
waste resources
under scarcity
Inefficiency due to
misallocation of resources
can create
1. Poverty
2. Inflation
3. Unemployment
4. Negative growth
REVELATION
Quran
Hadiths
UNLIMITED
DESIRES
SCARCITY
BASIC ECONOMIC
PROBLEMS
P1: What to produce?
How much?
PROBLEM OF CHOICE
KNOWLEDGE
REASON/DEDUCTION(Istiqra)
SENSES/INDUCTION (Istinbat)
Human Behaviour
Choice &
Action
Fard Ayn
(Obligatory knowledge)
Reason
Facts
Based on
Observable
Foundations
(SCIENCE)
Based on
Non-Observable
Foundations
(DIVINE)
Rukun
Iman
Rukun
Islam
Concept
of
IslamicWorldview
God
Din
Man
Society
Universe
Prophethood
Primordial
Stage (Alam Ruh)
Mothers Womb
(Alam Rahim)
The Muslim Mindset
Stages
of Existence
from Islamic
perspective
Dunya (World)
Scarcity
Alam Barzakh
(Life in the Grave)
Hereafter
(Akhirah)
Principles of
Islamic Finance
1. Shari Principles Equity objective
e.g. Halal & Haram
DOING THE RIGHT THING
2.
SHARIAH PRINCIPLES IN
FINANCIAL TRANSACTIONS
Principle #1 : Prohibition of riba
Principle #2: Application of al-bay (trade
and commerce)
Principle #3: Avoidance of gharar
(ambiguities) in contractual
agreements
Principle #4: Prohibition of maisir (gambling)
Principle #5: Disengagement from production of
impure commodities.
AQIDAH (FAITH)
Rukn Iman
Belief in God, the Angels,
the Prophets, the Holy Books,
and Predestination
AKHLAK
(ETHICS AND MORALITY
Knowledge of Conducts
Virtues and Vices
MUAMALAT
(INTERACTIONS)
SHARIAH
Purpose of Shariah: PROTECTION OF
PUBLIC INTEREST
1. Preservation of benefits The
Permissible (Halal)
2. Prevention of harm The
Prohibited (Haram)
SHARIAH PRINCIPLE #1
Prohibition of interest as riba
No contractual guarantee(s) on investments
SHARIAH PRINCIPLE #2
Application of
Al-Bay
SHARIAH PRINCIPLE #3
Elimination of
uncertainties/ambiguities (gharar) in
contractual agreements
SHARIAH PRINCIPLE #4
Prohibition of Gambling (Maisir)
i.e earning via game of chance
Gambling
Lotteries
Casinos
Insurance
Commodity Trading
Futures
Options
SHARIAH PRINCIPLE #5
Avoiding impure commodities.
Islamic Finance
Corporate Finance
Sukuks, Islamic Private Debt Securities, Islamic REITS,
Islamic Unit Trusts
Consumer Finance
Murabahah, Ijara
Enterprise Finance Small & Medium Sized Enterprises
Mudaraba, Musyarakah
Microfinance
Public Finance
Al-Bay
Contract of Exchange
Uqud al-buyu
Contract Sale
Exchange Goods for Money
Al-Murabahah
Credit sale
Contract of Profit-Sharing
Uqud al-Istiraq
Contract of Sale
Exchange Services for Money
Deferred Sale
Bay Muajjal
Bai-Bithaman Ajil
Forward
Sale
Istisna
Al-Mudharabah
(Trustee Partnership)
Ijarah
Wakalah
Kafalah
Salam
Al-Shirka
(General Partnership)
EFFORT
RESPONSIBILITY
Al-kharaj bil daman
AQAD
Murabahah
Partnership
Wakalah, kafala
Industry Updates
Islamic REIT
Objective
Structure
Regulatory Regime
General Benefits
Investors
Comparison with Alternative Investment
Fees and Charges
Performance Indicators
Guidance
Financial
Group
Name of
Fund
Guidance
Fixed
Income Fund
Country
USA
Size
(USDm)
200
Type
Residential
Investor Advisor
Description
Freddie Mac
real estate finance assets. The securities will
be issued and guaranteed by the Federal
Home Loan Mortgage Corporation (Freddie
Mac). The fund will hold securities that are
backed by Shariah-compliant
Shamil Bank
China Realty
Fund
China
150
Commercial
CITIC International
Assets
Management Co.
Ltd. (CITICIAM)
Name of
Fund
Country
Size
(USDm)
Type
Investor Advisor
Description
Kuwait Finance
House
Baitak Asia
Real Estate
Fund
South Asia
600
Commercial,
Residential
Kuwait Finance
House
Islamic
European
Real Estate
Fund
Europe
486
Commercial,
Residential
Equity Estates BV
Dubai Islamic
Bank (DIB);
Cheung Kong
Group
Al Islamic Far
Eastern Real
Estate Fund
Far East
450
Commercial,
Retail,
Residential
ARA Asset
Management
United States has the largest real estate market in the world. The estimated size of the
US market is approximately US$5 trillion.
Japan ranks second with around US$2 trillion, followed by the four major European
economies. The German market is approximately US$1.1 trillion, with the UK just behind
at approximately US$1 trillion.
France is close to US$800 billion. Italy is approximately US$660 billion. Canada comes in
at just under the US$400 billion mark.
The top 15 countries comprise around 88% of the total global real estate market.
Interestingly, the top five countries hold 68% of the total. The next ten countries add 20%
and
the remaining
34 countries
make
upstructured
the final under
12%.Conventional legislation in non-Muslim countries.
No OIC
member
countries. But
Islamic REITS
can be
Unitholders
Management
Company
REIT
Invest in authorised
investment
Distribution and
Possible capital gains
Trustee
Islamic REITS
Tripartite agreement between three
parties:
1. The Manager
2. The Trustee
3. Unitholders
Tripartite relationship is governed by a
Deed registered with the Regulator (e.g
Securities Commission Malaysia)
DEED
A Deed is a legal instrument used to grant a right.
The trust deed is a legally binding agreement between
the manager, trustee and unit holders. The agreement
usually spells out clearly how the unit trust scheme is
to be administered. The contents usually include:
Shariah Aspects
Islamic REITS
$200m
sales
sales
$100m
Wakalah Fees
Annual Management Fee
Annual Maintenance and Management Fee
Annual Trustee Fee
Shariah Committee Members Fee
Fund Expenses
Wakalah Model.
Management Company (ie Wakil) does not bear
potential of loss (ie. risk) of investment.
Management Company is entrusted to invest the REIT
Fund in return for a Fee (ujrah).
Potential loss of investment is borned by Unitholders.
Management Company receives fee payment (ie fees)
eventhough Unitholders are suffering capital losses.
Nominal fees (ie absolute amount) may fall when net
asset value of REIT declined.
Percentage fee remained unchanged.
Risk-Return Principle
Juristic Principle (Al-Qawaid Fiqiah) Al-Ghorm Bil Ghonm
No Pain No Gain
2006*
35.48 (US$10.13m)
2007
35.70
Approx. 2.98
2008
36.43
Approx. 3.04
2009
36.96
Approx. 3.08
RETURN
Unitholders
Investment in REIT
Acts on behalf
of unitholders
Management
fee
REIT
manager
Distributions
REIT
Management
services
Trustees fees
Purchase assets
Property assets
Trustee
(holds properties
for the Benefit of
unitholders)
Unitholders*
Distributions
Management
fees
Manager
(Damansara REIT Management
services
Managers
Sdn. Bhd.)
Al-Aqar
KPJ REIT
Ownership
of properties
Maintenance and
management
fees
Holding
of units
Acts on behalf
of unitholders
Trustees fees
Trustee
(Amanah Raya
Berhad)
Rental payments
Maintenance manager
for the properties Maintenance and REIT properties,
management
(Healthcare Technical
comprising 6 hospitals
services
Services Sdn. Bhd.)
Rent
Hospital tenants
Sale of Assets
Letting of
Asset for rental
Unitholders*
To be paid by
tenants
Distribution in the form of
Dividends and other distributions
Investment in REITS
Management
fees
Boustead
REIT Manager
Advise the
Al-Hadharah
REIT on
Shariahrelated
matters
IBFIM
Shariah Advisor
Al-Hadharah
Management
Boustead
services
Acts on behalf
of unitholders
Trustees fees
CIMB
Trustee
Rental Income
Ownership
of properties
(Vested in
Trustees)
Plantation Asets
Monitoring the
Plantation Assets
Plantation Adviser
CONTRACTS
Ijarah Arrangements: The arrangements
by al-Hadharah Bousted REITS
(AHBR)where the Trustee on behalf of AHBR
as lanlord agrees to let the Plantation Assets
to the Vendors as tenants for a period of
three years which are renewable four times
up to twelve years and thereafter renewable
for up to an additional fifteen years
comprising five additional terms of not more
than threee years each, save and except for
the tenancy of the Malay Reserved Land
which are not automatically renewable.
Regulatory Framework
Islamic REITS
REITS DEFINED
Securities Commission REITs
Guidelines:
REITS DEFINED
Invests at least 50% of its total
assets in real estates
Trusts passive income vehicle
Distributes dividends to unit-holders
Governed by a constitution
Cannot reinvest income as retained
earnings
Dividends are tax deductible
REITS DEFINED
Has a management company
Has a trustee company
Employs a property manager
Australia
Japan
Malaysia
Hong Kong
Thailand
South
Korea
Taiwan
Dividend
yield
At least
90% of
taxable
earnings
100% of
taxable
earnings
At least
90%
No
requireme
nt
At least
90% aftertaxincome
At least
90% of net
profit
At least
90% of
taxable
earnings
Income
must be
distributed
within 6
months
ofFYE
Tax pass
through
Yes
Yes
Yes
Yes for
local
residents
only
No
Yes
No
yes
Property
transfer
taxes
Stamp
duty
waived for
5 years to
2010
None
Reduced
tax rates
Stamp
duty
waived
None
Reduced
property
transfer
rate
property
transfer
rate
None
Tax
incentives
for investors
Yes
Nil
Nil
Nil 25%
withholdin
g tax on
dividend
Nil
Nil
Nil
Yes 6%
withholdin
g tax on
dividend
Gearing cap
Max 35%
of total
assets
unless
REIT or all
borrowing
s rated
min A
No
restriction
, market
average
38%
No
restriction,
market
average
25-45%
35% of
asset,
unless
approved
by SC
Max 35%
of gross
asset
value
Borrowing
not
permitted
Borrowing
not
permitted
No stated,
but
regulations
prefers
less than
35% of
gross asset
value
Investment
restrictions
At least
70% in
real
estate
None
At least
75% in real
estate
At least
75% in real
estate
<10% of
asset in
nonincome
producing
properties
At least
75% in real
estate
At least
70-90% in
real estate
At least
75% in real
estate
Developmen
t
Max 20%
Yes
Yes, if
>50% of
assets are
income
producing
No
No
Properties
at least
80%
constructe
d
K REIT- yes
CR REIT-No
No
REITs were formed in 1960 Congress passed legislation providing small investors access to
income producing properties (The Real Estate Investment Trust Act of 1960).
Benefit of REIT structure entity does not pay corporate taxes as at least 90% of income
distributed to shareholders annually.
To qualify as REIT status, a company must meet and maintain certain provisions.
Publicly traded REITs are SEC-registrants and subjected various regulatory requirements.
Have a minimum of 100 shareholders
Conventional REITS
Islamic REITS
1. Permissibility
Not established
Permissible (Halal)
2.Rental purpose
No restrictions
3.Insurance
No restrictions
Takaful only
4. Activities on
No restrictions
property
5. Financing
No restrictions
OPERATIONAL ASPECTS
Islamic REITS
Performance Indicators
Authorized Investments
At least 75% of al-aqar KPJ REIT total
assets shall be investment in Shariahcompliant real estate, single purpose
companies which are Shariah compliant,
real-estate related assets or liquid assets
which are Shariah compliant;
The remaining 25% of al-aqar KPJ may be
invested in other Shariah-compliant assets
(ie Shariah compliant real estate related
assets, Shariah compliant non-real estate
related assets such as Islamic asset-backed
securities)
Performance Indicators
Premium
of 230
bps
200bps
3.6
Japan REITs
4.54.2
4
US 10 yr Gov bond
US REIT
Premium
of 7036bps
bps
4.9
3.23.2
7
Premium
ofof 140
bps
133bps
4.6
Singapore REITs
5.25.4
0
7.1
4.13.9
1
7.3
4 Yield (%) 5
Premium
of
of 170
bps
200bps
Premium
of 340
of
bps
320bps
Capital stability
& growth
Quality real
estate
Liquidity
& valuation
Diversification
Expert
Management
Defensive
Transparency
Types of investment
Risk level
Expected return
level
Low
Low
High
High
Cash
Fixed deposit
Bonds
REITs
Direct investment in
real estate
Investment in shares
Financial derivative
products
Al-Ghorm bil Ghonm
No Reward Without Risk
Philippines
Philippines
Thailand
Thailand
China
China
41
Wassalam
Thank You