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REIT to add new horizon to capital market

Renata gets nod for bond worth Tk660cr
Staff Correspondent
11 Jan 2024 22:05:50 | Update: 11 Jan 2024 22:05:50
REIT to add new horizon to capital market

The Bangladesh Securities and Exchange Commission (BSEC) has finalised draft rules for the Real Estate Investment Trust (REIT), to create opportunities for people to receive dividends from real estate investments and finance the sector from the market.

Currently waiting on opinions from stakeholders, the draft rules raise hopes that the first-ever exchange can be launched within a couple of months. The draft received approval at a meeting held at the BSEC Agargaon office on Thursday, chaired by its Chairman Shibli Rubayat Ul Islam.

Back in November 2022, the securities regulator held a meeting with three committees formed earlier to frame regulations for the draft rules. The Real Estate Investment Trust fund will collect funds from general investors, such as mutual funds, by issuing units.

Senior officials of the BSEC said REIT are going to add a new horizon in the country’s capital market that had long been dependent on equity products, and very recently achieved momentum in publicly traded debt instruments.

The Real Estate Investment Trust would democratise the real estate market, as mutual funds did in the equity market, by allowing small sums to be collectively invested in a basket of real estate properties.

After debt instruments, REIT would be another asset class to offer portfolio investors diversifying opportunities, said a BSEC official.

BSEC Chairman Prof Shibli Rubayat Ul Islam had earlier said the REIT concept would be very useful, as the country’s population is rising.

The REIT will collect funds from general investors, like mutual funds, by issuing units. They will get dividends against their funds collected for constructing housing and multipurpose complexes.

The investors will also be allowed to transfer their units of the asset-backed securities, like the mutual fund units.

The REIT usually invests in most real estate property types, including apartment buildings, cell towers, data centers, hotels, medical facilities, offices, retail centers, and warehouses.

BSEC Commissioner Dr Shaikh Shamsuddin Ahmed said, “We will have to move forward, taking into account the issue of ensuring confidence among investors. We will have to think about the proper valuation of products.”

In other countries, the companies that pool such funds are required to distribute more than 90 per cent of their profits.

Renata Ltd gets nod for bond

At the same commission meeting, the BSEC also approved the issuance of Renata Ltd, a leading drug manufacturer in Bangladesh’s secured, non-convertible, zero-coupon bond worth Tk 660.15 crore for one to five years.

The pharma company would issue the bond to repay the bank loan. The per-unit price of the bond has been fixed at Tk 1 lakh for private placement holders.

The BSEC also asked the company to get listed on the alternative trading board (ATB) of the bourses. Brac EPL Investments Ltd would act as the trustee of the bond, while City Bank Capital would act as the arranger of the bond.

Renata witnessed a 54.8 per cent year-on-year drop in net profit in the fiscal year 2022–23, though its revenue grew by 6 per cent in the year.

The situation, as per the company, is credited to the increase in the
prices of raw materials and the rise in energy prices caused by the global dollar crisis.

The publicly traded company on Saturday declared a 62.5 per cent cash dividend for FY23 to its shareholders, the lowest in the last seven years. The drug maker’s profit after tax was Tk 231 crore in FY23, down from Tk 511 crore recorded in the previous fiscal year.

According to the pharmaceutical company’s audited FY23 financial report, its net revenue grew by 5.8 per cent, amounting to Tk 3,287 crore against Tk 3,107 crore in FY22.

The drug manufacturer got listed on the stock exchanges in 1979, and currently its shares are stuck on the floor price of Tk 1,217.90 each.