Islamic REIT / Sabana

Islamic REIT / Sabana: Islamic REITS in Msia and Spore reached records as analysts forecast annual dividends of almost twice the average on benchmark stocks. Spore’s Sabana Shari’ah Compliant Industrial REIT gained 11.4% and will provide an annual dividend yield of 9.7%, according to UOBK. The STI is predicted to pay 3.7%. HSBC says investors are buying the securities because they are more easily traded than sukuk (instruments that pay returns on assetsto comply with Islam’s ban on interest) and safer than equities given their rental income. The total capitalization of all REITs in Asia is US$4.1 tr vs US$8.7 tr for the MSCI Asia-Pacific Index of 1006 major companies. OCBC also agrees Islamic REITs are a defensive asset class; amidst the volatility and uncertainty in the global market due to the risk that Europe’s crisis may worsen, notes some investors are shifting their asset allocation. Shariah-compliant REITs forbid investments in properties involved in gambling, financial services based on interest payments, hotels and bars. Sabana is +0.5% at $0.99.