Shari'ah Compliance

Frequently Asked Questions

Q. What does being Shari'ah compliant mean for Sabana REIT?

This means Sabana REIT will be managed in accordance with Shari'ah investment principles and procedures, which are consistent with principles of Islamic law and general considerations of ethical investments in terms of social responsibility in asset selection and structuring.

To enable Sabana REIT to comply with Shari'ah investment principles and procedures, the Manager has, through the Shari'ah Adviser, appointed the Independent Shari'ah Committee to provide ongoing advice on Shari'ah compliance to Sabana REIT.

Specifically, Sabana REIT is required to ensure that the total rental income from lessees, tenants and/or sub-tenants engaging in activities which are non-permissible under the Shari'ah Guidelines, which include activities relating to conventional financial and insurance services, gaming, non-halal production, tobacco-related products, non-permitted entertainment activities and stock-broking in non-compliant securities does not exceed 5.0% per annum of the gross revenue of Sabana REIT's portfolio of properties.

In terms of financing, investment and deposit facilities and insurance and risk management solutions, Sabana REIT will seek Shari'ah compliant options where commercially available. Where Shari'ah compliant options are not commercially viable, the Manager can seek approval from the Independent Shari'ah Committee to utilise conventional options.

Q. Who ensures that Sabana REIT is Shari'ah compliant?

The Independent Shari'ah Committee, which is an external committee comprising three independent Shari'ah scholars appointed by the Manager through Five Pillars, advises the Manager on Shari'ah related matters pertaining to Sabana REIT.

The Independent Shari'ah Committee has been appointed to ensure the initial and continued Shari'ah compliance of Sabana REIT. This involves, among other measures, the Independent Shari'ah Committee issuing specific guidelines to be observed by the Manager to ensure that Sabana REIT is, and will continue to be, Shari'ah compliant and providing an annual written certification confirming the Shari'ah compliant status of Sabana REIT.

Q. Why establish a Shari'ah compliant REIT?

The Manager is of the view that the growth in the Islamic finance industry globally and especially in South East Asia will translate into an increase in demand for Shari'ah compliant financial products, such as listed REITs.

The Manager also believes that being the only Shari'ah compliant REIT listed in Singapore and the largest listed Shari'ah compliant REIT by total assets globally will enable Sabana REIT to access the Islamic equity markets. The Manager believes this would provide Sabana REIT with an advantage over conventional REITs by allowing it to tap into relatively more diverse sources of equity funding and a larger investor base.

Such additional sources of funding and larger investor base will facilitate the implementation of the Manager's strategies, the achievement of the Manager's objective of delivering regular and stable returns to investors, and long-term growth in DPU in Sabana REIT and NAV per Unit.

Q. Can investors of any faith invest in Sabana REIT?

Yes, both conventional and Islamic investors may apply for units in Sabana REIT. In addition to the conventional global investor base that is customary for Singapore REITs, Sabana REIT will be unique among Singapore REITs in its ability to tap a separate pool of capital, namely that of Shari'ah investors who require their investments to be made in accordance with Shari'ah investment principles.

This allows Sabana REIT to appeal to a wider and broader set of potential investors as compared to conventional REITs listed in Singapore, which could result in greater demand for Units than if Sabana REIT were not Shari'ah compliant.

Q. Does Sabana REIT have to comply with prevailing legislation, regulations, accounting standards, guidelines and directives affecting REITs in Singapore or is it only subject to Shari'ah Guidelines?

Sabana REIT has to and will comply with prevailing legislation, regulation, accounting standards, guidelines and directives affecting REITs in Singapore. The Manager's management of Sabana REIT in accordance with Shari'ah investment principles and procedures are in addition to the laws, rules and regulations of any other relevant regulatory or supervisory body or agency applicable to Sabana REIT. Where Shari'ah principles conflict with the laws, rules and regulations applicable to Sabana REIT, such laws, rules and regulations shall prevail.