RAKIA Sukuk (continued...) - Islamic Finance News

Deals of the Year 2007 Handbook
Al-Hadharah Boustead REIT (continued...)
valued at RM472 million (US$148 million) — were purchased
from Boustead Properties, Boustead Plantations and
Boustead Heah Joo Seang (collectively, the vendors).
Oil palm, being a favored product as a feedstock in
biodiesel production, and with the strong demand for oil
palm in the market which will sustain CPO prices, is seen as
a more attractive alternative investment to savvy investors
monitoring the sky-rocketing oil prices. The Al-Hadharah
Boustead REIT provides stable earnings and income
growth. Risk is minimized with the support of the value of
the plantation assets as well as the yields offered, providing
the investor with some degree of capital protection.
To fund the purchase consideration for the plantation
assets, the Al-Hadharah Boustead REIT issued units to the
vendors as part of the purchase consideration and the
balance of the purchase consideration was satisfi ed in
cash, based on the proceeds raised from the initial public
offering (IPO).
THE DEAL
The units issued by the Al-Hadharah Boustead REIT, together
with the proceeds from the IPO and Islamic fi nancing
facility, were utilized by the Al-Hadharah Boustead REIT
to fi nance the purchase of the plantation assets and to
fi nance the listing expenses and working capital of the Al-
Hadharah Boustead REIT.
AI-Hadharah Boustead REIT’s purchase of the plantation
assets is primarily to facilitate the REIT exercise involving the
arrangement to lease those assets back to the vendors
pursuant to several Ijarah agreements.
The income of the Al-Hadharah Boustead REIT is derived,
among others, from a stable distribution of returns of
fi xed fee rentals and a variable fee which introduced
performance-based profi t sharing, which is accustomed
to providing a yield dependent on the growth of the
plantation assets acquired and the palm oil industry.
The Al-Hadharah Boustead REIT offered a profi t sharing of
at least 98% of its distributable earnings to be paid to its unit
holders in the fi rst three fi nancial years.
INSTRUMENTAL DOCUMENTS
The Al-Hadharah Boustead REIT is governed by the REIT
Guidelines issued by the Securities Commission of Malaysia
(SC). The transaction was complex as it involved the transfer
of ownership of land which had various restrictions in interest.
Hence, the transaction documents for the acquisition and
continued...
Boustead Properties
and other Vendors
Letting of
Assets for
rental to
be paid by
Sale of Assets Tenants
Up to 53.4% Above 46.6%
Other Unitholders
Boustead REIT
Managers
Shariah
advisory
Investment in REITS
Manager’s
Fee
Management
services
Ownership
of assets
(Vested in
Trustee)
Al-Hadharah
Boustead
REIT
Distribution in the form of
dividends and other distributions
Rental
Income
Trustee’s
Fee
Acts on behalf
of Unitholders
CIMB Trustee
IBFIM
Plantation Assets
Plantation
Adviser
Plantation Management
Company
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