Islamic Global Real Estate Securities Fund SPC - National Bank of ...

Private Placement MemorandumII. GLOBAL REAL ESTATE SECURITIES OVERVIEW1. Global Real Estate Securities.The global public real estate market is currently undergoing a transformation. Today in countries throughoutAsia, Europe and Latin America, authorities are introducing or considering new tax-transparent propertyinvestment vehicles similar to U.S. real estate investment trusts (“REITs”) and Australian listed property trusts.REITs are publicly-traded real estate companies that provide investors with access to commercial real estate. Thetransparent tax treatment of REITs gives investors access to the same cash flow characteristics that previously wereonly available to direct commercial real estate investors. In markets where these vehicles have been introduced,and where they already have existed, investors’ demand for safety and yield has caused share prices to rise sharplyover the last few years. As a result, the equity market capitalization of the global public securities market hasgrown significantly over the past ten years. The growth of global REITs and listed real estate stocks providesinvestors around the world with access to commercial real estate investment, which the Investment Advisorbelieves should provide investors with new diversification and return enhancement opportunities.When developing a strategic asset allocation to commercial real estate, the Investment Advisor believes thatinvestors should consider an investment in Real Estate Securities, which would include the securities of real estateinvestment, development and operating companies, including REITs, and the securities of companies providingmanagement and investment advisory services to real estate investment, development and operating companies,which securities may consist of shares, general and limited partnership interests, membership interests andother equity and quasi-equity instruments. For a large number of investors, Real Estate Securities are the onlyreasonable way to gain exposure to the commercial real estate equity asset class. Advantages of an investmentin Real Estate Securities over a direct investment in real estate include liquidity, corporate transparency andgovernance, real-time pricing and lower transaction costs.The attractiveness of Real Estate Securities combines the appeal of the underlying real estate assets with theliquidity associated with the ownership of securities. As of September 30, 2007, the global real estate securitiesmarkets represented approximately 7% of the total real estate universe and less than 3% of all public equitymarkets. The real estate securities markets have shown steady signs of growth, contributing to the creation ofa vast and liquid pool of Real Estate Securities in which to invest. The Investment Advisor expects that thegrowth of the real estate securities markets will continue for the next several years and that the share of RealEstate Securities in various markets compared to the capitalization of real estate property in such markets leavessignificant room for the growth of Real Estate Securities. Real Estate Securities have also provided good valueto investors for the past decade as returns on those securities have considerably outperformed returns derivedfrom global bonds or global stocks during that period.In addition to a higher return compared to global stock and global bonds, the Investment Advisor believesthat Real Estate Securities offer less volatility than global stocks and bonds and have provided excellent riskadjustedreturns. Since the mid-1990s, listed property shares have delivered competitive returns, and have lowcorrelations with other asset classes, making them quite attractive.In summary, the real estate securities market presents very attractive features: strong property markets, strongfinancial value of securities and liquidity. The Investment Advisor believes that a shift is underway withinthe global commercial real estate asset class. The advantages of Real Estate Securities over direct real estateinclude liquidity, corporate transparency and governance, real-time pricing and lower transaction costs. Theseadvantages create a natural preference for Real Estate Securities and, over time, a significant amount of directreal estate may be securitized. The Investment Advisor expects that as Real Estate Securities continue to growworldwide, their share of the commercial real estate market will also grow, as will their acceptance as a methodof obtaining exposure to the commercial real estate asset class.2. Shariah Compliance.Real Estate Securities in which the Wafra-Pramerica Fund invests are required to comply with the ShariahCriteria. The Shariah Criteria are comprised primarily of the Industry Screen and a Financial Screen. The9