Halk Real Estate Investment Trust (REIT) has issued Turkey's first Sharia-compliant, interest-free financial certificate, known as sukuk, through Halkinvest.
According to a Halk REIT statement y, the company has completed the issuance of an 87-day lease certificate with a nominal value of TL 100 million ($26.12 million) through Halkinvest.
This transaction, based on the management contract, represents the first sukuk issuance in the real estate investment sector in Turkey. The transaction was done through a qualified investor sales method, and the simple return of the 87-day lease certificate will be realized at 13.25 percent at the end of the maturity period.
The transaction based on the management contract, in which Halk REIT was a fund user, was the first transaction in which Halk Varlık Kiralama AŞ, a new player in the lease certificates market, became the issuer asset leasing company.
Halk REIT General Manager Feyzullah Yetgin said that the widespread use of real estate-based financial products will make a great contribution to the real potential of the sector. "At Halk REIT, we believe that applications such as real estate investment funds, certificates and sukuk will contribute greatly to the development of the sector," Yetgin said, stressing that their primary goal is to create shareable and growing values for their shareholders. "We believe that this issuance, which we have realized with the experience of Halkinvest, will become an exemplary transaction in the widespread use of real estate-based financial products."
Halkinvest General Manager Serdar Sürer said that the lease certificate issuance transaction executed on behalf of Halk REIT is their 60th capital market issuance transaction this year. He also said that they will continue to add value to their business partners with products based on the real economy. "This transaction we realized as Turkey's first REIT sukuk issuance was an important step toward the development of lease certificates, a newly emerging tool in the domestic capital markets," Sürer said.
Sukuk is an Islamic financial certificate, similar to a bond in global finance, that complies with Sharia. Since the traditional, Western interest-paying bond structure is not permissible in Islam, the issuer of a sukuk sells an investor group a certificate, and then uses the proceeds to purchase an asset, of which the investor group has partial ownership. The issuer must also make a contractual promise to buy back the bond at a future date at par value.