The draft Reit regulations 2012 published by the Capital Markets Authority (CMA) allow for creation of Shariah-compliant Reit products. Besides complying with requirements for development and construction Reits (D-Reits) and income investment Reits (I-Reits), proposed Islamic Reit funds will have to appoint Shariah advisers.
Shariah advisers will guide Reit managers on Shariah principles applicable in Kenya and conduct Shariah-compliant assessments of the terms of Reit schemes and Reit securities. "Prior to any offer or issue being made, the trustee shall appoint a Shariah adviser to assess the compliance status of the Reit scheme," state the proposed regulations.
"For the purposes of these Regulations a Shariah adviser shall be an expert who by virtue of their occupation, religious standing , expertise or reputation is competent to provide an authoritative statement on the compliance of a real estate investment trust scheme with Shariah law." Shariah advisers will assess real estate assets prior to acquisition as well as the tenants to ensure they only carry out permissible activities or businesses. They will also advise on the method and terms of borrowing and financing arrangements for Islamic Reits.