While the tokenization concept by fintech start-ups has helped transform real estate assets into liquid investment instruments, Nigerian firm Yahshud has come up with an alternate short-term prospect that offers regular income returns.
Founder and CEO Abduljabbar Oyekan told IFN Investor the underlying concept is a Mudarabah profit-sharing arrangement involving a completed property, which has an ongoing lease. This asset backs the issuance of Shariah compliant notes, which are then offered to investors.
Using the leasehold income, investors get quarterly payouts and full return of capital upon the 12-month Islamic notes expiry – effectively becoming a fixed income instrument. But at present, this scheme isn’t regulated by a securities regulator.
“To ensure accountability, it was run as a cooperative scheme because we didn’t have a fund management license,” Abduljabbar admitted. “Having seen how successful our initial effort was, we quickly applied for the necessary licensing and approvals.”
Using the duly-registered Yahshud Cooperative, the proof-of-concept investment scheme took off 14 months ago among family and friends – raising NGN200 million (US$126,000) and was fully paid back with the contracted Shariah profit.
The amount raised went to fund the purchase or development of another property project, which is then used as an asset to back the issuance of another set of 12-month Islamic notes. Abduljabbar described this as a pipeline concept, to continuously fund more property projects.
This innovation came about because retail mortgages are not easily available in Nigeria, due to a weak consumer finance regulatory environment. As such, Abduljabbar said most residences are purchased in cash from developers or the secondary market.
With a knock-on effect on leases, causing landlords to demand at least a year or two’s worth of upfront payment, Yahshud was formed to address the affordability gap and help tenants secure roofs over their heads by converting these contracts into monthly Shariah compliant rentals.
Abduljabbar explained this monthly Eazirent scheme pioneered by Yahshud led to the establishment of the RAIN (real estate asset investment notes) initiative because the firm found the credit crunch being applied all along the Nigerian property supply chain – including on the landlords and developers.
Continuing to use the Yahshud Cooperative structure, a second set of Islamic notes is in progress to raise NGN100 million (US$63,000), closing the funding round on the 23rd August 2024. A third set of Islamic notes is already being planned, aiming to rope in licensed fund managers to boost investments.
“This is a temporary measure till Yahshud gets the full fund management license approvals,” Abduljabbar assured. “The demand is strong as the first round was oversubscribed and those who missed out already formed 30% of investors in the current round.”
Confident in the growth potential of both Eazirent and the RAIN schemes, Yahshud is planning to combine them into a single app platform called EaziEstate that will allow the firm’s Shariah compliant investment offerings to be further expanded.
