Is Equiton Investment halal?

Salamun alaikum. Can you tell me if Equiton’s Apartment Fund (Residential Income Fund) qualifies as halal / sharia-compliant?

They offer a private REIT investing in and upgrading condos/apartment buildings and investors earn monthly distributions from the rent and property appreciation, not through interest on lending. The fund (as of Oct 2023) was at 55% cash ownership with the remaining 45% in debt (loans). I was informed their loan payback is on a 3% rate (considerably lower than current bank rates) and on a 7-year term.

Unlike the residential (apartment) fund, their other investment offerings deal with commercial development and income fund (which does involve profiting on lending).

As-salamu Alaykum Wa Rahmaa Tu’lahi Wa Brakatu,

If this was in the stock market, many shari’ah committees would not verify this fund as halal due to the high debt to cash ratio.

In regards to their Apartment Fund, it’s best to find out the share class and setup of the fund. Some funds are completely isolated and do not share funds or income with others whereas some do up to a limited percentage.

Finally, there might be some complexities here as you might be interested in just a service they are providing and not the company itself so the debt to cash ratio is irrelevant. The next thing you would have to do is identify to the best of your or a professionals ability the architecture of the fund and if it is isolated or being shared with other funds where your profits might be derived from.

Take a look at Thier KIP or fact/fund sheet.

At the bottom fine print it states the following.

  • Assets Under Management includes cash, investment properties, property purchase deposits, and loan receivables. AUM numbers are preliminary and subject to
    change based on audited financial statements