BLME launches first Sharia’a compliant UK light industrial building fund for Gulf investors

Bank of London and The Middle East (BLME), the London based wholesale Sharia’a compliant bank whose main shareholders are Boubyan Bank, National Bank of Kuwait, today announced the launch of its Light Industrial Building Fund (LIBF), a Sharia’a compliant UK real estate fund which invests in sustainable property assets.  

The LIBF, which targets institutional investors, invests in carefully selected light industrial buildings across the UK. The target cash on cash yield is 8% to 10% per annum, with quarterly cash dividends paid to investors. Target IRR (Internal Rate of Return) is 15% for the five-year duration of this closed ended fund. The target close for the fund is between £50 million and £100 million in equity, which will be leveraged to create a portfolio of up to £200 million of assets. 

“As the UK economy recovers, we anticipate an increasing number of SMEs operating new businesses from industrial estates,” commented Derek Weist, Director - Asset Management at BLME. “Pricing in this sector is considered attractive with high yields available on many types of industrial property assets. In addition, the highly diversified mix of tenants, by industry and geography, and strengthening occupier demand supports the prospect for rental growth in future, which can provide a strong positive cashflow for private client and institutional investors.” 

The UK multi-let light industrial building sector currently covers over £30 billion of properties, located in approximately 6,000 industrial estates across the UK. These are typically low technology, low obsolescence buildings constructed of concrete, brick or steel, and are used for light manufacturing, assembly, storage, warehousing and distribution activities. 

Nigel Denison, Head of Asset Management for BLME, said: “This is an exciting opportunity for institutions to invest in a different type of UK property asset in a sector which offers excellent potential and value. The launch of this fund is a result of our ongoing strategy to develop innovative products that offer clients quality assets which provide diversification and competitive returns. ” 

The fund is available to both UK resident and non-UK resident investors. The fund is a compartment of the BLME Sharia’a Umbrella Fund SICAV-SIF, which is domiciled in Luxembourg.