The National Investor has announced its Emirates Real Estate Fund has acquired the future cash flows of 27 Abu Dhabi residential properties developed by Al Ahmadain General Contracting Co. LLC (AAGCC).
The Shari’a-compliant transaction, which is worth AED 19 million, represents the Fund’s second major investment in the burgeoning Abu Dhabi real estate market. The Fund was the first of its kind to be approved by the UAE Central Bank when it was launched in 2003 and its current size stands at AED 114 million, with major GCC institutions among its unitholders. With this latest transaction, the Fund’s portfolio now stands at 63 prime properties throughout Abu Dhabi with gross yields in excess of 10%.
Commenting on the deal, Dr Karim El Solh, CEO of The National Investor, said: “The National Investor decided to securitize the future cash flows generated by the properties in the portfolio of AAGCC because of the excellent quality of the design and construction as well as the high quality of the tenants, thus ensuring a steady and predictable rental income for the Fund’s unitholders.
“AAGCC has the best Istithmar track record and the largest and highest-quality portfolio of properties in Abu Dhabi. The portfolio of properties we have acquired will generate sizable and high-quality income for the Emirates Real Estate Fund.
“Rather than waiting several years to recover its investment from the rental income of the properties during the Istithmar period, AAGCC obtains an upfront payment through an Ijara lease equivalent to the property’s future projected cash flows. In essence, the Fund is monetizing the developer’s future cash flows,” said Dr. El Solh.
“This is our second transaction with The National Investor and the Emirates Real Estate Fund and we look forward to even further cooperation in the near future”, said Mr. Sultan Alotaiba, Chairman of AAGCC.
Outlining the benefits for the company, Mr. Abdulla Gadalla, General Manager of AAGCC, said: “The upfront payment gives us an immediate profit realization and allows us to recycle our capital into other developments, allowing us to continue growing.”
