Global MENA Real Estate Ijarah Fund Closes and Concludes Two Lucrative Ijarah Financing Deals
Global Investment House "Global" announced today the closing of Global MENA Ijarah Real Estate Fund, a close ended fund dedicated to providing its investors competitive returns using sophisticated Ijarah structures in accordance with Islamic Shari`a principles.
The Fund was launched in July 2007 and recently completed its initial and subsequent closings. The Fund’s objective is to provide unit holders with current income of 8-10% per annum on it’s invested capital contributions, net of all fees. The Fund seeks to achieve its investment objective by providing development and/or acquisition financing for a diversified portfolio of real estate properties in the Middle East (including Turkey) and North Africa (“MENA”) region, through investment structures designed both to generate stable quarterly cash flows in accordance with Shari’a Principles and to mitigate capital risk.
The Fund subsequently concluded its first capital call for 40% of its committed capital to be invested into two lucrative deals finalized by the Fund.
Mr. Shailesh Dash, Senior Vice President and Head of the Alternative Investments Department at Global stated, “we are very excited about the closing of our first Ijarah fund focusing on real estate opportunities in the MENA region. Our MENA Ijarah Fund received excellent response from the region and also from far east countries. The Fund was successfully closed with overall capital commitments of USD 75.4 million.”
Mr. Dash further added, “the MENA region has been recording consistent GDP growth due to a variety of factors. The average GDP within the region increased by 6.3% in 2006, up from a 4.6% increase during each of the first four years of this decade. We believe that this growth will continue at the rate of 5.5% in the year 2007. The MENA region’s GDP increase in 2006 was one of its highest since the 1970s. The current pace of growth has narrowed the gap in per capita income growth between the MENA region and other developing regions”.
Mr. Rakesh Patnaik, Head of Real Estate Funds at Global stated, “this is an excellent time for the real estate sector in the MENA which is growing at a faster pace than any other sector in the region and thereby providing a spectrum of investment opportunities in the real estate space. Global has built a strong pipeline of deal flow and has evaluated two opportunities that match the fund objective and will consume the first capital call of the fund.
Elaborating on two prospective investment opportunities, Mr. Patnaik added, “the Fund will finance a respected real estate developer in the UAE to acquire and develop a land parcel in the prestigious Palm Jebel Ali project in Dubai. The project consists of a unique and premium grade residential tower with full service recreation and parking facilities.”
Mr. Patnaik stated that “The Fund intends to finance up to USD 15 million for a period of 30 months under a Musharaka structure which will optimally secure the interest of the investors and also receive excellent returns. The Fund will receive a fixed periodic profit at the rate of 12% and also a share in the net income from the project. The Fund will have a board representation to actively monitor the performance of the project. The anticipated net return from the investment will be over 10%, however, the overall returns will be improved substantially after factoring Fund’s share in the net income of the project”.
Mr. Patnaik further added, “along with the above investment, the Fund is also working on a second opportunity in Kuwait. The Fund intends to acquire two real estate income producing residential properties located in prime areas in Kuwait. The Fund will use a sale and lease back structure wherein, it will acquire and lease back the properties to the company initially for a period of six months extendable upto one year. The Fund will be entitled to receive monthly lease rentals at a profit rate of 11.5%. The anticipated cash-on-cash annualized net return to the Fund investors will be in the range of 8% to 9% net of all fees, commission and expenses.”
Mr. Patnaik concluded, “we have recently completed the due diligence and will conclude the investments soon. We intend to make a second capital call and wish to invest the overall capital by the end of the year.”
It is worth mentioning that Global currently manages 38 investment funds with multiple investment strategies and objectives. A number of which have won international awards and recognitions. Global’s commitment to its investors remains strong as evident with its ongoing achievement in markets across the region.
