National Bank of Dubai’s European Real Estate Fund (NBD EREF), has announced that its performance has exceeded the projected total return of 15%pa Internal Rate of Return. In addition, it is expected that the income component distributed through a quarterly coupon will rise noticeably as rental income from purchases feeds through.
2006 was yet another year in which new record volumes of global real estate investment volumes were achieved. All major markets witnessed a rise in commercial real estate investment, with Europe up 50% representing increased share in the global trade from 41% to 46%. A significant aspect of this growth has been increased across border activity.
Therefore, increased investor demand has resulted in higher prices and lower yields (yield compression). This has been the major driver in very strong real estate investment performance, provoking even greater demand and higher prices
“Increasingly NBD’s investors are prepared to seek higher net returns through participation in added value and speculative developments in the UK and in mature Western European markets. NBD’s EREF is a response to this growing investment trend and forms an integral part of NBD’s strategy and commitment to its customers to provide diversified investment opportunities,” said Faranak Foroughi, Head of Private Banking, National Bank of Dubai. “Real estate funds are an ideal building block for enhancing and safeguarding the assets of investors wishing to develop their investment portfolios, therefore we have in place a team of experts that will advice customers on the best investment choices available.”
“The team offers real estate investment funds, assists in the acquisition, finance, and ownership of property in the UK and selected territories in Western Europe including Ireland, France, Germany and the Netherlands. The team enjoys a broad European market capability, in both residential and commercial property” concluded Faranak Foroughi.
NBD’s Private Office Real Estate Advisory Team manages the NBD European Real Estate Fund, based on a Jersey Property Unit Trust with a target gross asset value of $150m. As part of enhancing the real estate services offered, the Advisory Team also sources real estate co-investment deals.
To date, NBD EREF has invested €40m into four mixed-used real estate assets in Germany and a further €10m is earmarked for investments into the Netherlands. The triple net initial yields for the purchased assets are in a range of 5.00% to 6.32% with some uplift potential over the holding period. The average interest rate on borrowing provides a comfortable gap between the net cash flow generated by the assets and the costs of borrowing.
NBD EREF has recently expanding its client base to include a number of new Turkish clients, as well as UK domiciled clients. The team also supports investors with properties in France and Spain.
About NBD EREF
NBD’s closed-ended real estate fund launched in 2005 provides investors with exposure to a diversified portfolio of commercial properties in the UK and major continental European countries that offer superior growth and value opportunities. The Fund invests in office, retail and industrial investments with strong rental earning profiles, opportunities for income enhancement and sustainable capital growth.
50% of the Fund is invested in the existing CIT UK Investment Fund – The CIT UK Limited Real Estate Partnership. This partnership is a collective investment scheme operated by CIT, a leading investment company operating in the UK and Europe that aims to acquire incoming producing assets that can be improved through active asset management. The other 50% is invested in mature European (Euro zone) markets. With a focus that is very similar to the CIT Fund, the European Real Estate Fund seeks value in mature and transparent markets.
NBD EREF protects investors through a strategy that focuses on investing in medium sized real estate assets, mixed used properties, high yielding stock with minimum triple net yields of 6%, established secondary cities in mature European countries and a portfolio with a medium holding time horizon of five to seven years.
