The first Central Bank approved real estate fund in the UAE, the Emirates Real Estate Fund (“the Fund”), managed by the National Investor, has recently closed its first major investment in Abu Dhabi. The Fund acquired, in a Shariaa compliant manner, the future cash flows of 36 Abu Dhabi properties developed by Al Ahmadain General Contracting Co LLC (Al Ahmadain). This transaction is one of the first UAE Islamic real estate cash flow securitizations and totaled AED 23 million.
Al Ahmadain is a leading residential developer in Abu Dhabi specializing in the innovative Istithmar concept whereby a developer leases land from its owner, develops the properties and rents them during the lease (“Istithmar”) period prior to returning the properties to their owner at the end of the lease period. The National Investor decided to purchase the future cashflows generated by the properties in the portfolio of Al Ahmadain because of the excellent quality of the design and construction as well as the high quality of the tenants (ensuring a predictable rental income for the Fund). “Al Ahmadain has the best Istithmar track record and the largest and highest quality portfolio of properties in Abu Dhabi; the Company was the ideal partner for the Emirates Real Estate Fund”, said Dr. Karim El Solh, Chief Executive Officer of the National Investor.
“Rather than waiting several years to recover its investment from the rental income of the properties during the lease/Istithmar period, Al Ahmadain 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. Karim El Solh. “The upfront payment gives us an immediate profit and allows us to recycle our capital into other developments, allowing us to keep on growing as developers”, said Mr. Abdulla Jadalla, General Manager of Al Ahmadain.
“The Abu Dhabi real estate market is unique, in that one cannot sell properties except in the case of an inheritance. We had to be innovative in finding a way to get exposure to the growing and promising Abu Dhabi real estate market; securitization of future rental income was the optimal and most secure way of achieving that goal”, said Mr. Jamil Brair, Senior Associate, National Investor.
“We are pleased to partner with the Emirates Real Estate Fund and the National Investor on this landmark transaction and we look forward to even further cooperation in the near future”, said Mr. Sultan Al Otaiba, Chairman of Al Ahmadain.
About the National Investor: The National Investor is a leading UAE investment and advisory firm with a distinguished track record in fundraising, advisory services, asset management and private equity investments. The Company is backed by over 60 UAE shareholders who come from the highest echelons of the business and political community. NI is actively involved in investment banking, private equity and asset management. The Company is currently ranked as the leading arranger of public share offerings, having lead managed the largest number of public offerings in the UAE to date. For more information on the National Investor, please visit the Web site at www.nationalinvestor.ae. About the Emirates Real Estate Fund
The Emirates Real Estate Fund invests in income producing properties in the UAE to achieve above average returns at below market risk. The Fund, with its low risk investment profile, should appeal to risk-averse investors, who in the prevailing low deposit interest environment, are looking for a respectable current income and higher returns. As a new asset class, investors receive the returns derived from real estate, but without the risks and obligations of individual property ownership. The Fund is structured in a Sharia’a compliant manner. The strategic real estate advisor to the Fund is Colliers International, one of the largest and most respected real estate management firms with over 200 offices in 52 countries worldwide and over US$ 25 billion in property under management.