SIDRA Capital (Sidra), a CMA regulated Shariah-compliant financial services company, and Gatehouse Bank (Gatehouse), an FSA regulated UK-based Shariah-compliant bank specializing in UK real estate, have announced the first closing of the Sterling United Kingdom Real Estate Fund (SURF) and their first property acquisition in Cambridge, UK at £23.55 million.
SURF aims to complete purchases in the Shariah-compliant commercial real estate in the UK. The Fund will acquire a diverse real estate portfolio which covers the office, retail, logistics, student accommodation and light industrial sectors, to reach its target equity size of £100 million.
SURF has successfully deployed its fund capital with their first property acquisition in The Cooperative Group Distribution Centre (property) located in Huntingdon, near Cambridge, UK for £23.55 million.
The property will produce an average annual distribution yield of circa 8.40 percent over 5 years and has been fully let to Somerfield Property for a 35 year term from 1990.
The 23,844 square meter property was secured at a discount to the original quoting price and will provide SURF investors with a significant surplus over the fund's target annual distribution of 6.50 percent.
Hani Othman Baothman, Managing Director and CEO, Sidra, said the low-risk profile of the first asset acquired for the fund. "The Cooperative Group Distribution Centre was selected for acquisition due to its attractive lease profile and strong tenant.
Having secured the asset below the original quoting price, the property compares favorably to the wider UK logistics market. We project to deliver an average annual distribution yield of 8.40 percent and an expected IRR in excess of 9.50 percent for our investors," he added.
Richard Thomas, CEO, Gatehouse, said "the Sterling United Kingdom Real Estate is a shining example of Saudi Arabian — United Kingdom collaboration.
With SURF Gatehouse and Sidra expect to deliver an outstanding opportunity for investors pursuing income producing real estate investment with sustainable returns in the UK. Taking advantage of our expertise in the UK real estate sector and their experience in alternative investment fund activities around this region, SURF's first acquisition highlights our prudent investment methodology and the potential returns that are currently achievable." — SG