TFI’s Shariah JV fund acquires properties in UK

Barwa Bank’s investment banking division, The First Investor (TFI) and Investra Investments have announced the “first two property acquisitions” of the UK distribution, logistics and light-industrial income generating fund, which was launched in April 2013.

TFI has partnered with Investra for what is TFI and Barwa Bank Group’s first UK-based investment initiative and the first major Shariah-compliant fund in the region of its kind. The fund invests in income-generating property in the distribution, logistics and light-industrial sector of the UK, targeting net quarterly dividends of 7%-9% per annum and capital appreciation over three years. Both TFI and Investra have seeded the fund with approximately QR56mn capital from their respective balance sheets.

“Despite a slow economic recovery of the neighbouring eurozone countries, the UK industrial property market has been driven by increased online retail demand, requiring a specialist network of parcel delivery centres close to urban markets and increased demand for supply chain efficiencies, for faster delivery of online orders.

“The low supply and virtually no new construction in the last five years of light-industrial and warehousing property has buoyed rental rates and reduced tenant incentives.

“The industrial property sector in the UK uniquely offers triple net leases where maintenance, repair and insurance are the responsibility of the tenants, with long lease terms with five yearly upward only rent escalations and typically leases backed by credit covenants from the tenants or their holding companies,” TFI said.

Khalid al-Subeai, director, TFI Investra UK Property Income Fund and chief executive officer said, “The UK distribution, logistics and light-industrial property sector has historically outperformed the office and retail sector in generating income yield over the past 30 years and we believe this is the right time to enter the market for three to five year investment horizon. I am confident that through TFI’s investment expertise and Investra’s specialised knowledge of the UK real estate market, we will be able to capitalise on this unique opportunity”.

TFI and Investra have put together an institutional grade investment programme in collaboration with Pelham Associates, a long standing property management firm based in the UK as well as internationally renowned lawyers, tax advisors and administrators to deliver best in class governance, investment management and risk management.

TFI and Investra will be continuing their investment programme in the UK distribution, logistics and light-industrial sector until Q1, 2014, according to a statement.