Abu Dhabi Islamic Bank (ADIB) has provided AED 91 million (£18.9 million) in Sharia’a-compliant structured financing for a private UAE-based client. The financing will be used to acquire a AED 141 million (£29.1 million) business park on the UK’s south coast, which will provide the client with a cash on cash return of 8%.
The Grange Road Business Park, located in Christchurch, Dorset, comprises 15 mixed use buildings, with a total net lettable area of 150,191 sq/ft. Built in 2002, it is currently let in its entirety to BAE Systems, a multinational defence, security, and aerospace company until 2031, with the lease providing for upwards-only rent reviews and no tenant break options.
Paul Maisfield, Head of UK Real Estate at ADIB, said: “We are delighted to have supported our UAE-based client with a tailored financing solution to acquire an income-producing, high-quality asset in the UK offering long term secure income. The continued weakness of sterling against the dollar makes UK real estate an attractive proposition for investors in the Middle East seeking to diversify their portfolios. The primary challenge facing our clients is the very competitive nature of the UK commercial real estate market where we have witnessed a polarisation of both investor and financing appetite towards sectors and assets offering long dated and secure rental cash flows which have been more insulated from the effects of the pandemic. ADIB has a strong track record advising clients in the Gulf on the dynamics of the UK property market, and we look forward to continue guiding them to opportunities which meet their investment objectives.”
Mohammed Azab, Head of Private Banking at ADIB, said: “At ADIB, we remain steadfast in our commitment in providing financing to high-growth companies that are seeking attractive returns within the real estate sector. The completion of this transaction demonstrates our strong ability to bring bespoke and competitive Sharia-compliant property financing solutions, despite current economic challenges.”
Over the last three years, ADIB has catered to growing demand for commercial property investments in London as well as major regional cities in the UK, including Bristol, Leeds and Manchester. Among its major transactions, ADIB provided financing for The Bank of London and the Middle East (BLME) to acquire a AED 120 million (£26.95 million) Grade A office building in Edinburgh and financing to Saudi Arabia’s Cedar Tree Investments to acquire a AED 280 million (£39 million) residential portfolio in Manchester.
ADIB was recognised as the “Best Islamic Bank in the Middle East” at the MEA Finance Awards 2020.