ADIB UK provides AED 216 million structured financing for B&Q let retail warehouses in Northern England

Abu Dhabi Islamic Bank (ADIB)-UK has provided structured financing of AED 216 million (£44.5 million) across three (B&Q) let retail warehouse assets to support investors with their Islamic financing needs in the UK.

The first transaction was with Bank of London and the Middle East (BLME) in respect of their retail warehouse investment in Castleford, West Yorkshire. The second transaction was with Kamco Invest in respect of their clients’ retail warehouse investments in Bury and Grimsby.

The three assets are all predominantly let to B&Q Limited, the UK’s largest DIY and home improvement retailer, on full repairing and insuring leases with approximately nine years remaining, no tenant break options, and upwards only rent reviews.

B&Q is owned by Kingfisher Plc, Europe’s largest home improvement retail group and the third largest in the world. The DIY sector has proven one of the most resilient sectors during the COVID-19 pandemic and the company has benefited from a surge in home DIY projects as people have spent more time in garden and undertaking home renovations during the lockdowns.

Paul Maisfield, Head of UK Real Estate at ADIB, said: “We are delighted to have supported BLME for the second time, following last year’s financing for the acquisition of Centrica headquarters in Edinburgh.   We are equally pleased to have closed our first transaction with Kamco invest on behalf of their clients and we are look forward to helping support the execution of their UK commercial real estate investment strategy through targeting prime regional assets with good income visibility and strong tenant covenants with a focus on cash yield.”

He continued: “These latest transactions demonstrate that ADIB is a trusted partner in providing tailored Sharia’a-compliant financing solutions, with the ability to support clients with the origination of real estate investment opportunities in the UK.”

According to Savills the retail warehouse segment of the UK market saw their yields harden by 25bps in October 2020. This reflects a broadening acceptance amongst investors that not only are parts of the retail warehouse market more defensive against the rise of internet retailing, but that footfall on retail warehouse parks is almost back to normal levels due to more social distancing-friendly configuration. Retail warehousing remains very liquid and more transactional activity is expected in this sector in the coming months.

ADIB has strong track record in offering bespoke and competitive Sharia-compliant property financing solutions for its clients. This year, it has closed major transactions including the AED 91 million financing for a UAE-based client to acquire Grange Road Business Park in Christchurch, a AED 320 million financing facility on a AED 900 million prime London healthcare facility, and a AED 55 million logistics hub in Edinburgh.

ADIB was recognised as the “Best Islamic Bank in the Middle East” at the MEA Finance Awards 2020.