Al Rajhi Capital, subsidiary of Saudi Arabia’s Al Rajhi Bank, and Arcapita Bank, headquarted in Bahrain, have launched a $500 million (SR1.87 billion) Gulf property income fund to capitalise on falling prices.

The ARC Real Estate Income Fund represents the first collaboration in private equity between Al Rajhi Capital and Arcapita and the two companies will seed the fund with a joint investment of $50 million.

They will combine their resources and expertise to source and acquire investments for the fund in high-quality, income-generating real estate assets, in Saudi Arabia and other countries of the GCC. The focus will be on logistics, warehouses, as well as healthcare and education related assets, a statement said.

Simultaneously, Al Rajhi Capital and Arcapita announced the completion of the first acquisition for the fund, the largest logistics and distribution center in Riyadh.

The logistics facility is the main distribution hub for Azizia Panda United Company, a leading supermarket company in Saudi Arabia. It was acquired for $79.7 million (SR299 million) and will be leased back to Azizia Panda for a period of 18 years.

“We believe that this fund is launching at a time that will allow us to deploy our financial resources to gather a portfolio of prime real estate assets at attractive valuations,” stated Jorge Cantonnet, MD and head of Private Equity at Al Rajhi Capital.

“Economists predict that over the next decade, GCC growth will outpace global growth, and this income fund offers diversified exposure to the regional growth story,” added Hisham Al Raee, executive director of Investment Placement at Arcapita.

Al Rajhi Capital will serve as fund manager for the fund.  Deal sourcing and execution capability will be provided to the fund manager by a newly-formed real estate advisor, jointly owned by Arcapita and Al Rajhi Capital. The real estate advisor will be staffed with senior real-estate professionals from both Arcapita Bank and Al Rajhi Capital.

The fund will be offered to qualified institutional and high net worth investors within the GCC.-TradeArabia News Service