Global real estate fund closes first asset deal
Kuwait, September 8, 2008
Global Investment House has acquired its first asset in the Global GCC Real Estate Fund-II with the buyout of Mashreq Tower, a 'Class A' commercial building nearing completion, for $30 million with seed capital at Cairo Square in Riyadh.
The Global GCC Real Estate Fund-II is a $500 million close-ended fund that was launched in July 2008 dedicated at capitalising on investment opportunities in the GCC region.
Global seeded the fund with $50million, said Shailesh Dash, senior vice president and head of alternative investments at Global.
'Within two months of acquisition, we have received an expression of interest in buying the building for $42 milliion (40 per cent value appreciation). We expect that the capital value of the asset will become much higher after the leasing of the property, rental stabilization, and further value creation,' he noted.
Dash pointed out that Global was in the process of appointing a regionally well known property manager.
Mashreq Tower was acquired from a very respected business conglomerate in Saudi Arabia, who is the anchor tenant of the tower. The building comprises two basements, a ground floor, and nine floors with a total leasable area of 9,300 sq m.
'It is a modern structure that is designed efficiently and has the most superior electrical and mechanical systems with an excellent curb appeal,' he commented.
He said the idea of the establishment of the new Global GCC Real Estate Fund-II was inspired by the success of the GCC real Estate Fund-I which has a target IRR between 11 and 12 percent and is currently performing at an IRR of approximately 20 per cent.
The fund targets its investment in a diversified portfolio of opportunistic and value-added real estate properties in the GCC region, through investment structures designed to achieve short to medium-term capital appreciation in accordance with Shari'a Principles.
The fund is currently being marketed to regional and international clients.
Rakesh Patnaik, vice president and head of Real Estate Funds at Global said, 'We believe that the Fund-II offers its regional and international investors an opportunity to capitalise on the region's flourishing real estate sector and allows them to expand and diversify their portfolios'.
'The Fund also intends to generate a gross return of around 25 per cent. We have a strong pipeline of transactions which include private equity real estate opportunities in Saudi Arabia, Qatar and the UAE.'
Patnaik said the fund was also evaluating land transactions in Jumeirah Village and Dubai Waterfront in the UAE, besides commercial and residential development prospects in Saudi Arabia and Bahrain.-TradeArabia News Service