NBAD launches UAE real estate fund
Dubai, April 22, 2012
National Bank of Abu Dhabi has launched a real estate fund in partnership with a Kuwaiti firm to seek investment opportunities in the UAE's property sector, the lender said on Sunday.
NBAD, the UAE's top bank by market capitalisation, has teamed up with Kuwaiti firm Gulf Investment Corp for the venture, which it plans to convert to a real estate investment trust (REIT) in the future.
NBAD Investment Management is a fully owned subsidiary of the bank and will be incorporated in the Dubai International Financial Centre (DIFC), regulated by the Dubai Financial Services Authority.
"In the future, it is our intention to bring this fund to an initial public offering, thereby creating what we expect to the region's first REIT," Mahmood Al-Aradi, senior general manager of NBAD's financial markets division said in a statement.
Aradi added later that the IPO could take place in the next "couple of years".
The fund will focus on high-quality income-generating properties in the UAE where property prices have fallen sharply since the 2008 global financial crisis.
It is seeking a portfolio of between 7-10 properties in the industrial and warehousing sectors, primarily in locations such as free zones. The fund will be advised by Abu Dhabi National Properties, an NBAD subsidiary, and property consultants Knight Frank. Target investors are global institutional investors looking at diversification opportunities in the region.
"We are seeing a special interest from investors wanting to allocate to the Mena (Middle East and North Africa) region. The Gulf Cooperation Council is a new geography for many international investors," Russell Read, deputy chief executive officer and chief investment officer at GIC, told reporters.
The fund will be launched with a seed capital of 100 million dirhams ($27.2 million) with NBAD and Gulf Investment pooling in 50 million dirhams each, and will be leveraged three times to the equity.
The parties expect to start raising money for the fund soon, Aradi told reporters in Dubai.
Zain Abdullah, senior executive officer managing the fund, added that the target size of the fund was "conservatively" estimated at 1 billion dirhams, with a minimum ticket size of at least 25-50 million dirhams. - Reuters