JEDDAH: Sidra Capital, a capital regulated Shariah compliant financial services company and Gatehouse Bank, an FSA regulated Shariah-compliant bank specializing in UK real estate, announced the completion of the latest acquisition through their £100 million Sterling United Kingdom Real Estate Fund (SURF) partnership.
Mohammed Shawkat, the British Consul General made the announcement at the British Consulate in Jeddah on Monday.
The partnership of Saudi-based Sidra Capital, and UK-based Gatehouse Bank marks a new chapter in investment between Saudi Arabia and the UK as Saudi Arabian — United Kingdom real estate fund completed a £32 million UK acquisition.
The newly constructed 74,146 sq ft Market House in Maidenhead acquired by SURF will contribute significantly to the funds’ targeted return of 7% per annum. Their third successful property acquisition serves as EMEA headquarters for Adobe Systems Europe Ltd.
Shawkat praised the Sidra Capital and Gatehouse Bank initiative. He said the British foreign and Commonwealth office has long been seen as a ministry which focuses on foreign policies, facing up to challenges such as climate change and international terrorism.
“The UK currently stands as one of the most mature, transparent, well-regulated and liquid markets in the world, offering a number of investment opportunities for GCC investors. Saudi Arabia is the UK’s main trading partner in the Middle East and the two share a long standing close economic relationship,” said Shawkat “We currently have 200 UK-Saudi joint ventures where total investment is estimated to be USD 17.5 billion. Saudi Arabia has already been deemed a high growth market by UKTI, and ties such as this are further strengthened by financial products such as SURF,” he added.
Hani Othman Baothman, Managing Director and CEO of Sidra Capital said property was selected for acquisition due to its attractive lease profile.
Baothman said, “Securing long-term sustainable returns from our investments is key and thanks to its positive regulatory environment, maturity, transparency and liquidity, the UK is considered to be one of the safest locations for investment in the world. By diversifying our risk across multiple asset classes, SURF’s mixed portfolio will provide an effective hedge against inflation with regular income distributions and strong potential for capital growth.”
He said SURF is open to both UK and international investors and draws on the key strengths of the two – Gatehouse’s Shariah compliant expertise in the UK’s real estate sector and Sidra’s comprehensive knowledge of alternative investment fund activities in the Middle East.
“It aims to acquire a diverse real estate portfolio in the UK, offering investors access to one of the world’s most transparent and well-regulated markets,” said Baothman.
Adam Cavanagh, manager of real estate at Gatehouse Bank said the regional office market is an extremely resilient sector in the UK and demand from international investors is focused on £20 million plus lots where active asset management offers significant scope to enhance returns.
“This particular property offers a compelling investment opportunity and with Middle Eastern investors favoring 10 year income assets, sourcing income-producing real estate investment opportunities with sustainable returns remains a key element of our acquisition strategy,” he said.
SURF announced a first round of net dividend distributions of 7.0% annualized for the Fund’s investors. Higher than SURF’s targeted distribution of 6.5%, the current distribution trend is expected to be maintained for the duration of the Fund. The distribution was made from income generated by SURF’s previous acquisitions; namely the Co-operative Distribution Unit, Huntingdon, Cambridge and TDG Distribution Center in Glasgow.
Michael Cockle, Deputy Consul General and manager of trade and investment at the British consulate gave a presentation on London in 2012, a positive environment for companies to invest and current economic situation in terms of trade and growth.