Global’s GCC Real Estate Fund-II Announces its First Acquisition
• Dash: The establishment of the new Global GCC Real Estate Fund-II was inspired by the success of the GCC Real Estate Fund-I.
• Patnaik: We believe that the Global Real Estate Fund-II offers its regional and international investors an opportunity to capitalize on the region’s flourishing real estate sector and allows them to expand and diversify their portfolios.
Global Investment House (Global) announced today the successful acquisition of its first asset in the Global GCC Real Estate Fund-II. Global seeded the fund with USD50million. The Global GCC Real Estate Fund-II is a USD500million close-ended fund that was launched in July 2008 dedicated to capitalizing on investment opportunities in the GCC region.
Mr.Shailesh Dash, Senior Vice President and Head of Alternative Investments at Global said, “The Fund has acquired a ‘Class A’ commercial building nearing completion known as the Mashreq Tower for USD30million with the seed capital at Cairo Square in Riyadh”.
Mr. Dash added, “Within two months of acquisition, we have received an expression of interest in buying the building for USD42milliion (40 percent 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”. Mr. Dash further added that Global is currently in the process of appointing a regionally well known Property Manager.
It is worth mentioning that Mashreq Tower was acquired from a very respected business conglomerate in the Kingdom of Saudi Arabia, who is the anchor tenant of the tower. The building is comprised of two basements, a ground floor, and nine floors with a total leasable area of 9,300 square meters. “It is a modern structure that is designed efficiently and has the most superior electrical and mechanical systems with an excellent curb appeal” commented Mr. Dash.
He further added that the idea of the establishment of the new Global GCC Real Estate Fund-II, which was launched last July, 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 percent.
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.
Mr. Rakesh Patnaik, Vice President and Head of Real Estate Funds at Global stated, “We believe that the Global Real Estate Fund-II offers its regional and international investors an opportunity to capitalize on the region’s flourishing real estate sector and allows them to expand and diversify their portfolios”.
Mr. Patnaik continued, “The Fund also intends to generate a gross return of around 25 percent. We have a strong pipeline of transactions which include Private Equity Real Estate opportunities in the Kingdom of Saudi Arabia, Qatar and the UAE. We are also evaluating land transactions in Jumeirah Village and Dubai Waterfront in the UAE, as well as commercial and residential development prospects in Saudi Arabia and Bahrain. The Fund has allocated 20 percent of its capital to transactions outside the GCC, were we have a transaction pipeline consisting of attractive real estate opportunities in Jordan, Egypt, and the North African markets.”
He concluded that the fund has received great interest from both regional and international financial institutions, pension funds, and sovereign wealth funds which are currently conducting due diligence on the fund. It is worth noting that Global’s Fund Team will be conducting a road-show for the Fund in the US, UK, and Europe in September and October 2008.
