Together with Gatehouse Bank (Gatehouse), a Shariah compliant wholesale investment bank based in the City of London and regulated by the FSA, have announced the completion of the latest acquisition via their £100 million Sterling United Kingdom Real Estate Fund (“SURF”) partnership.
The newly constructed 74,146 sq ft Market House, in Maidenhead, UK, was acquired for £32 million, and will significantly contribute towards the Funds’ targeted return of 7% per annum. This is the third property to be successfully acquired by SURF and serves as EMEA headquarters for Adobe Systems Europe Ltd on a weighted unexpired lease term of 10.5 years. SURF continues to enjoy the support from its financiers who remain comfortable with its strategy and quality of assets acquired, which in turn are tenable lending transactions for them.
Hani Othman Baothman, Managing Director and CEO of Sidra, commented: “This property was selected for acquisition due to its attractive lease profile and strong anchor tenant. 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.”
SURF is open to both UK and international investors and draws on the key strengths of the two partners – 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.
Commenting on the acquisition, Adam Cavanagh, Head 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 large, £20 million plus lot sizes, where active asset management offers significant scope to enhance returns. This particular property offers a compelling investment opportunity and, with Middle Eastern investors in particular favouring 10 year income assets, sourcing income-producing real estate investment opportunities with sustainable returns remains a key element of our acquisition strategy.”
Recently, SURF announced a first round of net dividend distributions of 7.0% annualised 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 Centre in Glasgow.
The property in Maidenhead is split over ground and three upper floors and offers Grade A office space in a prominent and centrally located position. Outside of London, Maidenhead is one of the most high profile office markets in the UK, with a high concentration of HQ firms from a variety of sectors attracted by its transport links and proximity to the UK capital.
Sidra and Gatehouse, in collaboration with UK Trade and Investment (“UKTI”), a government agency responsible for promoting investments in the UK, have hosted a series of workshops entitled “Investing in UK Real Estate” for select Riyadh and Jeddah-based GCC clients. The events, held at the British Counsul General’s residence in Jeddah and the Faisaliah Hotel in Riyadh, promote the advantages of investing in the UK real estate market, and share information on topics including investment structures, the tax regime and sector outlook.
His Excellency Mohammed Shokat, The British Consul General to Jeddah, hailed SURF as a stellar example of UK – Saudi partnership. He commented: “The UK currently stands as one of the most mature, transparent, and 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 have shared a long standing close economic relationship. We currently have around 200 UK-Saudi joint ventures, where the 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.”
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