The UK branch of Abu Dhabi Islamic Bank (ADIB) has provided structured financing of AED100 million ($27 million) for a supermarket asset to support investors with their Islamic financing needs in the UK.
This is the fourth supermarket investment transaction that ADIB has financed in the UK in the last 12 months which demonstrates the continued strong demand for prime supermarket property investments given the sector resilience demonstrated during the Covid pandemic.
The transaction supported Urbium Capital Partners (UCP) with their acquisition of a Sainsbury’s store in Edinburgh, Scotland.
The property comprises an 85,961 sq ft prime food store and a 12 pump petrol filling station occupying a 4.6 acre site, constructed in 2013.
The property is let to Sainsbury’s Supermarket Limited on a 25-year full repairing and insuring lease with 16.5 years unexpired (no tenant break options) and 5 yearly upwards only open market rent reviews.
The property occupies a highly prominent site offering excellent accessibility and visibility, benefiting from a large and affluent catchment area with a population of 250,000 within 3 miles.
Paul Maisfield, Head of UK Real Estate at ADIB, said: “This high-quality asset not only provides long term secure income, but also benefits from all of the attributes of a store capable of performing an omnichannel function, thus future proofed against changes in the sector. We look forward to helping support UCP execute their UK commercial real estate investment strategy targeting well located core assets with good income visibility and strong tenant covenants, with a focus on cash yield.”
Suliman Al Aujan, Managing Partner at Urbium Capital Partners, said: “The prime subject asset forms part of Sainsbury’s dynamic omni-channel network and benefits from strong trading fundamentals.
“UCP will strive to build a defensive portfolio of assets that target income as the principal driver of attractive risk adjusted returns while looking to achieve capital growth through active management.”
According to Savills, the UK supermarket sector saw investment volumes reach circa £1.57 billion in 2021. The CBRE Prime Benchmark Yield for Supermarkets was reduced to 4.0% in December 2020, reflecting the continuing strength of the market. It was improved again to 3.75% in April 2021 and now sits at 3.50% and trending ‘stronger’, reflecting the ongoing improvement in demand during 2021 and its impact on pricing.
ADIB has a strong track record in offering bespoke and competitive Sharia-compliant property financing solutions for its clients in the UK. The bank closed over AED1 billion in senior financing transactions in 2021 including AED260 million financing for a major Saudi investor to acquire the PWC HQ in Belfast.
ADIB was recognised as the “Best Islamic Bank in the Middle East” at the MEA Finance Awards 2020. It was previously named the “World’s Best Islamic Bank” by FT’s The Banker Magazine.-
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