The UK's Bank of London and the Middle East has completed the purchase of the first asset for its recently launched £10m ($16.5m) Light Industrial Building Fund.
The Islamic Globe has learned that BLME is also close to buying three or four other assets. The first property in the fund is a 40,000sq.ft. light industrial unit, Interserve House Christchurch in Bournemouth, Sussex, valued at £2.4m. The current tenant has a further 11 years left on its contract.
A spokesperson from BLME claimed that there has been a surge of demand from the GCC for the fund, launched in May this year, but as it is a closed-ended fund it needs to own assets before BLME can take in subscriptions from potential investors.
Derek Weist (above), director of asset management for BLME, told The Islamic Globe: "Investors are increasingly aware that there is a wealth of assets outside of the traditional office and leisure space, and a product like the LIBF can offer not only diversification in the UK away from London, but also provides diversification away from the traditional heavily covered asset classes within the property sector."
He continued: "This means that investors will see a different risk and return profile from some other Shari'ah compliant funds available in this sector."
The UK multi-let light industrial building sector currently covers over £30bn ($49.4bn) of properties, located in approximately 6,000 industrial estates across the UK. These are typically low technology, low obsolescence buildings constructed of concrete, brick or steel, and are used for light manufacturing, assembly, storage, warehousing and distribution activities.
BLME has appointed COBA Asset Management to acquire and manage the assets. COBA is being supported by Seven Dials Fund Management and Vine Property Management, both specialists in the light industrial sector. The fund has a five-year life cycle and is aiming to have assets under management of £200m ($330m).
The fund charges 1% of the cost for each property acquisition, split 50:50 with COBA, the AMC is 1.25% of gross asset value and it has a performance fee of 20% of any profit in excess of an 8% net investor IRR. In addition, BLME charges up to 2% subscription fee to the investor.
© The Islamic Globe 2011
