To part finance RO 51m worth real estate project
MUSCAT -- Al Madina Financial & Investment Services has raised close to RO 10 million by floating a real estate specific closed-ended mutual fund called Tilal Fund. The corpus of the scheme will be used to partly fund a RO 51 million worth green field mixed-use real estate project on an area of 77,000 square metres of land at Al Khuwair in Muscat. The real estate venture called Al Khuwair project, which is being developed by Al Madina Real Estate Company, will have residential apartments, retail mall, a five-star hotel and office space.
Tilal Fund, a close-ended 3-year fund with 2-year extension managed by Al Madina Financial, will be listed on the Muscat Securities Market (MSM). With a face value of RO 1, the scheme was floated through the private placement route. In the case of individual investors, the minimum subscription was 5,000 units and in multiples of 1,000 units thereafter. But the minimum investment for institutions was 200,000 units. The fund managers will convene the first meeting of Tilal Fund investors on Saturday.
The initial investment plan of the fund includes up to RO 5 million equity investments into a project special purpose vehicle (SPV), which will own the land and project development rights and up to RO 5 million used to access real estate properties at wholesale prices within the project. According to the prospectus, the Tilal Fund will invest up to RO 5 million or 31.25 per cent maximum equity stake into a project special purpose vehicle, which is fully capitalised at RO 16 million. The balance RO 11 million will be obtained from Al Madina Real Estate Company and a consortium of Omani and GCC-based strategic investors.
Al Madina Real Estate is expected to invest RO 4.6 million, while the balance RO 6.4 million will be from other investors. Al Madina Real Estate is owned by Al Madina Financial Services with a consortium of GCC-based institutional investors. The Al Khuwair development is expected to be a large-scale development that will act as a demand generator and significant landmark project. It will incorporate architectural design in line with the country's lifestyle, which should be a driving factor.
The site's retail component is to cater to office staff, hotel/serviced apartments as well as residential apartments. The synergy of retail, office, residential and five-star hotel components will create an all-encompassing entertainment destination. The hotel is expected to cater guests associated with the nearby office space and also those that will be centrally located. The retail element will capture the residents of the nearby area while leveraging the landmark and heritage nature of the project.
It will be promoted as a cultural centre and travel destination with the addition of a traditional Arab souq and an area for cultural events. The site is approximately 15-minute-drive from the traditional entertainment and hotels areas of Qurum and Seeb Airport. Of the project cost of RO 51 million, construction expense is estimated at RO 34.9 million and another RO 12 million for purchasing land. The feasibility study for the real estate project was conducted by RSP Group, the largest real estate and hospitality investment advisory organization.
By A E James
© Oman Daily Observer 2006
