PineBridge Investments has raised US$140 million for a Sharia-compliant fund aimed at buying schools, hospitals, shops and warehouses across the Gulf and leasing them back to occupiers.
The New York-based fund manager has completed the first close of its PineBridge GCC Real Estate Fund I, exceeding an original target of $100m, the company said yesterday.
The fund acquired its first asset in November when it struck a sale and leaseback deal for a school in Dubai with Gems Education.
Sale and leaseback deals became popular in the US and Europe over the past decade as companies sought to realise value from their property assets to plough into their businesses. However, the idea has never really taken off in GCC countries where landlords often prefer to hold on to their valuable assets.
PineBridge said there had been strong demand from the types of Middle Eastern investors often known for buying assets in the more established real estate markets of Europe and North America. It expects to have a final closing of $200m for the fund in the coming months.
“All of this money was raised from the region. Our investor base includes sovereign wealth funds, it includes several of the pension funds in the region, some financial institutions such as insurance companies and several family offices,” said Talal Al Zain, the chief executive of PineBridge Investments Middle East.
PineBridge said it expected to buy eight to 10 properties across the region and would aim to purchase each of its investments with roughly 50 per cent debt, giving the fund a total value of $400m. The average lot size will be $20m to US$40m each.
The fund said it was close to securing two more sale and leaseback deals in the region.
It said that it was targeting an annual yield of about 8 per cent and planned to hold the properties for between five and seven years before selling them on, either individually or as a portfolio.
“What we are focused on is education and health, warehousing and shopping outlets,” Mr Al Zain added. “For us these are the sectors that we believe the risk associated is really low because of the high demand for these sectors. As we know these areas, especially the social infrastructure, the governments in the region have been allocating big budgets to these sectors and they have been looking to the private sector to increase participation.”
And with property markets across the GCC recovering strongly from the effects of the global financial crisis, interest in performing assets in the region – especially in schools – is increasing.
According to research from the property consultants CBRE, Asian pension funds are looking to invest more than $150 billion around the world in real estate, with Dubai one of their potential targets.
“With the introduction of compulsory health insurance and the promotion of Dubai as a regional medical hub, the healthcare sector is expected to witness further growth in demand,” said Mansoor Ahmed, the director at Colliers International’s Dubai office.
“Based on [current growth and occupancy figures] by the year 2020, the number of inpatient hospital beds in Dubai is expected to reach 2,100 beds from 1,468 beds in 2012 and 793 in 2005. The number of inpatients is expected to reach over 800,000 in 2020,” Mr Ahmed added.
lbarnard@thenational.ae
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