Gatehouse Bank advises Malaysian sovereign wealth fund on first UK real estate investment

Gatehouse Bank advises Malaysian sovereign wealth fund on first UK real estate investment

Mobilisation of funds shows international reach of Islamic Finance principles

Gatehouse Bank plc, a wholesale Shariah compliant investment bank based in the City of London, has completed the £165 million acquisition of the law firm SJ Berwin’s offices at 10 Queen Street Place in London, in collaboration with a flourishing Malaysian Sovereign Wealth fund. Gatehouse acted as Investment and Shariah Adviser for the deal, which marks the Malaysian client’s first investment into the London real estate market and is a key part of its wider global investment strategy.

According to latest statistics, the UK accounted for £30bn of global real estate volumes traded in 2011, with cross border investment playing an increasingly critical role. This is particularly true in Central London, where foreign investment accounted for 85% of total cross border activity in 2010 and 2011.

As Richard Thomas, Chief Executive Officer of Gatehouse Bank, commented: “The global Islamic Finance markets are continuing to grow and diversify, and this latest deal offers a significant example of international co-operation and the extent to which funds can be mobilised around the world in a Shariah compliant manner. The unique position of Gatehouse Bank – located in the heart of the City of London with a strong international client base – means that we can tap into the worldwide spread of Islamic economic activity for the benefit of our clients and investors.”

As well as being a centre for Islamic Finance, London has historically been attractive to international investors due to its position as a world financial centre, and its maturity and transparency as a market. Alongside its growing reputation as one of the most popular destinations for Islamic Finance in Europe, London offers a significant number of benefits to real estate investors, including a relatively light regulatory environment, flexible labour laws and a heavy concentration of high quality buildings and desirable areas. It also offers a strong and improving infrastructure and transport system, with real estate leases that tend to be longer than elsewhere, along with mainly upwards-only rent reviews that are highly favourable for landlords.

As Adam Cavanagh, Head of Real Estate at Gatehouse Bank, explained: “The London property market, with its high concentration of global headquarters, long leases and upward only rent reviews, is still seen as a safe-haven for investment. This latest deal, for a property with a well-established tenant and in highly desirable location, exemplifies the qualities that overseas investors are looking for right now. As such, it presented an excellent opportunity to make an acquisition that promises long term income at an attractive yield. Our client has been looking for opportunities to diversify its portfolio and with its first foray into the London market the fund has made an excellent acquisition that offers a highly sustainable return on investment.”

At 221,198 sq ft, 10 Queen Street Place is a modern building in the City of London overlooking the Thames, comprising offices, retail, 20,000 sq ft roof terrace and accommodation arranged over basement, ground and four upper floors. Beneath the building is a car park, operated by NCP. The tenant, SJ Berwin, one of the UK’s leading legal firms, has invested heavily in the building’s upkeep and refurbishment throughout its tenancy having comprehensively refurbished the property in 2007.

With real estate assets under management in excess of £782 million, Gatehouse Bank specialises in originating, structuring and funding investments in a Shariah compliant manner. To meet continuing investor demand for high quality property investments, Gatehouse Bank provides leading advice and opportunities to investors across a diverse range of properties ranging from retail and offices, to student and logistics sectors.