National Bank of Kuwait has launched a €1bn Shari’ah-compliant diversified property fund to invest in Europe.
The Islamic European Real Estate Fund is a long-term, closed vehicle designed to achieve a 12%-15% annual internal rate of return with an expected annual yield of 5% in the first year, rising to between 7% to 8% thereafter. The fund will invest in office, warehouse residential and retail properties, and will offer a mix of core assets and property offering value-added opportunities.
The bank said that the focus will be on the German market, which it believes offers good cashflow opportunities with potential for appreciation in value. The vehicle may allocate funds to emerging markets such as Russia and Turkey.
NBK fund manager Nabil Maroof said the bank is raising €300m equity for the fund, which will be 75% leveraged. “We are attracting conventional and Islamic investors because of the lucrative returns,” Maroof added.
Pramerica Real Estate Investors is the fund’s investment adviser, while Wafra Capital Partners will manage the fund. The minimum investment amount will be €250,000 with additional amounts in €10,000 multiples.
