Real estate income fund launched

Tuesday, 23 February 2010

Al Rajhi Capital, the investment banking subsidiary of Saudi Arabia's Al Rajhi Bank, and Arcapita Bank, an international investment firm headquartered in Bahrain, have launched a US$500 million fund, the ARC Real Estate Income Fund.

The fund represents the first collaboration in private equity between Al Rajhi Capital and Arcapita. The two companies will seed the fund with a joint investment of US$50 million.

The companies will combine their resources and expertise to source and acquire investments for the fund in high-quality, income-generating real estate assets in Saudi Arabia and other GCC countries. The focus will be on logistics warehouses, as well as on healthcare and education-related assets.

Simultaneously, Al Rajhi Capital and Arcapita have announced the completion of the first acquisition for the fund, the largest logistics and distribution center in Riyadh.

The logistics facility is the main distribution hub for Azizia Panda United Company, a leading supermarket company in Saudi Arabia. It was acquired for US$79.7 million and will be leased back to Azizia Panda for a period of 18 years. 

Al Rajhi Capital will serve as fund manager for the fund. Deal sourcing and execution capability will be provided to the fund manager by a newly-formed real estate advisor, jointly owned by Arcapita and Al Rajhi Capital. The fund will be offered to qualified institutional and high net worth investors within the GCC.