Abraaj launches real estate fund

The fund's target capitalisation is US$100 million.

The ABRAAJ Real Estate Fund L.P. will also consider niche investment opportunities outside the region, in South Asia and Western Europe that have the potential to deliver significant returns and also help diversify the overall fund portfolio.

Arif Naqvi, Vice Chairman and Chief Executive of Abraaj Capital, described the launch of the Fund as timely as it coincides with the rapid development of regional real estate and property markets. He said the Fund would meet financial re-engineering needs in the Middle East's real estate sector and offer investors a much enhanced value proposition than what is currently available today.

"The region's real estate market is booming, supported by strong performance of the GCC economies and the commitment of returning Arab capital to this sector. With the markets opening to foreign investments, we now have opportunities for long-term lease, mortgage finance, expatriate owning freehold properties and the introduction of regulation reforms to support the overall real estate business. These factors provide the ideal platform to meet the objectives of the ABRAAJ Real Estate Fund L.P., which aims to achieve superior returns by making equity and equity related investments in this asset class," he said.

Shirish Saraf, Abraaj Capital's Executive Director, said that Abraaj has already seeded the Fund, which is domiciled in the Cayman Islands. At the time of going to the Press, commitment in the excess of US$30 million was already in place, he added.

"We have been able to create a very investor friendly fund, which targets drawdown of just 25 percent of the commitments upon subscription. The rest of the drawdown will happen depending on demands for project investments over a four year commitment period from the initial closing date of June 30," he said.

The initial minimum commitment obligation for investors to subscribe to the Fund is US$1 million. Saraf said that, given Abraaj Capital's track record and performance, investor response has been extremely positive. He also said that the fund manager has already identified a number of very attractive investment opportunities within the GCC.

"The Fund's investment objective is to achieve superior returns by making investments in a diversified portfolio of real estate developments and structured real estate investment opportunities in the region. We have got some major regional players in real estate as our partners and this gives us a huge leverage when identifying or getting into deals," he added.

Saraf said that the Fund is expected to invest the larger part of its capital in leisure, tourism and residential related projects and a lesser part in office, retail and industrial developments. The ABRAAJ Real Estate Fund L.P. aims to take up positions across the region and manage a diverse portfolio ranging from early stages of projects to structured deals, including securitisation at the later stages.

"The Fund intends to make five to 10 investments and targets an internal rate of return of 15 per cent. We are looking at a final closing for the Fund by the end of this year," he pointed out.