cpifinancial.net - Launched at the World Islamic Banking Conference, Solum Asset Management has unveiled plans for a Sukuk that will invest in income-producing student accommodation in the UK
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The firm plans to issue its UK Student Accommodation Sukuk in Q1 2012. Solum says it has identified and shall acquire existing income-producing assets. Value for money and rental affordability will be key tenets of the investment strategy, the firm said.
The UK student accommodation sector has performed well despite the downturn in the wider UK economy, commercial and residential property sectors. Structurally, there remains a long term shortage of purpose built housing for students in many cities and this, coupled with the low delivery of new private housing stock, has resulted in continued positive rental growth in many university towns and cities in the UK. (source)
Safdar Alam is Chief Executive Officer of Solum Asset Management. Most recently Safdar established and led the Islamic Banking business globally for JP Morgan, whilst based in Bahrain during 2007-2011.
The duration of the UK Student Accommodation Sukuk will be between five to seven years with net initial yields on acquisition likely to be between 5.75 per cent (London Prime) and 7.25 per cent (regional). The Sukuk will target assets where the average rental growth should be in the order of 2.5%+ per annum, but where the supply / demand imbalance is severe or refurbishment or active asset management is introduced, greater growth may be possible. The fund and the Sukuk issuing entity will be based in Luxembourg.
Solum Asset Management intends to follow up the Sukuk with a UK Social Housing Fund to be launched in Q4 2012.
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