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Tue 7 Dec 2010 04:09 PM

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Fairmont secures $115m to complete Palm project

Deal could indicate a faster than expected recovery for the real estate sector

Fairmont secures $115m to complete Palm project
FINANCE DEAL: Fairmont has secured a $115m finance deal from Standard Chartered to complete its Palm Jumeirah Hotel project (Supplied image - for illustrative purposes only)

The Fairmont Palm Jumeirah Hotel project has secured a $115m finance deal from Standard Chartered Bank, the first major real estate loan deal made by a bank since the Dubai markets crashed last year.

IFA Hotels & Resorts and its asset management subsidiary company, IFA Hotel Investments, oversees mixed-use developments including the Fairmont Palm.

The Standard Chartered agreement will allow it to expedite the project’s completion to the first quarter of 2012.

“The message I’d like to get across is that we see this deal that we’ve done with Standard Chartered as a vote of confidence in the robustness of the Dubai and UAE hotel market, and hope that it’s the catalyst of more such deals to come,” Joe Sita, president of IFA HI, said in an interview with Arabian Business.

“To our knowledge, it’s the first foreign bank deal for a Dubai hotel development since the downturn of the last two years  -- probably since the third quarter of 2008.”

In a statement, Talal Jassim Al Bahar, vice chairman and CEO of IFA HR, added that the deal would “have a positive impact on the UAE real estate industry as a whole.”

The financing comes as a surprise to an industry that’s just getting back on its feet and has been told debt funding was largely unavailable.

IFA’s deal could indicate a faster than expected recovery for the real estate sector.

“I’ve been working on this deal for the last 9-10 months,” Sita said. “It’s a relief to have got it done and it’s very exciting. I think it heralds good things to come.”

Paul Jurie, Standard Chartered Global Head of Alternative Investments, said banks like his would “only back projects… in which we believe all the necessary fundamentals are in place for a successful outcome. The Fairmont Palm Jumeirah hotel is already well underway and is backed by a client with a successful track record, both in the region and in other parts of the world.”

This is the second loan the bank has facilitated for IFA, with the first being a $165.9m loan to finance The River by Thai developer Raimon Land, in which IFA HR is a major stakeholder.

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