Gatehouse Bank inks $45.9m UK student property deal

Third such property deal for the Sharia-compliant bank, a subsidiary of Securities House Kuwait
Gatehouse Bank inks $45.9m UK student property deal
Gatehouse is a subsidiary
By Joanne Bladd
Mon 04 Oct 2010 03:58 PM

Gatehouse bank, a subsidiary of Securities House Kuwait, said Monday it had closed its third student accommodation deal in the UK, in a transaction valued at £29m ($45.9m).

The London based Sharia-compliant bank bought a student development in Oxford, UK, following similar deals for properties in the university cities of Loughborough and Liverpool last April.

The deal brings the total value of the bank’s real estate portfolio to £150m, Gatehouse said in a statement.

The property has been purchased at a net initial yield of 6.73 percent, and will deliver an average cash yield of 9.3 percent per annum, the bank said.

The associated university, Oxford Brookes, is understood to have guaranteed 97 percent of the term time rent, while the developer, Berkeley Homes has underwritten summer rent for the first five years.

Chairman of the board of directors at Gatehouse Bank, Mr Fahed Boodai, said the deal was poised to generate high income returns for investors.

“These investment opportunities are acknowledged by our investors who have been swift to take up these high yielding income producing opportunities,” he said.

Commenting on the deal, Philip Churchill, head of real estate at Gatehouse, said the student real estate sector was one of a few to post growth during the credit crunch.  

“Student accommodation is an extremely well-established sector in the UK, worth £6.5bn,” he said. “When combined with the inherent supply and demand imbalance, which guarantees nearly 100 percent occupancy rates, student properties make a particularly attractive investment option and we see it as an area of considerable growth for the bank.”

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