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Mon 3 Mar 2008 10:25 AM

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Qatar finalises $2.5bn Chelsea Barracks loan

Loan complies with Islam's ban on interest, will also help cover development costs.

Qatar finalises $2.5bn Chelsea Barracks loan

Qatar's $30 billion property investment arm said on Sunday it borrowed $2.5 billion to finance the purchase of the Chelsea Barracks in London in one of the UK's largest Islamic finance property deals.

Qatari Diar, owned by the country's sovereign wealth fund and partner CPC Group, bought the London property from Britain's Ministry of Defence for 959 million pounds ($1.87 billion) in January.

"Our inaugural syndicated financing represents a major step in the advancement of what is certain to be an important development for all of London," Chief Executive Ghanim bin Saad Al-Saad said in a statement.

The loan was underwritten by BNP Paribas, Calyon, HSBC, Qatari Islamic lender Masraf Al Rayan and Qatar National Bank, Diar said, without giving pricing or maturity of the facility.

The 3.5-year loan complies with Islam's ban on interest and is structured as an Ijara, or lease agreement, and would also be used to help cover development costs, three bankers said on February 12.

Diar plans to build homes and a luxury hotel on the site.

Ghanim said on February 28, the developer has invested $30 billion in property worldwide, which it planned to double with expansion focusing on the US and the Far East. (Reuters)

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