Barwa City Real Estate Co to enter into sharia financing arrangements with two other Barwa arms.
Qatar stepped in on Thursday to provide fresh funds for the Gulf Arab region's fifth-biggest developer, in a deal financed by its parent, the real estate arm of the Qatar Investment Authority (QIA).
Terms have yet to be determined, but the deal to support a unit of Barwa Real Estate comes after Barwa's 45 percent owner, Qatari Diar Finance, appointed Barclays, HSBC, Qatar National Bank, Standard Chartered and RBS to raise $3.5 billion of funds via a US dollar-denominated benchmark issue.
Qatari Diar Finance is a unit of Qatari Diar Real Estate Investment, a division of the QIA which also holds a direct 45 percent stake in Barwa.
The Qatari Diar group is at the centre of a legal row involving Britain's Prince Charles over its plans to develop a former army barracks site in central London.
Barwa, like other Gulf Arab developers, has been hit hard by the region-wide real estate slump. Qatar is ensuring its key property firms weather the global crisis by pushing through defensive mergers and using the real estate arm of the sovereign wealth fund to invest in them.
The deal, announced on Thursday, will take the form of murabaha financing, said Barwa's chief financial officer, Ahmed Al Ezabi.
In a murabaha deal, an Islamic bank buys an asset from the borrower and later sells it back at a premium - thereby avoiding the payment of interest, which is forbidden under sharia law.
In a statement on Thursday, Barwa said the refinanced unit, Barwa City Real Estate Company, will enter into sharia financing arrangements with two other Barwa subsidiaries once the financing from Qatari Diar is finalised.
Qatari Diar Real Estate owns the United States' former embassy in London, called the Chancery, and counts the controversial Chelsea Barracks development site among its most high-profile overseas assets.
On June 25, British property company CPC Group won a breach of contract court ruling against Qatari Diar over a $1.5 billion luxury housing scheme proposed for the barracks, after it bowed to pressure from the heir to Britain's throne to abandon the plans.
Charles had written a letter to Qatar's prime minister protesting the development as a "brutalist" contemporary design.(Reuters)