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EIIB Launches Sharia-Compliant Real Estate Fund

by Phillip Morton, Investors

12 December 2006

European Islamic Investment Bank Plc (EIIB), the first independent, Sharia-compliant Islamic investment bank to be authorised and regulated by the UK Financial Services Authority, has announced the launch of a Sharia-compliant real estate fund.

The EIIB Pan-European Islamic Real Estate Fund is structured as a tax-efficient Sharia-compliant fund which will directly purchase commercial real estate assets in the office, retail and industrial sectors in and around major cities in the UK and Western, Central and Eastern Europe.

EIIB has appointed Knight Frank Investment Management as the Property Fund Adviser, which will source real estate deals and actively manage the properties thereafter.

The fund takes the form of a closed-end fund with a fixed term of five years plus up to two years wind-down. With a target size of between EUR200 million to EUR500 million at launch, the fund may consider a listing on a stock exchange after the initial capital is deployed.

The fund's investment committee will be advised by EIIB's existing Sharia Supervisory Board, an independent body of recognised specialised scholars in Islamic commercial jurisprudence.

The fund's target return is 11% IRR per annum net of fees and expenses, and will be targeting income of 7% per annum net of fees and expenses. The fund plans to invest around 25% in the UK, representing high quality 'core' properties yielding 5-8% IRR per annum, with around 75% invested in continental European 'value-added' properties yielding 12-15% IRR per annum.

EIIB will be a co-investor in the fund.

Jeremy Beswick, Head of Asset Management, EIIB, announced that: "The launch of this fund is a significant milestone in the development of EIIB, representing an example of EIIB's intention to offer sophisticated and differentiated products to the Islamic investments marketplace. We believe there will be significant investor interest in this fund, which will deliver to investors a diversifed commercial property portfolio including exposure to the rapidly-developing markets in Central and Eastern Europe."

The launch is part of the roll-out of EIIB's own Sharia compliant investment fund range, covering the real estate, hedge fund and private equity asset classes, and including capital-protected structured products.

EIIB is also developing a number of derivative and asset securitisation products, and expects further new issue mandates in the coming months. EIIB will also partner with other financial institutions, both Islamic and conventional, to create bespoke Sharia-compliant investment products according to demand.

A comprehensive report in our Intelligence Report series examining offshore investment, offshore stock exchanges, and hedge funds is available in the Lowtax Library at and a description of the report can be seen at

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