|Qatar takes $2.5bn Islamic loan for Chelsea Barracks|
|DUBAI: Qatar’s $30bn property investment arm said yesterday it borrowed $2.5bn 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 12.8 acre (5.2 hectare) London property from Britain’s Ministry of Defence for £959mn in January.
They said the deal would be the largest Islamic financing on a property in the United Kingdom.
“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 had said on Thursday, the developer had invested $30bn in property worldwide, which it planned to double with expansion focusing on the US and the Far East.
Shariah, or Islamic law, prohibits charging or paying interest, so bankers and lawyers have developed a rapidly growing financial market by restructuring conventional products to make them compliant with Islam.
“The financial structure developed here has allowed us to deliver a truly innovative financing solution for the global real estate sector,” said Patrick Chenel, chief financial officer for Qatari Diar.
“We have broken new ground with our advisers, by creating and setting up Islamic financing of a scale not seen before in a major real estate acquisition in (the) UK.”
The red-brick fronted barracks built in the 1960s will be demolished. The troops who once stayed there have already been relocated to Woolwich in southeast London.
“This is the most important redevelopment scheme in London in the last fifty years and therefore it is fitting that together we have secured this historic financing,” said Christian Candy, founder of CPC Group. – Reuters, Zawya Dow Jones