Abu Dhabi Islamic Bank provides $54m financing for UK supermarket deals

Abu Dhabi Islamic Bank (ADIB) has announced it has provided structured Islamic financing worth AED200 million ($54 million) for Middle East investors on two supermarket assets in the UK.

The first transaction supported the acquisition of a Tesco Extra store and ancillary retail parade in Oldham, Greater Manchester by Kuwait Business Town Real Estate Co.

The second transaction comprises a purpose-built supermarket extending to over 34,000 sq ft in Weston-super-Mare, Somerset owned by Capital Trust. The building is leased to retail major Waitrose until May 2045.

According to Savills, the UK supermarket sector saw investment volumes reach £1.5 billion in 2020. The average prime achievable retail yield has moved out from 4.43 percent in 2019 to 4.75 percent at the end of 2020, while in contrast the average prime achievable yield for supermarkets moved in from 5.7 percent to 5.53 percent over the course of 2020.

Olga Aburdene, CEO of Capital Trust, said: “We are pleased to receive the continuous support of Abu Dhabi Islamic Bank that has allowed us to maximise the shareholder returns while pursuing our strategy for this asset.”

Paul Maisfield, head of UK Real Estate at ADIB, said: “Our clients have a strong appetite to acquire UK assets, particularly those benefitting from long dated income with proven operational resilience offering good income visibility underpinned by strong tenant covenants, providing attractive cash on cash yields.”

ADIB has previously closed over AED750 million in senior financing transactions including AED260 million financing for a major Saudi investor to acquire the PWC HQ in Belfast.