Author Archives: Charlotte Dennison

Viewpoint – What a start to 2017!

Firstly, welcome to 2017. I hope you got some rest over the end of the year, as it seems that much of the Islamic investment world kept on motoring.

Our own 90 North was working through the Christmas and New Year period, including Christmas Day, going unconditional on our latest US acquisition, more details of which we’ll be able to share in due course. This was working with Middle Eastern Shariah compliant investors who had certainly put the shock of Donald Trump’s victory behind them.

Now two weeks into 2017, I don’t remember a busier start to a new year. From day one, the phone has been ringing and emails arriving from investors wanting to start the year as they mean to go on. Interest remains extremely varied, from long-leased investment transactions across the US, the UK and Continental Europe to those seeking higher returns from added value or developments.

Putting such interest in the context of the current global political stage, 2016 on reflection was all about anticipation; 2017 (or more accurately the first three months) is when it will all happen.

By the end of January, Trump will be the president of the US and by the end of March, Theresa May has promised to serve the UK’s notice to leave the EU. To say what will follow will be interesting is an understatement.

While for the moment Islamic investors are not discouraged by either event, and indeed they are even encouraging some investment into the US and the UK, we at 90 North remain cautious and are continuing to monitor the situation, speculating that the markets may not have read the likely outcomes accurately.

Historically, although I confess it’s been a while since I’ve seen the research renewed, through their choice of Shariah compliant tenant activities, Islamic real estate investors have managed to avoid some of the extremes that fluctuating economic activity has delivered. As such investors continue to largely seek security and income from their property investments, we hope and trust that this will continue.

Not wanting to end on too dreary a note, uncertainty and differing views create opportunities, and we intend to make the most of them. After all, it’s less than 50 weeks until its 2018!

Original article appeared in Islamic Finance News.

Viewpoint – Looking ahead to 2017 – “Prediction is very difficult, especially if it’s about the future”*


After the events of 2016, including the UK’s decision to leave the European Union (‘Brexit’) and the election of Donald Trump as the next US President, we believe it would be foolish to make any predictions about 2017 – except perhaps that it will likely be another ‘bumpy’ year with potentially some unwelcome surprises.

The consensus of economic forecasters is that 2017 economic growth will be approximately 3% globally, 2.2% in the US, 1.5% in the Eurozone and 1.25% in the UK. Asia should continue to grow strongly, led by China.

But political events could blow these forecasts materially off course. These including the global trade and other policies of the new US administration, the forthcoming Brexit negotiations and key elections in Germany, France and Holland. All these, per 2016, have the potential to unsettle markets and investors. Adding to the mix –ongoing global geopolitical issues, the prospect for higher US interest rates, and unresolved fiscal issues and deficits means 90 North naturally remains very cautious.

We completed six significant transactions in 2016 taking our total transactions to twenty-five and our AUM to £1Billion/$1.5Billion. 90 North’s core focus remains principally on acquiring new or remodelled properties, preferably with strong environmental accreditation and in strong locations. Tenants across the portfolio in the US, UK and Europe are typically well known brands (including Siemens, Continental, the US Government, VW, Lenovo, Saint-Gobain, General Electric) but always financially very strong. We also prefer longer leases with fixed rental uplifts but also having assessed a tenant’s commitment to the location. We also like properties with ‘value triggers’ by having physical extension possibilities or leased at a price point that encourages the tenant to invest and intensify its use of a site.

For 2017, due to our natural risk aversion, we continue to progress investment opportunities that fulfil the same criteria. However, we are also reviewing properties which demonstrably have a broader value-add and opportunistic character. For these 90 North can use its asset management teams in London and Chicago to lever additional risk-adjusted returns for investors. However, we are mindful about the considerable competition for these assets, which has driven entry pricing to unrealistic levels in markets that remain tight on stock.

For more core/+ assets, our strategy, depending on the wants & needs or our partners, will also include seeking longer term bank financing – up to 10 years with amortisation. There is a simple reason for this – whilst the global ‘hunt for yield’ seems unrelenting, good quality opportunities will likely remain scarce. It is also expensive to trade property, and consequently we may choose to have the option to hold assets for the longer term (albeit with the benefit of a lower cash yield). Where disposals of certain assets would result in profits that meet or exceed business plans, 90 North will work with our partners examining the option of a sale versus, say, a refinance strategy.

Whatever the investment climate, 90 North is focused on further growth in 2017 – both geographically and also by adding additional skillsets. We are currently reviewing opportunities in Asia and, elsewhere, more early stage property development where risk adjusted returns are appropriate.

90 North Partners coinvest in all transactions and therefore we act in a true partnership with investors – caring about even microscopic details of transactions throughout their lifespan on the basis ‘if you look after the pennies the pounds will look after themselves’.

We hope we can partner with you in 2017 on a new acquisition or alternatively an existing asset that may require a confidential review and new approach to drive its performance.

Whatever the opportunity, we look forward to seeing you shortly and wish you, your colleagues and families a peaceful and prosperous 2017.

*Niels Bohr – Danish Physics Nobel Laureate

Viewpoint – Real estate remains highly attractive to Islamic investors

While for many real estate is considered among alternative assets, within the Islamic investment world real estate is certainly mainstream. Evolving from individuals buying properties directly, the industry today has considerable depth and sophistication. PHILIP CHURCHILL writes.


While the Islamic structuring is less of a challenge than it was 15 or so years ago when the structures as we now know them were being developed, the challenge nowadays is securing the real estate opportunity in the first place, with local real estate investment managers fulfilling this role.

For Islamic investors, such real estate investment is not restricted by borders or time zones with a global flow of capital and sellers familiar with seeing purchase offers from Islamic investors, with the association of such offers with underlying wealth still strong.

Review of 2016
As Islamic investors considered their international real estate allocations for 2016, they had the rather unusual considerations of political instability on the world stage to contemplate, with the UK voting to leave the EU and the prospect, latterly confirmed, of Donald Trump becoming president of the US.

However, none of these events reduced Islamic investor appetite, which increased during the year. The global hunt for yield continued with Muslim investors comparing what they can earn at the bank or with other assets and deciding that real estate should form a material part of their investment strategy.

What limited 2016 activity was a lack of suitable investment opportunities, with supply constrained by sellers either deciding to hold in the short-term while political events stabilize or to refinance, fueled by a historically low cost of senior finance.

As investors sought opportunities, they considered a far wider range of property asset classes beyond the usual office investment. Logistics has been a favorite for a while, but there was increasing allocation to retail and residential properties, particularly multi-family in the US and UK student accommodation saw increasing interest again.

Geographically, Islamic investors continued their voyage of discovery, seen most noticeably in Europe, for while the UK and Germany remain favorites, transactions were undertaken across the continent, with the Netherlands, the Nordics and Southern Europe all witnessing activity.

Preview of 2017
With political instability at home and abroad, no change is expected in investors being risk averse, with an often binary approach to investment opportunities. If the quality of location, property, tenant and lease length ticks all the boxes, then Islamic investors are willing to pay a full price to achieve certainty of investment income; without it, Islamic investors would often prefer to wait where such capital is concerned.

What will continue to limit activity is the availability of products, as Shariah compliant investors are not alone on the world stage of hunting for opportunities. Making themselves more attractive to sellers by having committed equity and the ability to move quickly and reduce transaction risk will be important to secure more of the pie for the Islamic investment world.

Changes to tax laws will most likely continue in the same vein on restricting tax deductions and establishing more of a level playing field for domestic and international investors. None of this should come as a shock to Islamic investors who have never sought an advantage and so any changes should be fairly easily accommodated.

2017 could see a bigger return to fund structures. Since the last downturn in 2007-09, investors have typically wanted transactions not fund platforms, but a paucity of opportunities may drive investors to allocate at least a portion of planned investment into fund initiatives if only to get some exposure to the asset class.

The impact of Trump on Islamic investment into the US will be interesting to observe. At the time of writing, thankfully, the previous rhetoric of Trump and bold statements on limiting travel into the US have subsided. With the volume of investment that he plans to undertake across the US, it would seem unlikely that he would seek to dissuade international capital from coming in, not least being a real estate man himself.

Within Europe, as the UK continues to decide how best to leave Europe, investors will likely use such uncertainty and a depressed pound sterling to invest, taking a longer-term view that their
investment will look wise once the dust has settled.

Germany has an election itself later in the year and while Angela Merkel looks to have a comfortable lead at the moment, recent history has taught us to take nothing for granted. All this could encourage Islamic investors to increasingly look outside of their traditional comfort zones. Alternative countries may be more stable than the established western favourites of the US, the UK and Germany.

Real estate returns remain highly attractive to Islamic investors, but no increase is expected in the volume of opportunities and the new world order of change needs to be taken into consideration.

Should be interesting.

Original article in Islamic Finance News Guide 2017 

Viewpoint – Oil-fueled Islamic Real Estate

Whilst the link between the oil price and the propensity of Islamic investors to partake in global real estate investment isn’t as correlated as many would think, with the sovereign wealth funds investing such oil revenue being one of a wide range of investor groups, there is no doubt that a higher oil price helps.

With so much of the commentary during 2016 being focused on depressed oil prices and OPEC not limiting production, I hope I can be excused for missing that since the lows of $30 back in January, even before the latest OPEC announcement the price had recovered to $50. Still materially below the glory days of $100 plus, but a 67% increase nonetheless.

So, whilst earlier in the year I was of the view that whilst sovereign wealth funds were slowing their international real estate acquisitions as they had both less money to invest and a focus on domestic needs, that is no longer the case. A recent transaction that helped to change my view was Abu Dhabi Investment Authority’s £130 million acquisition of two shopping centres and adjacent office building in Slough, a town to the west of London’s Heathrow airport.

No doubt looking to gain from the planned future growth of Heathrow, this is a very large investment for Slough and only the first stage as the acquisition comes with planning consent for 675 homes and a significant extension to one of the shopping centres. The sovereign wealth funds are definitely back in the game.

All of this before OPEC announced restrictions on future production and sent the oil price even higher, peaking at $57 at the time of writing. This can only fuel even greater interest in Islamic real estate, both from the Middle East and Malaysia, hopefully including some support for the Ringgit which looked to have strengthened on the news.

The question is where will the monies head? As I’ve previously reported Islamic investors have already put Brexit and Trump behind them, but so have other investor groups, with competition for properties remaining strong. Should the oil price be maintained or even grow further, perhaps we’ll see more transactions like ADIA’s Slough investment during 2017, that is, investors having to be increasingly creative to achieve the returns they seek.

A fitting end to 2016. Best wishes to all for 2017.

Original article in Islamic Finance News

Press Release – Zawya – 90 North doubles US portfolio value in 2016 to $540M


London headquartered global real estate investment firm 90 North has more than doubled the value of its US assets acquired since the beginning of 2016.

The firm has so far closed approximately $300 million of deals in the US this year, taking the overall value of its assets in the country to $540 million.  This marks an increase of more than 100% in the value of the firm’s US portfolio at the end of 2015.

In February, the firm completed the acquisition of the North American headquarters of Saint-Gobain in Pennsylvania for $123 million, before snapping up a newly constructed $67.1 million HQ office complex in South Carolina in April.

Most recently, in October, 90 North successfully closed on the $107 million acquisition of General Electric’s new Global Operations Centre in downtown Cincinnati, Ohio, in its capacity as an investment advisor.

The three transactions also take 90 North’s overall US AUM to approximately 2,000,000 sq.ft., as well as pushing the global value of its real estate transactions to date to more than $1.5 billion.

Nick Judd, Founder & Head of Investment at 90 North, commented:

“The 90 North team has worked flat out in 2016 closing transactions to meet the wants & needs of our partners and investors. We are delighted to have closed three significant transactions in the US this year taking our Global portfolio assets acquired to twenty-five in total. We first began operations in the States in 2014 and our rapid expansion here is a testimony to the diligence, determination, and expertise of our staff both in Chicago and London.”

“It is also indicative of the currently strong appeal of commercial property as an asset class. 90 North continues to appraise real estate opportunities in the U.S, UK & Europe which, typically, are modern, very well-located and secured by long-lease contracts. As 2016 ends and 2017 begins we will seek to capitalise on the rapid progress made over the past few years as we endeavour to secure the best investment opportunities for our clients.”

Original article in Zawya

Press Release – Property Week – 90 North achieves milestone purchase


90 North has completed its 25th transaction with a $107m (£87.5m) deal in the US that takes its investment to date to above $1.5bn.

It acted for KAMCO Investment Company, one of the Gulf’s largest real estate investors, in the purchase of General Electric’s new global operations centre in Cincinnati.

The 338,146 sq ft, 12-storey office building achieved practical completion in September and is let on a 15-year lease to General Electric which is using the building as its new global operations centre.

Since it was founded in 2012, 90 North has advised on deals across the US, UK and Europe. “This is a significant moment for 90 North”, said Nick Judd, the company’s founder and head of investment.

Khaled Fouad, chief investment office of KAMCO, added: “This acquisition is another landmark in our expansion plan”.

Original article in Property Week

Press Release – Wall Street Journal – A Kuwait Firm Buys GE Offices

A Kuwait-based financial services firm seeking more diversity in a world awash in cheap oil is paying $107 million for a new Cincinnati office building occupied by General Electric Co. in its biggest real-estate investment in the U.S.

Kamco Investment Co.’s purchase of the new development, named General Electric @ The Banks, is a sign that a new cadre of foreign investors is playing a bigger role in the U.S. commercial real-estate, even in smaller markets like Cincinnati.

The deal comes at a tricky time for the U.S. commercial real estate.  Overall U.S. sales volume was down 12.2% from last year to $299.1 billion as of the end of August, according to data firm Real Capital Analytics.

But a few foreign players are boosting spending.  Chinese investors have purchased or have contracts to buy $12.6 billion worth of property in 2016, more than double last year, while investment from Kuwait jumped to $726 million from $500 million, Real Capital said.

What’s more, Kamco’s investment in Cincinnati comes as foreign and other investors increasingly are looking to smaller cities for deals with higher yields.

Foreign investment used to focus on major markets such as New York, San Francisco and Chicago.  But prices in those cities have soared in recent years, driving down yields or so called capitalization rates, a common metric in the real estate industry that shows the relationship between price and income.

At this later state in the cycle, cap rates are more attractive for buyers in smaller markets.  For example, the cap rate in Kamco’s purchase of the 12-story Cincinnati building is about 5.5%, according to people involved in the deal, meaning that the building’s annual income is about 5.5% of its purchase price.  In cities like New York and San Francisco cap rates of high-quality office buildings are well below 5%.

Kamco, which is listed on the Dubai stock exchange, has been expanding its investments geographically as it deals with a “dramatic drop in oil prices,” the company said in its 2015 annual report.  The Cincinnati purchase is part of that diversification effort, according to Faisal Sarkhou, Kamco’s chief executive.

The company is looking for other U.S. property, Mr. Sarkhou said in an interview with The Wall Street Journal.  Besides diversification, Kamco is getting know-how from the U.S. real-estate industry, he said.  The firm hopes to “cross fertilize” its experience with other participants in U.S. deals “to build at home and develop markets,” he said.

Participants in the Cincinnati deal include 90 North Real Estate Partners LP, an investment company with expertise in working with Middle East partners.  The London-based firm helped negotiate and structure the purchase of the building from its developer, Atlanta-based Carter & Associates LLC, and also took a small equity stake.

About 60% of the purchase price came from Des Moines, Iowa-based Principal Global Investors, according to Daniel Copper, who is head of 90 North’s operations in North America.

Principal’s investment was structured as a lease to keep the deal compliant with the financial rules of Islamic or “Shariah” law, he said.

Principal didn’t immediately respond to a request for comment.

Kamco’s risk is limited because General Electric has leased most of the space in the building for 15 years, with options for another 25 years.  GE, which has links to Cincinnati dating back to 1948, occupied the building last month.

GE two years ago leased the space on the banks of the Ohio River and vowed to move up to 2,000 workers there.

With many of the jobs coming from suburban locations, the deal has been hailed as a sign that Rust Belt cities were beginning to enjoy the same trends that have been rejuvenating larger cities on the East and West Coasts.

Office tenants in Cincinnati occupied an additional 160,000 square feet as of the end of the second quarter, according to real-estate investment-services company JLL.  That helped push the vacancy rate down to 15.9%, JLL said.

Original article written by Peter Grant for the Wall Street Journal



Viewpoint – Never compromise on quality – the quality will remain long after the price is forgotten

According to the Bloomberg Barclays Global Aggregate Index, the total value of negative yielding corporate and sovereign debt jumped to $11.6 trillion at the end of September 2016. With a total Index value of $48.0 trillion, approximately 25% of the Index is invested in the certainty of losing money if held to maturity.

The motivation of such behaviour may be explained by Henry Royce’s famous quote that “The quality will remain long after the price is forgotten”, for whilst the inclination to buy a Rolls Royce car is very different to a bond portfolio, the same maxim applies of not wanting to make risky acquisitions, particularly with so much global uncertainty.

And so it is for real estate as well, but thankfully not having to go the extreme of negative yields. As a Founder of 90 North Real Estate Partners I am delighted that we have just advised on our 25th transaction, the $100+ million acquisition by Kamco Investment Company of General Electric’s brand new Global Operations Centre in Cincinnati USA. The property is leased for 15-years and will provide investors with a ‘through the mailbox’ current yield in excess of 6.0%, underpinned by the strong fundamentals of the location, property, lease and tenant.

Such current yield is frankly lower than we’ve previously been able to achieve, but with the global hunt for yield 90 North and our investors would rather compromise, albeit modestly, on the yield that the quality of the real estate investment itself.

Whilst our portfolio of transactions has now reached in excess of $1.5 billion , including £340 million of acquisitions so far this year across the USA, UK and Europe, our underwriting of the latest transactions is as relentless and focused as the first transaction we advised on. This near microscopic approach is backed up by 90 North Partners’ personal co-investment in each and every acquisition, ensuring alignment of interests.

Global markets are very challenging and frankly difficult to read at the moment, even by the best known economists. Should all markets take a turn for the worse, quality assets will provide the best downside protection whether that’s a sovereign bond or a blue chip property. Our focus will remain on high quality, long leased assets contracted to financially strong tenants. There is enough of a premium over bond rates not to have to chase dreams by taking unnecessary risk.

Speaking of dreams, a Rolls Royce isn’t for me – I prefer a Bentley!

Viewpoint – Coming off the gas?

Real estate advisor CBRE recently released their latest annual ‘In & Out Middle East’ research report, which as ever made for interesting reading.

Focusing on the global flow of monies out of the Middle East, they estimated that 2015 alone saw net acquisitions, such as purchases less sales, of US$16 billion, a near threefold increase on the US$5.5 billion of 2014; however, there was a suggestion that this activity may now be slowing.

Much of this global increase in activity came from investments into the US, with the significant transactions undertaken by Qatar Investment Authority with a 44% stake in the US$8.6 billion mixed use New York development and ADIA with a US$3.1 billion industrial portfolio definitely moving the needle. I’ve reported before on the increased attention the US is receiving from Islamic investors, with the report reminding readers that the US was the first of the G7 countries out of the gate with encouraging GDP growth, thus encouraging international attention.

2015 also saw a shift in sector focus. While offices had previously represented more than 50% of acquisitions, they slipped to below half, with industrial showing a sharp increase. No doubt the aforementioned ADIA transaction helped, but this also matches what we’ve seen from investor wishes.

There was, however, a suggestion that investment activity may be slowing and while you could hardly interpret this as being a stamp on the brakes, perhaps Middle East investors are beginning to come off the gas a little? I’d interpret the market slightly differently, as we are seeing no let-up in investor demand but the volume of available properties has fallen. In the global hunt for yield and with the low cost of finance, many property owners are choosing to refinance rather than sell, which makes it frustrating for investors, whether from the Middle East or otherwise, trying to get in.

Originally published in Islamic Finance News.

Viewpoint – Did anyone hear about the Empire State Building?

With surprisingly little fanfare, the Qatar Investment Authority (QIA) recently purchased a 9.9% stake in New York’s Empire State Building for a reported US$622 million. A not insignificant amount of money.

While more accurately they bought a stake in the Empire State Realty Trust, which owns a total of 14 office properties and six retail properties in New York, the headline is the iconic Empire State Building itself, the tallest building in the world from 1931 to 1970 and an undoubted icon of the New York skyline.

This doesn’t seem dissimilar to the Qataris buying London’s Harrods in 2010, which made the sovereign wealth fund a household name here in the UK. However, checking with my US colleagues in Chicago, none of them had heard of the QIA’s latest acquisition, and we like to think that we have our ears to the ground!

I know that Islamic investment into US real estate and infrastructure has occasionally been an emotional issue, with Donald Trump not helping matters at present, but the QIA’s reported intention to invest US$35 billion in the US over the next five years is significant. With Trump of course having a material real estate portfolio of his own, perhaps he could in time see the value of such investment.

Could more publicity in the US have prompted a backlash from the US public? I guess the outcome of the US election in November will give us a clue to that one, but to me it seems that familiarity and associated positive commentary as to the major advantages of this level of investment could only help. Who’s doing the public relations for Islamic investors in the US?