UK Islamic Finance News – 90 North: In its own words

Philip Churchill is the co-founder and managing partner of 90 North Real Estate Partners. In this contribution, he offers unique insights into the UK and global property market from an expert perspective: outlining current opportunities and looking ahead to what we can expect in the coming years.

Philip Churchill is the co-founder and managing partner of 90 North Real Estate Partners. In this contribution, he offers unique insights into the UK and global property market from an expert perspective: outlining current opportunities and looking ahead to what we can expect in the coming years.

What is 90 North?

We are a global real estate investment partnership specialising in Islamic finance and the acquisition of Shariah compliant assets. Myself and Nick Judd founded the firm back in 2011 after lengthy careers in finance and real estate: we were convinced there was a niche in the investment sphere waiting to be filled by an investment manager that both was completely independent (and so able to provide unbiased advice) and possessed the unique technical skillset Nick, I and the rest of the partners enjoy.

Our motto is ‘Doing great business with a good conscience’ – a philosophy which strikes to the heart of the firm. We are determined to deliver outstanding results for our clients, while remaining conscious of an ethical code that helps guide our business transactions and strengthens our business relationships.

It’s a combination that’s certainly paid off. Since the firm’s founding six years ago, 90 North has completed transactions on a range of assets across the globe – from a Grade A office in Cincinnati to a logistical facility in Oslo – worth a total of nearly US$1.7 billion (£1.32 billion).

What are the advantages of investing in commercial real estate over, say, bonds or gilts?

Commercial property offers a mix of solid returns and stability that other asset classes struggle to match. While acquiring such property is still something of an art requiring careful judgement and deep sector expertise (which, I’m pleased to say, 90 North possesses in abundance), once properly selected, they can generate yields which are far more resistant to political – and, to a degree, economic – shocks than bonds or gilts. Equally, this profitability is not a flash in the pan: fundamentally, businesses will need offices and warehouses for the foreseeable future, so there is a security of demand present too.

In addition, I have found many investors appreciate the tangible aspect of commercial property. They like being able to see an asset, find out what it does and watch it develop; you simply cannot get this with gold or gilts.

Do you think the volatile global climate is leading investors to prioritise safety over yield (and why/why not)?

Yes. There remains a hunt for yield, but, overall, we find investors are looking for safety and are willing to accept lower yields to achieve this.

A Brexit that remains unclear and a Trump presidency that remains volatile mean many are doubling down on dependable investments and delaying any risky moves until the global picture becomes steadier.

The investment partners we work with from the Middle East are still active in the real estate sector. According to research from Savills, MENA region investment now stands at £1.93 billion – up 25% on last year. However, there is still understandable nervousness around, for instance, the weakness of the pound, the status of London’s financial hub post-Brexit and the impact of the travel ban in the States. As a result, they are seeking extra security like long leases and local economic strength. The General Electric headquarters building in Ohio, which we acquired late last year for US$107 million (£83.1 million), is a great example of this attitude, since we acquired the building with a 15-year lease in one of the US’s strongest states economically.

90 North has a global spread of assets across the UK, Europe and the US – are there any regions you are particularly interested in targeting over the next half year/ year?

We’ve had a great start to the year, including two significant acquisitions in the States, the refinancing of two UK properties and the exit from one of our Norwegian properties, realising solid returns.

Going forward, we’ve just opened a new office in Australia, so we’re looking forward to taking advantage of the opportunities the country presents. I had thought the national market was dominated by local pension funds and that the economy would be overly vulnerable to falling commodity prices. However, the reality is very different: Australia’s economic outlook is healthy and there are plenty of opportunities to invest beyond the resource sector. Interestingly, there is also a strong understanding of Islamic finance in the country, giving me confidence that it’s a place where we can strike up great partnerships and attract talented staff.

What’s the big picture? Where do you see 90 North in 10 years?

Our firm has gone from strength to strength over the years and we’re now recognised globally as the leading Islamic finance investment advisor in the real estate sector – there’re very few firms out there that can do what we do.

I want to take this unique expertise 90 North possesses and use it to drive ever-larger and more challenging transactions, as we grow the global recognition of our distinctive brand. We have a fantastic footprint across the UK, Europe and the US and I am aiming to have this replicated in Australia and Southeast Asia in the next few years.At the same time, I don’t foresee us becoming an impersonal conglomerate. We’re something of a family at 90 North and that should stay, both for the benefit of our employees and so that we can continue to deliver on our philosophy of doing great business with a good conscience.