Gatehouse Bank has issued its first real estate backed sukuk, paying a distribution of 3% per annum over a five year term.
Investors will earn a return by virtue of having pro-rata ownership of the sukuk assets, which comprise shares in a company which owns a 62,000 sq ft property in Basingstoke, in the south east of England. The property is leased to IT services giant Fujitsu Services Limited for an unexpired term of 68 years. The strong tenant profile offers further guarantee of the security of investment, and is likely to appeal to investors looking for security of income.
Rental payments from the tenant will be applied to fund payments to the sukuk holders on each periodic distribution date, and sukuk holders will have the option to redeem their investment on a quarterly basis which will enhance the liquidity for the sukuk. The sukuk issuance is fully guaranteed by Gatehouse Bank with investors assured a full return on their investment.
“Investors want to own an income-producing asset that offers a consistent annual return. As such, this is a highly liquid investment opportunity, particularly as the use of a sukuk instrument delivers an enhanced yield when compared with standard bank deposits. The quarterly redemption option creates a short term cash instrument of 3 months tenor with an annual yield of 3%. The global sukuk market is expected to reach $292 billion issuances by 2016, and our entry into the market comes at an exciting time for the bank as we seek to expand our products and services for the benefit of our clients,” Abdulaziz AlDuweesh, Executive Vice President and Head of Wealth Management at Gatehouse Bank, said.