PineBridge Investments, the New York-based investment manager with $71 billion assets under management, has held a $140 million first close on its first real estate fund globally, a Gulf Cooperation Council-focused Shariah-compliant vehicle with a $200 million target.
Before this, PineBridge has focused primarily on fixed income and equities investments, including some alternatives such as private equity, but so far no real estate. This fund, dubbed PineBridge GCC Real Estate Fund I, is also PineBridge’s first Shariah-compliant vehicle, though the firm has worked with Shariah-compliant investors before.
The capital for the fund’s first close came predominantly from the Gulf region, and included sovereign wealth funds, pension funds, financial institutions, insurance companies and family offices, according to Talal Al Zain, chief executive of PineBridge Investments Middle East. He also told PERE that the final close on $200 million is expected within the next few months, though the fund was only launched at the beginning of last year.
GCC Real Estate Fund I’s mandate is sale-and-leaseback opportunities for income-producing assets in the three sectors of logistics, social infrastructure and community retail. “These are very strong growth sectors, that have strong demand because of the growing population and middle class,” Al Zain said. “We see buying the properties as a way of providing entrepreneurs and businesses an alternative source of funding to grow.”
The five-year fund will be targeting an 8 percent annual return, and with leverage is expected to have purchasing power of approximately $400 million. The firm has already transferred a seed asset into the fund, a United Arab Emirates-based school campus operated by GEMS Education that PineBridge bought in November last year. The average deal size of the fund is expected to be between $40 million and $50 million, according to Al Zain.
Although this is PineBridge’s first real estate fund, Al Zain pointed out that the Middle East team actually has specialized experience in the real estate sector, having deployed a total of $406 million in real estate deals.
PineBridge GCC Real Estate Fund I is only the most recent Shariah-compliant property vehicle to hit the market. AEP Capital and Mapletree Investments have both been raising Shariah-compliant real estate funds for Southeast Asia for the past year, and just last week CBRE came to market with its first Shariah-compliant platform for GCC investors to access Asia-Pacific property. Al Zain said that this flurry of Shariah-compliant vehicles comes from fund sponsors becoming more aware of how they can cater to the cash-rich Islamic investors.