$100m private equity fund to finance Daman's Dh1.6 billion DIFC project

DUBAI — Daman Asset Management yesterday announced the launch of a Dh1.6 billion real estate venture at Dubai International Financial Centre (DIFC) that would be financed by a Dh367 million ($100 million) private equity real estate fund.

By Isaac John

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Published: Tue 17 May 2005, 10:48 AM

Last updated: Thu 2 Apr 2015, 5:08 PM

The launch of the project — The Buildings by Daman — comes close on the heels of the acquisition by Daman of a 220,000 square foot plot of land in the DIFC last year.

Shehab M. Gargash, Managing Director of the Dubai-based Daman, said the private equity real estate fund is structured along internationally recognised lines. "Real estate developments in Dubai have traditionally been funded by single owners that have invested a great deal of equity in a single project and secured financing by collateralising assets beyond the scope of the project. In this project, Daman is bringing a globally recognised methodology in project finance to Dubai," he said.

Gargash said the ownership structure, along with the overall project finance model, which includes non-recourse, debt and re-invested project revenue, provide investors with the opportunity to participate in a major development through a special purpose structure. "The Fund will provide the equity component of the development funds for the project, which will also be funded with a significant debt component as well as re-invested project revenue."

The $100 million investment was placed with investors in units of $5 million and was closed by December 30, 2004. Some 40 per cent of the capital was raised from international investors and Daman has taken a five per cent stake in the project.

"Investors recognised our innovative approach and the Fund was fully subscribed almost immediately," said Gargash. 'The concept is new to the region and attracted top tier investors from around the world including select financial institutions and high net worth individuals. We expect to begin distributing dividends as early as 2008."

The Buildings by Daman will cover more than 1.6 million square feet of built up area including freehold apartments, offices, a luxury hotel and retail space.

The fund is structured as a special purpose company that was registered in the DIFC in September, 2004. The vehicle, Daman Real Estate Capital Partners Limited, has a Board of Directors that represents investors in the Project and oversees Daman's performance as the Manager of the Project.

Investment returns are expected to come from both operating income generated by the lease and management of the completed properties and capital gains upon the sale of specific interests in the property.

Daman also announced that US architectural firm Perkins and Will has been appointed as the design architect for the project.

UAE-based Multi-Property Development, a development management organisation whose principals have over 30 years combined experience in the UAE and international real estate development management, have been appointed as Development Managers.

"We are confident that location in the DIFC adds significant value to the project, because of strongly codified freehold rights, tax exemption commitments and other free zone features, and, most of all, the strong track record of the Government of Dubai in providing the infrastructure for the private sector to flourish," said Gargash.

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