Arzan Wealth (DIFC) Limited ‘Arzan Wealth’, a Dubai-based advisory firm regulated by the Dubai Financial Services Authority, is pleased to announce that it has advised a consortium of investors on the forward purchase of a German warehouse (under construction) for use as a spare parts storage and distribution center by Volkswagen AG ‘VW Property’. A conditional contract to acquire the VW Property was signed on 23 June 2014.
The Property is currently under construction and Practical Completion (“PC”) is due for 1 August 2014, at which time the tenant will occupy the 104,830m2 of storage space / open area and 480m2 of office space, which sit on a 158,000m2 site. After the expiration of a short rent-free period, the consortium of investors will acquire the VW Property in December 2014 and start receiving the projected investment returns.
The Property is leased entirely to Rudolph Automotive Logistik GmbH (“Rudolph”), a large international logistics company which is contracted by VW to store and distribute spare parts for all of VW’s brands. The lease has a term of 10 years, with a tenant extension option for up to a further 11 years upon expiry. While Rudolph is the tenant and operator of the logistics operations, VW guarantees the payment of the rent via a sub-lease arrangement between Rudolph and VW.
Arzan Wealth acted as the Strategic Advisor on the structuring and acquisition of the VW Property, in joint venture with the Property Advisor, 90 North Real Estate Partners (“90 North”). The consortium of investors that have committed to acquire the VW Property includes Al Tijaria (“The Commercial Real Estate Company”), Arzan Financial Group and other prominent international investors.
Muhannad Abulhasan, CEO of Arzan Wealth, said, “Building on our success in the UK property market, this German transaction pushes Arzan Wealth’s activities into another major global market, in response to the requirements of our advisory clients. This acquisition reinforces our primary strategy of seeking safety and a secure income stream for our clients, in various established major markets around the world .Arzan Wealth, along with our strategic partner, 90 North, will continue to ensure prudent risk management and attractive financial results are delivered to our valued clients.”
Consistent with past transactions that Arzan Wealth has advised on, this acquisition is expected to provide a secure monthly income stream, equating to 8.25% per annum, which is a highly attractive return profile when compared with typical yields from VW 10 year bonds.