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Memorandum No. _______________
Issued to _______________
PRIVATE PLACEMENT MEMORANDUM
Relating to
Limited Partnership Interests of:
Global Real Estate Ijarah Fund
a exempt closed-ended fund formed to invest in the MENA region and
constituted by
Global Real Estate Ijarah Fund Company B.S.C.(c)
(A Closed Joint Stock Company Incorporated under the Laws of the Kingdom
of Bahrain)
May ____, 2007
THIS PRIVATE PLACEMENT MEMORANDUM HAS BEEN FURNISHED ON A CONFIDENTIAL
BASIS SOLELY FOR THE INFORMATION OF THE PERSON TO WHOM IT HAS BEEN DELIVERED
ON BEHALF OF THE FUND, AND MAY NOT BE REPRODUCED OR USED FOR ANY OTHER
PURPOSES.
THE UNITS ARE SUBJECT TO CERTAIN RISKS (INCLUDING, WITHOUT LIMITATION, THOSE
DESCRIBED IN THIS PRIVATE PLACEMENT MEMORANDUM UNDER “RISK FACTORS”), AND
INVESTORS PURCHASING UNITS ARE HEREWITH ADVISED TO FAMILIARIZE THEMSELVES
WITH SUCH RISKS. THE UNITS ARE SUITABLE ONLY FOR INVESTORS WHO ARE IN A POSITION
TO ASSESS AND BEAR THE ECONOMIC RISK OF THEIR INVESTMENT, INCLUDING THE
POSSIBILITY OF THE COMPLETE LOSS OF SUCH INVESTMENT.
THERE IS NO PUBLIC MARKET FOR THE UNITS AND NONE IS EXPECTED TO DEVELOP. UNITS
ARE NOT REDEEMABLE AT THE OPTION OF THE HOLDER, EXCEPT ON A LIMITED BASIS
ASDESCRIBED IN THIS PLACEMENT MEMORANDUM UNDER “REDEMPTIONS & TRANSFERS.”
Global Investment House KSCC
TABLE OF CONTENTS
1 EXECUTIVE SUMMARY ………………..........................................................................………… 6
2 SUMMARY OF PRINCIPAL TERMS AND CONDITIONS ............................................................ 12
3 MENA REAL ESTATE SECTOR OVERVIEW AND OUTLOOK ................................................... 28
4 GLOBAL INVESTMENT HOUSE (K.S.C.C.) ................................................................................... 35
5 FUND MANAGEMENT ...................................................................................................................... 37
6 ADMINISTRATOR, CUSTODIAN, REGISTRAR AND Auditors ................................................... 42
7 INVESTMENT OBJECTIVES AND INVESTMENT PHILOSOPHY .............................................. 43
8 INVESTMENT PROCESS .................................................................................................................. 46
9 RISK FACTORS .................................................................................................................................. 49
10 REDEMPTIONS & TRANSFERS ....................................................................................................... 56
11 NET ASSET VALUE OF FUND ......................................................................................................... 58
12 FEES AND EXPENSES ....................................................................................................................... 60
13 TAX AND REGULATION .................................................................................................................. 63
14 MATERIAL CONTRACTS ................................................................................................................. 68
15 CONFLICTS OF INTEREST ............................................................................................................... 70
16 SUITABILITY; “KNOW YOUR CUSTOMER” AND AnTI-MONEY LAUNDERING .................. 72
17 GENERAL ............................................................................................................................................ 75
18 SUBSCRIPTION PROCEDURES ....................................................................................................... 81
APPENDIX A: Shari’a Guidelines ............................................................................................................. 82
Global Real Estate Ijarah Fund Company B.S.C.(c) 3
Global Investment House KSCC
THIS PRIVATE PLACEMENT MEMORANDUM (TOGETHER WITH THE APPENDIX, THIS
“PLACEMENT MEMORANDUM”) IS BEING FURNISHED ON A CONFIDENTIAL BASIS TO
SELECTED PROSPECTIVE INVESTORS (EACH OF WHICH IS AN “ACCREDITED INVESTOR” AS
DEFINED HEREIN) BY GLOBAL INVESTMENT HOUSE (K.S.C.C.) (“GLOBAL”) FOR THE PURPOSE
OF EVALUATING AN INVESTMENT IN UNITS WITH AN INITIAL OFFERING PRICE OF US$1000
EACH (THE “UNITS”) OF THE GLOBAL REAL ESTATE IJARAH FUND (THE “FUND”). THE UNITS
WILL BE CONSTITUTED BY AN INSTRUMENT TO BE ISSUED BY GLOBAL REAL ESTATE
IJARAH FUND COMPANY B.S.C.(C) (THE “COMPANY”), A CLOSED JOINT STOCK COMPANY
INCORPORATED UNDER THE LAWS OF THE KINGDOM OF BAHRAIN (“BAHRAIN”).
THE FUND WAS REGISTERED WITH THE CBB (AS DEFINED HEREIN) AS AN “EXEMPT CIU”
(AS DEFINED THEREIN) PURSUANT TO THE COLLECTIVE INVESTMENT UNDERTAKINGS
REGULATIONS (AS DEFINED HEREIN) ON [INSERT DATE OF REGISTRATION].
THE ATTENTION OF PROSPECTIVE INVESTORS IS SPECIFICALLY DRAWN TO THE
FACT THAT, AS AN EXEMPT SCHEME, THE FUND HAS NOT BEEN AUTHORISED BY THE
CBB AND SAVE FOR CERTAIN REPORTING REQUIREMENTS (MORE PARTICULARLY
DESCRIBED IN THIS PLACEMENT MEMORANDUM IN THE SECTION HEADED “SUMMARY
OF PRINCIPAL TERMS AND CONDITIONS – REPORTING”), IS NOT SUBJECT TO THE
ONGOING SUPERVISION OF AND REGULATION BY, THE CBB.
THE CBB ASSUMES NO RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF
THE STATEMENTS AND INFORMATION CONTAINED IN THIS PLACEMENT MEMORANDUM
AND EXPRESSLY DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER
ARISING FROM RELIANCE UPON THE WHOLE OR ANY PART OF THE CONTENTS OF THIS
PLACEMENT MEMORANDUM.
THIS PLACEMENT MEMORANDUM MAY NOT BE USED FOR ANY OTHER PURPOSE. THIS
PLACEMENT MEMORANDUM IS PROPRIETARY TO GLOBAL AND ITS CONTENTS ARE
CONFIDENTIAL. ACCORDINGLY, ANY REPRODUCTION OR DISTRIBUTION OF THIS PLACEMENT
MEMORANDUM, IN WHOLE OR IN PART, OR DISCLOSURE OF ITS CONTENTS, WITHOUT THE
PRIOR WRITTEN CONSENT OF GLOBAL IS PROHIBITED. BY ACCEPTING THIS PLACEMENT
MEMORANDUM, YOU AGREE TO PROMPTLY RETURN IT TO GLOBAL, THE INVESTMENT
MANAGER OF THE FUND (THE “INVESTMENT MANAGER”), ALONG WITH ANY OTHER
DOCUMENTS OR INFORMATION FURNISHED TO YOU, IF YOU DO NOT PURCHASE ANY OF THE
UNITS OR OTHERWISE UPON GLOBAL’S REQUEST.
GLOBAL IS ESTABLISHING THE FUND THROUGH THE COMPANY, TO OFFER INVESTORS
THE OPPORTUNITY TO PARTICIPATE IN A DIVERSIFIED PORTFOLIO OF REAL ESTATE
INVESTMENTS IN PROPERTIES LOCATED IN THE MIDDLE EAST (INCLUDING TURKEY) AND
NORTH AFRICA REGION (“MENA”). GLOBAL INTENDS THAT THE FUND WILL BE OPERATED
AND ITS INVESTMENTS CONDUCTED IN ACCORDANCE WITH THE PRINCIPLES OF ISLAMIC
SHARI’A.
THE UNITS OFFERED PURSUANT TO THIS PLACEMENT MEMORANDUM ARE BEING OFFERED
ONLY (A) TO NATURAL PERSONS WHO ARE CITIZENS AND RESIDENTS OF BAHRAIN OR
CORPORATIONS OR OTHER LEGAL ENTITIES ORGANIZED UNDER THE LAWS OF BAHRAIN; (B)
TO NATURAL PERSONS WHO ARE CITIZENS AND RESIDENTS OF OTHER COUNTRIES WHICH
ARE MEMBER COUNTRIES OF THE ARAB GULF CO-OPERATION COUNCIL (COMPRISING THE
SULTANATE OF OMAN, THE STATE OF QATAR, THE UNITED ARAB EMIRATES, THE KINGDOM
OF SAUDI ARABIA, BAHRAIN AND THE STATE OF KUWAIT) AND CORPORATIONS AND
OTHER LEGAL ENTITIES ORGANIZED UNDER THE LAWS OF SUCH COUNTRIES; AND (C) TO
Global Real Estate Ijarah Fund Company B.S.C.(c) 5
Global Investment House KSCC
OTHER NATURAL PERSONS AND LEGAL ENTITIES ACCEPTABLE TO GLOBAL IN ITS SOLE
DISCRETION.
THE INFORMATION CONTAINED HEREIN IS INTENDED SOLELY FOR SELECTED, SOPHISTICATED
INVESTORS HAVING THE NECESSARY EXPERTISE TO DETERMINE WHETHER TO ACCEPT THE
RISKS INHERENT IN AN INVESTMENT IN THE UNITS. IN MAKING AN INVESTMENT DECISION,
PROSPECTIVE INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE FUND AND THE
TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED.
THE UNITS MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, CHARGED, PLEDGED OR
HYPOTHECATED OTHER THAN SUBJECT TO AND UPON THE TERMS AND CONDITIONS
OF THIS PLACEMENT MEMORANDUM OR WITH THE PRIOR WRITTEN CONSENT OF THE
INVESTMENT MANAGER, WHICH MAY BE WITHHELD BY THE INVESTMENT MANAGER IN ITS
ABSOLUTE DISCRETION. IN ADDITION, THE UNITS MAY BE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE UNDER APPLICABLE SECURITIES LAWS. ACCORDINGLY,
INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF AN INVESTMENT IN THE SHARES FOR AN INDEFINITE PERIOD OF TIME.
THE UNITS ARE OFFERED SOLELY ON THE BASIS OF THE INFORMATION AND REPRESENTATIONS
CONTAINED IN THIS PLACEMENT MEMORANDUM, AND ANY FURTHER INFORMATION GIVEN
OR REPRESENTATIONS MADE BY ANY PERSON MAY NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY GLOBAL OR THE DIRECTORS OF THE COMPANY. STATEMENTS MADE IN
THIS PLACEMENT MEMORANDUM ARE MADE AS OF THE DATE HEREOF, UNLESS OTHERWISE
STATED HEREIN, AND NEITHER THE DELIVERY OF THIS PLACEMENT MEMORANDUM
AT ANY TIME, NOR ANY ISSUE OF UNITS HEREBY CONTEMPLATED, WILL UNDER ANY
CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO SUCH DATE.
THIS OFFERING OF UNITS IS A PRIVATE PLACEMENT. IT IS NOT SUBJECT TO THE REGULATIONS
OF THE CENTRAL BANK OF BAHRAIN THAT APPLY TO PUBLIC OFFERINGS OF SECURITIES
AND THE EXTENSIVE DISCLOSURE REQUIREMENTS AND OTHER PROTECTIONS THAT THOSE
REGULATIONS CONTAIN. THIS PLACEMENT MEMORANDUM IS THEREFORE INTENDED
ONLY FOR “ACCREDITED INVESTORS” AS DEFINED IN THE DEFINITIONS SECTION TO THIS
PLACEMENT MEMORANDUM.
IN ADDITION, THE UNITS MAY BE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE UNDER APPLICABLE SECURITIES LAWS. ACCORDINGLY, INVESTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF AN INVESTMENT
IN THE SHARES FOR AN INDEFINITE PERIOD OF TIME.
THE UNITS OFFERED PURSUANT TO THIS PLACEMENT MEMORANDUM MAY ONLY BE
SUBSCRIBED FOR IN MINIMUM SUBSCRIPTIONS OF US$100,000 OR ABOVE.
THERE WILL BE NO PUBLIC MARKET FOR THE UNITS, AND THERE IS NO OBLIGATION
ON THE PART OF ANY PERSON TO REGISTER THE UNITS OR THIS PLACEMENT UNDER
ANY SECURITIES LAWS. NO APPLICATION HAS BEEN OR WILL BE MADE FOR THE UNITS
OF THE FUND TO BE LISTED ON THE BAHRAIN STOCK EXCHANGE.
CERTAIN STATEMENTS CONTAINED HEREIN ARE FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS ARE BASED UPON CERTAIN BELIEFS OF GLOBAL AND
UPON CERTAIN ASSUMPTIONS MADE BY IT. WORDS SUCH AS “EXPECTS”, “ANTICIPATES”,
“SHOULD”, “MAY”, “WILL”, “ATTEMPTS”, “CONTINUES”, “INTENDS”, “PLANS”, “BELIEVES”,
6 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
“SEEKS”, “ESTIMATES”, “PROJECTS”, VARIATIONS OF SUCH WORDS AND SIMILAR EXPRESSIONS
ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE STATEMENTS
ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE CERTAIN RISKS AND
UNCERTAINTIES THAT ARE DIFFICULT TO PREDICT. THEREFORE, ACTUAL OUTCOMES AND
RESULTS MAY DIFFER MATERIALLY FROM THOSE REFLECTED IN OR CONTEMPLATED BY
SUCH FORWARD-LOOKING STATEMENTS.
CERTAIN INFORMATION CONTAINED IN THIS PLACEMENT MEMORANDUM HAS BEEN
OBTAINED FROM PUBLISHED SOURCES AND/OR PREPARED BY PARTIES OTHER THAN GLOBAL.
WHILST SUCH INFORMATION IS BELIEVED TO BE RELIABLE FOR THE PURPOSE USED HEREIN,
NO REPRESENTATIONS ARE MADE AS TO THE ACCURACY OR COMPLETENESS THEREOF AND
NONE OF GLOBAL, THE INVESTMENT MANAGER, THE FUND OR ANY OTHER PERSON ASSUMES
ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION.
PROSPECTIVE INVESTORS ARE STRONGLY ADVISED TO CONDUCT THEIR OWN DUE
DILIGENCE WITH RESPECT TO THE FUND AND THE UNITS. PROSPECTIVE INVESTORS SHOULD
NOT CONSTRUE THE CONTENTS OF THIS PLACEMENT MEMORANDUM AS LEGAL, TAX,
INVESTMENT OR OTHER ADVICE. EACH PROSPECTIVE INVESTOR SHOULD MAKE ITS OWN
INQUIRIES AND CONSULT ITS OWN ADVISERS AS TO THE FUND AND THIS OFFERING AND AS
TO LEGAL, TAX AND OTHER MATTERS CONCERNING AN INVESTMENT IN THE UNITS.
THE DISTRIBUTION OF THIS PLACEMENT MEMORANDUM, AND THE OFFER AND SALE OF
THE UNITS DESCRIBED HEREIN, MAY BE RESTRICTED IN CERTAIN JURISDICTIONS AND,
ACCORDINGLY, PERSONS INTO WHOSE POSSESSION THIS PLACEMENT MEMORANDUM MAY
COME MUST INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH RESTRICTIONS. THIS
PLACEMENT MEMORANDUM DOES NOT CONSTITUTE, AND MAY NOT BE USED FOR THE
PURPOSE OF, AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY UNITS IN
ANY JURISDICTION:
I. IN WHICH SUCH OFFER, SOLICITATION OR SALE IS NOT AUTHORIZED; OR
II. IN WHICH THE PERSON MAKING SUCH OFFER, SOLICITATION OR SALE IS NOT
QUALIFIED TO DO SO; OR
III. TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION
OR SALE.
NO ACTION HAS BEEN OR WILL BE TAKEN TO PERMIT A PUBLIC OFFERING OF THE
UNITS IN ANY JURISDICTION WHERE ACTION WOULD BE REQUIRED FOR THAT PURPOSE.
ACCORDINGLY, THE UNITS MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, AND
THIS PLACEMENT MEMORANDUM MAY NOT BE DISTRIBUTED, IN ANY JURISDICTION, EXCEPT
IN ACCORDANCE WITH THE LEGAL REQUIREMENTS APPLICABLE IN SUCH JURISDICTION.
THE UNITS HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE OR OTHER SECURITIES LAWS. THE UNITS WILL NOT BE OFFERED
OR SOLD IN THE UNITED STATES OR IN ANY OF ITS TERRITORIES OR POSSESSIONS, AND WILL
NOT BE OFFERED OR SOLD TO ANY PERSON WHO IS A RESIDENT OF THE UNITED STATES
OR OF ANY OF ITS TERRITORIES OR POSSESSIONS OR WOULD OTHERWISE CONSTITUTE A
“PROHIBITED INVESTOR.” (AS DEFINED BELOW). UNITS THAT ARE ACQUIRED BY PERSONS
NOT ENTITLED TO HOLD THEM WILL BE COMPULSORILY REDEEMED. SEE THE SECTION
HEADED “SUITABILITY; “KNOW YOUR CUSTOMER” AND ANTI-MONEY LAUNDERING—
SUITABILITY.”
Global Real Estate Ijarah Fund Company B.S.C.(c) 7
Global Investment House KSCC
THE FUND IS AN UNREGULATED INVESTMENT SCHEME FOR PURPOSES OF FSMA 2000, THE
PROMOTION OF WHICH IN THE UNITED KINGDOM BY AUTHORIZED PERSONS IS RESTRICTED
BY SECTION 238 OF FSMA 2000 AND BY UNAUTHORIZED PERSONS IS RESTRICTED BY SECTION
21 OF FSMA 2000. NO UNITS MAY BE OFFERED OR SOLD IN THE UNITED KINGDOM BY AN
AUTHORIZED PERSON BY MEANS OF THIS DOCUMENT OTHER THAN IN ACCORDANCE WITH
FSMA 2000 (PROMOTION OF COLLECTIVE INVESTMENT SCHEMES) (EXEMPTIONS) ORDER
2001 (2001/1060) (AS AMENDED) AND NO UNITS MAY BE OFFERED OR SOLD IN THE UNITED
KINGDOM BY AN UNAUTHORIZED PERSON BY MEANS OF THIS DOCUMENT OTHER THAN
IN ACCORDANCE WITH FSMA 2000 (FINANCIAL PROMOTION) ORDER 2005 (SI 2005/1529)
(AS AMENDED). EXCEPT AS DESCRIBED ABOVE, NO COMMUNICATION, INCLUDING THIS
PLACEMENT MEMORANDUM, MADE OR ISSUED IN CONNECTION WITH UNITS MAY BE PASSED
ON TO ANY PERSONS IN THE UNITED KINGDOM EXCEPT IN ACCORDANCE WITH FSMA 2000
(PROMOTION OF COLLECTIVE INVESTMENT SCHEMES) (EXEMPTIONS) ORDER 2001 (2001/
1060) (AS AMENDED) OR FSMA 2000 (FINANCIAL PROMOTION) ORDER 2005 (SI 2005/1529) (AS
AMENDED) (AS APPROPRIATE).
RECIPIENTS OF THIS PLACEMENT MEMORANDUM SHOULD NOT INTERPRET ANY FINANCIAL
INFORMATION CONTAINED HEREIN AS A PROMISE OF THE PERFORMANCE OF THE FUND.
GLOBAL CANNOT AND DOES NOT GUARANTEE THE PERFORMANCE OR SUCCESS OF THE
FUND. AN INVESTMENT IN THE UNITS WILL INVOLVE SIGNIFICANT RISKS, AND EACH
PROSPECTIVE INVESTOR SHOULD CAREFULLY REVIEW SUCH RISKS, WHICH ARE MORE
SPECIFICALLY DISCUSSED IN THE SECTION HEADED “RISK FACTORS”.
UNITS IN THE FUND ARE ONLY SUITABLE FOR SOPHISTICATED INVESTORS WHO HAVE THE
REQUISITE KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS TO
EVALUATE THE MERITS AND UNDERSTAND THE RISKS OF SUCH AN INVESTMENT. INVESTORS
SHOULD HAVE THE FINANCIAL ABILITY AND WILLINGNESS TO ACCEPT THE RISKS AND
LACK OF LIQUIDITY THAT ARE CHARACTERISTIC OF THE UNITS, AND SHOULD CONSULT
WITH THEIR LEGAL, TAX AND FINANCIAL ADVISERS REGARDING THE APPROPRIATENESS OF
MAKING AN INVESTMENT IN THE UNITS.
THE UNITS ARE SUBJECT TO THE RIGHT OF GLOBAL TO REJECT ANY SUBSCRIPTION IN
WHOLE OR IN PART.
THIS PLACEMENT MEMORANDUM IS BASED ON THE LAWS AND PRACTICES IN FORCE IN
BAHRAIN AS AT THE DATE HEREOF.
MAY ____, 2007
8 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
Arranger, Investment Manager and Global Investment House (K.S.C.C.)
Placement Agent Al-Mirqab, Abdulah Al-Mubarak Street
Souk Al-Safat Building – 2nd Floor
P.O. Box 28807
Safat 13149
Kuwait
Administrator, Custodian, Registrar Gulf Clearing Company BSC(c)
and Transfer Agent PO Box 2400
Manama
Bahrain
Auditors PricewaterhouseCoopers (Bahrain)
BMB Tower
4th Floor
Diplomatic Area
Manama
Bahrain
International Legal Counsel to Global Trowers & Hamlins
and the Company PO Box 3012
Manama
The Kingdom of Bahrain
Baker & Hostetler LLP
666 Fifth Avenue
New York, NY 10103
Shari’a Committee Al Rayah International Consulting & Training Company
5th Floor, Abrar Building
Fahd Al Salem Street
Kuwait
Global Real Estate Ijarah Fund Company B.S.C.(c) 9
Global Investment House KSCC
DEFINITIONS
Capitalized terms used in this Placement Memorandum and not otherwise defined in this Placement
Memorandum shall have the following meanings:
“Accredited Investor” means:
a individuals who have a minimum net worth (or joint net worth with their spouse) of not less than US$
1,000,000 (One Million US Dollars) (or the equivalent thereof in other currencies), excluding that
person’s principal place of residence;
b companies, partnerships, trusts or other commercial undertakings, which have financial assets available
for investment of not less than US$ 1,000,000 (One Million US Dollars) (or the equivalent thereof in
other currencies); or
c governments, supranational organisations, central banks or other national monetary authorities, and state
organisations whose main activity is to invest in financial instruments (such as state pension funds);
“Administrator” means Gulf Clearing Company B.S.C.(c), a closed joint stock company incorporated under
the laws of the Kingdom of Bahrain and having its principal place of business at PO Box 2400, Manama,
Kingdom of Bahrain, or such other regulated, reputable and experienced provider of fund administration
services as may from time to time be appointed by the Company as the administrator of the Fund, with the
approval of the CBB;
“Administration Agreement” means the fund administration agreement entered into (or to be entered into)
between the Company and the Administrator as more particularly described in the section headed “MATERIAL
CONTRACTS,” as the same may be amended, supplemented or replaced from time to time;
“Approved Investor” means any person who is both (a) an Accredited Investor and (b) either a GCC Investor
or such other natural person or legal entity as is acceptable to the Investment Manager in its sole discretion.
“Articles” means the Articles of Association of the Company, as in effect from time to time;
“Associate” means
a in the case of a company:
i any person which is a direct or indirect parent company or subsidiary or a direct or indirect subsidiary
of any such parent company; or
ii a company (or a direct or indirect subsidiary of a company) or partnership which controls or is controlled
by the person concerned or an associate of a person described in paragraph a(i) of this definition; and
b in the case of an individual, the immediate family of that individual, and any company directly or indirectly
controlled by such person and his associates; or
c in the case of a partnership, the partners thereof and any company directly or indirectly controlled by such
person and his associates; except, in all cases, any company, partnership or other business entity in which
the Fund holds an Investment;
“Auditors” means PricewaterhouseCoopers (Bahrain) whose principal place of business is at 4th Floor,
BMB Tower, Manama, Kingdom of Bahrain, or such other firm of chartered accountants or certified public
accountants as may from time to time be appointed by the Company as auditors of the Fund, with the approval
of the CBB;
10 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
“BD” means the lawful currency for the time being of the Kingdom of Bahrain;
“Board” means the board of directors of the Company for the time being, appointed or elected pursuant to, and
acting by resolution in accordance with, the Articles;
“Business Day” means a day (other than a Friday, Saturday or a public holiday) on which banks are generally
open for business in the Kingdom of Bahrain and, in relation to the transfer or payment of any amount
denominated in US Dollars, New York City, New York;
“Capital Commitment” has the meaning given to such expression in the section headed “SUMMARY OF
PRINCIPAL TERMS AND CONDITIONS—Minimum Capital Commitment”;
“Capital Contribution” has the meaning given to such expression in the section headed “SUMMARY OF
PRINCIPAL TERMS AND CONDITIONS—Subscriptions”;
“CBB” means the Central Bank of Bahrain or any successor thereof;
“Collective Investment Undertakings Regulations” means the regulatory framework of the CBB with
respect to the operation, marketing and regulatory supervision of collective investment undertakings (CIUs)
promulgated by the CBB on 30th May 2007 and as set out in Volume 6 of the CBB Rulebook, as the same may
be amended, supplemented or replaced from time to time;
“Company” means the Global Real Estate Ijarah Fund Company B.S.C.(c), a closed joint stock company
incorporated under the laws of the Kingdom of Bahrain;
“Custodian” means Gulf Clearing Company B.S.C.(c), a closed joint stock company incorporated under the
laws of the Kingdom of Bahrain and having its principal place of business at PO Box 2400, Manama, Kingdom
of Bahrain, or such other regulated, reputable and experienced provider of custody services as may from time
to time be appointed by the Company as the custodian of the Fund, with the approval of the CBB;
“Custody Agreement” means the fund custody agreement entered into (or to be entered into) between the
Company and the Custodian as more particularly described in the section headed “MATERIAL CONTRACTS,”
as the same may be amended, supplemented or replaced from time to time;
“EU” means the European Union;
“FDI” means net foreign direct investment;
“Fund” means the Global Real Estate Ijarah Fund, the fund constituted by the offering of Units by the Company
pursuant to this Placement Memorandum and the Instrument;
“GCC” means the Cooperation Council for the Arab States of the Gulf;
“GCC Investor” means (a) natural persons who are citizens and residents of the Kingdom of Bahrain or
corporations or other legal entities organized under the laws of the Kingdom of Bahrain and (b) natural persons
who are citizens and residents of other countries which are member countries of the GCC (comprising the Sultanate
of Oman, the State of Qatar, the United Arab Emirates, the Kingdom of Saudi Arabia, the Kingdom of Bahrain
and the State of Kuwait) and corporations and other legal entities organized under the laws of such countries.
“Global” means Global Investment House (K.S.C.C.) a joint stock company incorporated under the laws of
the State of Kuwait whose principal place of business is at 2nd Floor, Souk Al-Safat Buildings Al-Mirqab,
Abdulah Al-Mubarak Street, Safat, 13149, Kuwait;
Global Real Estate Ijarah Fund Company B.S.C.(c) 11
Global Investment House KSCC
“Incentive Fee” has the meaning given to such expression in the section headed “SUMMARY OF
PRINCIPAL TERMS AND SUBSCRIPTIONS—Fees Payable to the Investment Manager”;
“Initial Closing” has the meaning given to such expression in the section headed “SUMMARY OF
PRINCIPAL TERMS AND CONDITIONS—Fund Size; Initial Closing”;
“Initial Contribution” has the meaning given to such expression in the section headed “SUMMARY OF
PRINCIPAL TERMS AND CONDITIONS—Subscriptions”;
“Instrument” means the instrument to be issued by the Company, pursuant to which the Units will be issued
and by which the Fund will be constituted, as the same may be amended, supplemented or replaced from time
to time with the approval of the CBB;
“Invested Capital Contribution” in respect of a Unitholder, means the aggregate amount of Capital
Contributions invested by such Unitholder in each Portfolio Interest in which the Fund then holds an
Investment;
“Investment” means each investment (and each permitted re-investment of capital returned from such
Investment) in securities issued by, or obligations of, a Portfolio Interest, managed by the Investment Manager
pursuant to the Investment Management Agreement;
“Investment Committee” has the meaning given to such expression in the section headed “SUMMARY OF
PRINCIPAL TERMS AND CONDITIONS—Investment Manager; Investment Committee”;
“Investment Management Agreement” means the investment management and advisory services agreement
entered into (or to be entered into) between the Company and the Investment Manager and more particularly
described in the section headed “MATERIAL CONTRACTS,” as the same may be amended, supplemented
or replaced from time to time;
“Investment Manager” means Global or any other person from time to time appointed by the Company to
provide investment management and advisory services, in accordance with the terms and conditions of the
Investment Management Agreement, with the approval of the CBB;
“Investment Period” has the meaning given to such expression in the section headed “SUMMARY OF
PRINCIPAL TERMS AND CONDITIONS—Investment Period”;
“Investment Report” has the meaning given to such expression below in the section headed “INVESTMENT
PROCESS—Investment Committee Approval”;
“Management Fee” has the meaning given to such expression in the section headed “SUMMARY OF
PRINCIPAL TERMS AND CONDITIONS—Fees Payable to the Investment Manager”;
“MENA” has the meaning given to such expression in the section headed “EXECUTIVE SUMMARY—The
Offering”;
“NAV” means, at any time, the net asset value of the Fund at such time, as determined by the Administrator in
accordance with the principles set out in this Placement Memorandum and the Administration Agreement;
“Permitted Temporary Investment” has the meaning given to such expression in the section headed
“SUMMARY OF PRINCIPAL TERMS AND CONDITIONS—Voluntary Redemption”;
“Placement Fee” means the front end charge payable by each Unitholder to Global, in its capacity as placement
12 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
agent of the Units, in the amounts more particularly described below in the section headed “FEES AND
EXPENSES—Placement Fee”;
“Placement Memorandum” means this Placement Memorandum dated May ___, 2007 and all appendices,
attachments and supplements hereto;
“Portfolio Interest” means any body corporate, association, partnership or other entity or person in which the
Fund holds any Investment;
“Prohibited Investor” has the meaning given to such expression in the section headed “SUITABILITY;
“KNOW YOUR CUSTOMER” AND ANTI-MONEY LAUNDERING—Suitability”;
“Redemption Date” means the effective date of any compulsory or voluntary redemption of Units pursuant to
the terms of the Fund as set forth in this Placement Memorandum.
“Register” means the register of holders of Units (in book-entry form) maintained by the Registrar, entry upon
which shall be conclusive evidence of the holding by any person of Units;
“Registrar” means Gulf Clearing Company B.S.C.(c), a closed joint stock company incorporated under the
laws of the Kingdom of Bahrain and having its principal place of business at PO Box 2400, Manama, Kingdom
of Bahrain or such other regulated, reputable and experienced provider of registrar and transfer agency services
as may from time to time be appointed by the Company as the registrar and transfer agent of the Fund, with
the approval of the CBB;
“Registrar and Transfer Agent Agreement” means the registrar and transfer agent agreement entered into
(or to be entered into) between the Company and the Registrar as more particularly described in the section
headed “MATERIAL CONTRACTS,” as the same may be amended, supplemented or replaced from time to
time;
“Request for Redemption” has the meaning given to such expression in the section headed “SUMMARY OF
PRINCIPAL TERMS AND CONDITIONS—Voluntary Redemption”;
“SFV” has the meaning given to such expression in the section headed “SUMMARY OF PRINCIPAL
TERMS AND CONDITIONS—Manner of Investment”;
“Shari’a Committee” means a Shari’a committee comprising scholars from Al Rayah International Consulting
& Training Company, the initial members of which are Dr. Ali Ibrahim Al-Rashed, Dr. Abdulaziz Al-Qasar
and Dr. Essa Zaki, engaged by Global to advise the Fund and the Investment Manager with respect to the
interpretation of, and the Fund’s compliance with, Shari’a Principles;
“Shari’a Principles” means the principles and precepts of the Islamic Shari’a, including, without limitation,
those principles set out in Appendix A hereto;
“Subscription Agreement” means a subscription agreement to be delivered by a prospective investor to
the Investment Manager in connection with a subscription for Units, in the form approved by the Investment
Manager for such prospective investor;
“Term” means a period of four (4) years commencing on the date of the Initial Closing, which may be extended
for one additional one (1) year period at the discretion of the Investment Manager (with the approval of the
CBB);
“Total Redemption Amount” has the meaning given to such expression in the section headed “SUMMARY
Global Real Estate Ijarah Fund Company B.S.C.(c) 13
Global Investment House KSCC
OF PRINCIPAL TERMS AND CONDITIONS—Voluntary Redemption”;
“Unit” means each Unit in the Fund, having an initial purchase price of US$1000 each, and “Units” shall be
construed accordingly;
“Unitholder” means a holder of Units in the Fund from time to time, as determined by reference to the
Register, and “Unitholders” shall be construed accordingly;
“US$” or “US Dollar” means the lawful currency for the time being of the United States of America; and
“Valuation Date” means the last day of each calendar year at which the Administrator shall calculate the NAV
(provided that if such day is not a Business Day, the valuation shall take place on the immediately preceding
Business Day), together with each Redemption Date and each other Business Day as the Investment Manager
may, from time to time, designate as a Valuation Date.
14 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
1 EXECUTIVE SUMMARY
1.1 The Offering; Investment Objective
Global Investment House (K.S.C.C.) (“Global”) is offering investors the opportunity to subscribe for units
each (each a “Unit” and together, the “Units”) in the Global Real Estate Ijarah Fund (the “Fund”), an exempt
closed-ended investment fund to be established under the laws of the Kingdom of Bahrain. The Units will be
issued by the Global Real Estate Ijarah Fund Company B.S.C.(c) (the “Company”), a company incorporated
under the laws of the Kingdom of Bahrain. The Units will be issued pursuant to an instrument to be issued by
the Company prior to the Initial Closing (the “Instrument”).
The Fund will seek to provide Unitholders with current income of 8-10% per annum on the Fund’s Invested
Capital Contributions, net of all incentive and other fees paid to the Investment Manager, all fees and expenses
of the Fund’s auditor, legal counsel and other advisors (including any fees payable to the Shari’a Committee)
and all taxes payable by the Fund and its Portfolio Interests. The Fund intends to make distributions of current
income on a quarterly basis. The Fund will seek to achieve its investment objective by providing development
and/or acquisition financing for a diversified portfolio of real estate properties in the Middle East (including
Turkey) and North Africa (“MENA”) region, through investment structures designed both to generate stable
quarterly cash flows in accordance with Shari’a Principles and to mitigate capital risk. There can be no
assurance that the Fund will achieve its investment objective, including its target returns to Unitholders.
See “RISK FACTORS.”
Global is the Fund’s arranger and sponsor. Global is also the Fund’s Investment Manager.
The Fund is seeking up to US$300,000,000 in aggregate Capital Commitments from qualified investors for
the purchase of the Units. The Fund will hold its Initial Closing as soon as possible after the Investment
Manager accepts subscriptions for Capital Commitments totaling at least US$50,000,000. Staged closings
for subsequent Capital Commitments may be held at any time within six months after the date of the Initial
Closing. The Investment Manager currently anticipates that the Initial Closing will take place on or around
31st July 2007.
1.1.1 Subscriptions for Units
Subscriptions for Units may be made by completing and sending to the Investment Manager a Subscription
Agreement and, if requested by the Investment Manager, a cash amount equal to the Unitholder’s Initial
Contribution. The Initial Contribution will equal such percentage of the Unitholder’s Capital Commitment
as is determined by the Investment Manager prior to acceptance of the Unitholder’s subscription, and this
percentage will be the same for all Unitholders whose subscriptions are accepted on the same date. The
Investment Manager, in its sole discretion, may decline to accept the subscription of any prospective investor,
in whole or in part.
Units will be issued to Unitholders from time to time upon the making of Capital Contributions in connection
with drawdowns. Units issued in connection with the Initial Closing will be issued for a purchase price of
US$1,000 per Unit, and Units issued in connection with subsequent drawdowns (including any subsequent
closings) will be issued for a purchase price equal to the NAV per Unit as of the drawdown date. All Units issued
as part of any given drawdown (including any subsequent closings) will be issued at the same price per Unit. The
Units issued upon payment of each Capital Contribution by a Unitholder will be issued as fully paid Units.
All prospective investors must meet the suitability requirements described under paragraphs 1.1.4 and 16.2
below.
PROSPECTIVE INVESTORS MUST CAREFULLY CONSIDER THE PROPOSED AMOUNT
Global Real Estate Ijarah Fund Company B.S.C.(c) 15
Global Investment House KSCC
OF THEIR INVESTMENT IN THE FUND IN LIGHT OF THE AMOUNT OF THEIR OTHER
SPECULATIVE INVESTMENTS. AN INVESTMENT IN THE FUND SHOULD REPRESENT NO
MORE THAN A LIMITED PORTION OF THE RISK SEGMENT OF A SUBSCRIBER’S OVERALL
PORTFOLIO.
1.1.2 Minimum Capital Commitment
An investor will be required to make a Capital Commitment to the Fund of not less than US$100,000.
Capital Commitments in excess of the minimum Capital Commitment must be in an increment, or in increments,
of US$25,000, or such smaller increments as the Investment Manager may permit in its sole discretion.
1.1.3 Drawdowns of Unitholder Capital Commitments
Each Unitholder is required to make its Initial Contribution upon acceptance by the Investment Manager of
such Unitholder’s subscription. Except as described in the section headed “SUMMARY OF PRINCIPAL
TERMS AND CONDITIONS—Investment Period,” during the Term of the Fund, each Unitholder will be
required to make further Capital Contributions to the Fund, upon not less than 10 days’ prior written notice
from the Investment Manager (or from the Administrator on behalf of the Investment Manager), in an aggregate
amount up to such Unitholder’s Capital Commitment.
1.1.4 Suitability
All Unitholders must be, among other things: (a) persons who are Approved Investors; and (b) persons who
are not Prohibited Investors (see the section headed “SUITABILITY; “KNOW YOUR CUSTOMER AND
ANTI-MONEY LAUNDERING—Suitability.”)
IT IS THE RESPONSIBILITY OF EACH UNITHOLDER TO VERIFY THAT IT IS NOT A PERSON
THAT WOULD BE PROHIBITED FROM OWNING UNITS ISSUED BY THE FUND.
The Fund is registered with the CBB and categorized by the CBB as an “exempt CIU” (as defined in
the Collective Investment Scheme Regulations).
The Collective Investment Undertakings Regulations require that each actual or prospective investor
in an exempt CIU must be an Accredited Investor.
Accordingly, each Subscription Agreement submitted to the Investment Manager by a prospective
investor must be accompanied by a certificate, which:
a states that such prospective investor satisfies the definition of an “Accredited Investor”; and
b contains a confirmation that such prospective investor understands and accepts the higher risks involved
in investing in an exempt CIU.
The Investment Manager shall be entitled to request from each prospective investor, such documents
or other evidence as it determines to be necessary or desirable, in its sole and absolute discretion, to
demonstrate that such prospective investor is an Accredited Investor.
The determination of the Investment Manager shall be final and the Investment Manager may accept
or reject any application, without assigning any reason therefor.
Each prospective investor is urged to consult with its own advisers to determine the suitability of an investment
in the Units, and to consider the relationship of such an investment to the investor’s overall investment program
16 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
and financial and tax position. Each prospective investor is required to represent that, after all necessary advice
and analysis, its investment in the Fund is suitable and appropriate, in light of the foregoing considerations.
Each prospective investor will be required to agree that no Units, nor any interest therein, may be assigned,
sold or otherwise encumbered or transferred without the prior written consent of the Investment Manager,
which consent may be granted or denied in the sole discretion of the Investment Manager, and that, prior to
considering any request to permit the transfer of Units, the Investment Manager may require the submission
by the proposed transferee of a certification as to the matters referred to in the preceding paragraphs as well as
such other documents as the Investment Manager considers necessary.
1.1.5 Capital Structure of the Company
The Company which is issuing Units in the Fund will itself have an authorized and issued share capital of
BD1,000, split into one thousand shares of BD1 each (BD1 = approximately US$0.3775). The whole of the
issued share capital of the Company will be held directly or indirectly by Global.
1.1.6 Discretionary Fund
The Fund is to be established as a discretionary and fully-managed fund and on the basis that the investment
by the Unitholders will be entirely passive. All material decisions regarding the business, assets and operations
of the Fund are to be made by the Investment Manager, subject to the review of investment opportunities and
the making of final investment management decisions by the Investment Committee (see the section headed
“SUMMARY OF PRINCIPAL TERMS AND CONDITIONS—Investment Manager; Investment
Committee”). In particular, the composition of the Board will be determined from time to time by the
Investment Manager and Global, and the Board will delegate responsibility for the day-to-day management
and operations of the affairs of the Fund to the Investment Manager.
All Units will, when issued, be fully paid. The potential liability of Unitholders will be limited to fulfilling
their Capital Commitments, and Unitholders will have no personal liability for the debts or obligations of the
Company and/or any Associate of the Company.
Units will be issued in book-entry form only and, accordingly, certificates will not be issued. A Register setting
forth the number of Units at any time held by a Unitholder will be established and maintained by the Registrar.
The Registrar will provide each Unitholder with a statement of the number of Units held by such Unitholder at
the end of each calendar year during the Term.
1.1.7 Shari’a Compliance
Global intends that the Fund will make its Investments and conduct its affairs in a manner compliant with
Shari’a Principles and, in that regard, the Investment Manager will be required to comply with the guidelines
set forth in Appendix A hereto. The Shari’a Committee has been appointed to provide ongoing supervision
and oversight of the operations, policies and activities of the Fund to ensure their compliance with Shari’a
Principles.
1.2 Distinctive Investment Model and Opportunity
The Fund will seek to provide investors with stable and relatively secure quarterly returns in accordance with
Shari’a Principles while mitigating capital risk.
To accomplish this objective, the Fund intends to provide development and/or acquisition financing for a
diversified portfolio of real estate properties in the MENA region, primarily through the use of an Ijarah leasing
structure. The Fund anticipates capitalizing on the resources and business relationships of the Investment
Manager to generate investment opportunities.
Global Real Estate Ijarah Fund Company B.S.C.(c) 17
Global Investment House KSCC
The Fund intends to invest in a variety of commercial, residential and industrial real estate properties. The
Fund believes that using the Ijarah structure to invest in these properties will allow the Fund to minimize risks
that may be associated with any devaluation of these properties or delinquent lease payments by the Fund’s
counterparties.
In employing the Ijarah structure, the Fund generally anticipates that it will provide financing to the economic
owner of the relevant real estate assets by purchasing such assets and maintaining full ownership thereof for
the term of the financing. The Fund will then lease the assets back to the economic owner, in exchange for an
advance rental payment equal to approximately 30% of the value of the assets and a stream of periodic fixed
rental payments (in some cases, in lieu of the 30% advance rental payment, the Fund may purchase the relevant
assets for approximately 70% of their value). By requiring the advance rental payment (or by purchasing the
relevant assets for less than their value, as described in the previous sentence), the Fund will have reduced its
initial exposure with regard to any particular asset to approximately 70% of the value of that asset and will have
an initial coverage ratio of approximately 140% with respect to the investment made by the Fund in connection
with that asset. At the end of the lease term, the relevant asset would typically be sold back to the economic
owner for a purchase price equal to the Fund’s investment (minus any advance rental payment received by the
Fund at the outset of the lease).
In addition to the Ijarah structure, the Fund may utilize alternative financing structures when the Investment
Manager deems it appropriate to do so in order to achieve the Fund’s investment objectives. For example,
alternative structures may be considered in light of local ownership laws and tax laws in particular MENA
countries.
The Investment Manager believes that the Fund represents a unique and attractive investment opportunity
(subject to the risk factors and other considerations described in this Placement Memorandum) for the following
reasons:
• The Investment Manager believes that the real estate markets within the MENA region have
strong growth potential over the next decade due to a combination of factors currently present
within the economies of the MENA region. The Fund intends to provide real estate investors with
access to development and/or acquisition financing in those MENA region countries which the Investment
Manager believes are likely to demonstrate strong growth as these markets continue to develop.
• The Investment Manager will attempt to mitigate risk through a series of checks and balances.
Checks and balances will include the use of research to review each investment concept and all real estate
assets in which the Fund invests. The Investment Manager’s dedicated research group will be used to
estimate tenant and capital market demand and to analyze each individual investment.
• The Investment Manager has substantial experience, resources and business relationships in the
MENA region. Global believes that it is one of the leading asset management and investment banking
firms in the MENA region, and has developed strong local partnerships. Global currently has offices or
associates in eleven countries in the region targeted for investment by the Fund. Global believes that it
has one of the leading real estate groups to have successfully made real estate investments in the MENA
region, and has successfully launched three prior Shari’a-compliant real estate funds.
1.3 Capital Commitment
Global and/or its subsidiaries has agreed to make a Capital Commitment of not less than US$5,000,000 at the
Initial Closing.
18 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
1.4 Fund Structure
The Fund will be established through the issuance of Units by the Company, pursuant to the Instrument. Under
this structure, each investor will become a Unitholder, with responsibility for the liabilities of the Fund not
exceeding the fulfillment of its Capital Commitment. All material decisions regarding the business, assets
and operations of the Fund are to be made by the Investment Manager, subject to the review of investment
opportunities and the making of final investment management decisions by the Investment Committee (see the
section headed “SUMMARY OF PRINCIPAL TERMS AND CONDITIONS—Investment Manager;
Investment Committee”).
Global Real Estate Ijarah Fund Company B.S.C.(c) 19
Global Investment House KSCC
2 SUMMARY OF PRINCIPAL TERMS AND CONDITIONS
The following summary is qualified in its entirety by the detailed information included elsewhere in this Placement
Memorandum and should be read in conjunction with the full text of this Placement Memorandum.
The Fund: The “Fund” refers to the Global Real Estate Ijarah Fund, an exempt closed-ended
investment fund to be established under the laws of the Kingdom of Bahrain. The Fund
will be constituted in the form of units (the “Units”) issued by the Global Real Estate
Ijarah Fund Company B.S.C.(c), a company incorporated under the laws of the Kingdom of
Bahrain on [_______, __] 2007 (the “Company”). The Units will be issued pursuant to an
instrument to be issued by the Company prior to the Initial Closing (the “Instrument”).
Unitholder: “Unitholders” are persons that are holders of one or more Units in the Fund.
The Units: The Units will represent each Unitholder’s investment and participation in the Fund. Units
issued in connection with the Initial Closing will be issued for a purchase price of US$1000
per Unit. Units issued in connection with subsequent drawdowns (including any subsequent
closings) will be issued for a purchase price equal to the NAV per Unit as of the drawdown
date.
The Fund will not issue Unit certificates. All Units will be issued in non-certificated,
book-entry form, and will be registered for the account of each Unitholder in the Register
maintained by the Registrar and located at the business offices of the Registrar. Within
30 days after the end of each financial year of the Fund, the Registrar will provide each
Unitholder with a statement of the number of Units held by such Unitholder at the end of
such fiscal calendar year.
Rights attaching to The Units shall have no attached voting rights with regard to matters concerning the
the Units: Company. Nevertheless, the Board may call a meeting of the Unitholders to discuss matters
that directly affect the Unitholders’ rights. In such case, Units will be assigned voting rights
of one vote per Unit. The Board may but are not obliged to, with the approval of the CBB,
at any time convene a meeting of the Unitholders at such place as the Board may determine,
for the following purposes:
a to sanction any scheme of arrangement for the reconstruction of the Fund or for the
amalgamation of the Fund with any other fund or other entity;
b to sanction the exchange of the Units for, or the conversion of the Units into, shares,
stock, debentures, debenture stock or other obligations or securities of the Fund or of
any other entity formed or to be formed;
c to sanction the release of the Fund from its obligation to repay, reimburse or otherwise
account to Unitholders for all or any part of the principal monies owing upon or
capital invested with respect to the Units;
d to sanction any modification or compromise of the rights of the Unitholders against
the Fund proposed or agreed to by the Fund, whether such rights arise under the
Instrument or otherwise; and
e to assent to any modification of the provisions of the Instrument, proposed or agreed to
by the Fund.
Unitholders shall have no personal liability of any nature for the debts or obligations of the
Company and/or any Associate of the Company.
20 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
In addition to the discretion of the Board to call a meeting of the Unitholders described
above, the Board is also obliged to convene an annual general meeting of the Fund, which
all Unitholders are entitled to attend in person or by way of a duly appointed proxy, not
more than 30 days after the end of each financial year of the Fund. At each such annual
meeting, the Board (or the Investment Manager on the Board’s behalf) will, inter alia:
a report to the Unitholders on the Portfolio Interests in which the Fund has invested
during such financial year;
b report to the Unitholders on the Investments (if any) which the Fund has disposed or
from which the Fund has exited during such financial year, and the (net) returns (or
losses) to the Fund and the Unitholders from such Investments;
c report on any Shari’a-compliant financing facilities entered into by the Company, to
provide any leverage for the activities of the Fund; and
d generally report on the results and performance of the Fund for such financial year.
(See”—Unitholders’ Meetings”).
Investment The Fund will seek to provide Unitholders with current income of 8-10% per annum on
Objective: the Fund’s Invested Capital Contributions, net of all incentive and other fees paid to the
Investment Manager, all fees and expenses of the Fund’s auditor, legal counsel and other
advisors (including any fees payable to the Shari’a Committee) and all taxes payable by the
Fund and its Portfolio Interests. The Fund intends to make distributions of current income
on a quarterly basis.
The Fund will seek to achieve its investment objective by providing development and/
or acquisition financing for a diversified portfolio of real estate properties in the MENA
region, through investment structures designed both to generate stable quarterly cash flows
in accordance with Shari’a Principles and to mitigate capital risk.
There can be no assurance that the Fund will achieve its investment objective, including
its target returns to Unitholders. See the section headed “RISK FACTORS.”
Investment Global will act as the investment manager of the Fund (in such capacity, the “Investment
Manager; Manager”) pursuant to an investment management agreement (the “Investment
Investment Management Agreement”) between Global and the Company. Accordingly, the Board
Committee: will delegate responsibility for the day-to-day management and operation of the affairs of
the Fund to the Investment Manager. Subject to the review of investment opportunities and
the making of final investment management decisions by the Investment Committee, the
Investment Manager will be fully responsible for the conduct of the business and affairs of
the Fund and will make all material decisions regarding the business, assets and operations
of the Fund. The Investment Manager may transfer (or delegate) all or any of its rights,
duties and obligations, subject to the prior written approval of the CBB.
The chairman of the Investment Committee will be a senior executive of the Investment
Manager. The initial chairman will be Mr. Sameer Al-Gharaballi (the “Chairman”).
All material investment management decisions made on behalf of the Fund will be made
by the Investment Committee, including all such decisions related to the acquisition or
disposition of any Investment, the financing, refinancing, operation or management of the
underlying real property and any other matter pertaining to any existing or prospective
Investment. In that connection, the Investment Committee will consider and evaluate
recommendations made by the Investment Manager.
Global Real Estate Ijarah Fund Company B.S.C.(c) 21
Global Investment House KSCC
The Investment Committee will meet on a regular basis upon invitation by the Chairman
or at the written request of any two members of the Investment Committee. Such meetings
will only be valid and considered to be quorate, upon the attendance of at least a majority
of the members (which majority must include at least a majority of the members who are
officers or employees of the Investment Manager), whether in person or via conference
call or similar telecommunications facilities through which each participant can hear and
be heard by each other participant. The Investment Committee will be required to meet at
least quarterly.
Decisions of the Investment Committee made at a valid meeting thereof will be made by
majority vote of the members in attendance. In the case of a split vote, the Chairman will
have a casting vote. Decisions of the Investment Committee may also be made by written
consent of a majority of the members (which majority must include at least a majority of
the members who are officers or employees of Investment Manager).
Specialist The Investment Manager may, if it deems such assistance to be necessary or desirable
Advisers: to achieve the investment objectives of the Fund, engage the services of one or more
appropriately qualified specialist advisers having particular expertise and/or experience
in the real estate sector, whether generally or in the context of a particular country (or
countries ) within the MENA region (each person having such special real estate expertise,
a “Specialist Adviser”).
The Unitholders expressly acknowledge the right (but not the obligation) of the Investment
Manager, subject to the prior approval of the CBB, to appoint such one or more Specialist
Advisers. The Investment Manager will exercise reasonable care in the selection and
instruction of any such Specialist Adviser.
The costs, fees and expenses of any Specialist Adviser appointed by the Investment Manager
shall be borne by the Investment Manager, by way of a deduction from the Management Fee
(as defined below) (see "Fees Payable to the Investment Manager – Management Fee").
Manner of The Fund anticipates making each of its Investments through one or more special purpose
Investment: entities established in appropriate jurisdictions for the sole purpose of directly or indirectly
holding one or more of the Fund’s Investments (each such entity, an “SFV”). The number
of SFVs established in connection with each Investment, as well as the jurisdiction in which
each SFV is organized and the manner in which each SFV is capitalized by the Fund, will
be determined by the Investment Manager, in consultation with such legal, accounting and
other professional advisers as the Investment Manager may deem necessary or desirable, in
a manner intended both to comply with the applicable legal requirements and to invest the
Fund’s capital efficiently from an income and other tax perspective.
Shari’a Global intends that the Fund will make its Investments and conduct its affairs in a manner
Compliance compliant with Shari’a Principles, and, in that regard, the Investment Management
Agreement will require the Investment Manager to comply with the guidelines set forth
in Appendix A to this Placement Memorandum. Global has retained a Shari’a committee
comprising scholars from Al Rayah International Consulting & Training Company (the
“Shari’a Committee”), the initial members of which are Dr. Ali Ibrahim Al-Rashed, Dr.
Abdulaziz Al-Qasar and Dr. Essa Zaki.
The Shari’a Committee has reviewed the structure and proposed operation of the Fund as
described in this Placement Memorandum, and has provided a certification (a “fatwa”)
that they are compliant with Shari’a Principles. The Shari’a Committee will also provide
ongoing supervision and oversight of the operations, policies and activities of the Fund to
ensure their compliance with Shari’a Principles.
22 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
Suitability: All Unitholders must be, among other things: (a) persons who are Approved Investors; and
(b) persons who are not Prohibited Investors. See the section headed “SUITABILITY;
“KNOW YOUR CUSTOMER” AND ANTI-MONEY LAUNDERING”.
The Fund is registered with the CBB and categorized by the CBB as an "exempt CIU" (as
defined in the Collective Investment Scheme Regulations).
The Collective Investment Undertakings Regulations require that each actual or
prospective investor in an exempt CIU must be an Accredited Investor.
Accordingly, each Subscription Agreement submitted to the Investment Manager by
a prospective investor must be accompanied by a certificate, which:
c states that such prospective investor satisfies the definition of an "Accredited
Investor"; and
d contains a confirmation that such prospective investor understands and accepts
the higher risks involved in investing in an exempt CIU.
The Investment Manager shall be entitled to request from each prospective investor,
such documents or other evidence as it determines to be necessary or desirable, in
its sole and absolute discretion, to demonstrate that such prospective investor is an
Accredited Investor.
The determination of the Investment Manager shall be final and the Investment
Manager may accept or reject any application, without assigning any reason therefor.
Minimum Capital Each Unitholder will be required to make a capital commitment to the Fund (each a
Commitment: “Capital Commitment” and, together, the “Capital Commitments”) of not less than
US$100,000. Capital Commitments in excess of the minimum Capital Commitment
must be in an increment, or in increments, of US$25,000, or such smaller amounts as the
Investment Manager may permit in its sole discretion.
Global’s Capital Global and/or its subsidiaries will make a Capital Commitment of not less than US$5,000,000
Commitment: at the Initial Closing.
Subscriptions: Subscriptions for Units may be made by completing and sending to the Investment Manager
a Subscription Agreement, if requested by the Investment Manager, and a cash amount
equal to the Unitholder’s initial capital contribution (the “Initial Contribution”). The
Initial Contribution will equal such percentage of the Unitholder’s Capital Commitment
as is determined by the Investment Manager prior to acceptance of the Unitholder’s
subscription, and this percentage will be the same for all Unitholders whose subscriptions
are accepted on the same date. The Investment Manager, in its sole discretion, may decline
to accept the subscription of any prospective investor, in whole or in part.
Additional Units will be issued to Unitholders from time to time upon the making of capital
contributions to the Fund (such capital contributions, together with the Initial Contributions,
“Capital Contributions”) in connection with subsequent drawdowns. All Units issued as
part of any given drawdown will be issued at the same price per Unit. The Units issued upon
payment of each Capital Contribution by a Unitholder (including its Initial Contribution)
will be issued as fully paid Units.
Fund Size; Initial The Fund is seeking up to US$300,000,000 in aggregate Capital Commitments from
Closing: qualified investors for the purchase of Units.
Global Real Estate Ijarah Fund Company B.S.C.(c) 23
Global Investment House KSCC
The Fund will hold its initial closing (the “Initial Closing”) as soon as possible after
the Investment Manager accepts subscriptions for Capital Commitments totaling at least
US$50,000,000. Staged closings for subsequent Capital Commitments may be held at
any time within six months after the date of the Initial Closing. The Investment Manager
currently anticipates that the Initial Closing will take place on or around 31st July 2007.
Subsequent The Initial Contribution of each Unitholder admitted to the Fund at a subsequent closing
Closings: will be in an amount sufficient to cover:
a such Unitholder’s proportionate share of all Management Fees and organizational and
other expenses paid with the proceeds from prior drawdowns; and
b such Unitholder’s proportionate share of the original cost of all Investments (if any)
made by the Fund prior to such closing; provided that the amount payable under
this clause (b) will be increased or decreased to the extent necessary to reflect any
increase or decrease in the fair market value of such Investments (as determined in
good faith by the Investment Manager in its sole discretion).
All amounts paid to the Fund under clauses (a) and (b) above will be used to redeem a
pro rata portion of the Units issued to Unitholders that participated in prior closings, at
a redemption price equal to the NAV per Unit on the relevant subsequent closing date.
The unused Capital Commitment of each such existing Unitholder will be increased by
the sum of (i) such Unitholder’s pro rata share of the amount actually paid to all existing
Unitholders in respect of clause (a) above plus (ii) such Unitholder’s pro rata share of
the amount that would have been paid to all existing Unitholders in respect of clause (b)
above if there had been no increase or decrease in the fair market value of the relevant
Investments from their original cost.
As a result of the above-described procedures for subsequent closings, the Units acquired
by a Unitholder admitted to the Fund at a subsequent closing, and such Unitholder’s
percentage interest in the Fund’s Investments, will be the same as if such Unitholder’s
Capital Commitment had been included in the Fund’s Initial Closing. The Investment
Manager is authorized to make such further adjustments, consistent with the economic
arrangements among the Unitholders, as are necessary to achieve this result.
In addition, each Unitholder admitted to the Fund at a subsequent closing may be required
to make a payment to the Fund by way of a premium, the amount of which (if any) will be
determined by the Investment Manager in its sole discretion, to reflect the administrative
costs of, and to preclude any unfair advantage vis-à-vis other Unitholders arising from, late
admission to the Fund.
In addition to the above payments, each Unitholder admitted to the Fund at a subsequent
closing will be required to pay to Global the placement fees payable in respect of its Capital
Commitment. (See “—Placement Agent; Placement Fees”).
Investment At the end of 18 months from the Fund’s final closing for the acceptance of Capital
Period: Commitments (the “Investment Period”), all Unitholders will be released from any further
obligation with respect to their unused Capital Commitments to purchase Units, except to
the extent necessary to: (a) cover expenses, liabilities and obligations of the Fund, including
Management Fees; (b) complete Investments by the Fund in transactions which were in
process as of (or contemplated by the terms of securities or agreements held or entered into
by the Fund or any of its Portfolio Interests prior to) the end of the Investment Period; and
(c) effect follow-on Investments in existing Portfolio Interests up to an aggregate maximum
of 10% of the total Capital Commitments.
24 Global Real Estate Ijarah Fund Company B.S.C.(c)
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Drawdowns: Each Unitholder is required to make its Initial Contribution upon acceptance by the
Investment Manager of such Unitholder’s subscription (see the section headed “—
Subscriptions”). Except as described in the section headed “—Investment Period”
above, during the Term of the Fund, each Unitholder will be required to make further
Capital Contributions, upon not less than 10 days’ prior written notice from the Investment
Manager (or from the Administrator on behalf of the Investment Manager), in an aggregate
amount up to such Unitholder’s Capital Commitment.
Pending their investment or expenditure by the Fund, the proceeds from all Capital
Commitments which are drawn down by the Investment Manager will, to the extent that
the Investment Manager determines it is practicable to do so, be placed on deposit with an
Islamic bank or an Islamic window, subsidiary or affiliate of a conventional bank or otherwise
invested in liquid, short-term instruments or products that are Shari’a-compliant (any such
deposit, instrument or product, a “Permitted Temporary Investment”). In addition, to
ensure that the Fund will have cash available to satisfy voluntary redemption requests, the
Investment Manager may keep up to 10% of the aggregate Capital Commitments invested
in Permitted Temporary Investments (see “—Voluntary Redemption” below).
Diversification: The Investment Manager currently intends to invest not more than 10% of the aggregate
Capital Commitments in any single Portfolio Interest, and not more than 20% of the
aggregate Capital Commitments in Investments relating to real estate properties located in
any single country, provided that the Investment Manager may exceed these limits, subject
to prior approval by the Investment Committee, if it determines in good faith that doing so
would be in the best interests of the Unitholders as a result of changes in market conditions
or available investment opportunities.
Fees Payable to Management Fee. The Fund will pay (or will cause its Portfolio Interests to pay) to the
the Investment Investment Manager an annual fee (the “Management Fee”) in an amount equal to 1.5%
Manager: of the aggregate Invested Capital Contributions. The Management Fee will be paid in
arrears on the first day of each calendar quarter, and will be calculated by reference to
the Fund’s aggregate Invested Capital Contributions as of the last day of the immediately
preceding calendar quarter.
Incentive Fee. To the extent that distributions from the Fund (including in connection
with redemptions of Units) would result in Unitholders achieving an internal rate of return
on their Capital Contributions that exceeds 10% (compounded annually from the date of
drawdown), the Investment Manager will be entitled to receive a fee (the “Incentive Fee”)
equal to 25% of such excess distributions. The amount of the Incentive Fee will be finally
determined and paid upon the termination of the Fund. However, in the case of a redemption
of Units (other than in connection with subsequent closings), the Capital Contributions
attributable to the Units being redeemed will be deemed to constitute a separate investment
in the Fund by the redeeming Unitholder, and the Incentive Fee payable with respect to
such Capital Contributions will be determined and paid as of the relevant Redemption
Date. For purposes of calculating the Incentive Fee payable in connection with a partial
redemption of any Unitholder’s Units, such Units will be selected for redemption on a “first
in, first out” basis.
Distributions; The Fund may make distributions to Unitholders from time to time upon the resolution of
Reinvestment: the Board. It is anticipated that the Board will authorize distributions of current income on
a quarterly basis, subject to the establishment of such reserves for expenses and liabilities
(including payments of Management Fees and contingent liabilities) as it deems appropriate.
Payment of any distributions will require the prior written approval of the CBB.
No distributions will be paid prior to the date of the Fund’s final closing for the acceptance of
Capital Commitments. If the Fund receives any proceeds from the disposition, repayment
Global Real Estate Ijarah Fund Company B.S.C.(c) 25
Global Investment House KSCC
or redemption of any Investments prior to the end of the Investment Period, the portion of
such proceeds constituting a return of the Fund’s invested capital may be re-invested rather
than distributed.
All distributions to Unitholders will be made on a pro rata basis in accordance with the
number of Units then held by each of them.
Compulsory The Investment Manager may, in its sole discretion, cause the Fund compulsorily to redeem
Redemption: all or any portion of the Units that are owned directly or beneficially by (a) any Prohibited
Investor, (b) any person that is not an Approved Investor or (c) any other person whose
ownership thereof either gives rise to a breach of any applicable law or regulation in any
jurisdiction or may, either alone or together with ownership of Units by other Unitholders,
adversely effect the Fund, the Investment Manager or the other Unitholders, as determined
by the Investment Manager in its sole discretion.
Any such compulsory redemption shall be effective as of such Redemption Date as the
Manager shall determine in its sole discretion. Unless otherwise required by applicable
law, the redemption price for each Unit so redeemed shall equal the NAV per Unit as of
the relevant Redemption Date (or, if less and if the Investment Manager so elects in its sole
discretion, the amount (not less than zero) equal to (i) the purchase price paid for such Unit
minus (ii) all distributions made in respect of such Unit, to the extent that such distributions
constitute a return of the Fund’s invested capital). Such redemption price will be paid no
later than the last day of the Term.
Units will also be redeemed on a compulsory basis in connection with subsequent closings,
as described in the section headed “SUMMARY OF PRINCIPAL TERMS AND
CONDITIONS—Subsequent Closings.”
Voluntary Each Unitholder shall have the right, following the end of the Investment Period, to redeem
Redemption: all or a portion of its Units in the Fund on a voluntary basis at a per Unit redemption price
equal to the NAV per Unit on the relevant Redemption Date, all in accordance with the
procedures and subject to the limits described in the next three paragraphs.
Units may be redeemed on a voluntary basis effective as of the last day of the calendar
quarter in which the end of the Investment Period occurs, and on each anniversary of such
last day during the Term; and such last day and each such anniversary will constitute a
Redemption Date.
In order to redeem any Units as of any such Redemption Date, a duly completed and
signed request for redemption, in the form attached as Appendix B hereto (the “Request
for Redemption"), must be received by the Investment Manager with respect to such Units
at least 15 days prior to such Redemption Date. If a Request for Redemption is received
within 15 days of a voluntary Redemption Date, then such Request for Redemption
may be withdrawn by the relevant Unitholder and, if not so withdrawn, will constitute a
Request for Redemption as of the next succeeding voluntary Redemption Date. A Request
for Redemption will not in any event be deemed to have been properly submitted unless
(a) it specifies the number of Units to be redeemed, sets forth the name and address of
the redeeming Unitholder exactly as they appear in the Register, and is signed by such
Unitholder, and (b) such Unitholder subsequently provides such additional documentation
and information as the Investment Manager reasonably requests to confirm the Unitholder’s
identity or otherwise complete the redemption in compliance with applicable law.
The aggregate redemption price payable by the Fund in connection with all voluntary
redemptions of Units may not exceed 10% of the Fund’s aggregate Capital Commitments
(such amount, the “Total Redemption Amount”). Accordingly, if the aggregate redemption
price to be paid by the Fund to effect redemptions validly requested for any voluntary
Redemption Date (when added to the aggregate redemption prices paid by the Fund in respect
26 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
of any prior voluntary Redemption Dates) is less than the Total Redemption Amount, the
Fund will effect the requested redemptions in full. If, however, the aggregate redemption
price to be paid by the Fund to effect redemptions validly requested for any voluntary
Redemption Date (when added to the aggregate redemption prices paid by the Fund in
respect of any prior voluntary Redemption Dates) would exceed the Total Redemption
Amount, then the Fund will satisfy such redemption requests on a partial basis, if and
only to the extent that the aggregate redemption price paid by it in respect of all voluntary
Redemption Dates does not exceed the Total Redemption Amount. In the event that any
such partial redemption involves two or more Unitholders, such Unitholders’ Units will
be redeemed on a pro rata basis by reference to their individual Capital Commitments,
in accordance with the number of Units to be redeemed as set forth in their respective
Requests for Redemption.
Payment of the redemption price in respect of voluntary redemptions will be made within
a reasonable time, normally not to exceed 30 Business Days after the relevant Redemption
Date, except that such payment may be delayed in circumstances where the determination
of NAV as of such Redemption Date has been delayed for good reason.
The Fund is a closed-ended Fund and save as provided above, Unitholders will have no
right to request or require the redemption of all or any of their Units.
Placement Agent; Global will act as the exclusive placement agent for the Fund, and will receive a placement
Placement Fees: fee (the “Placement Fee”) from each Unitholder in respect of such Unitholder’s Capital
Commitment, as determined in accordance with the following table:
Amount of Unitholder’s Placement Fee (expressed as a Capital % of
Capital Commitment Unitholder’s Capital Commitment)
Up to $999,999 1.50%
$1,000,000 or more 1.25%
The Placement Fee attributable to each Unitholder’s Capital Commitment may be
modified or waived by Global in its sole discretion, and will be paid concurrently with such
Unitholder’s Initial Contribution.
The payment of a Placement Fee by a Unitholder will not constitute a Capital Contribution
for any purpose, including the computation of the Incentive Fee. Accordingly, the payment
of Placement Fees by a Unitholder will not reduce the Unitholder’s unused Capital
Commitment, and no Units will be issued to the Unitholder on account of such payment.
Organizational The Fund will bear all legal and other organizational expenses, including the out-of-
and Offering pocket expenses of the Investment Manager but excluding Placement Fees, incurred in
Expenses: connection with the formation of the Fund and the offering of Units up to an amount equal
to US$500,000. To the extent that such organizational expenses exceed US$500,000, they
will be borne by the Investment Manager.
Fund Expenses: The Fund will bear and be charged all expenses (“Fund Expenses”) relating to the operation
of the Fund. Fund Expenses will include, but will not be limited to:
(i) all costs and expenses in relation to the production and distribution of the reports and
accounts described in the section below headed “Reporting”, the cost of holding
Unitholders’ meetings, and any costs regarding valuations, legal opinions or
certifications (including any fatwa) issued (or to be issued) in connection with the
Fund;
Global Real Estate Ijarah Fund Company B.S.C.(c) 27
Global Investment House KSCC
(ii) all fees and expenses charged by lawyers, accountants and other professional advisors
appointed by the Investment Manager and acting on behalf of the Fund, all other fees,
costs and expenses in relation to the operation and administration of the Fund, and all
taxes, fees or other charges levied by any governmental agency against the Fund in
connection with its Investments or otherwise;
(iii) any fees, costs and expenses (if any) incurred exclusively in relation to the Fund
itself; and
(iv) all professional fees and costs, including legal, accounting, consulting and intermediary
fees and costs, relating directly to the acquisition, holding or disposal of completed
Investments, and all such fees and expenses relating to any prospective Investment
which does not proceed, but only to the extent that such costs are not borne by a third
party.
All costs and expenses incurred by the Investment Manager in providing the office facilities,
equipment and personnel to perform its obligations under the Investment Management
Agreement, including salaries and other benefits for such personnel, shall be borne by the
Investment Manager and shall not be for the account of the Fund.
Term: The term of the Fund will be four years from the date of the Initial Closing, and may be
extended for one additional one-year period by the Investment Manager, subject to the
prior approval of the CBB.
Defaults: Upon failure of a Unitholder to make any Capital Contribution as and when due pursuant
to a drawdown notice, the Unitholder will be in default (a “Defaulting Investor”), and
the Investment Manager may assess the Defaulting Investor an amount representing the
damages to the Fund and the Investment Manager that have resulted or are likely to arise
from such default, which shall be determined by the Investment Manager in its reasonable
discretion.
If the amount of such assessment is not paid by the Defaulting Investor to the Fund promptly
upon the Investment Manager notifying the Defaulting Investor of such assessment, then
the Investment Manager may, in its sole discretion: (a) cause the Defaulting Investor to
forfeit all or any portion of the Defaulting Investor’s allocable share of future distributions,
other than in respect of a return of capital, made by the Fund; (b) cause distributions that
would otherwise be made to the Defaulting Investor to be credited against the default
amount; (c) cause the Defaulting Investor to be excluded from participating in future
Investments by terminating its unused Capital Commitment; (d) cause a forced sale of
a portion of the Defaulting Investor’s Units (which shall not exceed 50%) to any non-
defaulting Unitholders who may wish to purchase such Units, pro rata based on their
respective Capital Commitments at such time, at a sales price equal to 100% of the
aggregate Capital Contributions made by the Defaulting Investor in respect of such Units,
reduced by the amount of any distributions made by the Fund to such Defaulting Investor
in respect of such Units, whether as a dividend or a return of capital or by Unit redemption,
and such Defaulting Investor’s allocable share (to the extent attributable to such Units) of
any writedown amount in respect of any unrealized Investments in which such Defaulting
Investor participated, as an investor in the Fund, as of the date of the default or, to the
extent that the non-defaulting Unitholders are not willing to purchase such Units on such
terms, to any person on such terms; and/or (e) institute proceedings to recover the default
amount. Unless the Investment Manager elects to terminate a Defaulting Investor’s unused
Capital Commitment, the Defaulting Investor will continue to remain obligated to make
Capital Contributions to the Fund, as and when required by drawdown notices, up to the
full amount of such Defaulting Investor’s unused Capital Commitment.
The foregoing remedies will be administered in a manner which the Investment Manager
deems to be equitable and, in consultation with the Shari’a Committee, deems to be
compliant with Shari’a Principles.
28 Global Real Estate Ijarah Fund Company B.S.C.(c)
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Unitholders’ The Fund will hold an annual general meeting offering Unitholders the opportunity to
Meetings: review and discuss the Fund’s activities. The meeting will be convened by the Board within
30 days after the end of each financial year of the Fund. A representative of each of the CBB
and the Ministry of Industry and Commerce of the Kingdom of Bahrain will be entitled to
be present at such meetings. (See “—Rights Attaching to the Units” above.)
Certain Risks: An investment in the Fund involves a high degree of risk. Please see the section below
headed “RISK FACTORS”, for a more complete description of certain of these risks.
Other Investment Global will not (and will not permit any of its majority-owned subsidiaries to) organize,
Activities: or act as the manager, the investment adviser or the primary source of transactions for,
another new pooled investment vehicle to be established, after the date of this Placement
Memorandum, with objectives substantially similar to those of the Fund until the earlier of
(a) the end of the Investment Period and (b) such time as the unused Capital Commitments
(excluding amounts reserved for follow-on Investments and reasonably anticipated
Fund expenses, including Management Fees) are less than 25% of the aggregate Capital
Commitments.
Except as described in the preceding paragraph, Global and its affiliates may continue
to engage actively in other activities, including investment activities which may involve
certain conflicts of interest with the Fund. See the section below headed “CONFLICTS
OF INTEREST”
Feeder Funds; In order to facilitate investment by certain investors (including non-GCC Investors), the
Parallel Investment Manager (a) may create certain corporate or partnership entities to be Unitholders
Investment or otherwise invest through the Fund, and may permit such investors to invest in the Fund
Entities: through such entities, and (b) may create parallel investment entities, the structure of which
may differ from that of the Fund, but which will generally invest proportionally in all Fund
transactions on effectively the same terms and conditions as the Fund, subject to applicable
legal, tax or regulatory constraints (and all references to the “Fund” in this Placement
Memorandum shall include any such additional entities).
Transfer of Units: No Unitholder may assign, sell, hypothecate or otherwise encumber or transfer any of
its Units (or any interest therein) except with the prior written consent of the Investment
Manager, which consent may be granted or denied in the Investment Manager’s sole
discretion.
Reporting: The Investment Manager will prepare and supply to the Unitholders, with copies to the
CBB, the following:
(i) quarterly reports containing unaudited, descriptive information with respect to any new
Investment made during the preceding fiscal quarter and a narrative summary of
material transactions or events (if any) occurring during the preceding fiscal quarter
with respect to any existing Investment;
(ii) the half yearly unaudited (but reviewed) results of the Fund, for the previous six months,
within 60 days of the end of that six-month period; and
(iii) within 90 days after the end of each financial year of the Fund, the audited accounts
or audited consolidated returns of the Fund (including the Auditors’ report) for that
financial year.
Indemnification The Fund will indemnify the Investment Manager, the Administrator, the Custodian,
and Exculpation: the Registrar and their respective officers, directors, employees, agents and affiliates
(collectively, the “Indemnified Parties”) out of the assets of the Fund against claims,
liabilities, costs and expenses, including legal fees, incurred by them by reason of their
activities on behalf of or in connection with the Fund, except to the extent arising from the
indemnified person’s gross negligence or willful misconduct. An Indemnified Party will not
be liable to the Fund, the Company or the Unitholders for any act or omission performed
Global Real Estate Ijarah Fund Company B.S.C.(c) 29
Global Investment House KSCC
by any of the Indemnified Parties in connection with the Fund, unless such act or omission
results from such Indemnified Party’s own gross negligence or willful misconduct.
Liability of In general, Unitholders will be liable for obligations of the Fund only to the extent of their
Unitholders: Capital Commitments and any undistributed profits. No Unitholder will be obligated to
make any Capital Contribution in excess of its Capital Commitment for any liability or for
the discharge of the obligations of the Fund.
Right to Amend: In order only to clarify any manifest or clerical inaccuracies, ambiguities or inconsistencies,
the Investment Manager shall have the right to amend the terms and conditions set out in
this Placement Memorandum and the Instrument without the specific consent of or advance
notice to Unitholders.
Any amendments to the investment objectives and policy of the Fund, this Placement
Memorandum or any other documents pertaining to the establishment and operation of the
Fund will require approval from the CBB.
Any proposed amendment to the investment objectives and policy of the Fund, this
Placement Memorandum or any other documents pertaining to the establishment and
operation of the Fund (other than those amendments described in the first paragraph above)
which has been approved by the CBB, will be notified to the Unitholders not less than 21
days prior to the date of any such amendment.
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3 MENA REAL ESTATE SECTOR OVERVIEW AND OUTLOOK
Set forth below is the Investment Manager’s assessment of macroeconomic conditions and the real estate
investment environment in the MENA region generally and in selected countries within the MENA region.
This assessment and, unless otherwise specifically indicated below, all factual statements and statistical data
cited below in this section are based upon research and analysis conducted by the Investment Manager.
3.1 OVERVIEW1
The primary focus of the Fund’s investment activities will be the MENA region. Fiscal surpluses generated
out of high oil prices have contributed to sustained economic growth for many countries in the MENA region.
At the same time, globalization and the terms and conditions of the World Trade Organization have caused
the governments of the MENA region to undertake economic reforms to create a more attractive investment
climate. The Investment Manager believes that these factors will create an increase in real estate investment
opportunities in the MENA region, and is forming the Fund in an effort to capitalize on such opportunities.
The MENA region has been recording consistent real gross domestic product (“GDP”) growth due to a variety
of factors. The average GDP within the region increased by 6.3% in 2006, up from a 4.6% increase during
each of the first four years of this decade. The Investment Manager believes that this growth will continue at a
rate of 5.5% in the year 2007, as compared to the GDP of the GCC countries, which the Investment Manager
expects will increase by 6.1% in 2007. The MENA region’s GDP increase in 2006 marked one of its highest
since the 1970s. The current pace of growth has narrowed the gap in per capita income growth between the
MENA region and other developing regions.
The increase in economic activity within the MENA region has led to current fiscal surpluses, high Forex
Reserves and an increase in government assets. In the year 2006, the MENA region recorded a strong trade
balance growth, resulting in a current account balance in excess of US$170 billion. In addition, the net foreign
direct investment (“FDI”) in the MENA region equaled US$35.2 billion in the year 2006. According to the
World Bank, nominal GDP of the MENA region is expected to reach US$1.64 trillion in 2007. It is worth
noting that the contribution of Gross Domestic Investment (GDI) to GDP growth almost doubled in 2006, from
2.6 to 4.1 GDP growth points. In addition, private investment as a share of GDP has been increasing, signaling
a shift toward more private-sector led growth.
The Investment Manager believes that the following factors will further impact real estate investment
opportunities within the MENA region: (i) an increasingly youthful population; and (ii) increased demand for
consumer products and services.
The Investment Manager expects the economic environment within the MENA region to be conducive to
increased investment potential during the years 2007–09. Nevertheless, domestic conditions vary across the
region due to political and religious conflicts. The Investment Manager acknowledges that political tensions
could negatively impact oil-market conditions and the confidence of global and regional investors.
In sum, the Investment Manager believes that the following factors may serve as catalysts for increased activity
and opportunity in the real estate markets of the MENA region:
• Increased government revenues and capital spending directed at economic infrastructure.
• Government grants of land at a discount.
• Increased disposable income in the GCC countries, as reflected by increased consumer spending.
• Ability of foreign persons and entities to directly own property in many countries in the MENA region.
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• Increased promotion of the MENA region as an attractive tourist destination.
• The increased presence of mortgage banking within the GCC countries and the MENA region
generally.
• The influx of new capital into the GCC real estate countries due to the repatriation of funds from
international locations and increased investment activity by Scandinavian and Western European investors
wishing to take advantage of the appreciating value of the Euro.
3.2 GCC REAL ESTATE SECTOR2
The Investment Manager believes that continued economic growth of the MENA region in general, and the
GCC countries in particular, will lead to increased real estate development and acquisition finance opportunities
therein for several reasons. First, the real estate market in the GCC is believed to account for an estimated $120
billion US dollars and 1.4% of the global real estate market. In the years 2004-2006, investments in the real
estate markets of the GCC countries have doubled.
The real estate market accounts for a significant portion of the GDP of the GCC, and the number of real estate
funds investing in the GCC countries has increased in recent years.
Rental yields in the GCC countries continually exceed 8% and are comparatively higher than yields of 3-
6% in the UK, Europe and Hong Kong. The intra-regional yields in the GCC have been relatively higher in
Jeddah, Riyadh and Qatar. The Investment Manager estimates that total retail space in the GCC countries
will increase from 4.5 million sqm in 2006 to 11 million sqm by 2010, for a cumulative annual growth rate
of approximately 25% during that four-year period. Rental yields in the industrial and office segments have
consistently outperformed residential rental yields across the GCC countries. On an absolute basis, office
rentals are the highest in Kuwait, around US$55/sqm per month, and the lowest in Oman, around US$18/sqm
per month.
3.3 MENA REAL ESTATE SECTOR (NON-GCC COUNTRIES)3
Jordan
Jordan enjoys a stable economic environment that has proved resilient despite political instability throughout
the MENA region. FDI inflows from GCC countries, Iraq and Lebanon have all contributed to increased
economic activity during each of the last three years. As a result, the Investment Manager believes that real
estate development and acquisition finance opportunities in Jordan will likely increase.
According to Jordan’s Department of Land and Surveys, Iraqis constitute the largest portion of foreign property
32 Global Real Estate Ijarah Fund Company B.S.C.(c)
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buyers. In recent years, GCC investors have increasingly looked to Jordan both as an investment opportunity
and as a vacation destination.
The continuous influx of tourism dollars into Jordan has benefited both the hotel and consumer retail industries.
Hotels which traditionally anticipated occupancy rates of 40–50% now enjoy near-capacity occupancy.
In addition to international interest, Jordan’s population demographics have also contributed to its growing
economy. Jordan’s population, currently estimated at six million, is expected to grow at an average rate of
2.8% per annum and is expected to double by the year 2032. The Investment Manager believes that real
estate development and acquisition finance opportunities will increase as additional housing supply becomes
necessary to meet the needs of a rapidly increasing population.
In addition, initiatives of the Jordanian government and banking system have augmented the growth of the
nation’s real estate market. The landlord and tenant law has been amended to allow landlords to increase rent
for an indefinite period, and all lease agreements executed prior to the amendment of the law will be considered
legally terminated in 2010. The Investment Manager believes that the changing landscape of landlord-tenant
relations will force much of Jordan’s population further away from city centers in pursuit of cheaper housing.
In fact, the Investment Manager’s research indicates that a large number of housing units are expected to be
built by the year 2010 in these outlying areas.
The Investment Manager believes that the following additional factors will further increase the opportunity for
real estate investment in Jordan:
• The Jordanian government has been actively modifying its legislative system in an effort to create a legal
environment capable of nurturing and facilitating an increased flow of investments into the country. A
2006 Global Investment Report ranked Jordan among the top 20 countries out of a total 141 countries in
terms of foreign investment opportunities.
• In addition to legislative system reforms, the Jordanian government has exerted considerable efforts to
create a favorable investment environment for both Jordanian and foreign investors.
Lebanon
The Lebanese real estate sector has enjoyed consistent growth due to an influx of foreign investments, as
construction activity has expanded into such residential districts of Beirut as Achraffieh, Ramlet El Baida,
Verdun and Raouche. Beirut and Tripoli continue to offer commercial and residential opportunities for property
investors searching for attractive rental yields and strong potential in property values.
The Lebanese real estate sector is particularly attractive to foreign investors because land is relatively scarce
as a result of the nation’s geographic restrictions. Additionally, there are many high-wealth Lebanese nationals
living both locally and abroad who wish to acquire property within Lebanon, further increasing the demand for
Lebanese real estate.
Tourism has been responsible for greater investor confidence both in the Lebanese economy generally and
in the real estate sector. Capital investment in the Lebanese travel and tourism sectors in the year 2006 was
estimated at US$455,000,000, accounting for 12.1% of overall investments made within the nation that year.
Confidence in the tourism industry has led Hyatt Express, Holiday Inn, Rotana and Intercontinental Hotels
to focus on development opportunities within Lebanon. The Investment Manager anticipates that at least 30
tourist and luxury residential projects valued in excess of US$1 billion will be launched within the foreseeable
future.
The Lebanese government has also made efforts to increase Lebanon’s profile as a destination for foreign
investment by overturning laws which differentiated between domestic and foreign real estate owners. This
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effort towards reform has resulted in the reduction of property taxes and registration fees traditionally borne
by international investors.
The Investment Manager believes that the following additional factors will further increase the opportunity for
real estate investment in Lebanon:
• Higher demand for high-end housing.
• Higher demand for modern commercial facilities and shopping malls and the progress that has been made
in the development thereof.
• The need for additional facilities required to accommodate increased tourist traffic.
• Basic existing utilities are currently being upgraded to accommodate future demand.
• The steady flow of FDI into Lebanon.
• Lebanese real estate transactions are normally denominated in US dollars, which tends to minimize the
foreign exchange risk.
Turkey
Turkey has recorded a cumulative 34% GDP growth over the last four years, due primarily to private
consumption and investments. Turkish real estate has proven increasingly attractive to international investors:
with natural assets and possible membership in the European Union (“EU”), the country has generated interest
from investors looking to buy property in prime locations before property values rise. For example, the number
of Britons owning property within the country has increased by 200% in the last 18 months.
Turkey has attracted considerable foreign interest and investment, particularly from Dubai, in advance of
potential inclusion in the EU. Corporate investors are developing new resorts, golf courses and other tourist
facilities, while public initiatives targeted at improving roads and airports have taken priority domestically.
The Aegean and Mediterranean coasts continue to be Turkey’s most popular tourist destinations.
The Investment Manager believes that Turkey’s economic growth will only continue with further development
in the real estate and tourism sectors.
The Investment Manager believes that the following factors will further increase the opportunity for real estate
investment in Turkey:
• Turkish law now makes mortgages available to foreign property owners.
• Turkey’s population of 70 million is likely to generate increased demand in an already strong internal
property market.
• Low cost of living and long pleasant summers make Turkey a favored retirement spot for Europeans.
3.4 NORTH AFRICA REAL ESTATE SECTOR
Morocco
The Moroccan real estate sector has enjoyed steady growth as a result of several initiatives by the Moroccan
government to strengthen housing opportunities and economic infrastructure. In addition, the Moroccan
government has allocated substantial funds to a tourism initiative, targeting the arrival of 10 million tourists
per year by 2010. Coupled with the implementation of several governmental reforms intended to make the
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investment environment more attractive for foreign investors, this tourism initiative is likely to result in greater
confidence in Morocco’s overall economy and real estate sector.
The Investment Manager believes that the following factors will further increase the opportunity for real estate
investment in Morocco:
• The comparatively low cost of properties in Morocco has proved increasingly attractive to European
investors.
• Rental occupancy is comparatively high relative to other countries in the MENA region, and is expected
to increase.
• Large projects are currently underway to improve Morocco’s infrastructure, including new roads, marinas,
trains, luxury resorts, shopping malls and beach clubs.
• An “open skies” policy adopted on January 1, 2006 allows low cost airlines to service Morocco, further
promoting the tourism industry.
• Increased tourism will result in an increased need for rental accommodations.
• Morocco recorded capital growth between 15-30% in the year 2006.
Tunisia
Tunisia has long been an attractive destination for foreign investment, and has proved increasingly popular
with GCC investors and Asian entrepreneurs. FDI constituted 12% of all investments made in Tunisia in the
year 2006 and equaled 2.7% of Tunisia’s GDP. Tunisia’s tourism industry recorded an increase of 9.3% in the
first quarter of 2007 as compared to the same period in 2006.
The Investment Manager believes that the Tunisian real estate and construction sectors will benefit from the
government’s tourism initiatives, as high-wealth tourists purchase vacation homes within the nation and/or
enjoy longer stays. The Investment Manager believes that an increase in tourism will lead to the development
of additional housing and luxury units in Tunisia.
Algeria
Following the turbulent period of the 1990s, Algeria has experienced significant economic growth, due in large
part to the privatization of industries previously controlled by the Algerian government as well as strong oil and
natural gas export revenues. The Investment Manager expects Algeria’s GDP to increase by 4% in 2007. The
Algerian government recently approved a US$120 billion five-year budget in an effort to create two million
jobs, construct one million housing units and reduce unemployment to 10% by 2010.
In addition, the Investment Manager believes that the government’s US$60 billion public spending plan has
increased confidence in Algeria’s real estate and construction sectors. This spending is focused on such public
works as a 1,260 km east-west highway and increased housing projects.
The Investment Manager also believes that Algeria’s tourism sector will enjoy increased success as hotel
groups such as American Marriott International, Accor and Sheraton plan to open new destination hotels within
the nation.
Egypt
Egypt enjoys a stable economic and political climate and continues to maintain a stable relationship with many
of the world’s most influential economies. Egypt is an attractive location for international real estate investors,
with major cities such as Luxor, Cairo and Alexandria attracting the highest levels of investment within the
country.
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Egypt continues to be a leading destination for European travelers. The Investment Manager believes that real
estate values in many locations will continue to rise as more international tourists purchase vacation homes or
second homes in Egypt.
The Egyptian government has allocated considerable funds to further improve the investment climate. In
addition, the World Bank recently announced a US$180,000,000 development project in greater Cairo, while
the Egyptian Tourism Development Authority has received offers from GCC and Western European investors
to build 26 tourist resorts valued at 9.5 billion Egyptian Pounds in Ain Sokhna, Ras Sidr and the Gulf of
Aqaba.
The Investment Manager believes that the following factors will further increase the opportunity for real estate
investment in Egypt:
• Egyptian mortgage law has recently been amended to allow for access to mortgages by foreign
investors.
• Foreign investors have the right to directly own Egyptian real estate.
• Egyptian real estate is currently generating strong rental yields.
• The Egyptian real estate sector has recorded year-on-year capital appreciation of 20-30%.
36 Global Real Estate Ijarah Fund Company B.S.C.(c)
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4 GLOBAL INVESTMENT HOUSE (K.S.C.C.)
4.1 General
Global is a full-service investment firm founded in 1998. It falls under the regulation of the Central Bank of
Kuwait. Global’s capital stock is currently listed on the Kuwait Stock Exchange, the Bahrain Stock Exchange
and the Dubai Financial Market. It has a local presence in Kuwait, Bahrain, Dubai, Abu Dhabi, India, Sudan
and Jordan, and services clients through a team of dedicated and experienced personnel. Assets presently
managed by Global are valued in excess of US$7.2 billion.
Global’s Investment Funds division develops and offers offshore and onshore fund-of-funds products to
clients. Clients are offered custom-made fund-of-funds products according to their risk profiles. The portfolios
of Global’s funds of funds are actively monitored in an effort to ensure the best returns to investors by using
investment analysis software which seeks to identify leading investment managers based on specific parameters
and criteria. The division has over the years developed extensive knowledge of and contacts with leading hedge
fund managers in various countries. The division plans to increase its assets under management by expanding
its market base in the GCC region and diversifying its product line.
Global’s real estate unit possesses substantial experience, combined with diversified skill sets and knowledge
of global real estate. Currently, there are 11 investment professionals in Global’s real estate unit, headed by
Sameer Al-Gharaballi (Executive Vice President, Investment Funds). Global’s real estate unit has successfully
launched three prior Shari’a-compliant real estate funds since 2004: the Global U.S. Real Estate Fund, the
Global Asia Real Estate Fund, and the GCC Real Estate Fund.
4.2 Global’s Board of Directors
Global’s Board of Directors currently consists of the following persons:
Mrs. Maha Khalid Al-Ghunaim, Chairperson of Global since 2007, and Managing Director of Global from
1998 to the present (Kuwaiti); Chairperson and Managing Director of the Company; Souq Al-Safat Building,
2nd Floor, P.O. Box 28807, Safat 13149, Kuwait. Mrs. Al-Ghunaim also currently serves as the Vice Chairman
of Housing Finance Company. She has served as a member of the Financial & Investment Committee at
Kuwait Chamber of Commerce & Industry since October 2001, and has served as a Board Member and a
member of the executive committee of National Industries Group since 1996. Mrs. Al-Ghunaim also served as
the Vice Chairman of Kuwait Financing Services Company (a listed company in Kuwait) from 2000 to 2002.
From 1994 to 1998, Mrs. Al-Ghunaim served as a Board Member and a member of the executive committee
at the United Bank of Kuwait (now Ahli United Bank). She was also a Board Member of the International
Financial Advisors Co. from 1986 to 1988. Mrs. Al-Ghunaim has served on the boards of a number of different
investment funds, was the head of the Strategy Committee for Asset and Currency Allocation at Kuwait
Investment Co. (“KIC”), and was also the Assistant General Manager of Asset Management at KIC. In 1982,
she joined Kuwait Foreign Trading Contracting & Investment Co., where she was promoted to be the head
of the portfolio management department in 1988. Mrs. Al-Ghunaim received a B.S. in Mathematics from San
Francisco State University, California.
Soud Ba’alawy (Kuwaiti), Executive Chairman of Global since 2007 (UAE). Prior to joining Global’s
Board, Mr. Ba’alawy was the Executive Chairman of the Dubai Group, which was established to focus on
three key industries (Investments, banking and insurance) and has three members: Dubai Investment Group,
Dubai Capital Group and Noor Investment Group. Previously, Mr. Ba’alawy was Chief Executive Officer of
Dubai Investment Group, and played a key role in its foundation. He also has more than ten years of banking
experience with Citibank group, and served as Vice President of the Gulf Treasury, Citibank Dubai. He is
also an Executive Committee Member of Dubai Holding, which provides strategic direction for companies
in a range of sectors, including media, technology, healthcare, tourism, real estate, finance, biotechnology,
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industrial and energy. Mr. Ba’alawy is the Chairman of Marfin Popular Bank, a Cyprus-based bank, Board
Member and Vice Chairman of Dubai Bank, and a Board Member of Noor Islamic Bank, Emirates Integrated
Telecommunications Company and the Dubai Financial Market. He is also the Chairman of Manzil, a non-profit
centre for persons with special needs. Mr. Ba’alawy is a member of the Chartered Institute of Management
Accountants, United Kingdom.
Khalid Jassem Al-Wazzan, Director from 1998 to the present (Kuwaiti). Mr. Al-Wazzan currently serves as
the Chairman of Mezan Holdings Group of Companies and its subsidiaries. Mr. Al-Wazzan has been a Board
Member of Gulf Insurance Company, a listed company on the Kuwait Stock Exchange, since 1990. From 1993
to 1995, Mr. Al-Wazzan was a member of the Branch Committee of Public Authority for Assessing Damages
resulting from the war against Kuwait. He was a member of the Board of Directors of the Public Authority
for Industry from 1997 to 2000 and of the Board of Directors of the Kuwaiti Ports Company from 1992 to
1996. He was also the Vice Chairman of Commercial Bank of Kuwait, a listed company on the Kuwait Stock
Exchange.
Sheikh Abdulla Al-Jaber Al-Sabah, Director from 1998 to the present, and Assistant General Manager from
2004 to the present (Kuwaiti); Al-Shuhada Street, Al-Sharq, Kuwait. Prior to becoming the Assistant General
Manager of the Manager in 2004, Mr. Al-Sabah was the Investment Technical Office Manager at the Public
Institution for the Social Security of Kuwait (“PIFSS”), where he earlier worked as Manager of the Securities
Department and the Head of Private Equity from 2000 to 2002. Mr. Al-Sabah also currently serves as Chairman
of the Housing Finance Company (Iskan) and as a Director of Al-Ahli Bank of Kuwait. Mr. Al-Sabah was a
Vice President at Wafra Investment Advisory Group, Inc. in New York from 1991 to 1998, and was involved
with projects with the direct equity, real estate and securities divisions. He began his career at PIFSS, where he
was a Portfolio Manager from 1988 to 1991, specializing in U.S. and Japanese equities. Mr. Al-Sabah received
his M.B.A. in Finance from Columbia University and his B.A. in Economics and International Relations from
Brown University.
Marzouk Naser Al-Kharafi, Director from 1998 to the present (Kuwaiti). Mr. Al-Kharafi is currently the
Managing Director of Kuwait Food Company, S. A. K. “Americana.” He is also the Director General of
Aluminum Industries Co. and the Assistant Managing Director of Mohammed Abdulmohsen Al-Kharafi and
Sons Company. In addition, Mr. Al-Kharafi is a Board Member of the National Company for Mechanical and
Electrical Works, a Vice President of the Aluminum Producers and Traders Association, and the Chairman of
International Khoshtam Food Co. (Iran) and Kuwaiti Syrian Holding Co. Mr. Al-Kharafi received his Degree
in Finance and Business Administration from Kuwait University.
38 Global Real Estate Ijarah Fund Company B.S.C.(c)
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5 FUND MANAGEMENT
5.1 General
Global will act as the Investment Manager of the Fund pursuant to the Investment Manager Agreement between
the Company and Global. Accordingly, the Board will delegate responsibility for the day-to-day management
and operation of the affairs of the Fund to the Investment Manager. Subject to the review of investment
opportunities and the making of final investment management decisions by the Investment Committee, the
Investment Manager will be fully responsible for the conduct of the business and affairs of the Fund and will
make all material decisions regarding the business, assets and operations of the Fund. The Investment Manager
may transfer (or delegate) all or any of its rights, duties and obligations, subject to the prior written approval
of the CBB.
In its capacity as the Fund’s Investment Manager, Global will originate, analyze, negotiate, execute and
manage the Fund’s Investments, and will make investment management recommendations to the Investment
Committee. In performing its duties, the Investment Manager will implement all investment management
decisions made by the Investment Committee (see the section headed “SUMMARY OF PRINCIPAL
TERMS AND CONDITIONS—Investment Committee” below).
5.1.1 Track-Record
The Investment Manager’s management team, including its initial designees on the Investment Committee,
possess substantial experience in private equity investment, fund management, investment banking and real
estate development. Collectively, their experience covers the following regions: MENA, South East Asia, the
Far East, Australasia, Africa, Europe, North America and Latin America. Global has successfully launched
3 Shari’a-compliant real estate funds since 2004: the Global U.S. Real Estate Fund, Global Asia Real Estate
Fund and the GCC Real Estate Fund.
Since 2005, Global’s investment expertise has been recognized with the following awards and honors:
• EuroMoney’s Best Equity House, 2005-2006
• Gulf Excellence Award, 2005
• Banker Magazine, Deal of the Year, 2005
• IREF ME Award, Best Real Estate Fund, 2006
• EuroMoney’s Best Real Estate Investment House-Kuwait, 2005
5.1.2 Regional Knowledge and Access
The Investment Manager’s management team, including its initial designees on the Investment Committee,
have substantial experience supervising investment activity and have successfully executed transactions in the
infrastructure, private equity and real estate sectors in the MENA region. In addition, the Investment Manager
maintains ongoing relationships with various real estate concerns in the MENA region. As a result of this
experience and these relationships, the Investment Manager anticipates preferred access to proprietary deal
flow from existing companies and institutions within the MENA region.
5.2 Role of the Investment Manager
The Investment Manager anticipates performing the following functions in conjunction with its management
of the Fund:
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5.2.1 Origination of Investments
The Investment Manager will monitor trends in the real estate markets of the MENA region and identify both
development and acquisition finance opportunities which may be of interest to the Fund.
5.2.2 Informed Decision Making
In analyzing any investment opportunity on behalf of the Fund, the Investment Manager will employ a consistent
deliberation process. This process will include rigorous analysis to ensure that investment decisions are made
efficiently and conform to the objectives set forth in the section headed “INVESTMENT OBJECTIVES
AND INVESTMENT PHILOSOPHY”.
5.2.3 Post-acquisition Support to Investments
The Investment Manager anticipates that providing guidance and support to Portfolio Interests will be critical
to enhancing the value of the Fund’ Investments and, accordingly, the rates of return to Unitholders. The
Investment Manager’s support will be provided through communication with the management teams of the
Portfolio Interests at regular intervals and, where possible, through representation on the governing boards of
such interests.
5.3 Corporate Governance
The Investment Manager will employ all corporate governance structures and processes necessary to ensure
that the Investment Manager, the Board and the Investment Committee operate the Fund at all times in a
manner consistent with the following underlying principles:
5.3.1 Financial Prudence
The Fund will seek to provide Unitholders with stable and relatively secure quarterly returns in accordance
with Shari’a Principles while mitigating capital risk (see the section headed “SUMMARY OF PRINCIPAL
TERMS AND CONDITIONS—Investment Objective”). In furtherance of the Fund’s financial objectives,
the Investment Manager will apply strict financial controls in an effort to ensure that Unitholders’ Capital
Contributions are deployed efficiently.
5.3.2 Clarity and Transparency
The Investment Manager will endeavor at all times to ensure that its (and, as applicable, the Investment
Committee’s) decision-making process and investment activities are reasonably clear and transparent such that
all Unitholders may be aware of, and understand the reasoning behind, any decision made by the Investment
Manager (or, as applicable, the Investment Committee) with regard to actual or prospective Investments and
Portfolio Interests.
5.3.3 Ethical Compliance
The Investment Manager will seek to identify real estate development and/or acquisition financing
opportunities that are consistent both with Shari’a Principles and those objectives set forth in the section headed
“INVESTMENT OBJECTIVES AND INVESTMENT PHILOSOPHY”. The Investment Manager and the
Investment Committee intend to consult regularly with the Shari’a Committee in making investment decisions
and to utilize Shari’a-compliant financial instruments when making investments on behalf of the Fund.
5.3.4 Anti-Money Laundering and Countering Terrorist Financing
The Investment Manager will put in place any and all reasonable procedures in accordance with best business
practice and the requirements of the CBB and the Administrator in an effort to thwart money-laundering and
terrorist financing activities.
40 Global Real Estate Ijarah Fund Company B.S.C.(c)
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5.3.5 Regulatory and Legal Compliance
The Investment Manager will make all reasonable efforts, and will endeavor to cause the Board and the
Investment Committee to make all reasonable efforts, to comply with all applicable laws, rules and regulations
of any country in which the Fund makes any Investment.
5.3.6 Reporting
The Investment Manager will report to the Unitholders on the Fund’s progress at reasonably regular intervals
(see the section headed “GENERAL—Reporting”).
5.4 Investment Committee
In performing its duties, the Investment Manager will implement all investment management decisions relating
to the Fund made by the Investment Committee. The Investment Committee will at all times during the Term
consist of not less than five senior executives of the Investment Manager and may include one or more other
members designated by the Investment Manager, provided that a majority of the members of the Investment
Committee will always be officers or employees of the Investment Manager. The Investment Manager currently
intends to have Mr. Sameer Al-Gharaballi (Executive Vice President, Investment Funds), Mr. Rakesh Patnaik
(Head-Real Estate), Mr. Fawaz Al Bader (Senior Manager-Real Estate), Mr. Vinod Kumar (Senior Investment
Analyst-Real Estate) and Mr. Fawez Al Nejadah (Project Management Officer-Real Estate) act as its initial
designees on the Investment Committee.
The chairman of the Investment Committee will at all times during the Term be a senior executive of the
Investment Manager. The initial chairman will be Mr. Sameer Al-Gharaballi (the “Chairman”).
All material investment management decisions made on behalf of the Fund will be made by the Investment
Committee, including all such decisions related to the acquisition or disposition of any Investment, the financing,
refinancing, operation or management of the underlying real property and any other matter pertaining to any
existing or prospective Investment. In that connection, the Investment Committee will consider and evaluate
recommendations made by the Investment Manager.
The Investment Committee will meet on a regular basis upon invitation by the Chairman or at the written
request of any two members of the Investment Committee. Such meetings will only be valid and considered to
be quorate, upon the attendance of at least a majority of the members (which majority must include at least a
majority of the members who are officers or employees of the Investment Manager), whether in person or via
conference call or similar telecommunications facilities through which each participant can hear and be heard
by each other participant. The Investment Committee will be required to meet at least quarterly.
Decisions of the Investment Committee made at a valid meeting thereof will be made by majority vote of the
members in attendance. In the case of a split vote, the Chairman will have a casting vote. Decisions of the
Investment Committee may also be made by written consent of a majority of the members (which majority
must include at least a majority of the members who are officers or employees of the Investment Manager).
Brief biographical information with respect to the initial members of the Investment Committee (all of whom
are officers or employees of the Investment Manager) follows:
Sameer Al-Gharaballi, Chairman of the Investment Committee; Executive Vice President of the Investment
Manager; Director of the Company; Souq Al-Safat Building, 2nd Floor, P.O. Box 28807, Safat 13149, Kuwait.
Mr. Al-Gharaballi received his M.A. from the University of Northern Colorado in 1980 and his Bachelor’s
Degree from Alexandria University in Egypt. He was an instructor at Kuwait Commercial Institute (1977-
78) and Kuwait University (1978-1982). In 1982, Mr. Al-Gharaballi joined the Financial Group of Kuwait
and became its General Manager in 1991. From 1996 to 1998, he was the head of marketing in the Asset
Management Division of KIC. He was also a member of the Strategy Committee for Asset and Currency
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Allocation at KIC. Currently, Mr. Al-Gharaballi serves as the Vice Chairman of Gulf Clearing Company, Gulf
Takaful and Gulf Custody Company and is a member of the Board of Directors of Mazaya Holding Real Estate
Company.
Rakesh Patnaik, Manager-Real Estate of the Investment Manager; Souq Al-Safat Building, 2nd Floor, P.O.
Box 28807, Safat 13149, Kuwait. Mr. Patnaik has the responsibility of structuring, sponsoring and managing
real estate investment products on a worldwide basis on behalf of the Investment Manager. Mr. Patnaik has
12 years of experience in real estate fund management and investment, including corporate real estate and
property experience in key markets in the United States, the GCC region and South Asia. Mr. Patnaik has a
post-graduate degree in Business Management from T.A. Pai Management Institute, located in India.
Fawaz Al-Bader, Senior Manager-Real Estate of the Investment Manager; Souq Al-Safat Building, 2nd Floor,
P.O. Box 28807, Safat 13149, Kuwait. Mr. Al-Bader has over nine years of experience in corporate/individual
client finance, real estate investment, risk analysis and structuring transactions in a Shari’a-compliant manner.
Mr. Al-Bader received his Bachelor’s of Science in Business Administration from the University of Colorado
at Denver in August, 1998.
Vinod Kumar, Senior Investment Analyst-Real Estate of the Investment Manager; Souq Al-Safat Building, 2nd
Floor, P.O. Box 28807, Safat 13149, Kuwait. Mr. Kumar has 12 years of experience encompassing financial
restructuring, feasibility studies, financial due diligence, valuation studies, and acquisition, investment and
privatization advisory services. Before joining Global, he was working on the divestment of an Indian oil
refinery to a strategic investor in Middle East. Mr. Kumar received his Bachelor of Technology Degree from
the Indian Institute of Technology in Kanpur, India and holds a PGBM in Business Management from XLRI
in Jamshedpur, India.
Fawaz Al Nejadah, Project Management Officer-Real Estate of the Investment Manager; Souq Al-Safat
Building, 2nd Floor, P.O. Box 28807, Safat 13149, Kuwait. Prior to joining Global, Mr. Al Nejadah worked
as the Head of the Concrete Department of the National Industries Company for four years. He has expertise
in the planning, scheduling, budgeting and overall control of construction and renovation projects. Mr. Al
Nejadah received his Bachelor’s Degree in Civil Engineering from Kuwait University, College of Engineering
in June, 2002.
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6 ADMINISTRATOR, CUSTODIAN, REGISTRAR AND AUDITORS
6.1 Administrator, Custodian and Registrar
Gulf Clearing Company was incorporated in Kuwait in 2001 and commenced its operations in Bahrain through
the Custodian/Registrar in 2003. GCC provides a wide range of fund custodian, fund administration and share
registrar services to both investment funds and fund managers, and is one of the leading providers of such
services in the Kuwaiti and Bahraini markets.
6.2 Auditors
PricewaterhouseCoopers have been practicing in Bahrain since the mid-1970s, specializing in assurance,
business and financial advisory services.
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7 INVESTMENT OBJECTIVES AND INVESTMENT PHILOSOPHY
7.1 Investment Objective
The Fund will seek to provide Unitholders with current income of 8-10% per annum on the Fund’s Invested
Capital Contributions, net of all incentive and other fees paid to the Investment Manager, all fees and expenses
of the Fund’s auditor, legal counsel and other advisors (including any fees payable to the Shari’a Committee)
and all taxes payable by the Fund and its Portfolio Interests. The Fund intends to make distributions of current
income on a quarterly basis.
The Fund will seek to achieve its investment objective by providing development and/or acquisition financing
for a diversified portfolio of real estate properties in the MENA region through investment structures designed
to both generate stable quarterly cash flows in accordance with Shari’a Principles and to mitigate capital risk.
The Fund anticipates capitalizing on the resources and business relationships of the Investment Manager to
generate investment opportunities.
The Fund intends to invest in a variety of commercial, residential and industrial real estate properties, primarily
through the use of an Ijarah leasing structure. The Fund believes that using the Ijarah structure to invest in
these properties will allow the Fund to minimize risks that may be associated with any devaluation of these
properties or delinquent lease payments by the Fund’s counterparties.
In employing the Ijarah structure, the Fund generally anticipates that it will provide financing to the economic
owner of the relevant real estate assets by purchasing such assets and maintaining full ownership thereof for
the term of the financing. The Fund will then lease the assets back to the economic owner, in exchange for an
advance rental payment equal to approximately 30% of the value of the assets and a stream of periodic fixed
rental payments (in some cases, in lieu of the 30% advance rental payment, the Fund may purchase the relevant
assets for approximately 70% of their value). By requiring the advance rental payment (or by purchasing the
relevant assets for less than their value, as described in the previous sentence), the Fund will have reduced its
initial exposure with regard to any particular asset to approximately 70% of the value of that asset and will have
an initial coverage ratio of approximately 140% with respect to the investment made by the Fund in connection
with that asset. At the end of the lease term, the relevant asset would typically be sold back to the economic
owner for a purchase price equal to the Fund’s investment (minus any advance rental payment received by the
Fund at the outset of the lease).
In addition to the Ijarah structure, the Fund may utilize alternative financing structures when the Investment
Manager deems it appropriate to do so in order to achieve the Fund’s investment objectives. For example,
alternative structures may be considered in light of local ownership laws and tax laws in particular MENA
countries.
The Fund anticipates making each of its investments through one or more SFVs established in appropriate
jurisdictions for the sole purpose of directly or indirectly holding one or more of the Fund’s Investments. The
number of SFVs established in connection with each Investment, as well as the jurisdiction in which each SFV
is organized and the manner in which each SFV is capitalized by the Fund, will be determined by the Investment
Manager in consultation with such legal, accounting and other professional advisers as the Investment Manager
may deem necessary or desirable, in a manner intended both to comply with the applicable legal requirements
and to invest the Fund’s capital efficiently from an income and other tax perspective.
There can be no assurance that the Fund will achieve its investment objective, including its target returns to
Unitholders. See the section headed “RISK FACTORS”.
44 Global Real Estate Ijarah Fund Company B.S.C.(c)
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7.2 Investment Philosophy
The Investment Manager believes it is important to quantify the risk of any potential Investment in relation
to the Fund’s total investment portfolio before the recommendation is made to the Investment Committee to
include such potential Investment in the Fund’s portfolio. The Investment Manager also believes that it is
important to be disciplined in its approach towards analysis of a potential Investment.
7.3 Shari’a Compliance
Global intends that the Fund will make its investments and conduct its affairs in a manner compliant with
Shari’a Principles and, in that regard, the Investment Management Agreement will require the Investment
Manager to comply with the guidelines set forth in Appendix A to this Placement Memorandum. Global has
retained a Shari’a Committee, comprising scholars from Al Rayah Consulting & Training Company. The
Fund’s investments will be limited to those that comply with Shari’a Principles (as determined in the sole
judgment of the Manager, in consultation with the Shari’a Committee).
The following prominent Islamic scholars and authorities are the initial members of the Shari’a Committee:
Dr. Ali Ibrahim Al-Rashed
• PhD in Comparative Fiqh (Cairo University, Dar Al Oloum College)
• Masters Degree in Comparative Fiqh (Cairo University, Dar Al Oloum College)
• BS in Islamic Shari’a (Kuwait University)
Dr. Abdulaziz Al-Qassar
• Assistant Dean of Education, Higher Education and Research (College of Shari’a, Kuwait University)
• Member of a number of Shari’a supervision institutions
Dr. Essa Zaki
• Shari’a counsellor for Kuwait Awqaf Public Foundation
• Member of a number of Shari’a supervision institutions
The Shari’a Committee has reviewed the structure and proposed operation of the Fund as described in this
Placement Memorandum, and has provided a certification (“fatwa”) that they are compliant with Shari’a
Principles. The Shari’a Committee will also provide ongoing supervision and oversight of the operations,
policies and activities of the Fund to ensure their compliance with Shari’a Principles.
The Shari’a Committee serves in an advisory capacity only, and will not have the power to make any investment
decisions for the Fund. The members of the Shari’a Committee will be paid annual fees by the Fund for their
service as such. The Investment Manager, in agreement with the members of the Shari’a Committee, intends to
retain such members for the life of the Fund, although there can be no assurance that any of them will remain
a member of the Shari’a Committee throughout the entire Term of the Fund.
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8 INVESTMENT PROCESS
The Investment Manager anticipates making each of its investment recommendations to the Investment
Committee in accordance with a methodical approach set forth in the table below:
Figure 1: Investment Process
8.1 Transaction Sourcing
The Investment Manager will operate within its broad network of relationships with both regional and
international project sponsors and developers, industry specialists, consultants and advisers, investment banks,
and real estate developers, managers and brokers to identify potential Investments for the Fund. The Investment
Manager may also initiate real estate development projects for the purpose of investment by the Fund.
8.2 Preliminary Analysis and Transaction Summary
Once a potential Portfolio Investment has been identified, the Investment Manager will consider whether
such potential Investment meets the Fund’s objectives as set forth in the section headed “INVESTMENT
OBJECTIVES AND INVESTMENT PHILOSOPHY—Investment Objectives.” Once the Investment
Manager has concluded that the potential Investment may be of interest to the Fund, the Investment Committee
will receive a preliminary analysis prepared by the Investment Manager’s analysts.
8.3 Due Diligence
The Investment Manager will conduct a thorough due diligence process with regard to the potential Investment
under consideration. Throughout its diligence, the Investment Manager may consult external legal counsel and
technical advisers. Any out-of-pocket expenses, including but not limited to remuneration for any professional
advice, incurred during the diligence regarding any potential Investment will be borne by the Fund. The
Investment Manager’s diligence may include any of the following:
8.3.1 Financial Due Diligence
In conducting financial due diligence, the Investment Manager will (i) identify and analyze the cash position
and all financial obligations of the potential Portfolio Interest, (ii) analyze historical and projected financial
performance of the potential Portfolio Interest, and (iii) assess the reasonableness and achievability of such
financial projections by examining the key assumptions on which such projections are based.
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8.3.2 Legal and Tax Due Diligence
The Investment Manager will seek the advice of internal and external legal counsel(s) to assist in the review of
all legal agreements to which the potential Portfolio Interest is a party. The Investment Manager’s internal and
external legal counsel will also assess the regulatory framework affecting the potential Portfolio Interest. The
Investment Manager will also seek professional advice on tax matters regarding the potential Portfolio Interest
and any tax implications of the Fund’s investment therein.
8.3.3 Technical Due Diligence
The Investment Manager will seek the advice of technical advisers to assist in the evaluation of the technical
aspects of any real estate assets which are the subject of a potential Investment by the Fund.
8.4 Shari’a Approval
Prior to presenting any potential Investment to the Investment Committee, the Investment Manager will seek
the approval of the Shari’a Committee. The Shari’a Committee will then examine the potential Investment
and determine whether the underlying real estate assets and the Fund’s proposed manner of investment therein
may be operated and conducted in accordance with Shari’a Principles. In the event that the Shari’a Committee
disapproves of a potential Investment, the Investment Manager will discontinue any and all efforts to invest
therein. In the event that the Shari’a Committee finds that the potential Investment would comply with Shari’a
Principles, the Investment Manager will then present the potential Investment to the Investment Committee
for approval.
8.5 Investment Committee Approval
The Investment Manager will prepare a report (an “Investment Report”) with respect to each potential
Investment to be submitted for approval by the Investment Committee, including a detailed description of
the transaction, a description of the due diligence exercise and the final findings, and a description of the risks
and mitigants related to the potential investment. The Investment Manager will submit the Investment Report
to the Investment Committee for final approval. In the event that the Investment Committee determines that
making the proposed Investment would not be inconsistent with the objectives set forth in the section headed
“INVESTMENT OBJECTIVES AND INVESTMENT PHILOSOPHY—Investment Objectives” and
that any identified risks are acceptable or potentially can be mitigated, the Investment Committee may approve
the proposed Investment.
8.6 Capital Investment
Once the Investment Committee has approved an Investment by the Fund in a particular Portfolio Interest,
the Investment Manager will issue a drawdown notice to the Unitholders requesting that a portion of each
Unitholder’s Capital Commitment be contributed to the Fund for investment in the Portfolio Interest. Any and
all actions and documentation required in effecting the Fund’s Investment in a particular Portfolio Interest
will be conducted and executed in accordance with Shari’a Principles and any applicable laws, rules and
regulations.
8.7 Monitoring
Once the Fund has invested in a Portfolio Interest, the Investment Manager will closely monitor such Portfolio
Interest and will seek to provide guidance and support for the purpose of preserving and enhancing the value of
the Fund’s Investment therein. The Investment Manager’s actions in this regard may include periodic review
of the conduct of the Portfolio Interest’s business as compared to its business plan and, where possible, the
placement of a representative on the board of the Portfolio Interest or any entity operating such Portfolio
Interest. The Investment Manager will endeavor to remain apprised of any developments in the business of
the Portfolio Interest and will communicate with senior management of the Portfolio Interest or any entity
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operating such Portfolio Interest on a regular basis. The Investment Manager will also take actions reasonable
and necessary to ensure that it receives audited and unaudited financial and management reports at regular
intervals with respect to each Portfolio Interest in which it invests.
8.8 Exit
Throughout the monitoring phase, the Investment Manager will both review the progress of a Portfolio
Interest and, upon consideration of the performance of such Portfolio Interest as well as any surrounding
market conditions, may recommend to the Investment Committee any exit options which may be available. The
Investment Manager will aim at all times to optimize the Fund’s returns by recommending to the Investment
Committee that a particular Investment be exited at an appropriate time (which, in some or all cases, may
prove to be the scheduled maturity date of such Investment). Once an exit has been approved by the Investment
Committee for any particular Investment, the Investment Manager will consummate the exit as soon as
practicable.
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9 RISK FACTORS
Investment in the Fund involves a high degree of risk. In addition to the normal risks associated with investments
in the general private equity and real estate sectors, there are considerations specific to the Fund which potential
Unitholders should consider. Only persons who are able to independently evaluate the risks and merits of
investing in the Fund are eligible to be offered, or should consider making, an investment in the Units. The
following is not a complete set of risk factors. Among the risks specific to an investment in the Fund that the
Investment Manager wishes to bring to the particular attention of potential Unitholders are the following:
9.1 General Operating and Investment Risks
Risk of Loss. An investment in the Units entails a high degree of risk. All or substantially all of an investment
in the Units may be lost. Accordingly, an investment in the Fund should be made only by persons who are able
to bear the risk of loss of all capital invested. No guarantee or representation is made that the overall investment
program of the Fund will be successful.
Illiquidity of an Investment in the Fund. An investment in the Fund should be viewed as illiquid. Although
the Fund is expected to generate current income for its investors, the return of a Unitholder’s capital will occur
only upon the scheduled maturity of the Fund’s Investments or upon the partial or complete disposition of the
Fund’s Investments prior their scheduled maturity. The Units will not be readily marketable, are redeemable on
a limited basis only (see the section headed “REDEMPTIONS & TRANSFERS”), and are not transferable
except under certain limited circumstances and then only with the prior written consent of the Investment
Manager. There will be no public market for the Units, and none is expected to develop.
Illiquidity of the Fund’s Investments. The Investments to be made by the Fund are likely to be illiquid.
Illiquidity may result from the absence of an established market for the Investments, as well as from legal,
contractual or other restrictions on their resale by the Fund. Dispositions of Investments may be subject to
contractual and other limitations on transfer, and other restrictions may exist that would interfere with such
dispositions or adversely affect the terms thereof. This illiquidity may limit the ability of the Fund to react
promptly to changes in economics or other conditions.
Counterparty Risk. The Fund’s ability to meet its investment objectives will depend upon the ability of
the Portfolio Interests in which the Fund invests to fulfill their payment obligations under their financing
agreements with the Fund. If one or more of these Portfolio Interests is delinquent in the making of rental or
other payments to the Fund, the Fund may be unable to make distributions of current income at its targeted
levels, and may lose all or a portion of its capital invested in such Portfolio Interests. In addition, as discussed
elsewhere in this Placement Memorandum, the Investment Manager may keep up to 10% of the aggregate
Capital Commitments invested in Permitted Temporary Investments to ensure that the Fund will have cash
available to satisfy voluntary redemption requests. Some or all of these Permitted Temporary Investments may
be on terms which involve risk of loss of the capital invested therein by the Fund.
No Operating History. Because the Fund is a newly formed entity, it has no operating history upon which
prospective Unitholders can evaluate the possible performance of the Fund.
Past Performance. The performance of the Fund will depend in large part on the performance of the Investment
Manager. The past performance of the Investment Manager is not necessarily indicative of the Fund’s future
results. While the Fund intends to make Investments which have estimated returns commensurate with the risks
undertaken, there can be no assurance that the Fund’s target return to investors will be achieved. On any given
investment, loss of invested capital is possible.
Lack of Diversification. The Fund will participate in a limited number of Investments and, as a consequence,
the aggregate return of the Fund may be materially affected by the performance of a single Investment.
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Furthermore, to the extent that the aggregate Capital Commitments obtained by the Fund are less than the
maximum targeted amount, the Fund may invest in fewer properties and thus be less diversified.
Because the Fund will be investing exclusively in real estate located in the MENA region, the overall adverse
impact on the Fund of adverse changes in the real estate markets of one or more countries within the MENA
region may be significant.
Limitations on Investments and Strategies. The Fund has been established with the objective of pursuing
investments which, in the sole judgment of the Investment Manager (in consultation with the Shari’a
Committee), comply with Shari’a Principles. Accordingly, the Fund will not necessarily pursue those investment
opportunities and/or strategies that present the most financial advantage, to the extent that the Investment
Manager determines such investment opportunities or strategies do not comply with Shari’a Principles, and
there is thus a risk that the Fund will decline to pursue certain investment opportunities and/or strategies that
may be more financially advantageous than the opportunities or strategies that the Fund does pursue. Moreover,
the Fund’s Islamic investment criteria may require divestment of certain assets or result in costs that would not
be involved if the Fund’s investments were made without regard to Shari’a Principles. Thus, the Fund’s Islamic
investment criteria may, under certain circumstances, have an adverse effect on the financial performance of
the Fund, as compared to the results that could possibly be obtained in the absence of such criteria.
Limited Investment Opportunities. It is possible that the Fund will never be fully invested if enough sufficiently
attractive investments are not identified and consummated. The business of identifying and structuring private
equity real estate investments is highly competitive and involves a high degree of uncertainty.
Competition for Investments. The Fund will be competing with numerous larger and better capitalized
individuals, corporations, institutional lenders and other investors engaged in real estate investment activities.
There is no assurance that the Fund will be successful in making Investments that satisfy its investment
objective or that it will be fully invested.
Delay in Investment in Real Property Assets. There may be a delay between the time at which a Unitholder is
required to make a Capital Contribution to the Fund and the time at which such Capital Contribution is invested
in real property assets through the SFVs. Any such delay may reduce the overall financial performance of the
Fund.
Unspecified Properties. Unitholders will not have an opportunity to evaluate for themselves, or to approve, the
specific properties to be invested in by the Fund. Investors must depend solely upon the ability and judgment of
the Investment Manager and the Investment Committee.
Currency and Exchange Rate Risks Associated with Fund Investments. While Investments of the Fund and
the current income and other proceeds received by the Fund with respect to its Investments may be denominated
in local currencies, the Fund is denominated in U.S. Dollars and distributions to Unitholders will be paid in U.S.
Dollars. Therefore, the short term and long term fluctuations in currency exchange rates and costs of conversion
between U.S. Dollars and such other currencies may adversely affect the U.S. Dollar value of the Fund’s
Investments, amounts realized upon the maturity or disposition of the Fund’s Investments and distributions of
current income made by the Fund. Currency devaluations and unfavorable changes in international monetary
and tax policies could also have a material adverse effect on the Fund’s financial performance.
General Investment Related Risks. There are certain general market conditions in which any given investment
strategy is unlikely to be profitable. The Investment Manager will not have any ability to control or predict such
market conditions.
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9.2 Real Estate Risks
General Real Estate Risk. The Fund’s ability to meet its investment objectives will depend in large part upon
the cash flows generated by the real estate assets in which the Fund invests through its Portfolio Interests.
Accordingly, the Fund will be subject to general risks incident to the ownership and operation of real estate
in the markets in which the Fund operates. Real estate cash flows, values and rental incomes are affected by a
number of factors, including: changes in the general economic climate; local conditions (i.e., an oversupply of
space or a reduction in demand for real estate in an area); competition from other available properties; insurance
and variable operating costs, including property taxes and other taxes; environmental, zoning and other laws;
risks associated with construction, development and renovation; and uninsured losses. Because some of the
Portfolio Interests’ income may be derived from rental income, the Fund’s financial performance could be
adversely affected by tenant insolvencies and a lack of demand for rental space. In the event of a default by a
tenant, the applicable Portfolio Interest may experience delays in enforcing, and may incur substantial costs to
enforce, its rights as landlord.
Development Risks. The fund may invest a substantial portion of its assets in real estate development projects.
This type of investment involves risks that, among other things:
• the Fund’s assets and management resources may be expended on projects which are not completed;
• construction costs of a project may exceed original estimates, and construction may not be completed on
schedule;
• occupancy rates and rents at a newly developed property may not be sufficient to make the property
profitable;
• rental rates per square foot could be less than projected; and
• there may be delays in obtaining, or an inability to obtain, necessary zoning, land use, building, occupancy
and other required governmental permits and authorizations.
Risks to Properties. In employing the Ijarah leasing structure (and, possibly, other financing structures), the
Fund generally anticipates that it (or one of its SFVs) will acquire full ownership of the real estate assets in
which it is investing. Under various laws and regulations, an owner of real property may have significant
liability for any contamination found on such property, including being liable for the costs of removal or
remediation of certain hazardous or toxic substances on or in such property. Such laws often impose such
liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous
or toxic substances. The cost of any required remediation and the owner’s liability therefor as to any property
may not be limited under such laws and could exceed the value of the property and/or the aggregate assets
of the owner. The presence of such substances, or the failure to properly remediate contamination from such
substances, may adversely affect the owner’s ability to sell the property and may have a significant adverse
effect on the value and returns from such property.
The environment itself poses risks to investments in real estate. For example, weather and climatic events, fire
and other hazards may adversely affect the properties in which the Fund invests.
Uninsured Losses. The Fund will seek to cause insurance following industry practices to be maintained on
commercially reasonable terms on all properties in which the Fund invests, including public liability and fire
and extended coverage insurance. However, these properties could suffer damage or the Fund (or its SFVs)
could become subject to public liability claims, resulting in losses which may not be fully compensated by
insurance proceeds. In addition, there are certain losses for which insurance is not available on commercially
practicable terms, such as losses from earthquakes, typhoons, flooding, war, terrorism, civil disorder or other
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unforeseeable catastrophic events, and local insurance policies offered in certain of the countries where the
Fund intends to invest may not meet the level of coverage typically required by institutional investors. Should
an uninsured loss or a loss in excess of insured limits occur, the Fund (or its SFVs) could be required to pay
compensation or lose its capital invested in the property affected as well as the anticipated future revenues from
such property. The Fund (or its SFVs) could also remain liable for any other obligations related to the property,
which could have a material adverse effect on the financial performance of the Fund.
9.3 Risks Relating to Investment in the MENA region
The Fund will seek to invest in the real estate markets of the MENA region. Accordingly, a substantial portion
of the Fund’s capital is expected to be invested in real estate located in countries which are still in a relatively
early stage of economic development. As a result, potential Unitholders should be aware that the Fund will be
exposed to a number of political, economic, legal, regulatory, tax, monetary and fiscal risks that are generally
associated with investments in countries in the MENA region, including, but not limited to:
Political/Sovereign Risk. Governments of many of the countries within the MENA region have imposed and
continue to exercise substantial influence over many aspects of their respective economies. Accordingly, these
governments may adjust their policies from time to time in a manner which could have a significant impact
on economic and market conditions in their countries. Moreover, the economies of certain of these countries
generally are heavily dependent upon international trade and, accordingly, have been and may continue to
be adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values
and other protectionist measures imposed or negotiated by the countries with which they trade. With respect
to any of these countries, there is the possibility of nationalization or expropriation of private property,
confiscatory taxation, political changes, government regulation, economic or social instability or other political
developments (including war) which could adversely affect the economies of these countries or the value of
the Fund’s investments.
Legal System and Corporate Governance. Many of these countries have not developed a fully integrated
legal system which adequately covers all aspects of commercial activity. This could harm the Fund’s operations
and financial performance because many of these countries may not provide adequate protection for the legal
rights of the Fund, including remedies for breaches of contract. In addition, laws and regulations (as well as
their interpretation and enforcement) could be subject to frequent and unforeseen changes in certain of these
countries as their legal systems mature, which may adversely affect the operations and financial performance
of the Fund.
Investment and Foreign Exchange Restrictions. The laws and regulations of some countries within the
MENA region may prohibit or restrict direct foreign investment in or ownership of real estate. In addition,
governments of some of these countries impose restrictions on the repatriation of investment income, capital
and the proceeds of sale by foreign investors. Furthermore, investments in companies in these countries may
require significant government approvals under corporate, securities, exchange control, foreign investment and
other similar laws and may require financing and structuring alternatives that differ significantly from those
customarily used in more developed countries.
Foreign Tax Liability. The Fund’s financial performance will be subject to the tax liabilities imposed by these
countries on the real estate assets in which the Fund invests that are located within their jurisdictions. To the
extent possible, the Fund will structure its investments and activities so as to operate in a tax-efficient manner.
However, there can be no assurance that the Fund will be able to eliminate such tax liabilities or reduce them
to a specified level.
No Assurance of Sustained Economic Growth. Certain of these countries have shown sustained growth
over the past few years with strong economic fundamentals. There is no assurance that such strong growth and
economic fundamentals will continue, and any slowdown of economic growth or deterioration of economic
conditions in the MENA region could have a negative effect on the financial performance of the Fund.
52 Global Real Estate Ijarah Fund Company B.S.C.(c)
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Factors which may adversely affect economic growth in the MENA region, and which are beyond the control
of the Fund, include: interest rates; fiscal, monetary and tax policies of governments; inflation and deflation;
consumer credit availability and consumer debt levels; unemployment trends; terrorist threats and activities;
military and domestic disturbances and conflicts, and other matters that influence consumer confidence,
spending and tourism. Increasing volatility in financial markets may cause these and other factors to change
with a greater degree of frequency and magnitude.
9.4 Conflicts of Interest
Certain inherent and potential conflicts of interest exist with respect to the operation of the Fund. See the
section headed “CONFLICTS OF INTEREST.”
9.5 No Participation in Business and Affairs
Except as otherwise expressly provided in this Placement Memorandum or in the Instrument, the Unitholders
will have no legal right to control or be involved in matters regarding the business and affairs of the Fund.
9.6 Reserves for Expenses and Contingencies
The Investment Manager may, from time to time, establish reserves on behalf of the Fund for estimated or
accrued expenses, liabilities or contingencies, including general reserves for unspecified contingencies, which
need not be taken in accordance with International Accounting Standards or United States generally accepted
accounting principles. These reserves could reduce the amount of the Fund’s distributions to its Unitholders.
9.7 Tax Consequences
Persons interested in subscribing for Units should consult their own professional advisers as to any income,
capital gains or other tax consequences in the countries in which they are resident or domiciled for tax purposes
that may result from the purchase, holding or disposition of Units. See the section headed “TAX AND
REGULATION.”
The enactment in the future of any income, withholding or capital gains tax with respect to Investments held
by the Fund may reduce the return to the Fund on those Investments.
9.8 Currency Risk at the Investor Level
Capital Contributions and other payments to be made by Unitholders to the Fund will generally be required to
be made in U.S. Dollars, and distributions from the Fund to Unitholders will generally be made in U.S. Dollars.
Fluctuations in the exchange rate between the U.S. Dollar and a Unitholders’s home currency may have a
substantial adverse effect on the performance of the Unitholders’s investment in the Fund.
9.9 Forward Looking Statements
Certain statements contained in this Placement Memorandum constitute “forward-looking statements,” which
can be identified by the use of forward-looking terminology such as “may,” “will,” “target,” “should,” “expect,”
“attempt,” “anticipate,” “project,” “estimate,” “intend,” “seek,” “continue” or “believe” or the negatives thereof,
other variations thereon or comparable terminology. Actual events or results, including, without limitation, the
actual performance of the Fund, may differ materially from those reflected or contemplated in such forward-
looking statements.
THE FOREGOING SET OF RISK FACTORS DOES NOT PURPORT TO PROVIDE A COMPLETE
EXPLANATION OF THE RISKS INVOLVED IN AN INVESTMENT IN THE FUND. POTENTIAL
UNITHOLDERS SHOULD READ THIS PLACEMENT MEMORANDUM IN ITS ENTIRETY, AND
SHOULD FAMILIARIZE THEMSELVES WITH ALL SUCH RISKS, BEFORE DECIDING WHETHER
TO INVEST IN THE FUND.
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10 REDEMPTIONS & TRANSFERS
10.1 Compulsory Redemption
The Investment Manager may, in its sole discretion, cause the Fund compulsorily to redeem all or any portion
of the Units that are owned directly or beneficially by (a) any Prohibited Investor, (b) any person that is not
an Approved Investor or (c) any other person whose ownership thereof either gives rise to a breach of any
applicable law or regulation in any jurisdiction or may, either alone or together with ownership of Units by
other Unitholders, adversely effect the Fund, the Investment Manager or the other Unitholders, as determined
by the Investment Manager in its sole discretion.
Any such compulsory redemption shall be effective as of such Redemption Date as the Manager shall determine
in its sole discretion. Unless otherwise required by applicable law, the redemption price for each Unit so
redeemed shall equal the NAV per Unit as of the relevant Redemption Date (or, if less and if the Investment
Manager so elects in its sole discretion, the amount (not less than zero) equal to (a) the purchase price paid
for such Unit minus (b) all distributions made in respect of such Unit, to the extent that such distributions
constitute a return of the Fund’s invested capital). Such redemption price will be paid no later than the last day
of the Term.
Units will also be redeemed on a compulsory basis in connection with subsequent closings, as described in the
section headed “SUMMARY OF PRINCIPAL TERMS AND CONDITIONS—Subsequent Closings.”
No compulsory redemption will be effected if such action is contrary to the relevant local laws of Bahrain.
10.2 Voluntary Redemption
Each Unitholder shall have the right, following the end of the Investment Period, to redeem all or a portion
of its Units in the Fund on a voluntary basis at a per Unit redemption price equal to the NAV per Unit on the
relevant Redemption Date, all in accordance with the procedures and subject to the limits described in the next
three paragraphs.
Units may be redeemed on a voluntary basis effective as of the last day of the calendar quarter in which the
end of the Investment Period occurs, and on each anniversary of such last day during the Term; and such last
day and each such anniversary will constitute a Redemption Date. In order to redeem any Units as of any such
Redemption Date, a duly completed and signed request for redemption (the “Request for Redemption”), in
the form attached as Appendix B hereto, must be received by the Investment Manager with respect to such
Units at least 15 days prior to such Redemption Date. If a Request for Redemption is received within 15
days of a voluntary Redemption Date, then such Request for Redemption may be withdrawn by the relevant
Unitholder and, if not so withdrawn, will constitute a Request for Redemption as of the next succeeding
voluntary Redemption Date. A Request for Redemption will not in any event be deemed to have been properly
submitted unless (a) it specifies the number of Units to be redeemed, sets forth the name and address of the
redeeming Unitholder exactly as they appear in the Register, and is signed by such Unitholder, and (b) such
Unitholder subsequently provides such additional documentation and information as the Investment Manager
reasonably requests to confirm the Unitholder’s identity or otherwise complete the redemption in compliance
with applicable law.
The aggregate redemption price payable by the Fund in connection with all voluntary redemptions of Units
may not exceed 10% of the Total Redemption Amount. Accordingly, if the aggregate redemption price to be
paid by the Fund to effect redemptions validly requested for any voluntary Redemption Date (when added to
the aggregate redemption prices paid by the Fund in respect of any prior voluntary Redemption Dates) is less
than the Total Redemption Amount, the Fund will effect the requested redemptions in full. If, however, the
aggregate redemption price to be paid by the Fund to effect redemptions validly requested for any voluntary
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Redemption Date (when added to the aggregate redemption prices paid by the Fund in respect of any prior
voluntary Redemption Dates) would exceed the Total Redemption Amount, then the Fund will satisfy such
redemption requests on a partial basis, and only to the extent that the aggregate redemption price paid by it in
respect of all voluntary Redemption Dates does not exceed the Total Redemption Amount. In the event that any
such partial redemption involves two or more Unitholders, such Unitholders’ Units will be redeemed on a pro
rata basis by reference to their individual Capital Commitments, in accordance with the number of Units to be
redeemed as set forth in their respective Requests for Redemption.
Payment of the redemption price in respect of voluntary redemptions will be made within a reasonable time,
normally not to exceed 30 Business Days after the relevant Redemption Date, except that such payment may
be delayed in circumstances where the determination of NAV as of such Redemption Date has been delayed
for good reason. To ensure that the Fund will have cash available to satisfy voluntary redemption requests,
the Investment Manager may keep up to 10% of the aggregate Capital Commitments invested in Permitted
Temporary Investments.
The Fund is a closed-ended Fund and save as provided above, Unitholders will have no right to request or
require the redemption of all or any of their Units.
10.3 Transfers
No Unitholder may assign, sell, hypothecate or otherwise encumber or transfer any of its Units (or any interest
therein) except with the prior written consent of the Investment Manager, which consent may be granted or
denied in the Investment Manager’s sole discretion.
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11 NET ASSET VALUE OF FUND
The NAV of the Fund will be determined annually (and as of each Redemption Date) by the Administrator
and shall be calculated by deducting the total liabilities, including all accrued liabilities, from the total assets
of the Fund; provided that in computing the NAV for purposes of any subsequent closing, (a) an amount equal
to all Management Fees and organizational and other expenses paid prior to such subsequent closing will be
added to the NAV and (b) liabilities (including accrued liabilities) for organizational expenses, Management
Fees and other Fund Expenses will not be deducted). Total assets are the sum of all cash, accrued profits and
other receivables and the current market value of all Investments, together with the current value of any other
assets held by the Fund. The Investments and other assets of the Fund shall be valued as of each Valuation
Date as follows:
• investments listed or quoted on a recognized market are valued at the bid price in the relevant market
on the Valuation Date utilizing generally an electronic price feed from one or more reputable price
vendors;
• investments in funds or similar investment vehicles are valued on the basis of the most recent valuation
thereof provided by the investment manager or administrator of the relevant fund;
• investments for which, in the Investment Manager’s opinion, no appropriate market price is readily
available or which are not listed or quoted on a recognized market are valued at their market value as
determined by one or more independent professional valuers/appraisers, at the sole discretion of the
Investment Manager;
• in the event that no third party is able to make a determination of the value for a particular Investment, the
Investment Manager is entitled to exercise reasonable judgment in determining the value to be attributed
to such Investment; such valuation shall be reviewed by the Auditors and may only be contested in good
faith by the Unitholders in the case of manifest error;
• assets and liabilities in foreign currencies will be expressed in US Dollars at the prevailing rate of
exchange on the relevant Valuation Date;
• the value of collected or deposited cash, bonds, notes, bills, total accruals and expenses paid in advance,
and receivables shall be considered equal to their full amounts unless it is deemed unlikely that they will
be collected in full, in which event their value shall be determined after making such discount as the
Investment Manager may deem to be appropriate to reflect their true value;
• all Fund liabilities, reserves and emergency items (inclusive of taxes), and accrued costs and expenses
that are paid through the Fund shall be deducted; and
• income and expenses shall accrue on a daily basis, whenever this is practical.
The NAV per Unit is determined by dividing the NAV of the Fund by the number of Units in issue on the
relevant Valuation Date and rounding to the nearest cent. The Investment Manager is entitled to exercise its
reasonable judgment in determining the values to be attributed to assets and liabilities of the Fund in accordance
with the foregoing guidelines and, provided it is acting in good faith in the interest of the Fund as a whole,
such values may only be contested in good faith by the Unitholders in the case of manifest error. If, in order to
effect compulsory redemptions, it is necessary to realize any Investments prematurely, any penalties or losses
incurred in connection therewith may be reflected in the redemption price of the Units, as determined by the
Investment Manager in its sole discretion.
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12 FEES AND EXPENSES
12.1 Organizational and Operating Expenses
The Fund will bear legal and other organizational expenses, including the out-of-pocket expenses of the
Investment Manager but excluding Placement Fees, incurred in connection with the formation of the Fund and
the offering of Units up to an amount equal to US$500,000. To the extent that such organizational expenses
exceed US$500,000, they will be borne by the Investment Manager.
The Fund will bear and be charged all expenses (“Fund Expenses”) relating to the operation of the Fund. Fund
Expenses will include, but will not be limited to:
• all costs and expenses in relation to the production and distribution of the reports and accounts described
in the section headed “GENERAL—Reporting”, the cost of holding Unitholders’ meetings, and any
costs regarding valuations, legal opinions or certifications (including any fatwa) issued (or to be issued)
in connection with the Fund;
• all fees and expenses charged by lawyers, accountants and other professional advisors appointed by the
Investment Manager and acting on behalf of the Fund, all other fees, costs and expenses in relation to the
operation and administration of the Fund, and all taxes, fees or other charges levied by any governmental
agency against the Fund in connection with its Investments or otherwise;
• any fees, costs and expenses (if any) incurred exclusively in relation to the Fund itself; and
• all professional fees and costs, including legal, accounting, consulting and intermediary fees and costs,
relating directly to the acquisition, holding or disposal of completed Investments, and all such fees and
expenses relating to any prospective Investment which does not proceed, but only to the extent that such
costs are not borne by a third party.
All costs and expenses incurred by the Investment Manager in providing the office facilities, equipment and
personnel to perform its obligations under the Investment Management Agreement, including salaries and
other benefits for such personnel, shall be borne by the Investment Manager and shall not be for the account
of the Fund.
12.2 Management Fee
The Fund will pay (or will cause its Portfolio Interests to pay) to the Investment Manager an annual Management
Fee in an amount equal to 1.5% of the aggregate Invested Capital Contributions. The Management Fee will
be paid in arrears on the first day of each calendar quarter, and will be calculated by reference to the Fund’s
aggregate Invested Capital Contributions as of the last day of the immediately preceding calendar quarter.
12.3 Incentive Fee
To the extent that distributions from the Fund (including in connection with redemptions of Units) would result
in Unitholders achieving an internal rate of return on their Capital Contributions that exceeds 10% (compounded
annually from the date of drawdown), the Investment Manager will be entitled to receive an Incentive Fee
equal to 25% of such excess distributions. The amount of the Incentive Fee will be finally determined and paid
upon the termination of the Fund. However, in the case of a redemption of Units (other than in connection
with subsequent closings), the Capital Contributions attributable to the Units being redeemed will be deemed
to constitute a separate investment in the Fund by the redeeming Unitholder, and the Incentive Fee payable
with respect to such Capital Contributions will be determined and paid as of the relevant Redemption Date. For
purposes of calculating the Incentive Fee payable in connection with a partial redemption of any Unitholder’s
Units, such Units will be selected for redemption on a “first in, first out” basis.
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12.4 Placement Fee
Global will act as the exclusive placement agent for the Fund, and will receive a Placement Fee from each
Unitholder in respect of such Unitholder’s Capital Commitment, as determined in accordance with the following
table:
Amount of Unitholder’s Capital Commitment Placement Fee (expressed as a % of Unitholder’s
Capital Commitment)
Up to $999,999 1.50%
$1,000,000 or more 1.25%
The Placement Fee attributable to each Unitholder’s Capital Commitment may be modified or waived by
Global in its sole discretion, and will be paid concurrently with such Unitholder’s Initial Contribution.
The payment of a Placement Fee by a Unitholder will not constitute a Capital Contribution for any purpose,
including the computation of the Incentive Fee. Accordingly, the payment of Placement Fees by a Unitholder
will not reduce the Unitholder’s unused Capital Commitment, and no Units will be issued to the Unitholder on
account of such payment.
12.5 Administrator’s, Custodian’s and Registrar’s Fees
The Fund will pay to the Administrator, the Custodian and the Registrar respectively, the following fees:
In addition, the Fund will reimburse the Administrator, the Custodian and the Registrar for its reasonable
out-of-pocket expenses for providing their services pursuant to the Administration Agreement, the Custody
Agreement and the Registrar and Transfer Agent Agreement respectively.
12.6 Auditor’s Fees
The Fund has agreed to pay to its auditors its auditors fees based on a time spent basis. The auditors have
estimated that their audit fees for the year ending 31 December 2008 audit will be BD[ ] excluding out of
pocket expenses. The auditors will also conduct a review of financial information for the period ended 30 June
2007 for which they will also charge a fee based on their hourly rates. They have estimated this fee will amount
to BD[ ] excluding disbursements.
12.7 Specialist Advisers’ Fees
The fees, costs and expenses of any Specialist Advisers shall be for the account of and shall be borne by the
Investment Manager.
58 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
12 TAX AND REGULATION
THE DISCUSSION HEREIN IS FOR INFORMATIONAL PURPOSES ONLY AND IS A VERY BRIEF
SUMMARY OF THE GENERAL TAXATION REGIME IN CERTAIN COUNTRIES IN THE MENA
REGION IN WHICH THE FUND IS PROPOSING TO INVEST. EACH PROSPECTIVE INVESTOR
SHOULD CONSULT ITS OWN PROFESSIONAL TAX ADVISERS WITH RESPECT TO THE TAX
ASPECTS OF AN INVESTMENT IN THE FUND.
13.1 General
The Fund will be domiciled in Bahrain. Accordingly, the taxation of income and capital gains of the Fund
would be subject to the fiscal law and practice of Bahrain, and other jurisdiction in which the Fund may make
it proposed investments. The laws of the jurisdictions in which Investors are resident or otherwise subject to
tax may also be applicable.
The following discussion contains a very brief summary of the general taxation regime in certain countries
in the MENA region in which the Fund is proposing to invest. The discussion contained herein is not a
full description of the complex tax rules involved and is based upon existing laws, judicial decisions and
administrative regulations, rulings and practices, all of which are subject to change, retroactively as well as
prospectively. The actual taxation rates and analysis which may apply to the Fund’s Investments in each of
these countries may vary from the rates and analysis discussed below. A decision to invest in the Fund should
be based upon an evaluation of the merits of the Fund’s investment program, and not upon any anticipated tax
benefits.
The Fund has not sought a ruling from any tax authority with respect to any of the tax issues affecting the Fund,
nor has the Fund obtained an opinion of counsel with respect to any tax issues. The following discussion of
the general taxation regime in certain MENA countries does not constitute legal or tax advice. Furthermore,
the following discussion is based on the taxation law and practice in force as of the date of this Placement
Memorandum and no assurances can be made that changes in such laws or practice will not occur in the
future.
THE FOLLOWING DISCUSSION DOES NOT ADDRESS ALL OF THE TAX CONSEQUENCES THAT
MAY BE RELEVANT TO A PARTICULAR UNITHOLDER. PROSPECTIVE INVESTORS MUST
CONSULT THEIR OWN TAX ADVISERS AS TO THE TAX CONSEQUENCES OF ACQUIRING,
HOLDING AND DISPOSING OF UNITS, AS WELL AS THE EFFECTS OF TAX LAWS OF THE
JURISDICTIONS OF WHICH THEY ARE CITIZENS, RESIDENTS OR DOMICILIARIES OR IN WHICH
THEY CONDUCT BUSINESS.
13.2 Algeria
The corporate income tax rate in Algeria is 25%. In certain cases, this rate may be reduced to 12.5% where the
taxpayer reinvests its profits in Algeria subject to meeting certain criteria.
An annual property tax between 3% and 10% is levied on most types of developed land. In addition, tax on
business activities (TAP) is payable at 2% on annual turnover by taxpayers of corporate income tax. This may
be reduced to nil under certain conditions. Transfers of land/buildings are subject to 1% land registration tax
and 5% registration duty based on the value of the property.
Payments made to non-residents are subject to withholding taxes of 15% (dividends); 10% to 40% (interest)
and 24% (payments for services). Furthermore, depending on the nature of transaction/product Value Added
Tax (“VAT”) would be imposed at either 7% or 17%.
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13.3 Bahrain
Based on the current law in Bahrain, the Fund would not be subject to income tax on its profits arising in
Bahrain or other GCC countries. The Fund would also not be subject to a capital gains tax in Bahrain on
appreciation of its capital property. There are currently no stamp duties that will be levied in Bahrain on the
issue or transfer of Units. However, there would be annual registration fees payable to the Ministry of Industry
and Commerce (Bahrain) and the Central Bank of Bahrain.
Furthermore, there is currently no income tax, withholding tax, corporate income tax, inheritance tax or estate
tax applicable to a company holding real estate in Bahrain.
13.4 Egypt
The corporate income tax rate in Egypt is 20%. This rate also applies to capital gains.
Dividend payments are not subject to withholding tax. Interest payments and payments in relation to management
fees made to non-residents are subject to 20% withholding tax.
Under the Egyptian law, indirect taxes, e.g. VAT may apply in certain cases. For example, sales tax at the rate
of 10% applies to commissions earned in relation to selling real estate.
13.5 Jordan
The corporate income tax rate in Jordan is 25%. In addition, 15% per annum tax is levied on commercial
property based on its rental value.
Dividends are not subject to withholding tax in Jordan. However, interest payments and payments related to
management fees (made to non-residents) are subject to 10% withholding tax.
13.6 Kuwait
Foreign (i.e., non-GCC) companies are subject to corporate taxes in Kuwait at rates as high as 55%. However,
where a Kuwaiti company has both foreign and GCC ownership, profits attributable to only the foreign
ownership are subject to taxes in Kuwait (i.e., GCC resident companies are not subject to corporate tax in
Kuwait.)
Capital gains are taxed in a similar manner as regular income. Registration charges of 0.5% of the property’s
value are applicable.
There is no withholding tax regime in Kuwait.
13.7 Morocco
The corporate income tax rate in Morocco is 35%, subject to minimum tax liability equal to 0.5% of its
turnover. Capital gains are taxed in a similar manner as regular income (at 35%).
In addition, all entities operating in Morocco are liable to the following taxes per annum based on the rental
value of property: business tax at rates between 6% and 36% (maximum of MAD 50 million, or US$6.1
million;) urban tax at 13.5%; inhabitation tax at 10%; and a total of 1.5% tax on sale price at the time of
acquisition of property. A five year exemption is generally available in relation to the business and urban tax.
A maximum of 5% registration duty is payable upon registration of land.
Payments made to non-residents related to dividends, interests, and services are subject to a 10% withholding
tax. Also, sale of real estate to other companies is subject to 14% VAT.
60 Global Real Estate Ijarah Fund Company B.S.C.(c)
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13.8 Oman
The corporate income tax rate is 12% on income over RO30,000 (US$78,000). Capital gains are also taxed at
12%.
There are no stamp duties on capital transfers, however, there would be registration charges levied by the
Municipality at 3% of the value of property.
There is no withholding tax on dividend or interest payments. However, a 10% withholding tax is applied to all
payments in relation to management services.
13.9 Qatar
The corporate income tax rate in Qatar is 35% on income over QR5 million (US$1,374,000). GCC owned
entities are not subject to corporate tax. Capital gains are taxable in the same manner as regular income. There
are no stamp duties, withholding taxes or indirect taxes in Qatar.
13.10 Saudi Arabia
Companies owned by Saudi (as well as GCC) residents are subject to Zakat at 2.5%. Zakat is a wealth-based
(religious) tax, which is calculated as 2.5% of the net worth of an entity’s assets (less specified deductions). In
contrast, companies with foreign (i.e. non-Saudi, non-GCC) ownership are subject to corporate income tax at
20%. Capital gains are taxed in a manner similar to regular income.
Where companies have both Saudi/GCC and foreign ownership, each respective proportional share of ownership
will be subject to either the Zakat or the corporate income taxation.
Dividend and interest payments are subject to 5% withholding tax. Payments for services (including management
fees) to non-residents are subject to 20% withholding rates.
13.11 Tunisia
The corporate income tax rate in Tunisia is 30% for a private company (15% for companies involved in
development of property in a regional development zone).
Property registration charges at 5% and registrar duty at 1% (based on the value of property) would be levied
on acquisition of the property. However, exemptions may be available for certain projects such as housing
development projects. Furthermore, foreign companies carrying out real estate development projects may opt
for a preferential capital gains tax rate (15%).
Dividends are not subject to withholding tax in Tunisia. However, interest payments and payments related to
management fees (made to non-residents) are subject to 20% and 15% withholding tax, respectively.
In general, the Tunisian law imposes 18% VAT on the sale of commercial real property.
13.12 Turkey
The corporate income tax rate is 20% (reduced in 2006 from 30%). Capital gains are taxed in a manner similar
to regular income.
Stamp duty is levied at rates between 0.15% and 0.75%. Also, 1.5% (of purchase price) deed registry fees is
applied to both the buyer and the seller, i.e. a total of 3%.
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Withholding taxes apply in relation to dividends at 15%, interest payments at 10%, and payments for services
at 20% of the respective amount.
Under Turkish law, VAT is imposed at 18% in general.
13.13 United Arab Emirates
The UAE Constitution provides that the UAE Government shall have exclusive jurisdiction over UAE taxation.
However, no federal tax laws (that impose corporate income tax) have been promulgated to date. Instead,
some of the Emirates historically introduced individual (general) income tax decrees which potentially tax all
business profits at rates up of up 55%.
Until repealed or superseded by a federal tax law, these tax decrees remain in force.
Accordingly, taxation in the UAE is currently determined on an Emirate by Emirate basis. These decrees have
not been enforced to date and therefore most businesses operating in the UAE do not currently pay income tax.
We note that there is a risk, albeit very minimal, that the income tax decrees may be imposed retroactively.
Land registration fees are payable to the Land Department in Dubai up to 2% of the purchase price and on
subsequent transfer. Similar fees may apply in the Emirate of Abu Dhabi.
13.14 Unitholder Taxation
Prospective investors should ascertain from their professional advisors the consequences of acquiring, holding,
redeeming, transferring or selling Units under the relevant laws of the jurisdictions to which they are subject,
including any tax consequences and exchange control requirements.
62 Global Real Estate Ijarah Fund Company B.S.C.(c)
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14 MATERIAL CONTRACTS
The following contracts, which are or may be material, have been entered into by the Company otherwise
than in the ordinary course of business. In each case the Company has agreed to indemnify the Board, the
Investment Manager, the Administrator, the Custodian and the Registrar, against all claims and demands which
may be made against them in the performance of their duties otherwise than by reason of their own gross
negligence or willful misconduct.
14.1 The Investment Management Agreement
The Company has appointed the Investment Manager to provide fund management and Investment advisory
services. These services include (without limitation) advice relating to the acquisition, management and
disposal of Investments, the monitoring and supervision of the Fund’s Investments, advice on expenditure,
cash flow, revenue and disposal of the Investments, and general strategic advice concerning acquisition of the
Investments or interests in Investments.
A copy of the Investment Management Agreement will be available for inspection at the registered office of
the Company.
14.2 The Custody Agreement
The Company has appointed the Custodian to provide custody services to the Fund.
These custody services include (without limitation) holding all title deeds and other instruments evidencing
ownership or other interests in the Fund’s portfolio of Investments of the Company or any special purpose
companies established by the Company to implement the Fund’s Investments, the opening and maintaining of
all bank accounts on behalf of the Fund and effecting payments required to be made by the Company in relation
to the implementation or divestment of such Investments for the Fund or such special purpose companies.
A copy of the Custody Agreement will be available at the registered office of the Company.
Pursuant to the Custody Agreement, the Company will be required to pay various fees to the Custodian as
compensation for the provision by the Custodian of the custody services, as more particularly described above
in the section headed “Fees and Expenses”.
14.3 The Administration Agreement
The Company has appointed the Administrator to provide fund administration services to the Fund.
These fund administration services include (without limitation) the keeping of books of account and other
books and records and the preparation of accounts for the Company, dealing with all correspondence relating
to the business and affairs of the Company and the organizing of all payments of distributions and the proceeds
of any redemption of the Units (whether at expiry of the Term or pursuant to any Compulsory Redemption),
as well as the provision of any other fund administration services reasonably requested by the Company, in
accordance with the terms of the Administration Agreement.
The Administrator will be responsible for calculating the NAV of the Fund and for producing a report or
certificate setting out the NAV (together, in reasonable detail, with its calculations thereof) and for distributing
a copy of such report or certificate to each Unitholder, not less than once a year, as soon as is practicable after
the end of each financial year during the Term.
A copy of the Administration Agreement will be available at the registered office of the Company.
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Pursuant to the Administration Agreement, the Company will be required to pay various fees to the Administrator
as compensation for the provision by the Administrator of the fund administration services, as more particularly
described above in the Section above headed “Fees and Expenses”.
14.4 Registrar and Transfer Agent Agreement
The Company has appointed the Registrar to provide registrar and transfer agency services to the Fund.
These registrar and transfer agency services include (without limitation) establishing and maintaining the
Register, preparing any relevant paperwork and otherwise facilitating the process of transferring any Units and
attending to any amendments to the Register, consequential upon any transfer of Units.
A copy of the Register and Transfer Agent Agreement will be available at the registered office of the
Company.
Pursuant to the Registrar and Transfer Agent Agreement, the Company will be required to pay various fees to
the Registrar as compensation for the provision by the Registrar of the registrar and transfer agency services,
as more particularly described above in the section headed “Fees and Expenses”.
No change in the identity of the Investment Manager, the Administrator, the Custodian or the Registrar and no
change in the terms of the Investment Management Agreement, the Administration Agreement, the Custody
Agreement or the Registrar and Transfer Agent Agreement may be made without the prior written consent of
the CBB.
64 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
15 CONFLICTS OF INTEREST
Prospective investors should be aware that there will be occasions where the Investment Manager may encounter
potential conflicts of interest in connection with the Fund. On any issue involving conflicts of interest, the
Investment Manager will be guided by its good faith judgment as to the Fund’s best interests (although the
best interests of different feeder entities and parallel investment entities may sometimes be inconsistent or in
conflict). If any matter arises that the Investment Manager determines in its good faith judgment constitutes an
actual conflict of interest, the Investment Manager may take such actions as may be necessary or appropriate
to ameliorate the conflict (and upon taking such actions the Investment Manager will be relieved of any
responsibility for such conflict). These actions may include disposing of the investment giving rise to the
conflict of interest. By acquiring an interest in the Fund, each Unitholder will be deemed to have acknowledged
the existence of any such actual or potential conflicts of interest and to have waived any claim with respect to
any liability arising from the existence of any such conflict of interest.
15.1 Investment Manager Incentive Fee
The existence of the Investment Manager’s Incentive Fee may create an incentive for the Investment Manager
to make riskier or more speculative investments on behalf of the Fund than would be the case in the absence of
this arrangement, although the Investment Manager’s Capital Commitment of $US5,000,000 may somewhat
mitigate this incentive. If distributions are made in securities instead of cash, the amount of any such distribution
will be accounted for at the fair market value of such securities, as determined by the Investment Manager in
accordance with the procedures set forth in the Partnership Agreement. An independent appraisal will not be
required and is not expected to be obtained.
15.2 Other Investment Activities
The Investment Manager will not (and will not permit any of its majority-owned subsidiaries to) organize, or
act as the general partner or manager, the investment adviser or the primary source of transactions for, another
pooled investment vehicle that is substantially similar in both size and investment strategy to the Fund until the
earlier of (a) the end of the Investment Period and (b) such time as the unused Capital Commitments (excluding
any portion thereof reserved for follow-on investments and reasonably anticipated Fund expenses, including
Management Fees) are less than 25% of the aggregate Capital Commitments.
15.3 Allocation of Investment Opportunities
Global may, from time to time, be presented with investment opportunities that fall within the investment
objectives of the Fund and other investment funds managed by Global or an affiliate thereof. Global will
allocate such opportunities among the Fund and those other funds on the basis that Global determines in good
faith to be fair and equitable taking into account the respective investment periods, investment guidelines and
objectives and other investments of each such fund, the relative amounts of capital available for investment,
and such other considerations as are deemed relevant by Global in good faith.
15.4 Other Activities of Global Personnel
Except as described in the section headed “SUMMARY OF PRINCIPAL TERMS AND CONDITIONS—
Other Investment Activities” above, the Investment Manager and its affiliates may continue to engage
actively in other activities, including investment activities. In that regard, the Global personnel responsible for
the day-to-day operations of the Fund will devote such time as is reasonably required to conduct the business
affairs of the Fund in an appropriate manner. However, these same personnel will also work on other projects,
including Global’s other investment funds, accordingly, conflicts may arise in the allocation of management
resources.
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Global Investment House KSCC
15.5 Dealings with Portfolio Interests
The Investment Manager and its affiliates will be entitled to provide investment advisory and other services to,
and to engage in other business dealings with, Portfolio Interests, and to receive remuneration in connection
therewith. Although the Investment Manager anticipates that any such remuneration will reflect competitive
market rates, such remuneration may not be determined through arm’s-length negotiation.
66 Global Real Estate Ijarah Fund Company B.S.C.(c)
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16 SUITABILITY; “KNOW YOUR CUSTOMER” AND AnTI-MONEY
LAUNDERING
16.1 Accredited Investors
The Fund is registered with the CBB and categorized by the CBB as an “exempt CIU” (as defined in the
Collective Investment Scheme Regulations).
The Collective Investment Undertakings Regulations require that each actual or prospective investor in an
exempt CIU must be an Accredited Investor.
Accordingly, each Subscription Agreement submitted to the Investment Manager by a prospective investor
must be accompanied by a certificate, which:
a states that such prospective investor satisfies the definition of an “Accredited Investor”; and
b contains a confirmation that such prospective investor understands and accepts the higher risks involved
in investing in an exempt CIU.
The Investment Manager shall be entitled to request from each prospective investor, such documents or other
evidence as it determines to be necessary or desirable, in its sole and absolute discretion, to demonstrate that
such prospective investor is an Accredited Investor.
The determination of the Investment Manager shall be final and the Investment Manager may accept or reject
any application, without assigning any reason therefor.
16.1 General
Without prejudice to the foregoing, the Investment Manager and the Administrator reserve the absolute right to
require further verification of the identity of each potential Unitholder or that of the person or entity on whose
behalf the potential Unitholder is applying for the purchase of Units. Each potential Unitholder is required to
provide satisfactory evidence of identity and the source of funds within a reasonable time period determined
by the Investment Manager. Pending the provision of such evidence, an application to subscribe for Units will
not be processed.
If a potential Unitholder fails to provide satisfactory evidence within the time specified, or if a potential
Unitholder provides evidence but the Investment Manager and the Administrator are not satisfied therewith,
the application may be rejected immediately.
The Fund will comply with: (a) the Bahrain’s Legislative Decree No. (4) of 2001 with respect to Prohibition
of and Combating Money Laundering and the various Ministerial Orders issued thereunder including, but not
limited to, Ministerial Order No. (7) of 2001 with respect to the Obligations Governing Institutions Concerning
the Prohibition of and Combating Money Laundering and Ministerial Order No. (23) of 2002 with respect
to Procedures of Money Laundering Prevention and Prohibition; and (b) all other applicable laws, rules,
regulations, guidelines and circulars now in force or in issue or otherwise promulgated by or on behalf of the
CBB or any other relevant legal or regulatory authority to which the Fund, the Investment Manager or the
Administrator may be subject from time to time during the Term.
16.2 Suitability
All Unitholders must be: (a) persons who are Approved Investors; and (b) persons who are not Prohibited
Investors.
For purposes of this offering of Units, “Prohibited Investor” means (i) any natural person resident in the
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United States (“U.S.”); (ii) any partnership or corporation organized or incorporated under the laws of the
U.S.; (iii) any estate of which any executor or administrator is a Prohibited Investor; (iv) any trust of which
any trustee is a Prohibited Investor; (v) any agency or branch of a foreign entity located in the U.S.; (vi) any
non–discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary
for the benefit or account of a Prohibited Investor; (vii) any discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in
the U.S.; or (viii) any partnership or corporation if: (A) organized or incorporated under the laws of any foreign
jurisdiction; and (B) formed by a Prohibited Investor principally for the purpose of investing in
securities not registered under the Securities Act of 1933, as amended (the “Securities Act ”),
unless it is organized or incorporated, and owned, by “accredited investors” (as defined in Rule 501(a)
under the Securities Act) who are not natural persons, estates or trusts.
Notwithstanding the above:
(1) any discretionary account or similar account (other than an estate or trust) held for the benefit or account
of a non–Prohibited Investor by a dealer or other professional fiduciary organized, incorporated, or (if an
individual) resident in the U.S. will not be deemed a Prohibited Investor;
(2) any estate of which any professional fiduciary acting as executor or administrator is a Prohibited Investor
will not be deemed a Prohibited Investor if: (i) an executor or administrator of the estate who is not a
Prohibited Investor has sole or shared investment discretion with respect to the assets of the estate; and
(ii) the estate is governed by foreign law;
(3) any trust of which any professional fiduciary acting as trustee is a Prohibited Investor will not be deemed
a Prohibited Investor if a trustee who is not a Prohibited Investor has sole or shared investment discretion
with respect to the trust assets, and no beneficiary of the trust (and no settlor if the trust is revocable) is a
Prohibited Investor;
(4) an employee benefit plan established and administered in accordance with the law of a country other than
the U.S. and customary practices and documentation of such country will not be deemed a Prohibited
Investor; and
(5) any agency or branch of a Prohibited Investor located outside the U.S. will not be deemed a Prohibited
Investor if: (i) the agency or branch operates for valid business reasons; and (ii) the agency or branch
is engaged in the business of insurance or banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
The International Monetary Fund, the International Bank for Reconstruction and Development, the Inter–
American Development Bank, the Asian Development Bank, the African Development Bank, the United
Nations, and their agencies, affiliates and pension plans, and any other similar international organizations, and
their agencies, affiliates and pension plans, will not be deemed Prohibited Investors.
“Prohibited Investor” will also mean any person to whom a transfer to, or holding by, such person of Units
would: (i) be in breach of any law or requirement of any country or governmental authority in any jurisdiction
whether on its own or in conjunction with any other relevant circumstances; (ii) result in the Company or the
Fund incurring any liability to taxation which the Company or the Fund would not otherwise have incurred or
suffered; (iii) require the Company or the Fund to be registered under any statute, law, or regulation, whether
as an investment company or trust scheme; or (iv) cause the Company or the Fund to be required to apply for
registration or to comply with any registration requirements in respect of any of its Units, whether in the United
Kingdom, the U.S., the Kingdom of Bahrain or any other jurisdiction.
Unitholders are required to notify the Investment Manager immediately of any change in such information.
68 Global Real Estate Ijarah Fund Company B.S.C.(c)
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IT IS THE RESPONSIBILITY OF EACH SUBSCRIBER FOR UNITS TO VERIFY THAT IT IS NOT A
PERSON THAT WOULD BE PROHIBITED FROM OWNING UNITS ISSUED BY THE FUND.
Each prospective investor is urged to consult with its own advisors to determine the suitability of an investment
in the Units, and the relationship of such an investment to the investor’s overall investment program and
financial and tax position. Each prospective investor is required to represent that, after all necessary advice and
analysis, its investment in the Fund is suitable and appropriate, in light of the foregoing considerations.
Each prospective investor will be required to agree that no Units, nor any interest therein, may be assigned, sold,
hypothecated or otherwise encumbered or transferred without the prior consent of the Investment Manager,
which consent may be granted or denied in the sole discretion of the Investment Manager, and that, prior to
considering any request to permit a transfer of Units, the Investment Manager may require the submission
by the proposed transferee of a certification as to the matters referred to in the preceding paragraphs as well
as such other documents as the Investment Manager considers necessary. Any transfer or attempted transfer
of any Units (or any interest therein) in violation of the foregoing restrictions will not be registered and,
accordingly, will be invalid.
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17 GENERAL
17.1 Voting Rights
The Units shall have no attached voting rights with regard to matters concerning the Company. Nevertheless,
the Board may call a meeting of the Unitholders to discuss matters that directly affect the Unitholders’ rights.
In such case, Units will be assigned voting rights of one vote per Unit. The Board will convene a Unitholders’
meeting for the following purposes:
a to sanction any scheme of arrangement for the reconstruction of the Fund or for the amalgamation of the
Fund with any other fund or other entity;
b to sanction the exchange of the Units for, or the conversion of the Units into, shares, stock, debentures,
debenture stock or other obligations or securities of the Fund or of any other entity formed or to be
formed;
c to sanction the release of the Fund from its obligation to repay, reimburse or otherwise account to
Unitholders for all or any part of the principal monies owing upon or capital invested with respect to the
Units;
d to sanction any modification or compromise of the rights of the Unitholders against the Fund proposed or
agreed to by the Company, whether such rights arise under this Instrument or otherwise; and
e to assent to any modification of the provisions of the Instrument, proposed or agreed to by the
Company.
Unitholders shall have no personal liability of any nature for the debts or obligations of the Company and/or
any Associate of the Company.
In addition to the discretion of the Board to call a meeting of the Unitholders, the Board is also obliged to
convene an annual general meeting of the Fund, which all Unitholders are entitled to attend in person or by way
of a duly appointed proxy, not more than 30 days after the end of each financial year of the Fund. At each such
annual meeting, the Board (or the Investment Manager on the Board’s behalf) will, inter alia:
a report to the Unitholders on the Portfolio Interests in which the Fund has invested during such financial
year;
b report to the Unitholders on the Investments (if any) which the Fund has disposed or from which the Fund
has exited during such financial year, and the (net) returns (or losses) to the Fund and the Unitholders
from such Investments;
c report on any Shari’a-compliant financing facilities entered into by the Company, to provide any leverage
for the activities of the Fund; and
d generally report on the results and performance of the Fund for such financial year. (See the section
headed ”SUMMARY OF PRINCIPAL TERMS AND CONDITIONS—Unitholders’ Meetings”).
The Fund will hold an annual meeting offering Unitholders the opportunity to review and discuss the Fund’s
activities. The meeting will be called by the Investment Manager within 30 days from the issuance of the
Fund’s annual audited financial statements. A representative of each of the CBB and the Ministry of Industry
and Commerce of the Kingdom of Bahrain will be entitled to be present at such meetings.
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17.2 Miscellaneous
1. No Units in the Fund are under option or agreed conditionally or unconditionally to be put under option.
2. No Units or loan capital of the Fund have been, or are proposed to be, issued other than in cash.
3. As at the date of this Placement Memorandum, neither the Fund nor the Company has any loan capital
outstanding or created and issued, and no outstanding mortgages, charges, debentures or other borrowings,
including bank overdrafts and liabilities under acceptances or acceptance credits, hire purchase or finance
lease agreements, guarantees or other contingent liabilities.
4. Global and the Investment Manager are respectively the promoters and manager of the Fund. The
Investment Manager will receive the Management Fee, the Placement Fee and other fees from the Fund
as described in this Placement Memorandum. Save as disclosed in this Placement Memorandum, no other
amount or benefit has been paid or given to Global and/or the Investment Manager and none is intended
to be paid or given.
17.3 Defaulting Unitholder
Upon failure of a Unitholder to make any Capital Contribution as and when due pursuant to a drawdown
notice, the Unitholder will be in default (a “Defaulting Investor”), and the Investment Manager may assess the
Defaulting Investor an amount representing the damages to the Fund and the Investment Manager that have
resulted or are likely to arise from such default, which shall be determined by the Investment Manager in its
reasonable discretion.
If the amount of such assessment is not paid by the Defaulting Investor to the Fund promptly upon the
Investment Manager notifying the Defaulting Investor of such assessment, then the Investment Manager may,
in its sole discretion: (a) cause the Defaulting Investor to forfeit all or any portion of the Defaulting Investor’s
allocable share of future distributions, other than in respect of a return of capital, made by the Fund; (b) cause
distributions that would otherwise be made to the Defaulting Investor to be credited against the default amount;
(c) cause the Defaulting Investor to be excluded from participating in future Investments by terminating its
unused Capital Commitment; (d) cause a forced sale of a portion of the Defaulting Investor’s Units (which
shall not exceed 50%) to any non-defaulting Unitholders who may wish to purchase such Units, pro rata
based on their respective Capital Commitments at such time, at a sales price equal to 100% of the aggregate
Capital Contributions made by the Defaulting Investor in respect of such Units, reduced by the amount of any
distributions made by the Fund to such Defaulting Investor in respect of such Units, whether as a dividend
or a return of capital or by Unit redemption, and such Defaulting Investor’s allocable share (to the extent
attributable to such Units) of any writedown amount in respect of any unrealized Investments in which such
Defaulting Investor participated, as an investor in the Fund, as of the date of the default or, to the extent that
the non-defaulting Unitholders are not willing to purchase such Units on such terms, to any person on such
terms; and/or (e) institute proceedings to recover the default amount. Unless the Investment Manager elects to
terminate a Defaulting Investor’s unused Capital Commitment, the Defaulting Investor will continue to remain
obligated to make Capital Contributions to the Fund, as and when required by drawdown notices, up to the full
amount of such Defaulting Investor’s unused Capital Commitment.
The foregoing remedies will be administered in a manner which the Investment Manager deems to be equitable
and, in consultation with the Shari’a Committee, deems to be compliant with Shari’a Principles.
17.4 Distributions
The Fund may make distributions to Unitholders from time to time upon the resolution of the Board. It is
anticipated that the Board will authorize distributions of current income on a quarterly basis, subject to the
establishment of such reserves for expenses and liabilities (including payments of Management Fees and
Global Real Estate Ijarah Fund Company B.S.C.(c) 71
Global Investment House KSCC
contingent liabilities) as it deems appropriate. Payment of any distributions will require the prior written
approval of the CBB.
No distributions will be paid prior to the date of the Fund’s final closing for the acceptance of Capital
Commitments. If the Fund receives any proceeds from the disposition, repayment or redemption of any
Investments prior to the end of the Investment Period, the portion of such proceeds constituting a return of the
Fund’s invested capital may be re-invested rather than distributed.
All distributions to Unitholders will be made on a pro rata basis in accordance with the number of Units then
held by each of them.
17.5 Reporting
The Investment Manager will prepare and supply to the Unitholders, with copies to the CBB, the following:
i quarterly reports containing unaudited, descriptive information with respect to any new Investment made
during the preceding fiscal quarter and a narrative summary of material transactions or events (if any)
occurring during the preceding fiscal quarter with respect to any existing Investment;
ii the half yearly unaudited (but reviewed) results of the Fund, for the previous six months, within 60 days
of the end of that six-month period; and
iii within 90 days after the end of each financial year of the Fund:
• An annual statement of attribution and information setting forth information to assist the Unitholders
in preparing their tax returns and information filings;
• A report containing information on any Investments made or disposed of during such period;
• A report containing a general description of other material events relating to the Investment Manager,
the Fund and the Fund’s business during such period;
• A report containing details of the Management Fee calculation and distributions (if any);
• Audited accounts or audited consolidated returns (including the Auditors’ report) for that financial
year; and
• A report prepared by the Shari’a Committee summarizing and confirming the substantial compliance
of the Fund with Shari’a Principles.
The Fund will publish the NAV per Unit on an annual basis.
17.6 Documents Available for Inspection
Copies of the following documents, which are available for information only and do not form part of this
Placement Memorandum, may be inspected at the offices of the Investment Manager during normal business
hours on any Business Day:
1 The material contracts referred to above;
2 The Commercial Companies Law (Decree Law No.21/2001);
72 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
3 This Placement Memorandum;
4 The Articles of Association of the Company; and
5 The Memorandum of Association of the Company.
17.7 Term
The term of the Fund will be 4 years from the date of the Initial Closing, and may be extended for one additional
one-year period by the Investment Manager, subject to the prior approval of the CBB.
17.8 Governing Law
This Placement Memorandum is governed by and shall be construed in accordance with the laws of the
Kingdom of Bahrain. The Fund is subject to the laws of the Kingdom of Bahrain and the regulations of the
CBB. All references to consents and permissions required from the CBB refer to those in place at the date of
this Placement Memorandum but the obligations of the Investment Manager and/or the Company to procure
consents and permissions during the Term will be governed by the laws of the Kingdom of Bahrain and the
regulations of the CBB in force from time to time.
17.9 Directors
The initial directors of the Company shall be as follows:
Mrs. Maha K. Al-Ghunaim, Chairman and Managing Director (Kuwaiti). See the section headed “GLOBAL
INVESTMENT HOUSE—Global’s Board of Directors” for biographical information as to Mrs. Al-
Ghunaim.
Sameer Al-Gharaballi, Director and Secretary of the Board (Kuwaiti); Executive Vice President of the
Investment Manager. See the section headed “GLOBAL INVESTMENT HOUSE—Global’s Board of
Directors” for biographical information as to Mr. Al-Gharaballi.
Rakesh Patnaik, Director (Indian). See the section headed “GLOBAL INVESTMENT HOUSE—Global’s
Board of Directors” for biographical information as to Mr. Patnaik.
Omar El Quqa, CFA, Director (Canadian); Executive Vice President-Corporate Finance and Treasury of the
Investment Manager; Souq Al-Safat Building, 2nd Floor, P.O. Box 28807, Safat 13149, Kuwait. Mr. El Quqa
received his M.B.A. from Sul Ross State University, in the United States, in 1982. He received a Chartered
Financial Analyst certificate in 1989 and began his career with the National Bank of Kuwait in the Money
Market Operations Department. From 1982 to 1990, Mr. El Quqa worked with the Kuwait Foreign Trading
Contracting & Investment Co. in its Portfolio Department. During the 1990 occupation of Kuwait, he managed
the Kuwait Foreign Trading Contracting & Investment Co.’s international portfolios from its offices in Geneva,
Switzerland. In 1993, Mr. El Quqa moved back to Kuwait as the Investment Advisor for the Asset Management
Department at KIC, and held this position until 1998. He was also a member of the Committee of the Laws and
By-laws Governing Mutual Funds in Kuwait and currently serves as a Board Member for the Kuwait Financing
Services Company and for Housing Finance Company.
Bader Al-Sumait, Director (Kuwaiti); Executive Vice President-Local and G.C.C. Markets of the Investment
Manager; Souq Al-Safat Building, 2nd Floor, P.O. Box 28807, Safat 13149, Kuwait. Mr. Al-Sumait received
his B.S. from Chapman University, in the United States, in 1980. In 1984, he became the General Manager
for Arab Financial Consultants Company and in 1997 he became its Managing Director. Mr. Al-Sumait helped
establish the Al-Oula Brokerage Company in 1985, where he served as the Chairman and Managing Director
until 1997. He has served as a Board Member of KIC, Kuwait International Fairs Co., Bank of Bahrain &
Global Real Estate Ijarah Fund Company B.S.C.(c) 73
Global Investment House KSCC
Kuwait, Educational Services Company and Palm Agricultural Production Company. In 1991, he served as
Chairman of the Committee for the Merger between KIC, Kuwait Foreign Trading Contracting & Investment
Co. and International Financial Advisors Co. Currently, he is Vice Chairman of Gulf Franchising Company
and Chairman of Kuwait Financing Services Company.
Mrs. Khawla Al Roomi, Director (Kuwaiti); Business Address, Senior Vice President, Personnel &
Administration, Global Investment House.]
17.10 Notices
Notices to be served by the Fund to any Unitholder shall be in writing and may be given personally or by
sending the notice by post, cable, fax, electronic means or any other method of written communication.
17.11 Inquiries
Inquiries concerning application for the Units should be directed to the Investment Manager at:
NBB Tower, Building 133, 19th Floor, Office 191, Government Avenue 383, Block 316, P.O. Box 855,
Manama, Kingdom of Bahrain, attn: [ ].
17.12 Representative in Bahrain
The Fund’s representative in the Kingdom of Bahrain will be Global Investment House B.S.C.(c) (attention:
[ ]).
Global Investment House B.S.C.(c)
NBB Tower
Building 133, 19th Floor
Government Avenue 383, Block 316
P.O. Box 855
Manama
Kingdom of Bahrain
Tel: +973-[ ]
Fax: +973-[ ]
74 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
18 SUBSCRIPTION PROCEDURES
A subscription for Units in the Fund must be made to the Investment Manager in accordance with the following
procedures and the procedures set forth in the Subscription Agreement.
Subscription Agreement
Subscriptions for Units may be made by completing and sending to the Investment Manager a Subscription
Agreement and, if requested by the Investment Manager, a cash amount equal to the investor’s Initial Capital
Contribution. The investor should send two original copies of the completed Subscription Agreement to the
Investment Manager by overnight courier, together with each of the documents therein referred to. Upon
acceptance of the investor’s Capital Commitment by the Investment Manager, a copy of the executed
Subscription Agreement signature page will be countersigned by the Fund and returned to the investor.
Payment Transfer
No Units will be issued to an applicant until cleared payment is received by the Fund. All wire transfers must
be in U.S. Dollars and comprised exclusively of immediately available funds. All wire transfers should be
sent to:
A/c: 001-265560-100
Bank: BAHRAIN, HSBC Bank Middle East
Swift: BBME BHBX
A/c Name: Global Real Estate Ijarah Fund Company B.S.C.(c) (under formation)
Reservation of Right to Reject Subscription
The Investment Manager reserves the right to reject any application in whole or in part. If the subscription is
not accepted, any purported capital contribution received from the prospective investor will be returned to it.
Anti-Money Laundering Procedures
Measures aimed at the prevention of money laundering will require an investor to verify its identity. Please
follow all instructions in that regard set forth in the Subscription Agreement.
Global Real Estate Ijarah Fund Company B.S.C.(c) 75
Global Investment House KSCC
APPENDIX A
Shari’a Guidelines
With respect to the business of the Fund, including execution and administration of Leases (as hereinafter
defined), the Investment Manager will act in accordance with the following Shari’a principles, as such principles
shall be interpreted and applied by the Investment Manager in consultation with the Shari’a Committee (for
the purposes of this Appendix B, the expression “Leases” will mean and include leases or subleases to entities
unaffiliated with Global of all or a portion of a property regardless of whether such lease or sublease is in effect
on the date of acquisition of the related investment or arranged or renewed thereafter):
1. The Investment Manager shall not recommend that the Fund acquire an investment in any property with
Leases running to an “Unacceptable Tenant,” nor will any space in any property after the making of any
investment therein be leased to an “Unacceptable Tenant.” An “Unacceptable Tenant” is defined as (a)
any entity whose primary business is the production, packaging, storage, sale or distribution of alcohol
products, pork products, pornography, or gambling products (“Unacceptable Products”); (b) operators of
gambling casinos; (c) operators of movie theaters; (d) banks; and (e) hotels.
2. If any property will be leased to multi-product tenants, such as supermarkets, the amount of Unacceptable
Products in the leased space must not exceed 10% of shelf-space as measured by the overall space leased
to that particular tenant.
3. All cash balances in the Fund (collectively, “Account Funds”) in excess of US$1,000,000 will be held
in Islamically-acceptable profit earning investment accounts offered by acceptable international financial
institutions (“Acceptable Accounts”) selected by the Investment Manager.
4. The Fund will use its best efforts to hold escrow or earnest money deposits in connection with sales or
purchases of properties in Acceptable Accounts. The profits accruing on any such Acceptable Accounts
shall be for the benefit of the Fund or the third-party seller or buyer, as determined in accordance with
the applicable purchase or sale agreement. All such funds released from escrow shall be transferred to an
Acceptable Account unless such funds are to be distributed and/or used (as the case may be) to conclude
the given transaction within the next seven days after such funds were initially deposited. If it is not
feasible to hold such escrow or earnest money deposits in Acceptable Accounts, then any profits accruing
to the Fund on such deposits shall be donated to a charity designated by the Investment Manager, in its
sole discretion.
5. If the Investment Manager arranges or obtains any financing in connection with the acquisition or
ownership of a particular property (“Financing”), such Financing shall be structured so as to be Islamically-
acceptable.
6. In case a tenant is delinquent in the payment of monthly rental or other sums due under its occupancy
lease, such lease may charge the tenant an additional amount sufficient to cover the legal pursuance
costs in connection therewith, as well as any administrative costs associated with legal action taken to
recover such delinquency or to terminate such lease and remove the tenant thereunder from the property
(collectively, “Remediation Costs”). Occupancy leases may also provide for late charges to be paid
by delinquent tenants. To the extent that the aggregate amount of Remediation Costs and late charges
actually received from any delinquent tenant shall exceed the total Remediation Costs for which such
tenant is liable under its occupancy lease, such excess shall either be paid to such tenant, donated to a
charity designated by Global or otherwise disposed of in an Islamically-acceptable manner.
7. The following instruments or any derivatives therefrom must not be used in the portfolio unless structured
so as to be Islamically-acceptable: (a) future contracts of any kind; (b) option contracts of any kind; (c)
76 Global Real Estate Ijarah Fund Company B.S.C.(c)
Global Investment House KSCC
swaps; (d) short sales; or (e) any other instruments, any components of which involve the payment or
receipt of interest.
Compliance with these Islamic operating guidelines shall be monitored by one or more representatives of
Investment Manager in consultation with the Shari’a Committee from time to time.
Global Real Estate Ijarah Fund Company B.S.C.(c) 77
Global Investment House KSCC
APPENDIX B
FORM OF REDEMPTION REQUEST
[to follow]
(Footnotes)
1
(Sources: Global Research, World Bank, Khaleej Times, Zawya, Cushman & Wakefield, Colliers, Jordan
Ahil Bank, Knowledge Wharton, ANIMA, Amberlamb & FinaCorp)
2 (Sources: Global Research, World Bank, Khaleej Times, Zawya, Cushman & Wakefield, Colliers, Jordan
Ahil Bank, Knowledge Wharton, ANIMA, Amberlamb & FinaCorp)
3
(Source: Global Research, World Bank, Khaleej Times, Zawya, Cushman & Wakefield, Colliers, Jordan
Ahil Bank, Knowledge Wharton, ANIMA, Amberlamb & FinaCorp)
78 Global Real Estate Ijarah Fund Company B.S.C.(c)
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