A £492M Singapore-listed REIT has secured a £50M first-of-its-kind loan to finance the acquisition of a portfolio and refinance some of its debt. 

Elite UK REIT, which primarily invests in buildings let to the UK Department for Work and Pensions, said in a stock market filing it had entered into a £50M, sustainability-linked Murabaha finance facility with Malayan Banking and RHB Bank. Murabaha finance is a type of Islamic finance structured to avoid the payment of interest, which is prohibited under Sharia law. 

Like Elite’s other debt facilities, repayments are reduced if the properties against which the debt is secured hit targets for cutting energy usage. Elite said the facility was the first Sterling-denominated, sustainability-linked Sharia finance to be issued out of Singapore.

So far, £22M of the debt has been drawn down to fund the £32M acquisition of a five-building portfolio leased to HMRC, the first time Elite has bought assets leased to that government department. 

The portfolio — Queensway House, East Kilbride; Griffin House, Wigan; Penhaligon House, St Austell; Challand House, Pontefract; and Bridgend Jobcentre, Bridgend — produces rental income of £2.6M a year and has a weighted average unexpired lease term of 13 years. 

Elite is seeking to diversify its portfolio beyond government-leased offices. It is converting one such building in Dundee to student accommodation and is building a data centre on a site it owns in Blackpool. 

“As a Singapore-listed REIT investing in UK real estate, it is important that we continue to diversify our sources of capital while maintaining a prudent approach to currency and balance sheet management,” Elite CEO Josh Liaw said in a statement. “A GBP-denominated Murabaha facility allows us to access Islamic financing while keeping our borrowings aligned with the currency of our assets and income.”