Specialist adviser Arc & Co. has arranged a £1.49 million Islamic finance facility secured against a regional office building in Nottingham.

The Commodity Murabaha facility was provided by Habib Bank Zurich plc through its Intermediaries Team and was structured with a profit margin of 2.75% and a finance-to-value ratio of 55%. As with other Murabaha arrangements, there are no early repayment charges.

The unencumbered property, occupied by two tenants, was in the process of re-gearing its leases at the time of execution. The borrower sought to release equity to fund a pipeline of upcoming development projects.

Although the leases were held over, Habib Bank Zurich’s intermediaries team adopted what Arc & Co. described as a “commercial and flexible approach”, recognising the underlying strength of the asset and its income profile.

SHORTER OFFICE LEASES

During negotiations, the bank initially preferred longer-term commitments of three and five years to provide additional security. However, Arc & Co. director Philip Kay (main picture) successfully negotiated terms that accommodated shorter leases, which he noted was unusual in the current climate for regional office assets.

Kay said: “This was a great example of a lender taking a pragmatic view on a strong regional asset and supporting a client with a clear growth strategy.

“The Intermediaries team (notably Fahad Khan) at Habib Bank Zurich plc maintained excellent communication and follow-up throughout the process and demonstrated flexibility in providing an Islamic facility where other lenders may have struggled with the short lease terms.”

EXCEPTIONAL PROFESSIONALISM

Fahad Sartaj Khan, senior relationship manager at Habib Bank AG Zurich, added: “Philip has conducted himself with exceptional professionalism throughout the transaction, truly embodying the values and ethics of Arc & Co. from case submission to completion.

“We greatly appreciate his approach and look forward to working with him – and the wider Arc & Co. team – on future opportunities.”