News
Shari’a Compliant
August 21, 2012
| Sure, you're LEED certified. But what does the man (or woman) upstairs have to say? Rancho Bernardo-based Property Income Advisors focuses on assisting non-US investors, primarily from the Middle East, in acquiring and managing US commercial property. CEO Scott Sweeney tells us that presents unique challenges. |
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| Scott?s about to put an East Coast single-tenant leased property under contract as the firm's first acquisition. Launched earlier this year, Property Income Advisors serves high-net-worth investors, family offices, private banking group clients, and smaller institutions, with special expertise in Shari?a compliant transactions. That means investing within Islamic guidelines. ?The biggest thing there is that they can't take a loan on a property and pay interest.? Instead, you have to structure it as a lease and separate out the third-party mortgage from the ownership structure. They also can't invest in properties occupied by banks, or other financial institutions that lend money, and alcohol-related businesses. |
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| As a boutique, Property Income Advisors has taken the IT function in-house—well, to Scott's 15-year-old son Ian. Scott says an Islamic investor might have issues with a hotel that has a lobby bar, but there are ways to strip out the bar operations so that the investor isn't receiving a return on that portion of the property's income. He also notes investors have varying degrees of Islamic compliance. One group might be OK with a shopping center whose supermarket anchor sells booze because it's a small part of the overall business. Scott honed his Middle East expertise and relationships during 19 years with Falcon Real Estate, where he most recently served as EVP and head of US asset management and Middle East marketing. |
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| Scott with Alvin and Bella. He decided now would be an opportune time to ?go off on my own and take advantage of the different factors? making US properties attractive to foreign investors. Among them are the Eurozone difficulties and expensive pricing in Central London—historically a target for Middle East investors. We would suggest Mars is a destination, but we hear Curiosity found too many banks and bars up there. |
