Islamic Real Estate Securitisation Abradat Kamalpour Partner Dechert LLP London
Areas to Cover: conventional securitisation common Islamic real estate financing structures confusion of some Sukuk with securitisation discussion of Islamic securitisation structures some points to consider
“…the repackaging of income generating assets into a marketable form which are used to secure bonds. The bonds are repaid from the dedicated cashflows generated by those assets.” What is conventional Securitisation
Simplified CMBS Structure Commercial Real Estate Loan Class A Notes Class B Notes Class C Notes Originator Issuer SPV Loan Sale Agreement Servicing Agreement Liquidity Facility Provider Liquidity Facility Bank Accounts Commercial Real Estate Loan
Ijara – Islamic Lease Financing Put Option and Call Option Lease (Ijara) Islamic Finance Originator Service Agent Lessee Service Agency Agreement
Murabaha Real Estate Financing Purchase Agreement (Real Estate) Bank Client Real Estate Seller Murabaha Agreement (Real Estate) Spot Payment Deferred Payment Obligation
The Ijara Sukuk Asset Holder Sukuk Cash Tenant / Final Purchaser Ijara CashAsset Transfer Cash Undertaking to Purchase the Asset Asset Transfer Issuer SPVSukuk Holders
Purpose is to generate profits Musharaka Profit Distribution Musharaka Partner Purchase Undertaking Musharakah Management Agreement Management Agreement Fund Contribution Sukuk Sukuk Al Musharaka Sukuk Holders Issuer
The Pooling Structure – Getting Close Islamic Finance Originator Purchase of Islamic Financing Assets (Ijara, Murabaha & Istisna’a) Guarantee / Liquidity Facility Sukuk Cash Sukuk Holders Issuer SPV
Islamic Real Estate Securitisation Structure Lessee Service Agent Islamic Finance Originator Issuer Sukuk Holders Lease (Ijara) and other documents Sukuk Asset Sale / Trust Servicing Agreement
Is a “True Sale” possible in the jurisdiction Stamp duty considerations for asset transfer Debt transfer for Murabaha Local bankruptcy law considerations Enforceability of foreign judgements Currency and clearing of Islamic bonds Rating agency familiarity Some Points to Consider