1 The European Market for Shar’iah Real Estate Funds “A niche market for specialists or a viable new business opportunity for major players?” Michael Walton Chief Executive Rynda Property Investors Terrapinn Real Estate Investment World Europe Conference London 23rd - 25th May 2006

2 Objective of this Case Study To explain:-  what a Shar’iah fund is  the practical difficulties of establishing and managing such funds and  to finally make an assessment as to the market opportunities in Europe

3 What is a Shar’iah Fund?  Established and managed in accordance with the Islamic law of Shar’iah – under the interpretation of the Qura’an  Two areas of particular relevance to real estate are the requirements:-  to avoid non permitted uses  to avoid riba - i.e. interest payments  Property uses involving betting, pornography, alcohol, armaments or certain financial services (especially teller operations) are not permitted  Borrowing debt directly to part finance the purchase of assets is not allowed  Respected Islamic scholars of religious law appointed to approve each aspect of the fund’s establishment and the on-going management  If satisfied a Fatwa (effectively a religious judgement) is issued

4 Practical difficulties of establishing and managing Shar’iah funds  avoiding non permitted uses  Structuring for Shar’iah requirements, debt, transfer taxes and corporate and personal taxes  Asset and Cash management – income purification  Real estate investment market perception

5 Proven Islamic fund structure Enforcer Property Owner Holding Co. External Investors Conventional Lending Bank Cayman Purpose Star Trust Debt Interest Freehold Cayman Islands LP Co-investment capital Prop Co General Partner Occupational Tenants Day one premium plus quarterly rent Ijara Agreement/Lease of asset plus Option to Buy Rent Dividend

6 The market opportunities in Europe for Shar’iah structured real estate funds  European assets are attractive  1.3 billion Muslims in the world  Islamic institutions 1975 = = 300+  $250 billion AUM’s and 15%+ p.a. growth  Shar’iah funds require experienced teams of investment managers, lawyers and accountants who are dedicated to the business  Shar’iah funds will continue to be established by the smaller niche fund managers who can provide the focus required for this specialist investment product

7 Rynda contact details Michael Walton Chief Executive Tel: +44 (0) Mobile: +44 (0) Web: Rynda Property Investors LLP is authorised and regulated by the Financial Services Authority.

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