Daman tower bankrolled by unique building fund

Investment firm raises $100 million from 14 private investors for tower project

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By  Colin Foreman Published  May 21, 2005

A unique single property fund has been set up to finance the construction of a US $450 million (AED1.6 billion) tower project in Dubai. Investment firm Daman Asset Management believes that the move will pave the way for more similarly structured deals in the region. Daman has already raised $100 million from a group of 14 private investors — each contributing $5 million This will provide the equity component of the development funds for the project, which will also include a significant debt component. According to Daman, negotiations are currently underway with several international banks to secure a loan of $250 to $325 million for the project. Daman managing director, Shehab M. Gargash, said: “Real estate developments in Dubai have traditionally been funded by single owners that have invested a great deal of equity in a single project, and secured financing by collateralising assets beyond the scope of the project. “In this project, Daman is bringing a globally recognised methodology in project finance to Dubai. “The concept is new to the region and has attracted top investors from around the world, including select financial institutions and high net worth individuals. We expect to begin distributing dividends as early as 2008.” Designed by US-based architect Percy and Will, the building will be a major mixed-use development project that will offer more than 160 000m2 of built-up area, including freehold apartments, offices, a luxury hotel and retail space. The building will be made up of two main sections: A lower rise office building forming a T-shaped configuration, with a taller, 58-storey, 205 m-high residential and hotel building. Contactors working on the project are expected to break ground in December 2005 and are scheduled to complete the building in early 2008. Multi-Property Development is project manager. Partner Andrew Butter said that the packaging strategy has yet to be decided, but separate enabling works and piling contracts will be let before a main contract is let to a grade A contractor for the completion of the superstructure. The announcement follows the acquisition by Daman of a 22 000 m2 plot of land in DIFC’s Park Avenue district following an open tendering process in March 2004.

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