In the Spotlight: Islamic Finance and Its Impact on Leasing Transactions in the U.S.

The flow of foreign investment money into real estate in the United States has certainly slowed over the last 18 months as commercial real estate markets have tried to adjust to the new reality of the current recession. However, as we all know, when commercial real estate markets in this country recover in the next several years, foreign funds will once again play a significant role in the recovery. For that reason, it is important for every owner of commercial real estate in the United States today to know something about Islamic finance. You may be selling your asset to a sovereign wealth fund or some other real estate investment fund originating in an Islamic country, or you may be forming a joint venture with such a fund as an equity partner to hold title to an asset. In either event, you are likely to come across investment money flowing into commercial real estate in the United States from an institution or entity subject to Islamic law. In the leasing context, there are a number of unique issues dictated by Islamic law (known as Shari'ah) that all owners and landlords of commercial real estate need to understand.