Emirates REIT, a Dubai-based sharia-compliant real estate investment trust, has agreed to acquire Lycée Français Jean Mermoz, a local French school, for $20.5 million. As part of the deal, Emirates REIT will immediately lease the school back for a period of 27 years.

The deal was signed by regional asset management firm Equitativa, which manages Emirates REIT. Equitativa says it expects the transaction to generate an estimated internal rate of return of more than 12% and provide an initial net yield of 9.75%.

Following the completion of the acquisition, Emirates REIT’s educational sector portfolio will increase to $238 million, which represents 27% of its total portfolio. The fund’s total portfolio will comprise eleven properties for a total value of $886 million.

Lycée Français Jean Mermoz opened in 2017, and is located in the residential area of Al Quoz. Its facilities comprise a large gym, an auditorium and two indoor pools alongside classrooms that can accommodate up to 1,500 students.

As part of the deal, the school simultaneously assigned the interest on the land leasehold plot to Emirates REIT and has entered into an agreement to fund the construction of an expansion of the facilities in two phases, with work beginning immediately.

“With this new acquisition, we are immediately strengthening Emirates REIT’s rental income, offering substantial upside valuation and securing long-term cash flows,” said Sylvain Vieujot, CEO of Equitativa Dubai, in a statement. Vieujot noted that this acquisition was similar to transactions previously completed by Equitativa, including deals for the Jebel Ali School and British Columbia Canadian School.