State-owned investment firm Qatari Diar has appointed Qatar Islamic Bank (QIB) as lead arranger for a five-year, QR3.5 billion ($962 million) syndicated Islamic facility, it said on Wednesday.

Qatari Diar, which counts London's Chelsea Barracks among its most high-profile overseas assets, said the Islamic facility will be used to finance European investments.

Qatar has been aggressive in targeting the UK in order to snap up real estate bargains due to the global economic downturn.

Qatar Holding, the investment arm of the Qatar Investment Authority, and China Investment Corporation, in August agreed a deal to take a stake in London's Canary Wharf's majority owner Songbird Estates.

Qatari Diar, the country's property arm, last month launched a luxury real estate project in Tajikistan, its first in Central Asia, worth at least $150 million.

'This transaction comes at a time where Europe and France, in particular, are eager to develop Islamic finance and is at the same time in line with QIB Group's plan to serve European and French markets,' Jean Marc Riegel, general manager corporate investment and development group at Qatar Islamic Bank, said in the statement on Wednesday.

Qatari Diar is refinancing its 637.5 million euro loan that was underwritten in 2008 and signed in March 2009, according to bankers.

That one-year deal which backed Diar's buyout of French engineering company Cegelec, paid a margin of 135 basis points over EURIBOR. Qatari Diar told Reuters in April it would focus on existing projects before expanding into new areas.-Reuters