international investment bank acquires us$98 million german commercial property portfolio
International Investment Bank (IIB), a globally focused investment bank based in Bahrain, announced its acquisition of a high quality portfolio of commercial real estate properties in Munich, Germany, valued at US$98 million.
IIB is taking a 95% stake in the portfolio, which is comprised of three commercial properties which are rented to a blue chip German company and are strategically located 3 kilometers from Munich city centre, where the Bank and its co-investors can effectively leverage continued growth and strong demand for office space in the German commercial property sector – particularly in this key commercial and production hub.
In making the acquisition, IIB has again partnered with a renowned asset manager with extensive experience in the structuring and management of Shari’ah-compliant real-estate investments in Europe, and who holds the remaining 5% share ownership in the portfolio.
The investment, which marks IIB’s fourth European investment in total, and its third real estate acquisition in Europe, is aimed at providing the Bank’s GCC-based investors with access to the buoyant German commercial property market, which continues to expand at a rapid rate and is expected to deliver opportunities for both healthy returns as well as diversification.
Commenting on the announcement, Mr. Aabed Al Zeera, Chief Executive Officer of IIB, said, “We are pleased to offer yet another compelling opportunity to our clients through our investment in the European property market. We have already developed a strong track record for investing in highly profitable real estate transactions both in Europe and in the GCC and we believe the commercial real estate sector in Germany offers attractive growth potential. Working together again with our partners, an established name in European asset management, we are confident that we are well positioned to benefit from strong market dynamics that exist today in Germany and which are expected to continue for some time to come.
“Munich is one of the largest cities in Germany and a manufacturing capital in Europe, and studies have found it to be the city with the best economic prospects in Germany as it witnessed the all time highest transaction volume in 2006 with a growth of 128% over 2005. The letting market in 2006 has grown by a substantial 13% over the previous year. This clearly reflects strong demand from tenants and we believe that those properties included in our portfolio will allow us to realize maximum gains from these positive trends,” said Mr. Al Zeera.
The Bank’s Chief Executive Officer added, “IIB, through our strong global network of contacts, continues to gain access to high quality investments, which are capable of providing superior risk adjusted returns to our investors. Selecting the right deals and working with the right partners to maximize value is critical to the ongoing success of IIB and to the enhanced value we continue to provide to our GCC-based investors and shareholders on an ongoing basis. Real estate continues to be an attractive asset class and we are well placed to offer a broad and well balanced portfolio of properties – both from within this region and other strong performing markets.”
The projected Internal Rate of Return (IRR) on the investment is in excess of 10.12% p.a. over an investment horizon of five years, with a cash yield of 7% p.a.
IIB’s Executive Director, Mr. Mohamed Hadi Mejai said, “IIB continues to seek out new and innovative ways to deliver real value for our clients through the sourcing and development of high quality Shari’ah-compliant products. We have had much success to date in offering numerous opportunities in diverse asset classes, industry sectors and countries, and we believe that our latest investment in the German property sector reflects the quality, strength and diversity of the investment avenues which we open up to our investors. Investments in real estate in a variety of countries and sectors meet our clients’ demands for investing in tangible assets with strong growth potential and opportunities for appreciation. The success of our previous entry into the French commercial property market last year has so far proved to have been very good, and we are confident that we are also investing in the German market at the right stage of the property cycle.”
IIB has recently acquired and is managing a high quality real estate portfolio in France, valued at US$105 million. IIB also recently concluded a highly profitable exit from its first European real estate investment in an office building located at 33 Grosvenor Place in the prestigious Belgravia area of London. Sold just 18 months after its purchase by IIB and its partners for US$409 million, this property delivered a 200% return on investment for the Bank and its co-investors.
In 2006, IIB also concluded two real estate investments totaling US$180 million in Dubai’s Business Bay development, which is being planned by the Dubai Government as the new dynamic ‘downtown’ area of Dubai. These included investments in West Bay Tower and One Business Bay. IIB also concluded its exit from One Business Bay well in advance of the initial projections and with an internal rate of return (IRR) of 25 percent. Other real estate investment in 2006 included the launch of Ewaan, a US$100 million company that will focus on investment in the Saudi Arabian real estate market. Based in Saudi Arabia, the new firm will seek to invest some SR2 billion (US$533 million) in the fast-developing Saudi property sector over the next three years.
About International Investment Bank
International Investment Bank B.S.C. (IIB) was incorporated in Bahrain in October 2003 as an Islamic investment bank, with an authorised capital of US$200 million and a paid up capital of US$43 million. Its shareholders are high net worth individuals, business houses and institutions from the GCC states. The Bank undertakes three core business activities - private equity, real estate and asset management – and aims to offer its clients an internationally diversified range of investments generated through its network of strategic partnerships.
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