First Islamic Investment Bank recently formed a joint venture with Sunrise Assisted Living. The joint venture vehicle, Sunrise First, acquired lease (Ijara) interests in 12 properties, comprising 940 residential units in the assisted living sector in the United States.
The properties are located in six key markets: Los Angeles, New York, Chicago, Detroit, Philadelphia and Virginia. The total transaction value is approximately $203.4 million.
First Islamic and its co-investors own 80 percent in the joint venture, with Sunrise holding the remaining 20 percent. Sunrise will act as an asset manager of the joint venture and Sunrise personnel will manage the properties. Fannie Mae, one of the largest providers of funds for home mortgages in the United States, provided a $138 million Islamic Ijara financing facility to leverage 11 of the properties in the portfolio and GMAC provided an Ijara facility for one of the properties.
First Islamic's joint venture partner, Sunrise, is the oldest and largest in terms of equity market capitalization provider of assisted living services in the US. Assisted living bridges the gap between independent living and nursing homes, catering to elderly people who need assistance with activities of daily living, but wish to live as independently as possible for as long as possible.
Americans spend over $150 billion annually on senior housing and care, indicating a large and robust market with demographics heavily influencing positive economic trends. Sunrise operates or has commenced development of over 200 communities in 25 states, and several in Canada and the United Kingdom, with a total resident capacity of over 15,000.
First Islamic projects that the investment will generate a blended Internal Rate of Return (IRR) of approximately 13 percent over the five-year investment horizon, inclusive of a projected annual cash yield of approximately 10 percent per annum, which will be distributed on a monthly basis.
First Islamic's Chief Executive Officer Atif Abdulmalik said “We are pleased to add a third asset class to our real estate portfolio following on the success of the US multifamily and distribution facilities investment offerings. Due to its healthcare focus, the assisted living sector is more recession resistant compared to other real estate asset classes.”
“We have structured the investment to generate a stable annual cash yield, which will be distributed on a monthly basis to our investors. This should suit institutions and individuals looking for stabilized real estate assets with a steady income stream,” added Mohamed Nooruddin, Executive Director of Investment Placement.
First Islamic Investment Bank E.C., a Bahrain-based investment bank, was established in 1997. Today, with a paid-in share capital of $112.5 million, and over 80 shareholders, First Islamic provides Shari'ah compliant investment banking solutions to institutional and individual investors internationally.
Sunrise is a Virginia-based public company with an equity market capitalization of $485 million and total assets of $1.1 billion. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
