“We have been studying the US real estate market for the past 18-months and come to conclusion that it is worth entering the market,” Aabed Al Zeera, Chief Executive Officer and Board Member of International Investment Bank (IIB) told The24X7News.
He was speaking after the Press Conference in which he revealed that IIB had acquired a $250 million, 2,400 unit multifamily residential portfolios in partnership with US based Atlas Residential.
He said over the period of five years, which is extendable up to seven years, the bank would pay 9.5% dividend in the first year on quarterly basis.
“Overall the investors will get 16% return on investments at the time of the exit starting from 9.5% during the first year which will be increased gradually,” he said.
The Class A portfolio was acquired from Dallas-based Pillar Income Asset Management and completed on the 30 December 2013. Existing senior debt for the portfolio, which is insured by US Department of Housing and Urban Development (HUD), was assumed during the transaction, with Macquarie Bank Limited providing $71 million in mezzanine financing.
The 11 property portfolio is primarily located in Dallas, Texas but includes assets in the Houston, Midland/Odessa and El Paso. The IIB / Atlas venture was created to acquire, improve and operate these assets to capitalize upon their long-term fundamentals. Atlas Residential Management will provide asset management for each of the properties and will affect the cosmetic enhancement and physical upgrades planned for each of the properties.
“The acquisition of these high quality multifamily residential apartment buildings adheres to our core strategy of focusing on investment opportunities with the objective of achieving attractive returns for our investors and we are excited about our partnership with Atlas on this project as well as similar endeavors in the future,” Saeed Al Fahim, Chairman of IIB, said.
“The partnership with Atlas Residential will create a platform and provide an opportunity for our investors seeking stabilized cash yields to participate in the booming Texas economy, which continues to support a robust multifamily market. Our investors will be able to earn a healthy current cash return in this very stable Class A portfolio. Our Bank has been seeking investment opportunities in the US over the last couple of years and believes that this Class A portfolio will meet the return expectations of our investors given that the US multifamily market is poised for continued growth,” Al Zeera, added.
“This was a great way to conclude 2013, and we are grateful to our partners IIB and Macquarie for sticking with us during a complicated HUD loan assumption process. This acquisition reinforces our belief in the Texas market where we have a long and successful track record of owning and managing diverse apartment portfolios. Atlas intends to acquire additional similar assets in major markets during 2014,” Steven Ivankovich, CEO of Atlas Residential in a statement said.