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Monday, August 17, 2009

KFH seals US$450m deal to invest in US properties

KUWAIT CITY: Kuwait's largest Islamic bank said yesterday it has signed a US$450 million (US$1 = RM3.52) deal with a US real estate investment trust to buy high income residential real estate in major American major cities.

The deal between Kuwait Finance House and Denver, Colorado-based apartment building owner UDR Inc is the second major foreign investment by a rich Gulf nation in the past few days.

"The joint venture will seek to acquire high-income residential real estate in major cities in the United States," according to a statement posted on KFH's website. Under the deal signed in London on Friday, KFH's participation is 70 per cent while UDR will shoulder a 30 per cent share, the statement said.

The Islamic bank said the joint venture will target class "A" assets with a minimum value of US$20 million that are less than seven years old, and the venture intends to be fully invested over a two-year period. The bank said it was targeting an internal return rate of 12 to 14 per cent annually.

Ali al-Ghanem, KFH's international real estate manager, said the partnership with UDR shows the bank was trying to return as a "major player" to the American real estate market, after it had liquidated a large portion of its investments there before the economic crisis began.

The statement quoted Tom Toomey, UDR's president and CEO as saying the company was looking forward to investing with its new partner during "these opportunistic times".

He said his company owns 50,000 apartment homes around the US, as well as thousands of houses under renovation.

The move is the latest in a string of recent investments from Gulf countries into Western property.

Student accommodation provider Unite Group on August 12 set up a five-year joint venture with Bahrain's Oasis Capital Bank to develop student housing in London worth an estimated STG194 million (STG1 = RM5.83).

An Omani wealth fund in June month bought a 75 per cent stake in London office landmark Bishops Square from Hammerson.

Bahrain- and London-listed investment house Investcorp also recently acquired mortgage loans in the US worth US$170.9 million to take advantage of low real estate prices.

By AP, Reuters

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