International Investment Bank (IIB), a globally-focused investment bank based in Bahrain, today announced its acquisition of a high-quality portfolio of commercial real estate properties in France, valued at US$ 105 million.
IIB is taking a 90% stake in the portfolio, which is comprised of six commercial properties that are strategically located in France’s two largest cities - Paris and Lyon - where the Bank and its co-investors can effectively leverage continued growth and strong demand for office space in the French commercial property sector – particularly in these key commercial hubs.
In making the acquisition, IIB has 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 10% share ownership in the portfolio.
The investment, which marks IIB’s third European investment in total, and its second real estate acquisition in Europe, is aimed at providing the Bank’s GCC-based investors with access to the buoyant French 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 French 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 France offers attractive growth potential. Working together with our French partner, 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 France and which are expected will continue for some time to come.
“Studies have confirmed Paris – where five of the six properties acquired by IIB are situated – as the largest office real estate market in Europe, second only to Tokyo in the world. From 2004 to 2005, commercial real-estate investments in Europe grew by 30%, with investments in France contributing substantially to this growth. At the same time, vacancy rates continued to decrease sharply, particularly in Paris, to rates as low as 5.7%. This clearly reflects strong demand from both investors and 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 projected Internal Rate of Return (IRR) on the investment is in the region of 12.0% p.a. over an investment horizon of five years, with cash yields ranging from 8.6% to 9.2% p.a..
“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 French 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 timing of our entry into the UK 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 French market at the right stage of the property cycle,” said IIB’s Chief Operating Officer, Mr. Salah Nooruddin.
“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,” concluded Mohamed Hadi Mejai, Director of Investment and Business Development at IIB.
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 recently concluded its exit from One Business Bay well in advance of initial projects and with a return on investment of 114 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.
