IIB exits Bahrain Property Fund
Manama, July 5, 2010
Bahrain-based International Investment Bank (IIB), a global investment bank operating in line with Shari’ah principles, has announced the exit of Bahrain Property Fund (BPF); a diversified portfolio of residential and commercial properties.
“While the global economy is still on the downturn, this announcement is a significant achievement for our valued investors,” said Aabed Al-Zeera, chief executive officer and board member of IIB.
“The realized IRR of 9.12 per cent per annum (p.a.) is very close to the targeted IRR of 10.0 per cent p.a. in our offering documents. In the context of the current financial crisis, we believe that the 9.12 per cent p.a. is very attractive.”
“We would also like to point out that at the time of this investment offering in 2004, the returns on investments in money market instruments and cash deposits were very low and this fund was presented as an attractive current income producing alternative to cash deposits, albeit of a longer maturity,” he added.
Al-Zeera continued: “In continuation of our strategy of providing our investors with attractive and diversified investment opportunities, the bank is in the advanced stages of structuring and offering to its sophisticated clientele base two investments.”
“The first to be offered is an investment opportunity in Saudi Arabia, comprising affordable housing units, commercial space and service amenities in the Western Province of Saudi Arabia.”
“The investment thesis is underpinned by the strong real estate market of Saudi Arabia which has demonstrated stability and resilience in the aftermath of the regional real estate crisis,” Al-Zeera said.
“The second offering would be an investment based in Bosnia & Herzegovina; a state-of-the-art real estate complex comprising a hotel tower, commercial office tower, a shopping centre and an entertainment center.”
“The rationale of making this investment is the acute scarcity of prime quality commercial and retail real estate space in the country plus the growing interest of the GCC investors to invest in Eastern European countries which offer untapped market potential and higher growth opportunities, relative to the saturated markets of Western Europe and the US,” Al-Zeera concluded.
Incorporated as a closed shareholding company in Bahrain in 2004, BPF acquired a total of five income generating properties at a total purchase price of $37.4 million, a statement said.
These purchases were leveraged at 50 per cent with the fund acquiring bank financing of $18.7 million from local banks, it added. – TradeArabia News Service