Markaz Sells US Real Estate Portfolio for US $245 million


The Deal Generated Gross IRR of 27% and a net amount distributable to investors of approximately US $ 70.5 million Kuwait Financial Centre S.A.K. “Markaz”, one of the Middle East’s leading investment banking and asset management companies, announced the sale of Markaz BBK US Retail Realty Investment Unit II, a portfolio of retail properties, for approximately US $245 million to a commingled fund. The selling of the portfolio delivered a gross IRR of 27%, a net IRR to end investors of approximately 20%, and a net amount distributable to investors of approximately US $ 70.5 million. Sami Shabshab, President of MAR-GULF added "The retail sector in the US had been one of the best performing sectors over the past five years with the NCREIF Retail Index (NPI) increasing at a CAGR of 17.4%, outperforming other real estate sectors. Investor activity in the sector increased dramatically with sales volumes increasing from US$ 12 billion in 2001 to US$ 52 billion in 2006. As a result, capitalization rates for the sector have compressed from 9.3% in 2001 to 6.7% by the end of 2006, allowing investors to capture significant capital gains". Markaz BBK US Retail Realty Investment Unit II was established in May 2003 when Markaz and BBK formed a partnership with Developers Diversified Realty (DDR), the largest retail REIT in the US, to acquire a portfolio of retail properties for $169 million. Markaz and BBK raised approximately $ 50 million in equity to acquire the portfolio. The portfolio is currently operating at approximately 99% occupancy and had been delivering a stable cash-on-cash yield of 12.12% since inception. It comprised of 7 community / power centres, located in 5 states, with a gross leaseable area of 1.5 million square feet. The major tenants included: Kohl's, Office Max, Ross, Circuit City, Publix and Petsmart Markaz has been active in the US real estate market since 1977 with the launching of its first syndicated transaction. Since 1988, Markaz has been conducting real estate transactions in the US through Mar-Gulf, the US real estate arm and wholly owned subsidiary of Markaz. Over the past twenty years, Markaz and Mar-Gulf have been involved in the ownership and development of real estate properties in a variety of segments (Industrial, Retail, Multifamily and Office) across the US. Markaz currently manages US$ 677 million of real estate assets in three real estate funds and several individual office properties. Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD1.21 billion as of March 31, 2007, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997; and has been awarded a BBB+ corporate rating by Capital Intelligence Ltd. -Ends- Photo Caption: Some of the properties owned by the fund