Markaz: US Real Estate Fund Outperforms Benchmark - Timing the Market Key to Success


Markaz announced that Gulf Pacific America (“GPA”), the longest running fund managed by Markaz which invests in US real estate has outperformed the NCREIF Property Index (the relevant index for private real estate funds) by approximately 1.5% annually. Over the past eight years (marking a complete real estate cycle) Markaz has provided GPA’s investors a net IRR of 15%. The Fund continues to deliver strong investment returns for its investors while maintaining stable distributions. GPA has a broad investment mandate and has invested in all major real estate sectors, including industrial, multifamily, retail and office, as well as in development projects and land. Mr. Sami Shabshab, President of Mar-Gulf Management Company Inc. (Mar-Gulf), the US real estate arm and wholly owned subsidiary of Markaz, stated that "Since inception of the Fund in 1988, Markaz has managed GPA with a consistent investment philosophy: focusing not only on location, sector and market but more importantly on timing." Consistent with its focus on timing the market, Markaz believes that valuations of income producing real estate have increased significantly over the past few years and will no longer provide adequate returns. In order to capitalize on the high prevailing valuations of office properties in Irvine, California, Markaz liquidated GPA’s two properties in the city. As a result of several liquidations, GPA is currently highly liquid. The first property, Pacifica Court, was developed by Markaz in 1999, and was the winner of the prestigious Golden Nugget award for design. Pacifica Court was sold in May 2006, delivering an IRR of almost 22%. The second, Irvine Spectrum Office Plaza (ISOP) was acquired by GPA in 1996. At the time of acquisition, the property was performing poorly and suffered from low rent and high vacancy rate. Improvement in the market conditions and better property management resulted in a substantial improvement in rent and vacancy rate by the time the property was sold in December 2006. ISOP delivered an IRR of over 19% to GPA. Another event that led to a major cash inflow to GPA was the liquidation of the Markaz BBK US Retail Realty Investment Unit II, a fund managed by Markaz which focused on retail properties located in the US. As a major investor in this portfolio, GPA benefited from the sale which resulted in an IRR of approximately 27%. Markaz currently manages four real estate funds with over USD 600 million in assets, encompassing warehouses, office buildings, retail centers and apartment buildings. Its real estate track record goes back to 1978, with the launching of its first syndicated transaction in the US. 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. In 1998, Markaz Local & MENA Real estate department was established. In December 2003 Markaz established Amar Finance & Leasing, a real estate mortgage finance company. Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD1.4 billion as of September 30, 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 was recently awarded a BBB+ corporate rating by Capital Intelligence Ltd. -Ends- Photo Caption: Mr. Sami Shabshab, President of Mar-Gulf Management Company Inc.