KUWAIT CITY, Jan 9: Gatehouse Bank, a subsidiary of Securities House in Kuwait, announced Monday its successful delivery of a real estate realized investment in the sale of VA Oceanside Clinic, a medical facility near San Deigo, California, USA, for $54.5 million.
The announcement was made at a press conference by Chairman of Gatehouse Bank, Fahed Boodai. Talking to the media, Boodai said the property was purchased by Gatehouse in June 2010 for $44.8 million without any bank finance and sold in Dec 2011 for $54.5 million. (source)
The announcement was made at a press conference by Chairman of Gatehouse Bank, Fahed Boodai. Talking to the media, Boodai said the property was purchased by Gatehouse in June 2010 for $44.8 million without any bank finance and sold in Dec 2011 for $54.5 million. (source)
The property, the chairman noted, is a specialized medical clinic leased to and operated by the US Department of Veteran Affairs for a period of 20 years, and has been generating an annual return of 7 percent that is distributed to shareholders on a monthly basis.
Boodai attributed this lucrative return in a short period of time to the bank’s calculative strategies of taking advantage of adverse situations. “We went into this deal in 2010 at a time when the financial crisis was dealing a blow to the world economy..
“As a scarce opportunity in a strong and growing asset class, the backing of the US Government underscored the credit quality and significantly limited operational risk, to create an attractive prospect for investors who sought a low risk product with strong returns.
“With a long lease to the US Government, the income stream from this hospital purchase was extremely robust and contributed to the overall capital value of the investment.
“We are proud of this deal and this is the first exit the bank is making since its inception.” Boodai said that the bank looks at its clients like partners and lays much store by their money.
Further the chairman observed that the bank has always shown the courage and foresight to invest while most conservative investors would tend to hold back. “We look at turning crises into opportunities, and this deal is an example of that.”
The bank, he said, is keen on expanding its customer base both in the Gulf and Europe by making more such judicious investments to the benefit of our clients.
The Oceanside Outpatient Clinic is a two-storey property spanning close to 80,000 sq feet of space.
Talking about the wisdom behind the investment, Boodai mentioned that the US Treasury bills in 2009 posted returns of 4.39 percent, while the property yielded 7 percent per year. “And the risks were similar. The bills of course are more liquid than real estate.”
“The return on the property throughout the holding period was 21 percent, with an Internal Rate of Return of 14 percent.”
Gatehouse Bank is a pioneering FSA regulated bank offering Shariah compliant wholesale banking services based in London, UK. Some of the other properties of Gatehouse include British Telecom Regional HQ purchased for 40.2 million pounds with a cash yield of 9.1 percent and IRR and a projected IRR of 10.8 percent.
The bank purchased InterContinental Hotels Group Global HQ, UK, in 2010, for 32.7 million pounds, and also owns Rollys-Royce Core Manufacturing & Logistics Facility obtained for 51.7 million pounds with a cash yield of 8 percent and IRR of 10 percent.
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