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Venture Capital Bank (VCBank), an Islamic wholesale bank licensed by the Central Bank of Bahrain, announced today its successful exit from a real estate portfolio in the US multifamily residential sector. With a gross sale value of USD 104 million, this exit generated a return on investment (ROI) of 49 per cent; and provided investors with an internal rate of return (IRR) of 13 per cent over the four-year holding period.
The portfolio consists of two multifamily residential assets - Bridgewater and Preston Creek - in Atlanta, Georgia, USA. VCBank and its investors jointly acquired a 90 per cent stake in this portfolio in 2015. The acquisition was conducted in cooperation with a specialist US operator, who has extensive experience and expertise in the management and operation of multifamily residential assets.
Commenting on this exit, Mr. Abdullatif Janahi, Board Member and CEO of VCBank, said: ‘These properties have performed exceptionally well over the investment period, providing investors with quarterly dividends equating to an annual cash-on-cash return of 8.5 per cent. Following the acquisition, the properties underwent a comprehensive value-creation programme, which involved renovating its apartment units, expanding recreational amenities, and enhancing the properties curb appeal."
Occupying prime locations in Atlanta, the Bridgewater and Preston Creek properties comprise a total of 866 garden and townhouse-style apartments, augmented by extensive recreational amenities, in family-friendly gated communities. The city of Atlanta was selected due to its robust economic factors, which include playing host to the highest number of headquartered Fortune 500 companies after New York City, Houston, and Dallas. Atlanta has witnessed strong population and job growth throughout the investment period, enabling it to achieve higher rental growth and value appreciation than the US national average. The promising potential of the city was identified by VCBank during its pre-acquisition due diligence process.
VCBank's growing portfolio of investments in the US multifamily residential sector includes a second property in Atlanta - WestHaven at Vinings - which was acquired in 2016; plus the latest acquisition earlier this year of Glenbridge Manors in Cincinnati, Ohio.
According to Mr. Janahi: ‘Our successful value-accretive transactions to date in the US multifamily sector - comprising four properties acquisitions and two exits - underline the considerable knowledge and expertise that the Bank has developed in this space since 2015. They illustrate the excellent returns provided to shareholders and investors resulting from our strategic focus on attractive yielding real estate opportunities in the USA.
‘We are positive about the future outlook for the US multifamily sector due to its strong market fundamentals, together with its demonstrable resilience to economic recessions. The Bank is currently identifying further multifamily residential properties in major metropolitan areas that display robust economic growth and attractive potential for investment. Additionally, we are also reviewing similar potential investment opportunities in Europe,' he concluded.
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