Kuwait Finance House (KFH) has announced that it has sold its Swedish real estate portfolio to one of Acta's funds at approx. €400 million (SEK 3.9 billion). With this transaction KFH realized a net profit of approx. €67 million (KD 29.1 million), at an annual internal rate of return of 21%.
Distribution center Gothenburg Gullbergsvass.
"KFH had purchased the portfolio in August 2002 against approximately €320 million (SEK 3.1 billion)," says Ali Othman Al-Ghannam, International Real Estate Department Manager of Kuwait Finance House. "The portfolio consists of 12 properties, being mail logistics- and distribution centers with an area of approximately 360,000 m² in three main cities: Stockholm, Malmo, and Gothenburg. They are leased by 88% to the Swedish Post which is fully owned by the government of Sweden, and responsible for distributing the mail in Sweden."
"KFH has sold the portfolio due to the availability of good investment opportunity and favorable circumstances for the sale due to the sharp increase in real estate prices in Europe and North America." He continued, "The sale is in line with KFH's tendence to enter emerging markets that may achieve good returns in the future, depending on the good reading of global real estate market developments, capital flow movement, and growth potential."
Al-Ghannam referred to real estate funds operating in the US, such as the Health Care Fund, specialized in leasing health care properties for the elderly, of which the assets total USD 170 million, with annual return of 8%, in the form of monthly dividends, and Al-Mumayaz2 Fund, for industrial property, which invests by leasing warehouses, with assets totaling USD 250 million, and 8% annual return, distributed monthly. Lately, KFH has established the Asian Real Estate Fund, which is set to seize outstanding real estate investment opportunities in South East Asian markets, with assets totaling USD 102 million, and 9% annual return, in the form of quarterly dividend distribution.
"The sale of this portfolio with such profit confirms the feasibility of KFH's real estate investment in the international markets, as well as the successful strategic plans set to benefit from the market developments, and achieve the highest profit rates for depositors and investors." He explained, "In addition, it reflects the efficiency of the human resources contributing to the supervision and decision-making."
Leimdörfer acted as the sole financial adviser to KFH in this transaction.