IIB acquires $98 million real estate in Munich

IIB acquires $98 million real estate in Munich

MANAMA: Bahrain-based Inter- national Investment Bank (IIB) announced its acquisition of a high-quality portfolio of commercial real estate properties in Munich, Germany, valued at $98 million.

IIB is taking a 95 per cent stake in the portfolio, which is comprised of three commercial properties, which are rented to a blue-chip German company.

They are strategically located three kilometres from Munich city centre, where the bank and its co-investors can effectively leverage continued growth and strong demand for office space in the German commercial property sector - particularly in this key commercial and production hub.

In making the acquisition, IIB has again partnered with a renowned asset manager with extensive experience in the structuring and management of Sharia-compliant real-estate investments in Europe, and who holds the remaining 5pc share ownership in the portfolio, the bank said.

The investment, which marks IIB's fourth European investment in total and its third real estate acquisition in Europe, is aimed at providing the bank's GCC-based investors with access to the buoyant German commercial property market.

IIB said that the property market continues to expand at a rapid rate and is expected to deliver opportunities for both healthy returns as well as diversification.

"We are pleased to offer yet another compelling opportunity to our clients through our investment in the European property market," said IIB chief executive officer Aabed Al Zeera.

"We have already developed a strong track record for investing in highly profitable real estate transactions both in Europe and in the GCC and we believe the commercial real estate sector in Germany offers attractive growth potential.

"Working together again with our partners, an established name in European asset management, we are confident that we are well-positioned to benefit from strong market dynamics that exist today in Germany and which are expected to continue for some time to come.

"Munich is one of the largest cities in Germany and a manufacturing capital in Europe, and studies have found it to be the city with the best economic prospects in Germany as it witnessed the all-time highest transaction volume last year with a growth of 128pc over 2005.

"The letting market in 2006 has grown by a substantial 13pc over the previous year. This clearly reflects strong demand from tenants and we believe that those properties included in our portfolio will allow us to realise maximum gains from these positive trends.

"IIB, through our strong global network of contacts, continues to gain access to high-quality investments, which are capable of providing superior risk adjusted returns to our investors.

"Selecting the right deals and working with the right partners to maximise value is critical to the ongoing success of IIB and to the enhanced value we continue to provide to our GCC-based investors and shareholders on an ongoing basis.

"Real estate continues to be an attractive asset class and we are well placed to offer a broad and well balanced portfolio of properties - both from within this region and other strong performing markets."

The projected Internal Rate of Return (IRR) on the investment is in excess of 10.12pc p.a. over an investment horizon of five years, with a cash yield of 7pc p.a.

IIB's executive director Mohamed Hadi Mejai said that the bank continues to seek out new and innovative ways to deliver real value for its clients through the sourcing and development of high quality Shari'ah-compliant products.

"We have had much success to date in offering numerous opportunities in diverse asset classes, industry sectors and countries, and we believe that our latest investment in the German property sector reflects the quality, strength and diversity of the investment avenues which we open up to our investors," he said.

"Investments in real estate in a variety of countries and sectors meet our clients' demands for investing in tangible assets with strong growth potential and opportunities for appreciation.

"The success of our previous entry into the French commercial property market last year has so far proved to have been very good, and we are confident that we are also investing in the German market at the right stage of the property cycle."