Islamic lender Kuwait Finance House (KFH) is tying up with United States apartment building owner UDR Inc to buy high income property in the United States to tap lower asset prices. "The joint venture will seek to acquire high income residential real estate in major cities in the United States with total investments of up to $450 million," Kuwait Finance said in a statement on Saturday.
Gulf Arab investors have been holding on to funds for months after the region was caught up in the global liquidity freeze late last year, but are now buying into Western real estate again to benefit from lower valuations. KFH said it was cautiously "optimistic" in the United States real estate market after making initial investments in the late 1990s, but pulling out prior to the financial crisis.
The joint venture will target "A" class assets with a minimum of $20 million that are less than seven years old. Abdulnasser Abdulmuhsen Al-Subeih, assistant general manager at KFH said the deal was targeting an internal return rate of 12 percent to 14 percent annually.
KFH said it would contribute up to 70 percent of the venture with UDR the remainder. Denver-based apartment building owner UDR, which reported a 13 percent increase in quarterly funds from operations on August 5, owns about 50,000 apartment homes in the United States, President Tom Toomey said in the statement.
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