Gatehouse Bank acquires second U.S. Industrial Real Estate Portfolio
Deal brings total acquisitions in the US industrial sector to almost $350 million for 2012
Gatehouse Bank plc (Gatehouse), a Shariah compliant bank based in the City of London, has completed the acquisition of a diverse industrial portfolio of 19 operationally critical properties across the United States of America. The portfolio is stabilised at 100% occupancy, and the properties are leased to 16 tenants with an average remaining lease term of 14 years.
The USD 178 million portfolio was acquired in partnership with the Brennan Investment Group (BIG). The properties, located in 16 cities across the Midwest, Northeast, Southeast and Southwest regions of the U.S., will be held for approximately five years, offering investors a stable projected net annual cash yield as well as an attractive IRR upon exit from the investment.
Mr Fahed Boodai, Chairman of the Board of Directors at Gatehouse Bank, commented:
“This is an attractive investment opportunity with the potential to deliver an extremely robust and long term income stream of high net yields that appeal to our investors. This is the second industrial portfolio to be acquired by Gatehouse Bank in the U.S, bringing our total acquisitions in the sector to almost $350 million. The investment case for property in this sector remains strong, with credit to the diversity of tenants, industries and geographies associated with a portfolio purchase of this type.
Mr Boodai added: The first half of 2012 has seen investors transact on 99.6 million square feet of industrial real estate, up 42.3% compared to the same period last year. In particular, the U.S. industrial sector has historically been a favoured real estate sector by domestic and foreign capital, and such properties are one of the four major components of a core institutional real estate investment strategy. Historically, annual average returns are comparable to the Office and Multi-Family sectors, but with much less volatility, which makes it an increasingly appealing investment prospect.”
The portfolio of assets is spread across four different regions in the U.S, in 13 different States, covering 13 different Metropolitan Statistical Areas (MSAs). This model creates a diversification of risk, mitigating any issues posed by a downturn in any one particular market or sub-market.
Michael Brennan, Chairman and Managing Principal of the Brennan Investment Group, added:
“It is an attractive time to have acquired an industrial real estate portfolio of this calibre. Industrial space absorption in 2012 should exceed 2011 levels by 25%, with national occupancy rates back up to 92%. A stronger business environment drove the demand for industrial space in almost all industries, with all four census regions of the US-South, mid-West, West and East-reporting positive space absorption.”
The portfolio includes a number of inherent features of U.S. industrial real estate that make the sector appealing for investment. It offers stability and predictability of cash flow, low operational risk, low on-going capital requirements, diversity of investment and a low risk of oversupply.
Gatehouse Bank specialises in originating, structuring and funding investments in a Shariah compliant manner. To meet continuing investor demand for high quality property investments, Gatehouse provides leading advice and opportunities to investors across a diverse range of properties ranging from offices to the student and logistics sectors. This is the fifth US-based real estate investment offering presented to the market by Gatehouse Bank, and brings its global real estate portfolio to in excess of USD 1.50 billion.
Gatehouse Bank was assisted by Arch Street Capital Advisors and sister company GSH in this transaction.