Investcorp Bank BSC, the first firm to funnel Gulf money into Western real estate, announced a $400 million US portfolio today. It assembled eight metropolitan properties across the Midwest and South from June through September, continuing a focus on residential investments.
The rental properties total more than 3.2 million square feet with about 3,400 units. Investcorp plans to renovate the properties, which have an average occupancy rate of about 96 percent. It typically underwrites five-year holding periods, but a spokeswoman said Investcorp will sell depending on market conditions. The new properties, in Las Vegas, Denver, Chicago, Atlanta and Dallas, fit with Investcorp’s strategy of investing in top 30 US markets with growth potential.
The announcement comes as Investcorp pushes further into real estate after the firm took a hard hit during the global financial crisis. In 2008, it managed $17.6 billion and, as of June 30, managed $10.6 billion in total assets, including $1.4 billion in real estate. Investcorp lost $7.8 million in its property investments after marking down some of its US assets’ value to zero, according to a June Bloomberg article. Investor demand has driven real estate investment, pushing the firm’s real estate assets under management up 10 percent in the 2015 fiscal year.
To get back on its feet, Investcorp spent more than $1 billion in the last year to acquire 34 US properties, according to data from Real Capital Analytics. Purchases ranged from a Residence Inn in Manhattan Beach, California to a multifamily rental property in Las Vegas.
“In an environment in which the US homeownership rate has dropped to a 50-year low, these acquisitions affirm our confidence in the attractiveness of investing in high-quality multifamily rental properties in major US markets,” said Herb Myers, Investcorp’s managing director of real estate investment, in a statement. “This fact, combined with the solid demographic and employment fundamentals in these areas, should assist in driving the upside potential of these investments.”
The firm is also weighing a real estate foray into Europe, a region it left in 1994 because of low returns, according to Bloomberg.