x Abu Dhabi, UAEFriday 28 July 2017

Investcorp targets US property

Bahrain investment firm Investcorp is stepping up its property purchases in the United States.

Investcorp, based in Bahrain, is one of the top 10 largest foreign investors in US property. Above, the New York skyline. Daniel Acker / Bloomberg News
Investcorp, based in Bahrain, is one of the top 10 largest foreign investors in US property. Above, the New York skyline. Daniel Acker / Bloomberg News

Investcorp, based in Bahrain, is embarking on a US property buying spree.

The asset management firm yesterday announced the purchase of a 12,545 square metre shopping centre in Coral Springs, Florida. It was Investcorp's third commercial property deal in the US in recent weeks for the company, bringing its total value of purchases to US$120 million (Dh440.7m).

The deals represent a shift in strategy for Investcorp, which controls $12.2 billion in assets.

The firm focuses on US investments, but last year its activity centred on buying distressed debt and equity, not property, said a company spokesman.

The company invested a total of $69m in US property in its fiscal year last year - all in debt and equity funding. "We think it is the right time to buy" property assets, the spokesman said.

The firm did not disclose a purchase price for Florida's Coral Palm Plaza, a 25-year-old complex that was renovated in 2000. The centre is 94 per cent leased and located on a heavy-traffic retail and commercial corridor, the company said.

Investcorp's other recent purchases include the Princeton Forrestal Village, a 51,000 sq metre mixed-use development in Princeton, New Jersey, which includes a 294-room Westin Hotel, and the Shops at Tech Ridge, a 31,000 sq metre retail centre in Austin, Texas.

Investcorp now owns 24 shopping centres in Texas.

"Our last three acquisitions show how Investcorp acts decisively when we find an opportunity to invest in an attractively valued asset in one of the more stable sub-regions in the US," said Mazin al Khatib, the company's managing director.

Foreign investment in US property has been steadily picking up in the past year as investors look to take advantage of a steep decline in values after the global financial crisis.

Inter-regional investment in US property more than doubled last year, rising to $13.3bn from $5.6bn in 2009.

A recent survey of commercial investors by the Association of Foreign Investors in Real Estate found Washington DC and New York were the top targets for investment so far this year, surpassing London, the top choice last year.

But it is difficult for investors to find quality property for sale in the key markets, industry analysts say.

The gateway markets - New York and Washington - are "tapped out", leading investors to look in more markets for deals, according to Jones Lang LaSalle.

"Today the demand is increasing but there isn't enough quality product to buy in the top two core US markets," Steve Collins, the managing director of the Americas for Jones Lang LaSalle's international capital group, said in a report last month.

"So interest will extend to five markets in the next six months and into eight to 10 markets throughout the country by the end of the year."

Boston, Los Angeles, San Francisco, Chicago and Houston are among the cities likely to have an increase in foreign investment in the next year, Mr Collinspredicts.

Investcorp is one the top 10 largest foreign investors in US property. It typically focuses on commercial and office space, not residential, the company spokesman said.

Investcorp is looking for properties that are "performing well, have strong anchor tenants and are located in regions with favourable long-term demographic trends", Mr al Khatib said.

kbrass@thenational.ae