QInvest and GCC investor launch â€śMagnolia Fundâ€ť to invest in US residential market
QInvest, Qatar's leading private investment group and one of the region’s most prominent Islamic financial institutions, announced today its collaboration with a GCC institutional investor to create and launch the Magnolia Real Estate Fund, LLC (“the Fund” or “the Magnolia Fund”) which completed its first acquisition of an outstanding asset in Colorado, US.
The acquisition was funded using an Ijarah property debt structure provided by Freddie Mac.
“Today’s acquisition is part of our strategy which proactively responds to demand from GCC-investors for access to US real estate market in a Shari'ah’a compliant manner. By focusing on the multifamily space, one of the fastest growing segments in the US real estate sector, we are confident that we can offer regional investors higher than average, targeted risk-adjusted returns with the benefits of a structured platform that ensures proper management of assets and diversification,” said Commenting on the acquisition, Tamim Hamad Al-Kawari, Chief Executive Officer of QInvest.
The Magnolia Fund is focused on investing in the fast-growing, income-generating multifamily residential market in the US, which is experiencing its seventh consecutive year of growth. The Fund is building a portfolio of assets in the sector and plans to make more acquisitions during 2017. The newly acquired asset is located in Fox Creek, Thornton, a northern suburb of Denver, Colorado in the US, and comprises of 287 units. The asset is projected to yield net cash in excess of eight per cent on annual basis and a net IRR in the range of 12-13 per cent.
“We are targeting value-add multifamily investments in strong submarkets within the US. Thornton boasts favourable demographics and significant growth over the past 20 years, combined with muted levels of new supply in the submarket. The targeted annual net cash yield and net IRR exceeds average returns usually achieved in real estate equity investments. In addition, structuring this investment within an Ijarah framework has been a deliberate effort on our part, leveraging our value-oriented investment approach, to offer a unique platform for GCC-based investors to enter a very exciting market,” said Craig Cowie, Head of Real Estate at QInvest.
The launch of this Fund further realises QInvest’s investment strategy in the multifamily real estate space and offers its investors an income-generating investment platform to access the sector. It follows from the announcement earlier this year that QInvest had made its first investment in the sector with the acquisition of a residential development in Charlotte, North Carolina, US.
“The newly acquired asset in Thornton, Denver presents an attractive opportunity to invest in a well-located asset at a discount to replacement cost in one of the most fundamentally sound rental markets in the US. GCC investors that wish to gain exposure to such exciting investment opportunities are best placed to direct their investments through a platform like the Magnolia Fund,” said David D. Kent, Managing Partner of the Magnolia Real Estate Management.
TruAmerica, a best-in-class multifamily manager, has co-invested in the asset and will oversee the day-to-day operations of the property.