08/17/2009 | By Allen Kenney
In another instance of REITs partnering with foreign investors, multifamily REIT UDR Inc. announced August 17 that it had entered into a $450 million joint venture agreement with Islamic banking firm Kuwait Finance House (KFH).
UDR said the fund was formed to target class "A" assets—those with a minimum value of $20 million that are less than 7 years old. Under the terms of the agreement, 70 percent of the initial $180 million equity stake will come from KFH, while UDR will contribute the remaining 30 percent.
Tom Toomey, UDR's president and CEO, said the partnership would help enable his company to capitalize on the growing number of opportunities resulting from the instability in the commercial real estate market.
"This venture will allow UDR to continue to expand its portfolio into high barrier to entry markets with judicious use of the company's capital and enhanced return potential through fees and promotes," Toomey said. "UDR is looking forward to investing with its new partner during these opportunistic times."
KFH specializes in financial products and services compliant with Islamic law, known as Shari'a. The firm has established its own independent commercial banks outside of Kuwait in Turkey, Malaysia, Bahrain, Saudi Arabia, UAE, Singapore and Australia. KFH also invests in regional and international banks around the world. Overall, KFH has a market capitalization of $10 Billion and total assets of $37 Billion.
Mohammad Sulaiman Al-Omar, KFH CEO, said the partnership was in line with the company's focus on acquiring "income-producing assets" that are part of the "real economy."