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03 October 2023

Arcapita offloads US real estate portfolio

By Staff

Bahrain-based Arcapita Bank and its affiliates have sold 29 senior living communities in the United States, post better returns the initial estimates, said a press statement.

The portfolio is being acquired by a joint venture between Sunrise Senior Living and CNL Lifestyle Properties for $630 million. Returns to investors will exceed the projections made at the outset of the investment seven years ago.

Arcapita acquired the portfolio in 2003. As a diversified portfolio of senior living communities spread over 12 US states, the investment was structured to deliver yield through the holding period, as well as a component of capital gain on disposal. Over 7 years, the investment has delivered an average yield of more than nine per cent per annum. Combined with the capital gain achieved at exit, the overall performance has been very strong, and in excess of target.

Abdulaziz Hamad Aljomaih, Arcapita's Vice Chairman, said: "As market conditions improve, Arcapita is beginning to unlock the considerable value stored within its global investment portfolio. Less than a month ago, the bank realised over $430 million in a $920 million IPO of industrial assets in Singapore, this latest divestment has come from the US and there are opportunities for further realisations emerging in other geographic regions."

"This sale represents a very successful outcome for Arcapita's investors, and is the result of sustained outperformance over the term of the investment," said Atif A. Abdulmalik, Chief Executive Officer of Arcapita.

"Since acquisition in 2003, the investment team first improved the financial structure, and then over the course of a challenging holding period, worked successfully to improve the operational efficiency of the individual communities within the portfolio. Close attention to maintain occupancy in difficult economic conditions has protected the annual yield, and efficiencies and improvements have contributed to the capital gain realised at exit," he said.

"Looking ahead, although investors remain cautious and discerning, our deal teams are reporting a considerably brighter market for new investments. We are confident that this will translate into a quickening deal flow, as a greater number of attractive opportunities become available," added Abdulmalik.