17-10-2021
Qatar First Bank announced its successful exit from the Kennedy Apartments project, a residential building for families in the United States of America and is looking to achieve a return of more than 9% of the internal rate of return for investors since the acquisition of this building three and a half years ago.
The Kennedy Apartments project is the second property that Qatar First Bank acquired in the United States of America on behalf of its investors, when the bank transformed its business model and launched its Sharia-compliant real estate investment program, as part of its quest to become a major player in the GCC countries in the field of investment in the developed residential and commercial real estate. According to the new model based on fee income generation, it promised to distribute 8% annually on this property (after deducting all costs, operating fees and net taxes) and after gaining the confidence of a few private investors, Qatar First Bank acquired a 99% stake in Kennedy Apartments 1, a 374-unit Class A family apartment building in Connecticut as of May 2018. The expected holding period for this property in the United States was estimated at five years, but real estate markets performed better than expected as Qatar First Bank was able to sell stakes in the property, capital and profits will be returned to investors earlier than expected.
Less than three and a half years later, those investors who put their trust and money in Qatar First Bank have achieved returns on investment through Shariah-compliant real estate investment in the United States.
Mr. Alexander Bernassau, Head of Investments at Qatar First Bank announced: “Each investor is scheduled to recover his capital in addition to the related profits with an annual return of 8% from the date of participation with an internal rate of return of 9%. Achieving this rate means that investors have received an annual net rate of 9%, including profits on exit.”
Commenting on the sale, Mr. Ayman Zeidan, Executive Vice President and Chief Investment Officer at Qatar First Bank, said: “We have exited for the benefit of our investors from the first acquisition of Sharia-compliant real estate in the United States after only three and a half years from the initial purchase. QFB will pay its investors their capital in addition to an annual return of 12% for the year 2021 only, after distributing 8% annually without interruption. Payments will be made after deducting costs and taxes and with the blessing of the Bank's Sharia Supervisory Board. It is an impeccable example and a unique model of the kind of American investments that the Bank offers to qualified investors.”
Mr. Abdul Rahman Totonji, CEO of Qatar First Bank, added: “What Qatar First Bank has achieved over the past 18 months is impressive. It is a testament to our team and proof that our new business model built on generating fee income is rewarding. QFB has so far acquired more than 11 properties, and has under management over $1 billion in assets in the US real estate market. The bank has raised more than $300 million from clients. This is commendable, as this step is just the beginning of the new QFB journey. And all of this could not have been achieved without the success granted from Allah, and then the efforts of our work team.
For his part, Qatar First Bank Chairman, His Excellency Sheikh Faisal bin Thani Al Thani, commented: “This is evidence of the success of Qatar First Bank’s Islamic real estate investment program. I would like to assure our investors that we are delivering what we promised which is to get 7% or more annually, and return the capital with some profits within 5 years. Now we need to scale up this successful business model, and as you know when the paid-in capital of QFB increases and the balance sheet increases, QFB will be able to conduct more transactions and seek more operations at the same time. The increase in paid-up capital allows us to prepare Qatar First Bank for the next stage of growth with the same successful business model, but better, bigger and faster. As Qatar First Bank was recently awarded the Best Corporate and Investment Bank in Qatar award, I aim to become the premier Shari'a compliant investment bank and a dominant player in the GCC. We also hope that the successful exit of the Kennedy Apartments will act as a catalyst for the Bank and the sale is an example of its accomplishments in order to enhance the confidence placed by shareholders and investors in me and the Bank. It is the beginning of a new journey for Qatar First Bank.”