QFB Kennedy Flats
Doha: Kennedy Flats is the second property Qatar First Bank (QFB) acquired in the USA on behalf of its investors when the bank turned around its business model and started its shariah-compliant real estate program, aiming at becoming a premier GCC player into the developed residential and commercial real estate markets.
The new fee income-based model promised to distribute for this property 8 percent per annum (net of all operational costs and fees and net of taxes) and gaining the trust of a few private investors QFB acquired a 99 percent stake in 1 Kennedy Flats, a 374-unit class A multifamily residential building in Connecticut in May 2018. The anticipated holding period for the US real estate building was 5 years.
However, real estate markets performed better than expected and QFB was able to sell shares in the property and will be returning capital and profit to investors earlier than anticipated.
Less than 3.5 years today, those investors who committed their trust and money with QFB are standing to make a commendable return on investment through the shariah compliant US real estate investment.
Head of Investments at QFB Alexandre Bernassau explained: “Each investor is set to receive its capital back plus capital gains after receiving 8 percent coupons each year from the investment reaching an IRR of 9 percent. A net IRR of 9 percent implies investors have received on average 9 percent net per annum post on exit".
Commenting on the sale, Ayman Zaidan, Deputy CEO and CIO of QFB said: “Today we have exited for our investors our first US shariah-compliant Real Estate acquisition only 3.5 years after the initial purchase, and QFB will be paying investors their capital plus 12 percent in annualised coupon for 2021 alone after distributing 8 percent per annum uninterrupted. All of this after costs and taxes and with the blessing of our Shariah board. It is impeccable but a perfect example of the type of US investments our bank offers to qualified investors”.
QFB Chairman Sheikh Faisal Thani Al Thani (left) and Abdulrahman Totonji, QFB CEO
Abdulrahman Totonji, CEO of QFB added: “What QFB has achieved over the last 18 months is admirable. It’s a testament to the team and it demonstrates that our new fee-income business model works. To date QFB has acquired more than 11 assets, has more than $1bn asset under management in US real estate and has raised more than $300m from clients. It deserves praise, but this is also just the beginning of QFB’s new journey. All this could not have happened without the blessing of God and then the efforts of the team.”
Sheikh Faisal bin Thani Al Thani, Chairman of QFB concluded: “This is the proof QFB’s Islamic real estate investment program works. I want to show our investors that we deliver on our promise: invest, receive 7 percent or more per annum, and returned capital with some gains within five years. Now we need to scale up this successful business model and as you may know we are increasing QFB’s share paid-up capital, with a larger balance sheet, QFB will be able to make more transactions and pursue more deals at the same time. QFB’s increase in share paid-up capital is allowing us to position QFB for its next growth phase.
"Same successful business model, but better, bigger, and faster. As QFB has been awarded “the Best Corporate and Investment Bank in Qatar” recently, I’m aiming for QFB to become the premier Shariah-Compliant investment bank and a dominant player in the GCC. I hope for Kennedy Flats’ excellent exit to be a catalyst for QFB. I want this sale to exemplify QFB’s credentials and to cement the trust our shareholders and investors have placed with me and the bank. This is just the beginning of QFB’s new journey," he added.
QFB is the first independent Shari’ah compliant bank authorised by the QFC Regulatory Authority (QFCRA) and a listed entity on the Qatar Stock Exchange (QSE).
