Gatehouse Bank, the sharia-compliant investment bank, has delivered a 37% return to investors following the sale of two student housing blocks.
The Gulf institution has sold Europa in Liverpool and Optima in Loughborough in a deal worth £34.3m.
It bought the two properties from Watkin Jones Group for £29.2m in March 2010 in its debut deal in the student accommodation sector, which it followed up with another deal in Oxford in October. Both buildings are let to the Watkin Jones Group for a further 18 years and both are 100% occupied.
The firm said the deal delivered an 18% initial rate of return to investors during the two-year holding period, and a return of 37% on exit.
Gatehouse’s real estate team looks for deals in the office, student and logistics sectors, which it then syndicates to investors in the Gulf, who aim for cash returns of 7-8%.
It puts in a small amount of equity and uses debt, typically at a loan-to-value ratio of 65%.
Stuart Jarvis, Gatehouse vice-president and head of student accommodation, said that despite the economic downturn, average rental growth rates in his sector had remained “extremely resilient” compared with traditional real estate investment in the past year.
