Killam Properties Teams with Kuwait Finance on $450M Canadian M-F JV

April 12, 2010
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user Alaskan Dude

Reaching beyond North American borders, Halifax, N.S.-based Killam Properties Inc. has found a real estate investment partner with deep pockets. Killam has just formed a joint venture with Kuwait City-based Kuwait Finance House for the acquisition of as much as $450 million in multifamily assets across Canada.

The joint venture is being funded through a $25 million equity contribution from Killam and an additional $75 million from KFH. Acquisition activity will span a two-year period during which the joint venture will shell out approximately $250 million on multifamily property purchases.

For Killam, the partnership will allow the company to enhance its portfolio and, as asset and property manager for the joint venture, Killam will be able to pocket some cash, too. For KFH, the partnership has a broader significance, despite the fact that the Islamic bank is no stranger to the North American real estate market.

In August 2009, KFH formed a $450 million joint venture with Denver-based REIT UDR, Inc. for the acquisition of multifamily assets in the U.S. However, the deal with Killam paves the way for KFH to expand into new North American territory; the joint venture marks the bank’s first foray into the Canadian real estate market.

Canada has had its own recession, but economic issues have not impacted the country’s commercial real estate market as severely as economic woes have pummeled the industry in the U.S. The 2009 average apartment vacancy rate in the U.S. climbed to 7.4 percent, while the number reached a drastically lower 3.1 percent in Canada, according to reports by commercial real estate services firm CB Richard Ellis Group Inc. “We believe the Canadian market offers exceptional value, and we intend to make further investments in the country going forward,” Abdul Naser A. Al-Subaih, Assistant General Manager for the Investment Sector of KFH, said in a prepared statement.