By Andy Sambidge
US unit of Kuwait Financial Centre sets up $100m fund, expects 15% returns.
A unit of a Kuwait-based investment banking and asset management company has launched a $100m fund to invest in US non-performing mortgages.
Kuwait Financial Centre (Markaz) said non-performing and sub-performing commercial mortgages would be targeted with annual returns of more than 15 percent expected, KUNA News Agency reported.
Sami Shabshab, chairman of MarGulf Management Inc, the wholly owned US real estate investments arm of Markaz, said: "With over $1.2 trillion of commercial real estate mortgages maturing in the next four years, lenders will continue to face challenges.
"Sellers are, therefore, liquidating these distressed loans at large discounts to underlying collateral values. This is creating a unique opportunity to generate significant risk-adjusted returns by investing in sub-performing and non-performing first lien whole-loan commercial mortgages."
He said the fund aimed to acquire loans from distressed sellers at "significant discounts".
MarGulf acquired two loans in the second quarter of 2010, collateralised by properties in California, and has already received several offers from potential buyers, he added.
The target size of the Markaz US distressed debt programme is $100m, of which Markaz is seeding $10m in proprietary funds.