Islamic finance firm Kuwait Finance House (KFH) has sold the Baitak Tower in the center of Kuwait City for KWD 50mn (US 174.5mn) to National Real Estate Portfolio managed by Kuwait Financial Center (Markaz), Al Qabas daily reported. KFH will gain a net profit of KWD 26mn from the sale of Baitak Tower.
Markaz is financing the deal through the KWD 250mn fund it manages on behalf of Kuwait’s General Authority for Investment. Baitak Tower, built less than 5 years ago, is located in the commercial heart of Kuwait City. It has office spaces on top of commercial shopping areas all of which are 100% occupied by prime tenants. The investment’s internal rate of return is between 6-7%.
The sale will provide a much needed boost to the recapitalisation of KFH, which has been undergoing debt restructuring. This week Moody’s downgraded KFH’s long-term rating by one notch to A1 and baseline credit assessment and bank financing strength rating by two notches to ba1 and D+, respectively, while maintaining a negative outlook. The credit ratings agency expressed concern over KFH’s concentration of asset in the real estate sector.
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