Dubai, United Arab Emirates — As part of its strategy focused on investments into debt structures, Arzan Wealth (DIFC) Limited (‘Arzan Wealth’), a Dubai-based consulting firm governed by the Dubai Financial Services Authority, has advised on an investment into a tax-efficient Jersey SPV that would offer an Amortizing Mezzanine loan to a US based Sponsor and backed by a portfolio of Rental Single-Family Homes in Baltimore, Maryland, USA. The structure has been created to comply with Shariah guidelines.
This portfolio being financed includes 491 total rental units all located in Baltimore, Maryland, USA. The properties currently have an average occupancy of 88% and are rented below market rates. The credit quality of the rental cash flows is greatly enhanced by the fact that approximately 61% of portfolio rent is supported by local and federal government programs which are aimed at keeping key workforce housing affordable.
The term of this mezzanine loan is three and a half years with a one-year extension option that is contingent on meeting strong minimum covenants. Distributions would be made to investors on a quarterly basis at an average rate of 11% p.a. during the loan term. With the final fixed payment, the net IRR is projected at ~13.3% net of fees, taxes, and expenses.
Arzan Wealth advised on the structuring of the mezzanine instrument and the due diligence of the underlying collateral assets and will continue its advisory role during the holding period of this investment.
Muhannad Abulhasan, CEO of Arzan Wealth said:
“Arzan Wealth's key objectives are to safeguard its clients' assets, offer stable and secure income, and broaden transaction variety in the key markets we operate in. To bring opportunities with a favorable risk-reward dynamic to our clients, Arzan Wealth is particularly focused on its debt platform this time, given the present elevated interest rate environment. The amortization component built into our transactions also helps our clients to recover their initial capital faster and more efficiently and re-invest it in new investment opportunities. By providing its clients with top-notch consultancy services, Arzan Wealth is committed to supporting them strategically, and carefully diversifying their international investments. The foundational asset you have, is your vision of where you want to be”.