The tiny Persian Gulf nation of Bahrain has been hungry for U.S. commercial real estate in recent years. As with most foreign players, however, Bahraini investors pulled back significantly after the COVID-19 pandemic struck.
Part of this retreat also may be due to economic turbulence at home. Located on a roughly 295-square-mile island off the southeast coast of Saudi Arabia, Bahrain depends on oil-refining and tourism revenues from its Middle Eastern neighbors. The nation’s refineries and resorts sustained a dual blow with the worldwide drop in oil prices and the pandemic-induced restrictions on travel, causing Bahrain’s economy to contract by 5.4% in 2020.
Nevertheless, Bahrainian investment companies were at least partial investors last year in the acquisition of 44 U.S. properties, which totaled $763.5 million in sales volume, Real Capital Analytics (RCA) reported. Although this figure was down 65% year over year, the country held its place as the 10th-largest foreign source of capital into the U.S. for the third year in a row, RCA reported.
Among key Bahrain-based investors in 2020, one company stood out: Investcorp. In September 2019, company chairman Mohammed bin Mahfoodh Saad Al-Ardhi told the Financial Times that Investcorp planned to increase its global assets by roughly one-third, with the goal of having $50 billion under management. The pandemic did not stand in the way of this plan. The private equity firm, which has an office in New York City, aggressively added to its global real estate empire and completed numerous deals in the U.S. after COVID-19 emerged in March 2020.
The company was particularly active in the industrial sector. In September 2020, Investcorp purchased a portfolio of 19 industrial properties for $130.7 million, RCA reported. A month later, Investcorp teamed with a U.S. partner to purchase eight industrial buildings totaling nearly one million square feet for $74.3 million in Chicago’s O’Hare submarket.
Also in October 2020, the company announced the $50.1 million purchase of the Victory Commerce Center, a 434,000-square-foot distribution warehouse built in 2019 in the Cleveland suburbs. After a series of deals, Investcorp announced this past October that its total holdings included more than 260 industrial buildings in the U.S. with an estimated value of about $2 billion.
Investcorp has looked outside of the industrial sector. Prior to the outbreak of COVID-19, it partnered with New York-based Brickman Associates in January 2020 on a $128 million deal to purchase a 184,643-square-foot office building located in the Back Bay neighborhood of Boston.
The company made waves last year in the multifamily sector when it bought a 420-unit complex near the University of North Florida in Jacksonville for $72.8 million. In January 2021, the company announced the $330 million acquisition of five multifamily properties totaling 1,854 units in the suburbs of Atlanta, Baltimore and Jacksonville. Investcorp also sold eight U.S. apartment properties valued at nearly $1 billion, just a few months after defaulting on a $65.1 million loan on a South Florida mall, according to a November 2020 report from The Real Deal.
Aside from Investcorp, Bahrain-based GFH Financial Group partnered with Arbor Lodging Partners in January 2020 to purchase 12 chain-hotel properties for $188.5 million. GFH has many U.S. holdings across the commercial real estate spectrum, including hotels, offices and senior housing. ●