Arzan Wealth Limited, a Dubai-based advisory firm regulated by the Dubai Financial Services Authority, is pleased to announce that it has advised on a mezzanine lending opportunity in the USA, as part of the launch of a new strategy focusing on investments into debt structures.
This first investment utilizes the innovative Property Development Certificate instrument, which is an amortizing mezzanine loan, and has been structured in a Sharia-compliant manner.
This first Property Development Certificate finances the acquisition of a portfolio comprising three multifamily properties consisting of 399 apartments located in Jackson, Mississippi, USA.
The properties currently have an average occupancy of over 90%, and are rented just below market rates. The borrower is a specialist multifamily asset management company that is providing the equity to acquire the Portfolio, and has previously improved operations of similar assets in the same regional market.
The current Property Development Certificate transaction is structured with a 9% coupon, payable quarterly, and with an escalating quarterly amortization schedule.
It is expected that at exit, the investors advised by Arzan Wealth will have received more than 95% of their investment through quarterly payments alone, and will receive an additional payment at the end of the instrument’s term that is linked to the Mississippi Apartment MVI index.
The total IRR of the Property Development Certificate is structured with a floor of 9% and a ceiling of 14%, depending on the performance of the index. This index has grown by around 50% in the last 6 years period.
Arzan Wealth acted as the Strategic Advisor on the structuring of the Property Development Certificate instrument and the due diligence of the underlying assets, and will continue its advisory role during the holding period of this investment.