By Ron Chen, Bureau Chief, Asia

A Dubai-based consulting firm governed by the Dubai Financial Services Authority, Arzan Wealth (DIFC) Limited has announced that it has advised on a successful exit of a mezzanine lending transaction in Baltimore, Maryland, USA, achieving returns that exceeded expectations.

The investment was entered into in October 2020 as part of Arzan Wealth’s Debt platform, utilizing the Real Estate Index Linked Securities (REILS) structure, which was designed as a 6-year amortizing mezzanine loan to a portfolio of 272 single family rental (SFR) homes in Baltimore, Maryland, USA. In December 2021, the Sponsor acquired a second portfolio of 217 stabilized residential units in Baltimore, thus adding more collateral to the loan and reducing the risk profile of the investment.

The transaction was structured with an expected net 8.25 per cent coupon, payable quarterly, plus regular amortization.  Based on the level of inflation we expected a net IRR of between 10 per cent and 13 per cent at underwriting, and we are pleased to announce that upon the recent exit of this loan, the actual IRR achieved and delivered to investors was 13.1 per cent, with a net return multiple of 1.3x. 

CEO of Arzan Wealth Muhannad Abulhasan, said: “The Arzan Wealth team is extremely pleased to be able to exit the Baltimore mezzanine loan deal and to provide our investors with these excellent results. Arzan Wealth will continue to diversify further in established international markets and concentrate on offering advice on future debt projects and other real estate investment possibilities that generate a stable and consistent income stream with the lowest possible risk profile. Arzan Wealth will always be a steady and trustworthy partner to our clients, and we appreciate their continued faith in Arzan Wealth.”