Regent Forges Major International Partnership

LOS ANGELES—Los Angeles-based Regent Properties has formed an international partnership with Bahrain Mumtalakat Holding Co., the investment arm of Kingdom of Bahrain. Mumtalakat will acquire an interest in a $250 million class-A office portfolio with properties in Phoenix and Dallas. This is Mumtalakat's, a Middle East-based investor, third US investment in two years, and is an example of its growing presence here.

“We have been looking for international investors as a way to diversify our investor base for some time,” Eric Fleiss, president of Regent Properties, tells GlobeSt.com. “We are delighted to have found an investor that shares our entrepreneurial spirit and appreciates our unique commercial real estate portfolio in markets that provide our investors with a very attractive risk/reward profile.”

All of the properties are near fully leased by strong credit tenants and have the ability for rent growth, but more importantly, they all hit Regent's specific investment criteria. “The driving philosophy behind all of our investments is our willingness to pursue a contrarian strategy by acquiring complex or distressed assets often in out-of-favor markets,” adds Fleiss. “In 2010, when we bought many of these properties in the Sunbelt many thought we were crazy, but we knew these were great buildings and we saw tremendous opportunity in these markets. Today these buildings enjoy a 90% occupancy rate, 65% of which are public/high credit tenants.”

Additionally, all of the properties are located in walkable markets with freeway access, and they have substantial creative office upgrades, like high ceilings and open floor plans that would appeal to a tech tenant. “This makes them very different from many investors' conceptions of office properties in the Sunbelt only being in barren, isolated and dated corporate parks,” says Fleiss. “The portfolio also demonstrates the substantial diversification of industries and tenant base in Phoenix and Dallas that are hard to find in many other markets in the US, which don't have such variation in tenancy. True diversification in tenant base is the best way to withstand an economic downturn, which is why it is so important for foreign investors.”

The properties were all purchased at a discount to replacement cost and discount to replacement rents. That isn't unusual for these markets, where the cap rate spreads are higher than historical highs prior to the financial crisis in gateway markets. As a result, Regent will continue to look for opportunities in these markets with a long-term business strategy. “Mumtalakat's investment will not alter our business plans for the assets,” adds Fleiss. “Our partnership believes there is still significant value to be captured as rents continue to increase in these markets and looks forward to continuing our work as a responsive and thoughtful landlord to these diverse set of businesses.”

LOS ANGELES—Los Angeles-based Regent Properties has formed an international partnership with Bahrain Mumtalakat Holding Co., the investment arm of Kingdom of Bahrain. Mumtalakat will acquire an interest in a $250 million class-A office portfolio with properties in Phoenix and Dallas. This is Mumtalakat's, a Middle East-based investor, third US investment in two years, and is an example of its growing presence here.

“We have been looking for international investors as a way to diversify our investor base for some time,” Eric Fleiss, president of Regent Properties, tells GlobeSt.com. “We are delighted to have found an investor that shares our entrepreneurial spirit and appreciates our unique commercial real estate portfolio in markets that provide our investors with a very attractive risk/reward profile.”

All of the properties are near fully leased by strong credit tenants and have the ability for rent growth, but more importantly, they all hit Regent's specific investment criteria. “The driving philosophy behind all of our investments is our willingness to pursue a contrarian strategy by acquiring complex or distressed assets often in out-of-favor markets,” adds Fleiss. “In 2010, when we bought many of these properties in the Sunbelt many thought we were crazy, but we knew these were great buildings and we saw tremendous opportunity in these markets. Today these buildings enjoy a 90% occupancy rate, 65% of which are public/high credit tenants.”

Additionally, all of the properties are located in walkable markets with freeway access, and they have substantial creative office upgrades, like high ceilings and open floor plans that would appeal to a tech tenant. “This makes them very different from many investors' conceptions of office properties in the Sunbelt only being in barren, isolated and dated corporate parks,” says Fleiss. “The portfolio also demonstrates the substantial diversification of industries and tenant base in Phoenix and Dallas that are hard to find in many other markets in the US, which don't have such variation in tenancy. True diversification in tenant base is the best way to withstand an economic downturn, which is why it is so important for foreign investors.”

The properties were all purchased at a discount to replacement cost and discount to replacement rents. That isn't unusual for these markets, where the cap rate spreads are higher than historical highs prior to the financial crisis in gateway markets. As a result, Regent will continue to look for opportunities in these markets with a long-term business strategy. “Mumtalakat's investment will not alter our business plans for the assets,” adds Fleiss. “Our partnership believes there is still significant value to be captured as rents continue to increase in these markets and looks forward to continuing our work as a responsive and thoughtful landlord to these diverse set of businesses.”