$325 million sought
to buy unsold properties
Novel investment scheme being proposed
Developer Namir Cortas and property broker and consultant Massaad Fares are launching the first fundraising round for an investment scheme, or ‘platform’, dedicated to buying unsold high-end properties in Beirut and its immediate surroundings.
The goal is to raise $325 million by promoting apartments ranging in price between $500,000 and $2 million, through Legacy Central, a company chaired by Fares and Cortas that will act as the investment manager.
“Legacy Central is a sales company with enough technical expertise, and it can reach the diaspora, who will buy the apartments,” said Wael El Zein, Chairman of Lucid Investment Bank.
Lucid Investment Bank, financial administrator and leading placement agent, recently received the Capital Markets Authority's approval to market ‘priority’ shares valued at $75 million, as well as $250 million in bonds for Legacy One (a holding company).
Priority shares are similar to preferred shares in addition to granting their holders voting rights.
The bonds primarily target local banks that had originally lent to developers.
“The bank will swap that loan with bonds. This way, the developer is relieved from the loan and the bank will have ‘good quality’ debt,” El Zein said.
Many developers in Greater Beirut have finished or have almost completed their projects. Due to slow sales, some of them are having difficulties paying back the bank loans they acquired to build their projects.
Bonds are divided into Series A with a 7.5 percent coupon and Series B with six percent coupon and profit sharing. Series A targets local banks and Series B foreign investors. Priority shares will be offered to local investors.
Around 250 units will be bought using the funds, according to Fares.
The two Chairmen hope that the first round will be completed by the end of the year.
Around half of the required amount has been pledged so far, according to Fares.
“We were authorized and regulated to raise $325 million but we are hoping to reach our $1 billion goal in future rounds,” Cortas said.
Cortas is the Chairman of the Real Estate Developers Association of Lebanon (REDAL). Fares is the Secretary of the Real Estate Syndicate of Lebanon (REAL).
The company targets the Diaspora in North America and Europe. It will offer new owners additional services such as tax and fee payment as well as maintenance. “Apartment buyers will automatically become members of the Concierge Club that offers these services,” Fares said.
The targeted Internal Rate of Return is over 15 percent, with a projected exit horizon of five years.
Erga Group will be the consultant that will make sure which apartments to select after conducting proper due diligence. Alem and Associates is the legal counsel.
In addition to Fares and Cortas, Legacy One’s board includes Alain Bassoul, and independent members, former minister Walid Daouk, and Pierre Gaspard.
Reported by Yassmine Alieh
Date Posted: Oct 22, 2018