2021 was a year of defensive recovery for economies around the world. For GFH, it was more of a year of active ambition and pragmatism. Despite the continued economic headwinds and market turbulence, we remained steadfast in our efforts to grow and deliver strong returns and value for our shareholders by building a portfolio of quality, diverse assets.
We completed no fewer than 9 investment deals in 2021, around US$ 1.5 billion in value. In the process, GFH generated US$ 399 million in gross revenues and more than US$ 92 million of consolidated net profits for the year. We believe that these achievements reflect our position as one of the most resilient financial groups in the GCC region.
Real estate
Many of our headline investments last year were in the yielding real estate sector. The largest was a US$ 3 billion transaction for 19 logistics assets leased to Amazon. Spread across 15 states in the US, the portfolio totals more than 11 million square feet of prime space and positions. Further capitalising on the growing need for high-quality logistics assets within supply chains, we took on a warehousing portfolio of built-to-suit facilities leased to FedEx and General Mills valued at US$ 730 million and a distribution facility in Ohio leased to FedEx in a transaction valued at US$ 100 million. We also signed up a mission-critical distribution facility in Illinois, leased to leading tyre brand Michelin valued at US$ 137 million.
In the expanding residential sector we secured two multifamily deals worth around US$ 280 million to take on favourable demographics and shifting trends in the US property market. In addition, we acquired a US$ 115 million student housing portfolio affiliated to top rated universities located in the US.
In the resilient medical offices sector supported by the increased spending on health care and the ageing population of the US, we acquired a portfolio of Medical Office Buildings comprising 11 assets across 7 states in the US in a transaction valued at US$ 440 million.
Our focus on the multifamily sector, medical offices and logistics distribution hubs is aligned to market shifts and our strategy for recession-proof assets. Ageing populations are looking towards multifamily residences as ideal solutions to urban living, and the global e-commerce boom shows no signs of slowing down, with demand for warehousing and distribution assets continuing to outnumber current supply. Meanwhile, our student housing portfolio sees us tapping into a timely opportunity to leverage scarce student housing supplies in the midst of growing student enrolment numbers and COVID-19 economic recovery.
Spotlight on Real Estate Investments
Technology
In the technology space, we made several important moves. We successfully closed our Global Tech Opportunities II offering, comprising investments in a portfolio of pre-IPO stage, high-growth companies that specialise in next-gen technologies. The companies operate in some of the most disruptive tech sub-sectors that are benefiting from secular trends in digital adoption – such as cloud and enterprise software, cybersecurity, fintech, mental health, e-commerce, and mobile gaming. Our investments in market leaders and niche spaces align with prevailing interests in global digitalisation. For example, our various investments in Cloud RPA providers are reflective of a technology that is quickly becoming the fastest growing vertical in enterprise software, whereas the pandemic has sparked a boom in both mobile gaming and e-commerce – two verticals also included within our offering.
Education
The pandemic has had a marked impact on the education sector over the last two years with the global integration of remote and hybrid learning, but the sector remains stable and holds bright opportunities. Britus Education, our education investment platform, acquired The British International School of Tunis (BIST), further expanding the group’s presence in the Tunisian market. The transaction gives Britus Education a 70% stake in the thriving school and will support plans for the establishment of other branches of BIST in major cities in Tunis and in Tunis Bay in the near future. Britus Education further expanded its footprint in Saudi Arabia with the opening of a new K-12 international school in Al Olaya in Riyadh, the Britus International School – Olaya. By continually pursuing opportunities in the MENA region’s education sector that align with its investment strategy, Britus Education laid the groundwork in 2021 to strengthen its regional footprint in the years to come. As a result, Britus Education is in the process of entering the Egypt, Kuwait and Oman markets during 2022 while further expanding its presence in Saudi Arabia.
Britus Education also built on its educational offerings through acquiring management rights for the Bahrain-based Athena School for Special Education – now rebranded as Britus International School – Special Education. Furthermore, the investment arm launched BritusED, a cross-cultural educational forum meant to harness global pedagogies to best address the needs of today’s students.
Healthcare
With certain segments of the healthcare market also presenting significant opportunities in the wake of the pandemic, we acquired a US$ 200 million portfolio of 11 US medical offices spread across seven states. As hospital admissions reached critical mass during the pandemic, outpatient care emerged as a vital but previously undervalued component of modern-day healthcare systems, showing steady growth and resilience. The Sharia-compliant deal brought the value of our US healthcare portfolio to over US$ 400 million.
We also secured a 60% stake in the UAE’s leading provider of multi-specialty healthcare, Trust Vision Investment LLC, in a deal value exceeding US$ 100 million. Operating 19 clinics across the UAE, the provider is positioned for steady growth due to rising demand for multi-specialty healthcare services amid changing demographics in the region. With healthcare a growing high priority investment area for the UAE Government, and the country’s rollout of its mandatory health insurance scheme, Trust Vision benefits from a robust regulatory infrastructure and is well placed to further expand its offerings.
Both within the United States and in the UAE, our strategy of honing in on medical specialties with large growth potential, and developing clinics and care centers near anchor institutions, is proving to be successful.
Spotlight on Private Equity Investments
Exits
We also made several successful exits at opportune moments throughout the last 12 months. In the US, we exited our industrial portfolio after a five-year term, delivering a 40% return to investors over the holding period as the demand for US industrial space surged during the pandemic amid a rush among retailers and manufacturers to replenish depleted inventories. We also completed the early exit of an Amazon-leased warehouse in Spain, delivering target yields in less than a year after the initial investment. In the UK, our subsidiary, Roebuck Asset Management, sold a prime logistics park for US$ 123 million, having acquired it for US$ 84 million in 2017.
In the US, we successfully completed the early exit of our tech offices portfolio, which was acquired in 2019. Proceeds from the exit delivered to investors an approximate return of more than 50% over the holding period.
The last two years have demonstrated the importance of opportunism. As well as leaping on trends that present themselves and investing in areas such as healthcare and technology, we have also been opportunistic in our exits. The foundation of a solid exit strategy is built on the back of an equally sound acquisition strategy. Our dedication to researching and selecting promising investments has allowed us to exit some portfolios much earlier than planned as our teams worked to maximise returns for shareholders, as part of our strategy to remain nimble and thrive in the face of change.
“The last two years have demonstrated the importance of opportunism. As well as leaping on trends that present themselves and investing in areas such as healthcare and technology, we have also been opportunistic in our exits.”
In the US, we successfully completed the early exit of our tech offices portfolio, which was acquired in 2019. Proceeds from the exit delivered to investors an approximate return of more than 50% over the holding period.
The last two years have demonstrated the importance of opportunism. As well as leaping on trends that present themselves and investing in areas such as healthcare and technology, we have also been opportunistic in our exits. The foundation of a solid exit strategy is built on the back of an equally sound acquisition strategy. Our dedication to researching and selecting promising investments has allowed us to exit some portfolios much earlier than planned as our teams worked to maximise returns for shareholders, as part of our strategy to remain nimble and thrive in the face of change.
GFH Properties
GFH Properties, the Group’s specialist real estate development arm, marked the launch of Harbour Row, the crowning jewel of its real estate portfolio. The US$ 145 million project on Bahrain’s waterfront comprises a mix of luxury residential high-rises alongside a thriving business, retail, and leisure hub.
GFH Properties also backed a significant development in Bahrain’s real estate sector – the decision to launch Cityscape Bahrain in 2022, an offshoot of Cityscape Global, an annual international property and real estate investment event that connects industry professionals and investors.
Recently, GFH Properties rebranded as Infracorp, as part of our efforts to drive the development of sustainable social infrastructure and positively impact the communities where our assets lie. Infracorp will specialise in investments focusing on accelerating growth and developing global sustainable infrastructure assets, and will manage a portfolio of almost US$ 3 billion.
Awards & Accolades
Aside from acquisitions and exits, we achieved several notable milestones in 2021, marking GFH out as a top financial group in Bahrain and the wider region. We were named the best Islamic investment bank in the Middle East and Africa region at the MEA Finance Awards, where we also won Best Sukuk Deal of the Year. Meanwhile, Harbour Heights was named Bahrain’s best residential high-rise development at the Africa & Arabia Property Awards.
The Year Ahead
In 2021, GFH was both opportunistic and defensive. Our strategy once again proved to be among the most resilient of financial groups in the region. We now have around US$ 15 billion of assets and assets under management and 2022 bodes well for the Group and its shareholders. Our pipeline is aligned with pandemic-driven trends such as digital acceleration, e-commerce growth, a shift towards outpatient care and increased government spending on education, hence we are well placed to capitalise on blossoming opportunities around the globe. We remain committed to researching, identifying, and enabling advancements across our sectors to deliver the best value for our shareholders, all the while creating a positive, lasting impact in the communities which we serve.
On behalf of the Group, I extend my sincere thanks to GFH’s shareholders and stakeholders, our local and international partners, and of course the valued communities in which our valued assets sit.
Fast Facts
US$399mn
gross revenues
US$92mn
consolidated profits in 2021 (87% increase on 2020)
c. US$1.5bn
new investments
US$60mn
total dividend
9
investment deals
