The international property arm of US insurance giant saw a 5% drop in net asset value in the fourth quarter of 2007 due to its highly leveraged position on one investment.

Frankfurt-listed AIG International Real Estate blamed the drop in NAV on the high amount of leverage it had used to finance the purchase of its 33% stake in the €100m (£80m) Tasman portfolio which consists of 99 office buildings across the Netherlands.

Dubai expansion

It said that if it had not been for the leverage used on this purchase the division’s NAV would have increased 7% across the quarter and 14% across the year, as other stakes taken in commercial and residential properties in the US, Asia and Europe had performed well. NAV for 2007 increased 1% to €43.48 a share.

The company also revealed this week that it had made its first investment in Dubai, paying €2m (£1.6m) for a stake in the Emaar Business Park development scheme.