Today, Wednesday, Arabian Centers Company announced the completion of the signing of two agreements with Riyad Capital on Tuesday, relating to the establishment of two closed-end real estate investment funds compliant with Islamic Sharia law, for an amount of 6.2 billion riyals per the purpose of developing the Jewel of Riyadh and Jewel of Jeddah centers. They are among the major projects included in the company’s expansion plan in the cities of Riyadh and Jeddah.
The Arabian Centers stated, in a statement on “Saudi Tadawul” that the two funds have acquired the two lands they own in Riyadh and Jeddah in order to complete the development of the two shopping centers on them.
The first investment fund aims to complete the development of the Riyadh Jewel Center on a ‘area territorial area of 623.4 thousand square meters, located on King Khalid Road with the intersection of Al-Orouba Road in the Al-Raed district of Riyadh, with a market value of approximately 2.1 billion riyals as of December 31, 2021.
The other investment fund aims to complete the development of the Jewel of Jeddah Center on a ‘area land area of 170.7 thousand square meters, located on King Abdulaziz Road, intersection of Salam Road (Globe Roundabout) in the Muhammadiyah district of Jeddah, with a market value of approximately 1.2 billion riyals as of December 31, 2021.
He explained that the ownership of the shares of the two funds belongs entirely to the Arab centers, while Riyad Capital will take care of the management of the two investment funds, which are authorized by the Capital Market Authority.
Arabian Centers will retain the privilege of managing and operating the two shopping centers after the completion of their development, in compliance with the terms and conditions of the two funds. The two funds may also wish to exit the investment through various options, including offering as a specialty fund in real estate trades (REITs).
The financial impact of the company’s contribution to these two funds will appear in its financial statements beginning in the first fiscal quarter ending June 30, 2022.
He indicated that part of thearea of both lots will be used for the development of multipurpose facilities (hotels and offices) connected to both centers in a later stage. Which will add further value and importance to them.
The Riyadh Jewel Center stands out for its strategic location due to its proximity to a number of major Riyadh landmarks such as the Diplomatic District and Diriyah Gate, where construction work started from August 2021 and has now reached the 15%. The fund allocated to this project aims to accelerate the pace of completion in this center and ensure the completion of its development in time, given the availability of the necessary funding through the fund, which will be open during the first half of 2025 as planned.
The total cost of developing the Jewel of Riyadh Center was set at around 1.8 billion riyals. Its annual revenues are expected to exceed 400 million riyals after its opening and reaching the level of operational stability. Given the importance and particularity of the Jewel project of Riyadh, the leasing department of the company received letters of desire from tenants that exceeded 70% of the total rental areas present, which amount to approximately 148.4 thousand square meters. It is also expected that this center will add around 7,000 jobs after its operation.
As for the Jeddah Jewel Center, which currently has a completion rate of around 14%, it also stands out for its strategic location; It is close to King Abdulaziz International Airport and the Yacht Club located in thearea by Jeddah Corniche.
The other fund designated for this project aims to complete and ensure the completion of the development work in it in time, given the availability of the necessary funding for this through the fund, which will be open in the first half of 2024, as planned. The total cost of developing the Jewel of Jeddah Center was set at around 1.1 billion riyals. While its annual revenues are expected to exceed 270 million riyals after its opening and reaching the level of operational stability.
Given the importance and particularity of the Jewel project of Jeddah, the company’s leasing department received letters of desire from tenants that exceeded 70% of the downtown’s total rental space, which amounts to approximately 87,200 square meters. It is also expected to add around 5,000 jobs after its operation.
This step is part of the company’s overall strategy by adopting a dilution model of asset. Through this innovative model, the company will be in able to mitigate the risks associated with maintaining the entire operating assets on the company’s financial position, which will help improve financial and operational flexibility in more operational and operational way.
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