Al Rajhi REIT receives notice to terminate 2 lease contracts

Al Rajhi Capital, the fund manager of Al Rajhi REIT Fund, received a notice to terminate the lease contracts for Blue Tower Building in Al Khobar and Luluah warehouse in Riyadh, two of Al Rajhi REIT Fund’s properties.

The fund manager said in a bourse filing on Sunday this is due to a force majeure, which is the COVID-19 outbreak in the Kingdom.

Presently, Blue Tower Building, Al Khobar and Luluah warehouse, Riyadh are leased on triple net basis (wherein the tenant is obliged to pay all the expenses of the property including insurance and maintenance) to Rawaj Real Estate Co. at an annual rent of SAR 18.3 million and SAR 13.6 million, respectively.

The fund manager added that both assets contribute SAR 31.9 million or 19.4% of total income of the fund.

The fund manager is studying the validity of this email notice, and added that the lessee does not have right to terminate these contracts.

Al Rajhi Capital will take all possible steps, including legal action, to protect the interest of unit holders.

The fund manager said it cannot determine the financial impact on fund’s dividend at present, noting that it will disclose any developments in due course.