Jadwa REIT Saudi, Jadwa Al Haramain disclose details of SAR 500 mln investment in private real estate fund

Jadwa Investment announced further details about the investments of Jadwa REIT Saudi Fund and Jadwa REIT Al Haramain Fund in a SAR 500 million closed-ended Shariah-compliant private real estate investment fund.

According to separate bourse statements, the initial offering of the fund is closed and the acquisition of real estate properties is completed.

The objective of the special fund is to provide investors with a stable stream of income and capital appreciation in the medium and long-term through the acquisition of income-generating real estate assets in Saudi Arabia.

The fund has a term of 10 years, which can be extended for two additional periods of five years each. It targets a fund size of SAR 10 billion, while the initial closing successfully raised SAR 2.8 billion.

The acquisitions were funded through in-kind and cash subscriptions amounting to SAR 1.5 billion. The remainder was funded through bank loans worth SAR 1.3 billion from Saudi banks for a period of five years, provided that the full amount of the financing is to be paid at the end of the fifth year.

The initial portfolio of assets for the fund comprises income-generating properties as follows:

Al Nakhla Residential Compound - A private residential compound located in the Qurtubah district in Riyadh. The compound is built on an area of 259,797 square meters (sqm) and consists of 1,136 residential units of various sizes and types. The compound is managed by Al Nakhla City Co., which specializes in managing and operating closed residential compounds.

The compound is witnessing an incremental and continuous growth in performance and occupancy rates since its inception in 2015. The property was acquired at a purchase price of SAR 1.8 billion and an expected net return of 8.93%.

REIF Flats - A residential apartment complex located in Qurtubah district in Riyadh, and is in front of the Al Nakhla residential compound. The project is built on an area of 8,787.5 sqm and consists of 133 apartments. The property was acquired at a purchase price of SAR 87 million, and will be operated after the completion of its development.

Seven commercial, office and service towers in the Laysen Valley project - The property consists of five commercial towers and two service towers (parking) in the Laysen Valley project, located in the intersection of King Khaled road with Al Urubah Road in Riyadh. Laysen Valley project is a mixed-use complex, including commercial, office, hotel and residential towers. The net leasable area for the towers that were acquired by the fund spans 42,095 sqm, and was leased under new contracts to prime tenants. The property was acquired at a purchase price of SAR 650 million and an expected net return of 8.32%.

According to data compiled by Argaam, Jadwa REIT Saudi Fund invested SAR 450 million and Jadwa REIT Al Haramain Fund invested SAR 50 million in a closed-ended Shariah-compliant private real estate investment fund.

The fund manager expects the result of the transaction to be positive on both the funds’ financial performance in the first quarter of 2021, as the investment is expected to achieve during the next five years an average annual return of 10%.