Mulkia REIT signs hedging agreement with Al Rajhi Bank to fix SAIBOR for SAR 100 mln financing

Logo Mulkia Gulf Real Estate REIT Fund

Mulkia Gulf Real Estate REIT Fund signed on April 5 a Shariah-compliant hedging agreement with Al Rajhi Bank to fix the benchmark rate (SAIBOR) for part of the SAR 600 million financing obtained earlier by the fund, fund manager Mulkia Investment Co. said in a statement to Tadawul.  

The SAIBOR margin was fixed at a rate of 3.71% annually until the date of repayment for SAR 100 million of the financing.   

Currently, the SAIBOR margin stands currently at approximately 2.43%, with the rest of the fund’s outstanding loans still subject to a variable margin.  

The change is expected to improve the fund's operational performance and protect its returns from interest rate volatility, through the stabilization of the SAIBOR margin rate for part of the financing until the end of the term, the statement noted.  

The finance maturity is seven years, ending on Dec. 28, 2027. Out of the SAR 600 million financing, SAR 577.39 million has been used to date, Mulkia Investment said.  

The fund manager hired Ehata Financial Co. as a licensed financial advisor specializing in this type of contracts in order to ensure that the fund receives the best conditions and prices based on current market conditions.   

The fund manager will continue to assess the possibility of executing a hedging contract for the remaining amounts of funding in the coming period, with any developments to be announced in due course, it added.  

In December 2020, Mulkia REIT signed a Shariah-compliant, seven-year financing agreement with Al Rajhi Bank worth SAR 600 million, Argaam earlier reported