Riyad REIT announced the terms and conditions of its planned capital increase to SAR 1.633 billion from a current SAR 500 million, after obtaining regulatory approval.

 

In May 2017, the fund’s board of directors recommended the capital hike to fund future asset acquisitions. The capital increase will be effected by a rights issue.

 

The fund will sell 121.7 million units at a target price of SAR 9.31 per unit -- 67.99 million units for in-kind subscriptions, and 53.71 million units for cash subscriptions.

 

REIT Details

Fund name

Riyad REIT fund

Investment objectives

The Fund invests in developed, income-generating real estate projects.

Capital

SAR 500 mln

Total fund size*

SAR 690 mln

Units On Offer

121.7 mln

Target Price/Unit

SAR 9.31

Units for Cash Subscriptions

53.71 mln

Minimum Subscription

50 units (SAR 465.5)

Maximum Subscription

3 mln units (SAR 27.93 mln)

Units for in-kind subscriptions

67.99 mln units

Target Capital

SAR 1.633 bln

Target Fund Size

SAR 1.753 bln

Receiving  Entities

Riyad Capital, Riyad Bank, Al Rajhi, NCB and Banque Saudi Fransi

*Fund Size refers to total unit-holder subscriptions plus total loans secured by the Fund.

 

The new units will be offered to potential investors as per the details below:

 

Details of the Capital Increase

Subscription Type

Number of Units (M)

Value

(SAR mln)

% of Total Capital Increase

% of Total Capital Post Increase

In-kind subscriptions

67.99

633.0

55.9 %

38.8 %

Real estate developer Burj Rafal (Kempinski Hotel)

35.17

327.4

28.9 %

20.0 %

Mohammed Ayman Dehlwi Sons (Omnia Center)

18.05

168.0

14.8 %

10.3 %

Higher Education Fund (Electronic University)

14.78

137.6

12.1 %

8.4 %

Cash Subscriptions

53.71

500.0

41.1 %

30.6 %

Target Increase

121.70

1,133.0

100 %

69.4 %

Total Capital Post the Increase

171.70

1,633.0

--

100%

 

The fund currently owns eight developed properties and one building under construction, geographically diversified across Riyadh, Dammam, Jeddah and Khobar.

 

The new acquisitions, that will be funded by the capital increase, include the Saudi Electronic University building in Riyadh, Omnia Center in Jeddah, and Kempinski Riyadh Hotel.

 

Target Acquisitions

Property

Location

Land Area (M²)

Valuation

(SAR mln)

Average Valuation

(SAR mln)

Target net rent and operating income of 2018 (SAR mln)

Saudi Electronic University

Riyadh

14,192

137.65

145.22

11.97

Kempinski Hotel

Riyadh

21,106

677.00

685.31

49.30

Omnia Center

Jeddah

10,000

168.00

199.04

14.30

 

The fund's target annual income for 2018 is as follows:

 

Constituent Real Estates Post Capital Increase (2018)

Property

Gross Income (%)

Net Income (%)

Al Izdhar Commercial Centre

9.27 %

8.69 %

Vivienda Hotel

8.54 %

8.54 %

Fursan Tower

9.35 %

8.67 %

Al Motamayz Center

8.46 %

7.95 %

The Residence

14.19 %

8.07 %

Beach Breeze Tower

8.72 %

8.11 %

Ascott Tahliya Tower- Jeddah

7.70 %

7.70 %

Saudi Electronic University

8.72 %

8.70 %

Kempinski Hotel

21.33 %

7.28 %

Omnia Center

9.11 %

8.51  %

Ascott Tower- Al Khobar Corniche (under construction)

4.74 %

2.96 %

 

The fund targets a net income of SAR 128.17 million in 2018 compared to SAR 35.96 million last year.

 

Fund Details Post Capital Increase

 

2017

2018

2019

Fund's Capital (Target)

500

1,633

1,633

Murabaha Facilities*

190

120

120

Fund Size

690

1,753

1,753

Total Leasing Income

37.85

237.36

290.41

Net Income (Target)

35.96

128.17

152.43

*The fund manager sourced short-term murabaha facilities to finance new acquisitions and projects under construction. The fund manager may elect to pay part of all of outstanding facilities from the capital increase proceeds.

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