Swicorp Wabel REIT to waive rents for eligible tenants; says negative impact on business

Swicorp, the fund manager of Swicorp Wabel REIT Fund, will support certain eligible tenants most affected by the disruption in business due to the Ministry of Municipality and Rural Affairs decision to close shopping centers until further notice to prevent the spread of the coronavirus.

The fund manager said in a bourse statement that the decision was taken as per the recommendation from the property manager who received several requests from real estate tenants to either reduce, reschedule or suspend due rents.

Considering the long-term interest of the unitholders, the fund’s board of directors decided to exempt eligible tenants in Al Makan Mall Hafr Al Batin, Al Makan Mall Riyadh, Al Makan Mall Tabuk, and Al Makan Mall AlDawadmi from paying rent for a period started March 17, 2020 until April 30, 2020 or the re-opening of the shopping centers.

However, the exemption did not include pharmacies and supermarkets or other ineligible tenants as they will remain open in accordance with the instructions and directives from the ministry.

Swicorp affirmed that it has done and will do everything to protect investors’ rights in-line with the regulations in Saudi Arabia, and judicial and legal principles relevant to such circumstances.

It is presently difficult to determine the full impact on the fund’s performance, as there is still uncertainty over the timeframe for the re-opening of malls, Swicorp noted, adding that the potential revenue loss can be up to 7.2% of annual rent for 1 month the malls are closed, negatively impacting the fund’s business.

Any further material developments will be revealed in due course, the company added.