MEFIC REIT terminates three lease contracts in Makkah, Riyadh

MEFIC REIT Fund approved to terminate lease agreements with the operators of Makkah-based Drnef Ajyad, Drnef Kuddai and Riyadh’s hospitality building to protect unit holders’ rights and ensure the highest receivables through leasing these assets to new operators, MEFIC Capital, the fund manager, said in a bourse statement.

The move came on the back of the current market conditions amid the COVID-19 outbreak and the related regulatory procedures, including the suspension of Umrah visits.

Though Makkah has witnessed these conditions since early March 2020, MEFIC REIT will continue to collect the rents of Drnef Ajyad and Drnef Kuddai until Sept. 27.

The fund manager added that it expects no negative financial impact on the fund’s revenue, as the abovementioned properties will be leased to other tenants, which aim to aggrandize rent returns over the coming period, in line with the fund’s objectives.

Moreover, the hospitality building is currently leased, and tenants will transfer their revenue directly to the fund, which will mitigate collection risks going forward, the statement added.