Alinma Makkah Fund to buy hotels, malls for SAR 6 bln

12/09/2017 Argaam

Alinma Makkah Fund is set to buy six hotel towers and two commercial malls in the first phase of the Jabal Omar development project in Makkah, at a total value of SAR 6 billion. 

 

Details

Fund

Alinma Makkah Fund, a closed Islamic income-generating real estate fund.

Investment purposes

Generating periodic rent income for unit holders through acquiring developed properties in hotel and hospitality sector and commercial malls within the first stage of Jabal Omar project

Fund size

SAR 6.09 bln

Unit price

SAR 10

Minimum Subscription Limit

SAR 10,000

Maximum Subscription Limit

SAR 5 bln

Fund Manager

Alinma Investment

Fund duration

Five years, can be extended for a period of one year unless terminated in accordance with the terms and conditions.

Cash Dividend

Semi-annual cash dividend for unit holders of not less than 90% of the fund’s net profit.

 

The fund will also acquire three five-star hotels and two commercial malls in Al Khalil, sources told Argaam.

 

The purchase agreement stipulates that the buyer will lease the purchased properties back to the seller (Jabal Omar Development Co.) for a period of 10 years at SAR 540 million per year.

 

Property purchase agreement

Agreement date

March 21, 2017

Purchase price

SAR 6 bln

Type of agreement

Buy and sell agreement with option condition

Properties

Hilton Suites Makkah, Hyatt Regency Hotel, Conrad Makkah Hotel, and associated shopping malls on an area of 15,962 sqm in the Jabal Omar Project (excluding apartments within the property).

Lease agreement

Buyer may rent the property to the seller for 10 years

Repurchase right

The buyer (REIT) gives the seller (Jabal Omar Co.) the right to repurchase the assets at anytime starting from the sixth year  until the tenth year at the same purchase value (SAR 6 bln) with a 6 month notice period before the purchase. The repurchase is forfeited at the end of the ten-year or upon both parties’ agreement.

 

The Alinma Makkah Fund, which will list on the Saudi Stock Exchange (Tadawul), will pay semi-annual dividends at not less than 90 percent of net earnings.

 

The fund, which is capitalized at SAR 6.09 billion, will have a five-year term and can be extended for one year.

 

The Saudi Capital Market Authority (CMA) last month approved a request from Alinma Investment Company to list Alinma Makkah Real Estate Fund on Tadawul.

 

Lease contract items

Item

Description

Tenant

Jabal Omar Development Co.

Contract start date

From REIT operation date

Contract duration

10 years

Allowed use

Hotels and malls

Total annual rental value

SAR 540 mln

Rent payment method

Payable in two semi-annual installments starting from REIT operation date

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