Al Maather REIT Fund signed an agreement to purchase an educational facility land in Al Salam district in Riyadh for a total of SAR 17 million, fund manager Osool & Bakheet Investment Co. said in a bourse statement.
The land spans across 10,000 square meters (sqm) and the building area is approximately 18,634.1 sqm.
The acquisition aims to complete the construction of an educational complex for boys (elementary, middle and high), the statement said, adding that construction costs is expected to reach SAR 23 million.
The property was leased out to Integrated Development Company for Education & Training for a period of 11 years, provided that the first lease year began at a value SAR 3.6 million.
The tenant will pay it in advance for part of the value of the construction currently being built on the property. Meanwhile, the rental value will increase, starting from the sixth year at 17.5%.
The total value of the lease contract is SAR 43.38 million and is guaranteed by ten-year promissory notes.
The fund manager expects a positive impact after transferring property ownership to the fund, by increasing net revenue after deducting fund fees, and expanding weighted average lease expiry (WALE).
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