Al Rajhi REIT Fund reported a drop of 11% year-on-year (YoY) in net profit to SAR 26.1 million in H2 2019. Net profit also fell 13% when compared to the first half of 2019.
The declines came as the figures implied almost SAR 4 million in provisions for doubtful rent receivables during H2 2019, compared to zero provisions in H2 2018 and H1 2019.
Funds from operations (FFO) decreased by 7% YoY and 8% when compared to the previous six months to SAR 34.8 million in H2 2019, on higher operating expenses, financing costs as well as general and administrative expenses.
Depreciation charges of real estate investments stood at SAR 9.5 million, compared to SAR 8.2 million in H2 2018.
Rental income grew by 9% YoY to SAR 59.6 million, thanks to new asset acquisitions.
The fund did not record asset impairment losses by the end of 2019, as the impairment was marginal.
|
Al Rajhi REIT Income Statement (SAR mln) |
||||
|
Item |
H1 2018* |
H2 2018 |
H1 2019 |
H2 2019 |
|
Rent Revenue |
37.2 |
54.6 |
56.3 |
59.6 |
|
OPEX |
(11.4) |
(17.3) |
(18.4) |
(24.8) |
|
Provision for doubtful debts |
-- |
-- |
-- |
(4.0) |
|
Funds from operations |
25.9 |
37.3 |
37.9 |
34.8 |
|
Real estate investment depreciation |
(5.5) |
(8.2) |
(8.5) |
(9.5) |
|
Revenue from investments & other |
0.0 |
0.3 |
0.6 |
0.7 |
|
Net profit |
20.4 |
29.3 |
30.0 |
26.1 |
|
Number of units (mln units) |
122.2 |
122.2 |
122.2 |
161.9 ** |
|
Earnings per unit (SAR/unit) |
0.17 |
0.24 |
0.25 |
0.16 |
|
Operating income per unit (SAR/unit) |
0.21 |
0.30 |
0.31 |
0.16 |
*From March 20, 2018 until June 30, 2018
**The capital was hiked through issuing new units
Al Rajhi REIT’s total assets jumped 37% YoY to SAR 2.39 billion in December 2019, driven by the increased value of real estate investments, as the fund acquired four properties in 2019.
Long-term loans rose by 73% YoY to SAR 791.3 million by the end of 2019. The fund secured additional seven-year facilities worth SAR 334 million.
Accordingly, total liabilities increased by 65% YoY to SAR 807.8 million by the end of December 2019.
|
Balance Sheet (SAR mln) |
||||
|
Item |
H1 2018 |
H2 2018 |
H1 2019 |
H2 2019 |
|
Real estate investments |
1,619.9 |
1,666.6 |
1,658.3 |
2,301.8 |
|
Total assets |
1,687.9 |
1,740.4 |
1,724.1 |
2,386.2 |
|
Total loans |
399.9 |
456.9 |
456.9 |
791.3 |
|
Total liabilities |
445.5 |
490.0 |
481.6 |
807.8 |
|
Net assets for unit holders |
1,242.4 |
1,250.4 |
1,242.5 |
1,578.4 |
The market value of real estate assets climbed to SAR 1.60 billion by the end of December 2019, compared to SAR 1.23 billion a year earlier.
The rise was backed by new acquisitions, which increased the fund’s total assets to 18. The average market value of total assets reached SAR 2.33 billion, according to valuers.
|
Market Value of Real Estate Investments (SAR mln)* |
||||
|
Value of real estate investment |
H1 2018 |
H2 2018 |
H1 2019 |
H2 2019 |
|
1st valuer |
1,482.2 |
1,659.9 |
1,684.4 |
2,383.9 |
|
2nd valuer |
1,566.8 |
1,637.8 |
1,633.2 |
2,270.3 |
|
Average valuation |
1,524.5 |
1,648.8 |
1,658.8 |
2,327.1 |
|
Assets book value (BV) |
1,619.9 |
1,666.6 |
1,658.3 |
2,301.8 |
|
FMV-BV variation |
(95.4) |
(17.8) |
0.5 |
25.2 |
|
Net assets for unit holders |
1,242.4 |
1,250.4 |
1,242.5 |
1,578.4 |
|
Net assets at FMV |
1,146.9 |
1,232.6 |
1,243.0 |
1,603.7 |
|
Assets BV/unit |
10.17 |
10.23 |
10.17 |
9.75 |
|
Assets FMV/unit |
9.39 |
10.09 |
10.17 |
9.91 |
*Valuers are Valustrat, Olaat, White Cubes and Jones Lang Frank.
The following table illustrates Al Rajhi REIT’s key financial indicators by the end of 2019:
|
Key financial indicators |
|
|
9.3% |
Gross annual return |
|
5.9% |
Net annual return |
|
3.5% |
Net return per unit/nominal value |
|
4.5% |
Operating revenue return per unit/nominal value |
|
11.5% |
Management fees/rent revenue |
|
37.3% |
OPEX/ Rent revenue |
|
49.3% |
Debt/ assets at FMV |
|
8.41 |
Current unit price (March 25) (SAR) |
|
(18%) |
Variation in unit price since year beginning |
|
5.4% |
Cash dividend return |
|
117.9% |
Cash dividend/operating income |
|
5.5% |
Return on operating revenue per unit/ unit price |
|
4.3% |
Net profit per unit/unit price |
The fund sold its full stake, or 384,000 units, in Al Rajhi Commodity Fund in 2019, recording an annual profit of SAR 1.2 million. Al Rajhi REIT reinvested SAR 40 million advance payments in the fund, and the units were issued on Jan. 1, 2020.
Occupancy rates at all assets hit 100% by the end of 2019, except for Jeddah’s Al-Andalus, where occupancy rates reached 82%.
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