Al Maather REIT purchases education facility land in Riyadh for SAR 17 mln
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Al Maather REIT Fund successfully completed 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.
Al Maather REIT Fund successfully completed the purchase of an educational facility land in Al Salam district in Riyadh for a total of SAR 17 million before value-added tax (VAT), fund manager Osool & Bakheet Investment Co. said in a bourse statement.
The property has been leased out to Integrated Development for 11 years, with the first lease starting within 15 days from the date of purchase with an annual rent of SAR 3.6 million.
The tenant has built structure worth SAR 5.94 million on the land, the ownership of which has been transferred to the fund.
The fund is committed under the lease contract to complete the construction of the educational complex with an estimated total cost of SAR 23 million (SAR 5.9 million for current construction and SAR 17.1 million for the rest of the construction).
The fund paid the tenant an amount of SAR 1.79 million as part of the current construction value, while the remaining amount of SAR 4.14 million provided by the tenant against the value of the first-year rent plus VAT. The rental value is fixed during the first five years, at SAR 3.6 million, which thereafter rises from the sixth year by 17.5%.
The tenant has provided rental guarantees in the form of ten years promissory notes.
The property is located in Riyadh’s Al Salam district, near the intersection of Abdulrahman Ibn Awf Rd. and Alshabab St. The building area is approximately 18,634.1 square meters built on a land area of approximately 10,000 square meters.
The fund manager further clarified that there are no transactions with related parties or transactions involving conflicts of interest in this transaction.
The impact of this event is expected to be positive after transferring property ownership to the fund, by increasing net revenue after deducting fund fees, and expanding weighted average lease expiry (WALE), the statement added.