Arabian Centres Co.’s chief executive officer, Faisal Al-Jedaie
Arabian Centres Co.’s (ACC) chief executive officer (CEO), Faisal Al-Jedaie, said that the policies implemented by the company helped it maintain basic profitability levels.
Al-Jedaie expects a continuous decline in the discounts offered to tenants in the upcoming period, which will be offset by ACC over the terms of outstanding lease contracts.
In a statement from the company, while commenting on the results of third quarter ended Dec. 31, 2020, he explained that ACC maintained a high renewal rate of lease contracts with the aim of reaching an occupancy rate, ranging between 93% and 94%, while continuing efforts to strengthen the strategy aimed at diversifying tenants and their categories to provide more offers and services.
The CEO highlighted the increase in net profit and profit margins from operations, despite the additional non-recurring discounts related to confronting the repercussions of the pandemic in Q3, reflecting the success of the company’s efforts to reduce financial expenditures and its exit from non-core investments, in addition to reducing rental expenses in light of mutual benefit agreements with land owners and leased centers.
ACC is optimistic about the positive activity in the market, which is expected to continue during the last quarter of fiscal years 2021 and 2022, coinciding with the peak of the retail market activity in the Kingdom, Al-Jedaie added.
He affirmed the company's commitment to maximizing the benefits of the opportunities presented by the retail sector in the Kingdom, and to continue to intensify its investments in expansion, particularly, in light of the planned future expansions.
Two projects are planned to take place in the short-term, in addition to six medium-term projects, which will result in upgrading ACC's portfolio of total potential leasable areas, by approximately 36% in the next three years.
The Saudi-listed firm indicated that the discounts provided to support tenants in the face of the negative impact of COVID-19 decreased by 9.2% in Q3 FY2020/21, compared to the previous quarter, reflecting the continued recovery of commercial activities in conjunction with the return to normal conditions.
ACC succeeded in maintaining the high pace of lease contracts renewals, as it renewed 1,518 contracts during the first nine months of FY2020/21, which represents 91.5% of the contracts expired during the period.
The company reported a net profit after Zakat and tax of SAR 359.7 million for 9M FY2020/21, down by 34%, compared to SAR 545.8 million in the same period in 2019, according to data compiled by Argaam.
ACC expects the total discounts offered to tenants as a result of the pandemic to hit SAR 569 million, which will be recorded over the period of the lease contracts.
The firm also indicated that non-recurring rental discounts related to the support provided to confront the pandemic were recorded at a value of SAR 62.4 million in Q3 FY2020/21, SAR 68.7 million in Q2, and SAR 62.7 million in Q1.
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