Banan signs MoU to establish Shariah-compliant private REIT

Banan Real Estate has signed an MoU to establish a CMA-licensed, Shariah-compliant private real estate fund to develop a hospitality project in Riyadh

Banan Real Estate Co. said it signed a memorandum of understanding with Artal Capital and Rakan Al-Tasan to establish a Shariah-compliant private real estate investment trust (REIT) licensed by the Capital Market Authority (CMA), according to a statement to Tadawul.

The fund will acquire a 3,278.8-square-meter land plot in Riyadh’s Al Rahmaniyah District owned by Banan’s subsidiary, Qimam Noshoz Real Estate Development Co., the statement said.

Under the MoU, the parties agreed to develop a hospitality project on the land and to appoint Banan Real Estate as the project’s exclusive developer and marketer. Banan will be responsible for development works, overseeing execution, and marketing the project in line with the approved plan. Artal Capital will be appointed as the fund manager.

In-kind units of the fund will be held equally by Qimam Noshoz and Rakan Al-Tasan.

The MoU is valid for three months from the date of signing and may be renewed subject to written approval from all parties.

No related parties are involved, the company said.

Banan said the financial impact will be recognized upon the start of project execution, in the form of development-related revenue.