Knowledge City sells 3 plots for SAR 398.8M, expects SAR 360.8M profit

KEC will use the proceeds from the transactions to enhance cash liquidity, support financial position, and redeploy capital.

Knowledge Economic City (KEC) signed two agreements on July 16 to sell three land plots located within the Knowledge Economic City project in Madinah, for a total net value of SAR 398.8 million, excluding real estate transaction tax, sale registration fees, and any other government fees.

In separate statements to Tadawul, the company said the two transactions are expected to generate a gross profit of SAR    360.8 million, before accounting for any expenses, fees, or liabilities associated with completing the transactions.

The first agreement involves the sale of Plot No. C06-6 and C06-3, with a combined area of 17,620 square meters (sqm), for a total net value of SAR 229.12 million.

The company said it signed the agreement with Al Bawaba International Investment Co. and Olu Real Estate Co. to develop a mixed-use project through the a dedicated real estate investment fund.

It noted that the book value of the land subject to the transaction in the company's records is SAR 21.61 million, and expects the transaction to generate a gross profit of SAR 207.52 million, before accounting for any expenses, fees, or liabilities associated with completing the transaction.

The second agreement involves the sale of Plot No. C10-28 for SAR 169.64 million.

The company explained that it signed the agreement with Oud Private Investment Fund 4, a closed-ended private real estate investment fund managed by Oud Financial, to develop a mixed-use project comprising residential, commercial, and office components.

The agreement also includes the leasing of 8,000-sqm office space to be developed by the buyer, for a period of 15 years, in accordance with the terms of the agreement. KEC will have the right to use or re-lease the offices at its sole discretion.

The company said the book value of the land subject to the transaction in its records is SAR 16.31 million, and expects the transaction to generate a gross profit of SAR 153.32 million, before accounting for any expenses, fees, or liabilities associated with completing the transaction.

The company said the two transactions are part of its strategy to maximize returns on its land portfolio, which spans approximately 6.8 million sqm, by developing the land directly, in partnership with specialized investors and developers, or through investment funds. This is expected to help accelerate project development and improve capital efficiency.

It explained that the two agreements represent one of the models adopted by the company to develop its assets through specialized companies and investment houses, supporting the attraction of high-quality investments and enhancing urban development within Knowledge Economic City.

The company expects the two transactions to enhance its cash liquidity, support its financial position, and enable the redeployment of capital toward the implementation of its current and future strategic projects.

They are also expected to accelerate the development of one of the strategic plots within Knowledge Economic City, supporting sustainable growth and enhancing value for shareholders.

The company noted that it will recognize the financial impact in its statements upon fulfillment of the accounting recognition requirements and completion of the ownership transfer procedures.

KEC will use the proceeds from the two transactions to enhance its cash liquidity, support its financial position, and redeploy capital toward the implementation of its current strategic projects to support sustainable growth and increase value for shareholders. It added that there are no related parties involved.