Riyad REIT announced the terms and conditions of its planned capital increase to SAR 1.633 billion from a current SAR 500 million, after obtaining regulatory approval.
In May 2017, the fund’s board of directors recommended the capital hike to fund future asset acquisitions. The capital increase will be effected by a rights issue.
The fund will sell 121.7 million units at a target price of SAR 9.31 per unit -- 67.99 million units for in-kind subscriptions, and 53.71 million units for cash subscriptions.
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REIT Details |
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Fund name |
Riyad REIT fund |
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Investment objectives |
The Fund invests in developed, income-generating real estate projects. |
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Capital |
SAR 500 mln |
|
Total fund size* |
SAR 690 mln |
|
Units On Offer |
121.7 mln |
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Target Price/Unit |
SAR 9.31 |
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Units for Cash Subscriptions |
53.71 mln |
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Minimum Subscription |
50 units (SAR 465.5) |
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Maximum Subscription |
3 mln units (SAR 27.93 mln) |
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Units for in-kind subscriptions |
67.99 mln units |
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Target Capital |
SAR 1.633 bln |
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Target Fund Size |
SAR 1.753 bln |
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Receiving Entities |
Riyad Capital, Riyad Bank, Al Rajhi, NCB and Banque Saudi Fransi |
*Fund Size refers to total unit-holder subscriptions plus total loans secured by the Fund.
The new units will be offered to potential investors as per the details below:
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Details of the Capital Increase |
||||
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Subscription Type |
Number of Units (M) |
Value (SAR mln) |
% of Total Capital Increase |
% of Total Capital Post Increase |
|
In-kind subscriptions |
67.99 |
633.0 |
55.9 % |
38.8 % |
|
Real estate developer Burj Rafal (Kempinski Hotel) |
35.17 |
327.4 |
28.9 % |
20.0 % |
|
Mohammed Ayman Dehlwi Sons (Omnia Center) |
18.05 |
168.0 |
14.8 % |
10.3 % |
|
Higher Education Fund (Electronic University) |
14.78 |
137.6 |
12.1 % |
8.4 % |
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Cash Subscriptions |
53.71 |
500.0 |
41.1 % |
30.6 % |
|
Target Increase |
121.70 |
1,133.0 |
100 % |
69.4 % |
|
Total Capital Post the Increase |
171.70 |
1,633.0 |
-- |
100% |
The fund currently owns eight developed properties and one building under construction, geographically diversified across Riyadh, Dammam, Jeddah and Khobar.
The new acquisitions, that will be funded by the capital increase, include the Saudi Electronic University building in Riyadh, Omnia Center in Jeddah, and Kempinski Riyadh Hotel.
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Target Acquisitions |
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Property |
Location |
Land Area (M²) |
Valuation (SAR mln) |
Average Valuation (SAR mln) |
Target net rent and operating income of 2018 (SAR mln) |
|
Saudi Electronic University |
Riyadh |
14,192 |
137.65 |
145.22 |
11.97 |
|
Kempinski Hotel |
Riyadh |
21,106 |
677.00 |
685.31 |
49.30 |
|
Omnia Center |
Jeddah |
10,000 |
168.00 |
199.04 |
14.30 |
The fund's target annual income for 2018 is as follows:
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Constituent Real Estates Post Capital Increase (2018) |
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Property |
Gross Income (%) |
Net Income (%) |
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Al Izdhar Commercial Centre |
9.27 % |
8.69 % |
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Vivienda Hotel |
8.54 % |
8.54 % |
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Fursan Tower |
9.35 % |
8.67 % |
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Al Motamayz Center |
8.46 % |
7.95 % |
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The Residence |
14.19 % |
8.07 % |
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Beach Breeze Tower |
8.72 % |
8.11 % |
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Ascott Tahliya Tower- Jeddah |
7.70 % |
7.70 % |
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Saudi Electronic University |
8.72 % |
8.70 % |
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Kempinski Hotel |
21.33 % |
7.28 % |
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Omnia Center |
9.11 % |
8.51 % |
|
Ascott Tower- Al Khobar Corniche (under construction) |
4.74 % |
2.96 % |
The fund targets a net income of SAR 128.17 million in 2018 compared to SAR 35.96 million last year.
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Fund Details Post Capital Increase |
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|
2017 |
2018 |
2019 |
|
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Fund's Capital (Target) |
500 |
1,633 |
1,633 |
|
Murabaha Facilities* |
190 |
120 |
120 |
|
Fund Size |
690 |
1,753 |
1,753 |
|
Total Leasing Income |
37.85 |
237.36 |
290.41 |
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Net Income (Target) |
35.96 |
128.17 |
152.43 |
*The fund manager sourced short-term murabaha facilities to finance new acquisitions and projects under construction. The fund manager may elect to pay part of all of outstanding facilities from the capital increase proceeds.
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