Banan signs tripartite agreement for real estate fund incorporation

Banan Real Estate Co. Logo; the company eyes establishing a new real estate fund for acquiring and developing a land plot in Riyadh  

Banan Real Estate Co. signed a tripartite cooperation agreement for the establishment of a real estate investment fund. The agreement is with Abdulaziz & Saad Al-Moajil Trade and Investment Co. and Artal Capital, with Banan as the third party.

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The fund aims to acquire and develop a land plot located in Al-Qairawan district, spanning 7,425 square meters, the company stated in a statement to Tadawul, adding that it will serve as the project’s developer under a separate development agreement.

Abdulaziz & Saad Al-Moajil, the current landowner, will contribute 70% of the fund’s capital in the form of an in-kind share (the land), while Banan will contribute 30% in cash, the statement added.

Banan expects the agreement to have a positive financial impact due to the generation of development fees stipulated in the agreement, as well as returns from its equity stake in the fund, contributing to improved financial performance over the medium and long term.

Under the agreement terms, Artal will be responsible for establishing and obtaining regulatory approvals for the fund from the Capital Market Authority (CMA) and will act as the fund manager. Banan Real Estate will be appointed as the exclusive developer, marketer, and leasing agent for the project.

Additionally, Banan will be designated as the lead developer under a development agreement that will be signed after the fund is established. Artal will also prepare the final financial feasibility study to determine the fund’s optimal capital structure, taking into account debt ratio and investor equity contributions.

In June, Banan signed a memorandum of understanding (MoU) with Abdulaziz & Saad Al-Moajil Trade and Investment Co. to develop a 7,425-square-meter real estate plot located in the Al-Qirawan district in Riyadh, Argaam data showed.