Sumou, KHC units sign Riyadh land development, sales deal

Logo of Sumou Real Estate Co. and Logo of Kingdom Holding Co. (KHC)

Sumou Real Estate Co. and Kingdom Holding Co. (KHC) signed an agreement to manage infrastructure development, as well as marketing and sale of 3.07 million square meters of residential and commercial land in Riyadh, the companies said in separate statements to Tadawul.

The project is for the benefit of Kingdom Real Estate Development Co. and Trade Center Co. Ltd., both KHC subsidiaries.

Under the 36-month contract, starting from official plan approvals, Sumou will receive 6.5% of total infrastructure development costs as management fees, plus 2.5% of project sales for marketing and sales management, in addition to brokerage commissions paid by buyers.

The agreement allows for extensions in cases of force majeure or delays not caused by Sumou.

Sumou has been appointed as the exclusive development manager, responsible for preparing development plans and timelines, obtaining regulatory approvals, overseeing design and execution of infrastructure works, supervising contractors and consultants, and marketing and selling the land plots.

Development execution will follow approved budgets and timelines under a consultant appointed by the landowners, with Sumou providing required performance guarantees.

KHC estimated total project sales at about SAR 4 billion, subject to prevailing market conditions. The financial impact is expected to be recognized gradually during the project through capitalization of infrastructure costs by the two subsidiaries and recognition of management fees and sales proceeds in line with IFRS and key project milestones.

Sumou said the project is expected to positively impact its financial results from the start of execution.

Kingdom Real Estate Development is wholly owned by KHC, while Trade Center is 89.8% owned by the group.