Addendum Announcement from Al Rajhi Capital Regarding a material development related to Al Rajhi REIT Fund
Date of the previous announcement: 07-05-1442 H Corresponding to 22-12-2020 G
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Further to the announcement of Al-Rajhi Capital published on 07-05-1442 H corresponding to 22-12-2020 G, The Fund Manager of Al Rajhi REIT would highlight that after negotiations and judicial sessions have appointed a legal counsel for the litigation against Al-Fouzan Trading & Contracting Company in its request to balance the lease contract of Al-Narjis, Al-Anwar and Rama Plaza, claiming inability to benefit from the leased property.
The fund manager have appointed an expert, who confirmed the lack of benefit for the tenant from Rama Plaza property due to Riyadh Metro works. The board of directors have considered the expert’s opinion taking into consideration the possible retroactive claim, aspiring for the best interest of the unite holders both on the short and long term, the board of directors have approved the settlement. The settlement has been registered in General Court on 13/03/1443 H corresponding to 19/10/2021 G included the following:
- Termination of lease agreement of Rama Plaza from the date of 01/07/1442 Hijri.
- Termination of lease agreement of Anwar Plaza from the date of 01/01/1443 Hijri, and the tenant will be obligated to pay a penalty for terminating the lease agreement with an amount of SAR 4,633,200.
- The Master Tenant will continue in the lease agreement of Al Narjis Plaza with the same terms of the agreement.
- The Master Tenant will settle the net due amount of SAR 29,408,010 by payment of SAR 15Mn and scheduling the rest of amounts on four quarterly payments.
- Finalizing the dispute in the properties of Narjis Plaza, Anwar Plaza and Rama Plaza.
The current situation of Rama Plaza as follows:
- Occupancy rate: 61%
- Total rental income SAR 2,657,344
(Note: Metro works adjacent to the property including road closures have affected the occupancy and the rental income)
The current situation of Anwar Plaza is as follows:
- Occupancy rate: 43.6%
- Rental income: SAR 1,207,400
It is worth mentioning here that the properties of Al Anwar and Rama are located in distinctive commercial locations, therefore the fund's management will work on a renovation plan for these properties, and is currently leading negotiations with potential tenants for Al Anwar and Rama Plaza to improve occupancy rates and rental returns.
The Impact Caused by the Event: Enhancement of fund’s liquidity, decrease in total rental income of the fund in the short term, it is expected to enhance the rental income after the renovations.
