Musharaka REIT Fund — Capital/Financing Update 2021

Jul 11, 2021

Musharaka Capital Company Announces a Material Development to Musharaka REIT Fund

4335 · 11/07/2021 08:34:24 · Announcement #64104 · View on Saudi Exchange

Musharaka Capital Company Announces a Material Development to Musharaka REIT Fund

4335

MUSHARAKA REIT

-0.49 %

1442/12/01     11/07/2021 08:34:24

Element List	Explanation
Introduction	With reference to the non-binding memorandum of understanding signed on Rajab 16, 1442 H corresponding to February 28,2021 Gregorian, Musharaka Capital Company, in its capacity as the fund manager of Musharaka REIT Fund, announces its intention to acquire a new property in Riyadh, KSA. The new property is a brand new, fully furnished, 4-star hotel consists of 94 rooms and hotel suits, GYM, wedding and conference halls, restaurant, swimming pools, and parking space for 80 cars. The acquisition price was decided after obtaining fair-valuation reports from two independent real estate evaluators and after completing the technical and legal due diligence.
Description of the Event	The property which the fund plans to acquire is leased for 10 years to a leading Saudi company whose business model is hotels operating for an average annual lease of SAR 7.77 million. The tenant submitted promissory notes to guarantee future rental payments. The follow is a summary of the property and transaction:

- Country: KSA

- City: Riyadh

- Hotel Name: Gardino

- Grade: 4 stars

- Age: Brand New

- Status: Fully furnished

- Condition: New and fully furnished.

- Neighborhood: Olaya.

- Street: Al-Takhassusi.

- Land area: Sqm 3,495.35

- Built-up Area: Sqm 14,075.7

- Acquisition price: SAR 85,500,000

- Average rental income over the full term: SAR 7,775,000

- Tenancy term: 10 years.

- Guarantee: Promissory notes.

- Lease: Maskan Al Salam Company for Commercial Development and Investment

Musharaka expects to complete the required administrative and legal procedures related to property title deed transfer within 90 days post the announcement date. The fund manager will use a sharia compliant credit facility to finance the planned acquisition. The Impact Caused by the Event Musharaka Capital expects the acquisition to have positive impact on the fund. From investment perspective, the fund’s portfolio will grow, become more diversified a) geographically through investing in Riyadh and b) in a growing hospitality sub-sector. Financially, the planned acquisition will improve the fund’s ability to generate cash flow, leverage up its net income bearing in mind that the fund manager will use the available cheap Islamic credit facilities to finance the transaction. Also, the longevity of tenancy contract would help to stabilize the fund’s long term dividend policy. Additional Information The Fund Manager will disclose any developments in this regard

The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.