Derayah REIT signs SAR 140 mln acquisition deal for Riyadh logistics complex

Derayah REIT Fund signed, on July 20, an agreement worth SAR 140 million to acquire a multi-use logistics complex, located in Sulay district in Riyadh.

Fund manager Derayah Financial said in a bourse statement that the expected timeframe to complete the transfer of the property is 30 days from signing the agreement, extendable by mutual consent.

The acquisition will be financed through the banking facility available for Derayah REIT.

The logistics complex consists of 193 units, out of which 164 units are earmarked as storage warehouses, and the remaining 29 units for retail warehouses and offices.

The property is built on a land area covering 198,000 square meters (sqm), whereas the built-up area spans across 120,000 sqm.

The complex will be leased to the seller in personal capacity for 15 years (non-terminable) with an annual net rent payment of SAR 11.2 million for the first five years, which will be increased to SAR 11.9 million to the end of the lease term.

The tenant will provide signed promissory notes, covering the payments throughout the lease duration, and will be responsible for the maintenance and operating expenses of the property.

The property is currently subleased to more than 120 corporate and individual tenants with an occupancy rate of 90%.

After the acquisition, the weighted average lease duration of Derayah REIT properties will increase to six years from five years, and the allocation to warehouses and logistics in the portfolio will increase to 38% from 32% of total assets value.

The move is in-line with Derayah Financial’s plan to diversify the type of owned properties and expand in the logistics industry, which is witnessing a gradual shift from traditional shopping to online shopping during the COVID-19 pandemic.

The fund manager expects the acquisition to have a positive impact on Derayah REIT’s Q4 2020 financial performance, adding that there are no related parties.

Derayah Financial will announce any material development as and when they occur.