Arabian Centres signs new management deal with Jeddah Park owner

Arabian Centres Co. (ACC) successfully ended, on Oct. 22, the negotiations with Sheikh Muhammad Sairafy, Jeddah Park’s owner and landlord, with regards to signing a new management, operation and maintenance agreement to replace the first 10 years of the initial lease contract for the property.

The company said in a statement to Tadawul that the contract includes lease, manage, operate and carry out maintenance works at Jeddah Park Shopping Centre on behalf of its owner and landlord and to his account, in accordance with the professional standards in this field, in return for a percentage of the centre’s net annual revenue.

Under the agreement, ACC will receive from the owner an ascending percentage from the annual net revenue of the shopping centre (according to three thresholds of the net revenue).

The duration of the contract is 10 years, starting from the date of signing and ending on Oct. 21, 2030. Upon the end of the new agreement, ACC is obligated to switch back to the initial lease contract signed on March 4, 2019, and act in accordance with its terms and conditions of terminating the new agreement.

On completion of the first three years of the new agreement, ACC reserves the right to switch back to the initial lease contract signed on March 4, 2019, and act in accordance with its terms and conditions of terminating the new agreement.

The company expects the agreement to have a positive impact on its financials and appear from the first quarter of the fiscal year 2022, the statement said, adding that there are no related parties to the contract.

Meanwhile, ACC’s management opted to negotiate with the owner and landlord of Jeddah Park on adjusting the lease contract, following a thorough review of local and global market prospects in light of the effects of COVID-19, in order to achieve the following:

-Taking the necessary precautions and measures to enable ACC to ensure the required resources to rent, manage and operate the shopping center in the best possible way and to achieve the optimal return for both parties in light of the current circumstances

-Managing the risks of the previous lease contract in an optimal way, by reducing its risks in the way of sharing it with the owner and landlord of the shopping center.

The company also added that to date, approximately 85% of construction works at Jeddah Park have been completed by the property’s owner, with the centre on schedule to open as expected in Q2 2021.

Jeddah Park marks the 22nd addition to ACC’s portfolio of shopping centers, bringing together 129,000 square meters (sqm) of additional gross leasable area (GLA).

Jeddah Park will house a large Cineplex, boasting 15 screens and 1,541 seats in a total area of 6,525 sqm, as well as a broad range of retail offerings, including the finest global and local brands in the areas of fashion, beauty, food & beverage. It will also include spaces dedicated to entertainment facilities and a hypermarket.