Mulkia REIT seals deal with Al Rajhi Bank to raise credit facilities limit, cut their value

Logo of Mulkia Gulf Real Estate REIT Fund

Mulkia Investment Co., manager of Mulkia Gulf Real Estate REIT Fund, announced today, March 19, the signing of a facilities agreement with Al Rajhi Bank, aimed at reducing financing costs and raising the withdrawal limit on credit facilities provided by the bank to the fund, according to a statement to Tadawul.

Accordingly, the withdrawal limit on credit facilities will be raised to SAR 750 million, instead of SAR 600 million. Also, the fixed interest rate on lending will be cut by 22.22%, the company added.

The fund manager expects the related impact of the deal to be generally positive on Mulkia REIT’s performance, due to reducing the bank’s fixed profit margin and raising the possibility of acquiring new real estate assets by accessing the unutilized amount of the credit facilities.

In December 2020, Mulkia Investment announced the signing of a seven-year credit facility agreement with Al Rajhi Bank, which aims to reduce financing costs and extend the loan term for the benefit of the unitholders. 

The withdrawal limit had been formerly set at SAR 600 million. According to the fund manager, the loan would be used to pay outstanding facilities withdrawn from Bank Albilad worth SAR 342.6 million, with the remainder geared towards the purchase of additional real estate assets, according to Argaam's data.