Al-Modawat inks lease contract for commercial building generating SAR 2.67M annually

Logo of Al-Modawat Specialized Medical Co.

Al-Modawat Specialized Medical Co. signed a lease contract with Qiam Real Estate Co. (a related party) for a commercial complex building in Budaiya District, Muhayil, according to a statement to Tadawul today, May 16.

The contract will generate SAR 2.67 million annually at a rate of SAR 181 per square meter (sqm), for a period of three years, said the company, noting that the deal is renewable for additional periods of up to 20 years, provided that the property’s lease value is revaluated every three years. The rent is 7% of the property’s market value, as per its valuation by a certified appraiser.

The lease contract covers a commercial building consisting of a basement, a ground floor, and three recurring floors, spanning a total area of 14,780 sqm. It will be used for the company’s doing business purposes and internal expansion.

Al-Modawat also pointed out that the rental value is good, indicating that a 20% vacancy discount was warranted, coupled with a 15% maintenance and operation rate, bringing the average price per sqm to SAR 181.

This property is an ideal investment opportunity to expand Al-Modawat's business, being the sole building adjacent to the hospital building. Additionally, its lease will save money and time to build new buildings for business expansion, the company stated.

The related financial impact is slated to be reflected upon the project’s completion and operation and it will likely be positive, given the potential of boosting the company’s business.

Any fundamental developments related to the lease contract and the project will be announced in due time, it noted.

The company also indicated that both Abdullah Al-Yahya and Abdulrahman Al-Yahya are indirect related parties. Meanwhile, Abdulaziz Al-Yahya has a direct interest in the contract, being the director and partner in Qiam Real Estate.

This contract was concluded within the normal course of doing business, entailing no preferential benefits.

It will be presented for voting to the general assembly in accordance with the relevant regulations. It includes a clause that gives the company the right to terminate the deal if the general assembly’s approval was not granted.