Sumou establishes real estate fund to develop SAR 2B project

Sumou Real Estate Co. headquarters

Sumou Real Estate Co. said on, Jan. 27, that AlJazira Capital and Sumou Global Investment Co. signed an agreement to set up a real estate fund aimed at developing a landmark project in Riyadh.

The project will span 414,320 square meters of developed land and include the construction of more than 800 residential units, according to a statement to Tadawul.

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The fund will acquire land owned by Sumou in Dammam and Khobar. The project's total value exceeds SAR 2 billion, with Sumou appointed as the project developer, earning a 10% development management fee based on total development costs, the statement added.

The company explained that the fund would pay SAR 90.7 million for its land holdings, with 78% of this amount settled in kind by issuing 7.05 million investment units to Sumou Real Estate, valued at SAR 70.45 million. Each unit will have a nominal value of SAR 10, pending regulatory approvals for the fund’s establishment.

The remaining 22% of the payment, totaling SAR 20.22 million, will be paid in cash via a certified check issued to Sumou Real Estate upon the land transfer.

Sumou's ownership in the fund will stand at 26.2%, which includes the development management fees and the in-kind settlement for the land.

The four-year contract is expected to positively impact the company’s financials starting from the establishment of the fund.

The agreement involves related parties, including Sumou Global Investment Co.