Alinma Makkah Fund to buy hotels, malls for SAR 6 bln

Alinma Makkah Fund is set to buy six hotel towers and two commercial malls in the first phase of the Jabal Omar development project in Makkah, at a total value of SAR 6 billion.

Details
Fund	Alinma Makkah Fund, a closed Islamic income-generating real estate fund.
Investment purposes	Generating periodic rent income for unit holders through acquiring developed properties in hotel and hospitality sector and commercial malls within the first stage of Jabal Omar project
Fund size	SAR 6.09 bln
Unit price	SAR 10
Minimum Subscription Limit	SAR 10,000
Maximum Subscription Limit	SAR 5 bln
Fund Manager	Alinma Investment
Fund duration	Five years, can be extended for a period of one year unless terminated in accordance with the terms and conditions.
Cash Dividend	Semi-annual cash dividend for unit holders of not less than 90% of the fund’s net profit.

The fund will also acquire three five-star hotels and two commercial malls in Al Khalil, sources told Argaam.

The purchase agreement stipulates that the buyer will lease the purchased properties back to the seller (Jabal Omar Development Co.) for a period of 10 years at SAR 540 million per year.

Property purchase agreement
Agreement date	March 21, 2017
Purchase price	SAR 6 bln
Type of agreement	Buy and sell agreement with option condition
Properties	Hilton Suites Makkah, Hyatt Regency Hotel, Conrad Makkah Hotel, and associated shopping malls on an area of 15,962 sqm in the Jabal Omar Project (excluding apartments within the property).
Lease agreement	Buyer may rent the property to the seller for 10 years
Repurchase right	The buyer (REIT) gives the seller (Jabal Omar Co.) the right to repurchase the assets at anytime starting from the sixth year until the tenth year at the same purchase value (SAR 6 bln) with a 6 month notice period before the purchase. The repurchase is forfeited at the end of the ten-year or upon both parties’ agreement.

The Alinma Makkah Fund, which will list on the Saudi Stock Exchange (Tadawul), will pay semi-annual dividends at not less than 90 percent of net earnings.

The fund, which is capitalized at SAR 6.09 billion, will have a five-year term and can be extended for one year.

The Saudi Capital Market Authority (CMA) last month approved a request from Alinma Investment Company to list Alinma Makkah Real Estate Fund on Tadawul.

Lease contract items
Item	Description
Tenant	Jabal Omar Development Co.
Contract start date	From REIT operation date
Contract duration	10 years
Allowed use	Hotels and malls
Total annual rental value	SAR 540 mln
Rent payment method	Payable in two semi-annual installments starting from REIT operation date

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