Tihama says terminating Jeddah tower leasing contract aims at cutting cost

Tihama Advertising & Public Relations Co. (Tihama) said that terminating its lease contract for MEFIC REIT Fund’s administrative tower in Al Hamra district in Jeddah falls within its plans to cutting costs and reducing credit risks, driven by lower rentals.

The company further explained, in a bourse filing on Thursday, that this step also aims to reduce risks associated with rentals collection, especially that the company incurred lower net rental income.

The expected financial impact entails mitigating lower net rental income that falls under revenue and other expenses item, and is note related to the company’s main activity and operations in light of the current economic situation.

MEFIC REIT, meanwhile, said in a statement yesterday that it generated SAR1.7 million from terminating the contract, Argaam data shows.

MEFIC Capital, the fund manager of MEFIC REIT Fund, terminated the lease contract with Tihama for the fund’s administrative tower in Al Hamra district in Jeddah. The contract termination generated a SAR 1.7 million profit for the fund, Argaam reported on April 22.