Musharaka REIT Q3 2020 results top expectations, new tax unlikely to impact expansions: chairman

Musharaka REIT Fund reported higher-than-expected results in Q3 2020, despite the direct impact of the COVID-19 precautionary measures on the real estate sector, the fund’s chairman, Ibrahim Al-Assaf, told Argaam in an exclusive.

In light of the pandemic, Musharaka took into its account the interest of the fund and unit holders, as well as maintaining occupancy rates, after taking some measures to help tenants survive the crisis. The fund will disclose the impact of the COVID-19 pandemic on its operations soon, Al-Assaf explained.

Rentals account for 96% of the gross leasable area (GLA) in the commercial sector, and represent 100% in the residential and hospitality sector. It also accounts for 100% in Musharaka’s self-storage warehouse in Dubai.

Moreover, the Riyadh-based Al-Baraka warehouse was finalized in Q3 2020, while maintenance works are ongoing ahead of leasing the property, the chairman said, expecting higher demand for top-quality warehouses in the near term.

He further expected the real estate market to see a significant rise in occupancy rates in the beginning of 2021 and a gradual end of the pandemic on the rollout of the new vaccine, underlining Musharaka’s bullish outlook for the market.

The fund is seeking to tap into new sectors, in line with Vision 2030, and the real estate industry transformations to maintain high occupancy rates, and enhance diversification in its sectors, in coordination with well-reputed tenants with a strong financial position.

Elsewhere, Al-Assaf explained that the new real estate transaction tax has become one of the costs incurred upon new asset acquisitions, shrugging off the impact on the fund’s future expansions.

“We do not expect a material impact on the fund, as the new tax will be taken into account in future acquisitions. In addition, the fund obtained loans at a low cost, which will support its position to seize the best opportunities, or study the purchase of new properties. The fund manager is studying various opportunities and will reach the right decision with the board in this regard,” he noted.

Musharaka Fund reported SAR 25.65 million rental income in Q3 2020, compared to SAR 27.96 million a year earlier, Argaam reported.