Mulkia REIT reaches settlement agreement with Jeddah Dinar tenant, expects revenue decline

Logo of Mulkia Gulf Real Estate REIT Fund

Mulkia Gulf Real Estate REIT Fund reached a settlement agreement with Jeddah Dinar building tenant that was signed and attested by the arbitral tribunal, fund manager Mulkia Investment Co. said in a bourse filing.

The agreement includes granting the tenant a discount for the periods of COVID-19 and previous years, and another conditional discount if the tenant abides by the agreed payments.

In addition to scheduling the payment of due amounts in several installments, registering the lease agreement in the EJAR platform, and amending the rent of the property to become SAR 6.97 million for the leasing year that begins on Oct. 19, 2021, and SAR 8.46 million for the following two years, from Oct. 19, 2022, until and Oct. 18, 2024.

The agreement is expected to increase the fund’s cash flow by collecting the due payments, while the related property revenue will decrease for the coming period with a percentage of 3.90% from the expected revenue for 2022 and 1.95% of the expected revenue for 2023 and 2024, the statement added.

The fund manager noted that it allocated a provision of credit loss during the previous periods that covers the discounted amounts mentioned in the settlement agreement.

In January 2021, Mulkia Gulf Real Estate REIT Fund started a legal action against Saba Real Estate Company Ltd, the tenant of Jeddah Dinar Commercial Building, requesting payment of the rental dues owed to the fund, according to data compiled by Argaam.