Riyad REIT invests SAR 61.8 mln in private real estate fund, expects annual average return of 8.5%

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Riyad Capital announced that Riyad REIT Fund invested SAR 61.8 million in a private closed-end real estate fund, according to a bourse statement.

This income-generating, Shariah-compliant real estate fund is managed by Riyad Capital.

The private fund aims to achieve stable current income and boost the invested capital in the medium and long term by acquiring high-quality institutional real estate assets, with stable returns and a diversified tenant base in prime locations across the Kingdom.

The fund’s target size is SAR 3 billion, and its initial closing size is SAR 315 million. The fund term is 20 years, extendable for an additional five years.

The fund consists of a diversified real estate portfolio of assets leased by institutions and listed companies, which enhances the quality of the fund's tenants. Furthermore, acquisitions in the real estate fund would be financed by accepting cash and in-kind contributions, in addition to Shariah-compliant bank facilities from Riyad Bank.

Since the fund is managed by Riyad Capital, the members representing the fund manager on Riyad REIT Fund’s board abstained from voting on the fund manager's recommendation to invest in the private fund.

Riyad REIT’s investment was fully financed from Shariah-compliant bank facilities available to the fund.

The investment is expected to generate an average annual return of 8.5% paid semi-annually over an investment period of five years.

The relevant financial impact is expected to be positive as it would increase the fund's revenues.