ACC Signs Two Agreements with Riyadh Capital to Establish Two Investment Funds worth SR6.2 bln

Arabian Centres Company (“ACC” or “the Company”) announced that it finalized two agreements with Riyad Capital for the establishment of two closed-end real estate funds. Valued at SR6.2 billion, the funds have been established for the purpose of developing Jawharat Riyadh and Jawharat Jeddah, two major projects in ACC’s investment pipeline. The projects are located at the cities of Riyadh and Jeddah, respectively.

The two newly established funds have acquired the Riyadh and Jeddah land plots, previously held by ACC, for the purpose of developing the two abovementioned projects. The Riyadh-focused fund will focus on continuing the development of Jawharat Riyadh project, which lies on a 623.4 thousand sqm plot at the intersection of King Khalid Road and Al-Urouba Road in Al-Raed District.

This land plot held a total market value of SR2.1 billion as of 31-Dec-2021. The Jeddah-focused fund will focus on continuing the development of Jawharat Jeddah project, which lies on a 170.7 thousand sqm land plot at the intersection of King Abdulaziz Road and Al-Salam Road (The Globe Roundabout) in Al-Muhammadiyah District. This land plot held a total market value of SR1.2 billion as of 31-Dec-2021.

ACC retains the full rights of ownership to the two funds’ units, while Riyad Capital has been mandated to manage the funds, which have received licensing from the Saudi Capital Market Authority “CMA”.

ACC retains its rights to manage and operate Jawharat Riyadh and Jawharat Jeddah centres upon the completion of development works, and according to the terms and conditions of the two funds. Moving forward, the two funds will consider later the possibility of offering them for public subscription, through multiple options including the form of a traded real estate investment trust (REIT). The impact from ACC’s contribution to the two funds will appear in the Company’s financial statements from the fiscal quarter ending 30-Jun-2022.

Both Jawharat Riyadh and Jawharat Jeddah will embody the utmost cutting-edge global trends and designs to meet the unprecedented range of visitor needs, marking them to be two lifestyle flagship destinations, helping meet the objectives of the Kingdom’s Vision 2030, which aims to continuously improve residents’ standards and quality of living. And to diversify and enrich the visitor experience, the two centres will combine closed sections with glass ceilings and pleasant open paths overlooking natural landscapes and water features interspersed with walking trails.

Meanwhile, in a first for ACC, the Company is allocating space in both centres to host branches of the most prestigious luxury brands in the field of fashion. Some of such will be opening their inaugural regional branches at these two centres. Also, the two centers will allocate a special area for entertainment, which is considered the largest in the Kingdom, that it will contain a cineplex and gaming hubs suitable for all groups and ages.

Space at both developments has also been allocated for multiuse facilities, such as offices and hotels, which will be connected to the centres at a later stage. This will further boost the centres’ value proposition and centrality to the surrounding urban fabric.

Jawharat Riyadh is strategically located in close proximity to a number of prestigious urban landmarks of Saudi Arabia’s capital city, including the Diriyah Gate and the Diplomatic Quarter. Construction at Jawharat Riyadh has been ongoing since August 2021 and has reached 15% completion. The fund focused on this project has already secured the necessary funding for it and will ensure acceleration of the pace of development works at the centre with a view to guaranteeing final delivery by H1 2025G, as scheduled.

Total development costs at Jawharat Riyadh have been set at SR1.8 billion, and it is estimated that the centre will generate annual revenues exceeding SR400 million at its stabilization. ACC’s leasing department has received letters of intent from a large number of prospective tenants interested in leasing space at Jawharat Riyadh. Combined, the tenants expressing interest would occupy more than 70% of the centre’s gross leasable area (GLA), which amounts to approximately 148.4 thousand sqm, reflecting Jawharat Riyadh’s strategic location and unique value proposition. Upon completion, Jawharat Riyadh is expected to create about 7,000 jobs for the local economy.

Meanwhile, development works at Jawharat Jeddah have reached a completion rate of 15%. Jawharat Jeddah is similarly strategically located, situated in close proximity to King Abdulaziz International Airport and the Yacht Club in Jeddah Corniche District. The fund focused on this project has already secured the necessary funding for it and will ensure completion of development works at the centre with a view to guaranteeing final delivery by H1 2024, as scheduled.

Total development costs at Jawharat Jeddah have been set at SR 1.1 billion, and it is estimated that the centre will generate annual revenues exceeding SR270 million at its stabilization. ACC’s leasing department has received letters of intent from a large number of prospective tenants interested in leasing space at Jawharat Jeddah. Combined, the tenants expressing interest would occupy more than 70% of the centre’s gross leasable area (GLA), which amount to approximately 87.2 thousand sqm, reflecting Jawharat Jeddah strategic location and unique value proposition. Upon completion, the centre is also expected to create about 5,000 jobs for the local economy.

This step is considered part of ACC’s broader strategy of committing to an asset-light model. Through which, the Company will be able to mitigate risks that would arise from keeping all of its operational properties on its balance sheet, which will enhance ACC’s financial and operational flexibility needed to roll out new locations in a rapid and efficient manner.