Arabian Centres Signs Agreement to Lease And Invest SR969.7 mln land for Jawharat Al-Khobar Mall

Arabian Centres (“ACC” or “lessee”) announced on Thursday the signing of a lease and investment agreement for a piece of land with an area of around 300,000 sqm, located north of Al-Khobar city in Al-Kurnaish district. The agreement is for a period of 30 Gregorian years renewable upon the agreement’s two parties’ consent and an average annual lease amount to around SR 51.5 million for the purpose of developing Jawharat Al-Khobar Mall and other mixed-use commercial facilities.

The land is exceptionally located on Al-Kurnaish beach in Al-Khobar city, granting it a unique view over the Arabian Gulf and the nearby landmarks in addition to its proximity to some of the nearby Gulf countries like Bahrain, Qatar, and Kuwait. ACC intends to initiate the development works of Jawharat Al-Khobar Mall on this piece of land during the coming six months with a budgeted development cost range between SR 1 billion to 1.3 billion and the mall plans to offer between 130 to 150 thousand sqm of GLA.

The development is expected to conclude and the mall to open between the second half of 2025 and the first half of 2026, and it is estimated that the mall will generate annual revenues of between SR 290 and 330 million at its stabilization.

Space at this development will be allocated for mixed use purposes (hotel and offices), which will be connected to the mall at a later stage, which will add up to 30% of additional returns in the future.

The details of mall, rendering, facilities and method of financing will be disclosed at a later date.

Developing lifestyle flagship destinations is one of ACC’s strategic pillars for expansion, and Jawharat Al-Khobar Mall will be the third flagship lifestyle destination as part of its malls’ portfolio, alongside Jawharat Al-Riyadh Mall and Jawharat Jeddah Mall (both currently under development).

The development will embody cutting-edge global trends and designs to meet the ever-growing needs of its visitors, ACC will be allocating a space in this mall to host branches of the most prestigious luxury brands in the field of fashion.

This new mall will become the sixth addition to ACC malls’ portfolio in Eastern Province and the 30th addition to the malls’ portfolio in the Kingdom (overall operational and under development malls), which further enhances ACC’s leading position in this region and across the Kingdom.

Lease and investment agreement for a piece of land located north of Al-Khobar city, Al-Kurnaish district, for a period of 30 Gregorian years renewable upon both parties’ consent for the purpose of developing a commercial mall and other commercial mixed-use facilities.

Main contract terms:

• Lease and investment of a piece of land located north of Al-Khobar city, Al-Kurnaish district, for a period of 30 Gregorian years for the purpose of developing a commercial mall and other mixed-use facilities, where the first two years are exempted from rent, and the first 20 years are considered binding to both parties, while the last 10 years are binding only to the lessor and optional for the lessee. The agreement is renewable to any further term subject to both parties’ consent one year before its end.
• The lessor acknowledges that there are no disputes, mortgages or legal actions on the land subject of the contract that prevent the lessee from benefiting from under the contract framework, and the lessor is obligated to compensate the lessee for any damages or losses if proven otherwise. The lessee is also obligated to obtain all licenses and approvals necessary for the establishment and development of the mall and the other commercial mixed-use facilities, at his own expense.
• In the event of expropriation of the land subject of the contract by the state in the public interest, the lessee has the right to collect the estimated compensation for the buildings and facilities built by him only. In the event of the occurrence of any of the force majeure circumstances mentioned in the contract, the lessee is relieved of his obligations under the contract until the circumstance has passed, and if it continues for more than 120 days, the lessee may terminate the contract.
• The lessee has the right to sublease the land subject of the contract or the facilities built on it, in whole or in part, provided that the term of contracts with sub-tenants does not exceed the term of this contract, and upon expiry or termination of this contract, the lessee shall hand over the land and all developments on it to the lessor in accordance with the terms mentioned in this contract.

The impact of this contract is expected to appear on the Company’s financial statements starting from the second quarter of fiscal year 2023, ending on 30 September 2022.