Riyad REIT invests SR 61.8M in a Private Real Estate Fund

Riyad Capital (“Fund Manager”) has announced that Riyad REIT Fund has invested SAR 61.8 in a private closed-end Real Estate Fund that is income-generating and Shariah-compliant and managed by Riyad Capital.

The private fund aims to achieve stable current income and grow 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 within the Kingdom of Saudi Arabia.

The private real estate fund’s target size is SAR 3 billion, and the initial closing size is SAR 315 million. The fund term is twenty years, extendable for an additional five years.

The private real estate fund under investment 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 private real estate fund would be financed by accepting cash and in-kind contributions in addition to bank facilities – obtained from Riyad Bank – in compliance with Shariah standards.

Due to the private fund being managed by the fund manager, the members representing the fund manager on the board of directors of Riyad REIT Fund abstained from voting on the fund manager’s recommendation to invest in the private fund.

It is worth noting that the investment of the Riyad REIT Fund was fully financed from the Sharia-compliant bank facilities available to the REIT.

The Impact Caused by the Event:

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

It should be noted that the financial impact of the investment is expected to be positive, by increasing the value of the fund’s revenues.