Derayah Financial Announces the Occurrence of an Event for Derayah REIT (signing an acquisition agreement for a logistics complex in Riyadh)

Element ListExplanation
Introduction Derayah Financial, the Fund Manager of Derayah REIT, announces the signing of a acquisition agreement on 20/07/2020 corresponding to 29/11/1441 to acquire a multi-use logistics complex for a total consideration of SR140 million. The expected timeframe to complete the transfer of this property is 30 days from signing the agreement, extendable by mutual consent.
Description of the Event The property is located in Sulay District in Riyadh with proximity to the Southern Ring Road. The property is a multi-use logistics complex consisting of 193 units, where 164 of such units are earmarked as storage warehouses, and the remaining 29 units are earmarked as retail warehouses and offices. The property is built on a land area circa. 198,000 sqm, whereas the property’s built-up area is circa. 120,000 sqm.

The property will be leased to the seller in his personal capacity for 15 years (non-terminable) with an annual net rent payment of SAR11,200,000 for the first five years, which will be increased to SAR11,900,000 after the fifth year to the end of the lease term. The tenant will provide promissory notes signed in his personal name covering the lease payments throughout the lease duration. The tenant shall be responsible for the maintenance and operating expenses of the property during the lease period. The property is currently subleased to more than 120 corporate and individual tenants with an occupancy rate of 90%.

After completing the acquisition of this property the weighted average lease duration of Derayah REIT properties will increase to circa. six years from five years, and the allocation to warehouses and logistics in the portfolio will increase to 38% from 32% of total assets value. This is in-line with Fund Manager plan to diversify the type of owned properties and expand in the logistics industry, which is witnessing a gradual shift from traditional shopping to online shopping. Such sector has proven resilient during the current COVID-19 pandemic.

It is expected that ownership of the property will be transferred within 30 days from the signing of the purchase agreement, extendable by mutual consent. The acquisition will be financed through the banking facility available for Derayah REIT.

The Impact Caused by the Event It is expected that the result of the acquisition will be positive on Derayah REIT’s financial performance in the fourth quarter of 2020, upon the completion of the legal and administrative procedures of this acquisition.
Additional Information Derayah Financial confirms that there are no related parties in the acquisition, except what was mentioned earlier. Derayah Financial will announce any material development as and when they occur.

The Capital Market Authority and the Saudi Stock Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.

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