At a local level, and in line with the Fund's continued focus on the development and advancement of the Saudi market, we have invested SAR 61.8 million in a closed-end, income-generating Sharia-compliant private real estate investment fund and that of Riyadh Capital. The Fund aims to provide stable rental income and capital growth over the medium to long term by acquiring high-quality, income-generating institutional real estate assets with a diversified rental base in various vital locations in Saudi Arabia. Globally, in the first half of 2022, the Fund has withdrawn from an investment in real estate in the United States of America (350 Rhode Island in San Francisco, California), which has an area of 11,808 square meters.
With this exit, the Fund generated a total return (ROI) of 57% and an internal rate of return (IRR) of 27% for Fund participants. The Riyadh REIT Fund has invested in a number of domestic and international investments, which has had a positive impact on the fund's performance. With the Fund's capital increase, it is expected to grow its real estate portfolio through more acquisitions focused on real estate assets with investment returns.
The Fund always seeks to diversify its investments, thereby reducing concentration risks in certain real estate sectors. The Fund will continue to seek new investment opportunities in the market to achieve and enhance the Fund's investment objectives.
Financial Highlights
Share Price
Portfolio Highlights
15Saudi Arabia
Portfolio’s Geographic
16USA
17Belgium
Market
Snapshot
Market Snapshot
In the hospitality sector, Riyadh's ADR and occupancy rates increased by 10.9% and 2.1% respectively compared to the same period in 2019. One of the announced targets is to increase Riyadh's population to 15-20 million by 2030 – pointing towards housing demand continues to develop in the long run. With this small addition, the total office stock in DMA now amounts to 1.26 million sq m.
Despite softening office market fundamentals nationally, the DFW office market is poised to remain bullish over the long term due to strong market fundamentals. This is the lowest unemployment rate in the Philadelphia MSA since the second quarter of 2019. Trophy buildings are expected to continue to reach healthy levels of occupancy in the coming year.
Overall, this has resulted in more investment being concentrated in the trophy segment of the market. In European real estate investments, the office sector is the largest sector by investment.
Revenue Base
Assets Base
Local
Portfolio
Local Portfolio
Riyadh, King Abdullah Road, Alraed District, near Prince Turki Ibn Abdulaziz Al Awwal.
Operational Properties
Hotel consists of 147 room keys, 8 meeting rooms and commercial rental space on King Fahad Road.
Investments
International Portfolio
European Portfolio
Risk
Assestment
It is possible that the value of units in the Fund may fall or that the investors may lose part or all of the capital invested. There is no guarantee that the expected returns or the objective of the Fund will be achieved. The Fund Manager will carry out valuation of the property portfolio twice a year in order to take the necessary precautions to protect the value of the underlying assets.
The level of risk to which the Fund is exposed increases if it pledges any of its assets in favor of a third party financier. Despite the fund manager's relative hedging against interest rates, it is expected that interest. rate fluctuations will continue to affect the fund's distributions. The Fund Manager also seeks to mitigate these risks by carrying out the development work after carrying out all necessary technical, financial and legal due diligence.
The Fund Manager adopts an effective approach to monitor regulatory requirements and any modifications thereof affecting the management of the Fund, such as modifications affecting compliance and risk management requirements relating to the Fund. Such practices by the Fund Manager are intended to establish appropriate controls to avoid non-compliance by the Fund or the Fund Manager. The fund is subject to real estate transaction tax, effective October 4, 2020, at a rate of 5%.
In the event that real estate transaction tax is levied on real estate sold by the fund, the fund will pay a tax of 5% of the value of the real estate to the General Authority of Zakat & Tax, which may affect the return for the fund and the shareholders. . The Fund Manager takes an effective approach to monitoring tax requirements and any changes thereto that affect the management of the Fund, such as changes affecting compliance and risk management requirements relating to the Fund. In this regard, the valuations carried out by the Fund Manager are for guidance only and do not constitute an accurate measure of the value to be obtained from the sale of the subject property.
The ultimate verification of the market value of a property depends largely on negotiations between a seller and a buyer, which may be affected by economic conditions and other circumstances beyond the control of the Fund and the Fund Manager. The Fund Manager will value the Fund's real estate assets based on appraisals carried out by two independent appraisers accredited by the Saudi Authority for Accredited Valuators. The average of two valuations will be used and in the event of a substantial difference between the two valuations, the Manager will appoint a third appraiser.
76Epidemics Risks
The Fund may be exposed to various risks associated with investing in real estate located outside the Kingdom. For example, changing foreign exchange rates, foreign real estate markets are subject to a decline in public activity and rental levels. In addition, the real estate properties or the companies owning these properties are exposed to losses as a result of claims related to environmental liability, occupational safety, insurance, tax or other legal or regulatory claims related to the ownership of foreign assets. .
The fund manager examines the markets in which the fund invests with the help of specialist advisers in the target markets to examine the markets in general and the potential risks of the investment. After acquiring real estate, the fund manager effectively monitors the level of activity on the real estate markets in which the fund invests, in addition to legal requirements and any changes to them. This contributes to the establishment of adequate control, which enables the fund manager to make appropriate decisions that ensure the interests of the fund and unit holders.
Disclaimer
