The fund operates in accordance with the Rules on real estate investment funds issued by the Capital Market Administration. The Fund aims to invest at least 75% of its assets under management in fully developed income-generating real estate assets in Saudi Arabia, while the Fund may invest a maximum of 25% of its assets under management in real estate investments outside the Kingdom. Saudi Arabia.
Percentage of value of leased
The percentage of the value of leased and vacant real estate to the total real estate value.
Percentage of value of leased and vacant real estate assets of total value of real estate assets
Percentage of rent for each
Percentage of rent for each asset from total rental income based on lease agreements during 2022
Details of
Uncollected Rent
Uncollected Rents
December 2022, the Fund Manager undertook legal proceedings against Eskan Company for Investment and Development which is the master tenant for Eskan 4 and
Percentage of Non-cash
Expenditure
Percentage of Non-cash expenditure from Net Income
Fund’s
Performance
Comparative Table covering the last three financial years
Details of Borrowed Assets
March 2021, the Fund obtained Shariaa compliant bank financing in the amount of SR 149,891,640 from Riyad Bank, the loan represents 25.97% from
Performance Record
Amount in SAR
Waiving of Management fees
Fundamental & Non-fundamental Changes
Statement about any special commission received by the fund manager during the period
Dividends during fund life
Fund
Board of Directors
During the year 2022, the foundation's board held two meetings, in April and in October. The following is an overview of the most important decision made by the foundation's board.
Risk
Assessment Report
- Inability to service the debts of the fund and other financial obligations
- Fund manager regularly monitors the liquidity of the fund to meet expected obligations including fund
- Continuous monitoring of obligations schedule and ensuring sufficient resources availability to honor these
- Continuously watching liquidity and coverage ratios for any adverse changes. Debt Service Coverage Ratio
- On 26 Mar 2023 all three properties were leased to Moro International Company until 31 December 2023,
For rent receivables, the fund manager continuously monitors the outstanding quota and follows up with tenants for payments. However, the fund manager works to assess the most suitable structure for the fund's capital to safeguard the interests of the fund's shareholders. Occupancy risk Risk of a decrease in the occupancy rate of the properties and thereby affect the fund's rental income.
In some cases, the Fund Manager may accept the renewal of lease according to prevailing market conditions. The Fund Manager meets regularly with the real estate agents and operators to discuss the. Decisions including investment Decisions and actions taken by the Fund Manager, which may have an impact on the performance of the Fund.
Investing in the Fund involves significant risk, which may affect the performance of the Fund. There may also be other risks and uncertainties not currently known to the Fund Manager.
SICO SAUDI REIT FUND
A Real Estate Investments Traded Fund
NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS 1 New standards, amendments to standards and interpretations
The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. According to the standard, the interpretation or change is valid from the current year and has been approved by the Company, however these have no influence on the Company's accounts. The following new standards, amendments and revisions to existing standards which have been issued by the IASB, but which have not yet entered into force on the date of issue of the company's annual accounts.
The Company has chosen not to early adopt these statements and they do not have a significant impact on the Company's financial statements. The costs minus the residual value of investment properties are depreciated over the shortest period of the useful life or term of the Fund, i.e. 35 years. An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds the recoverable amount, which is the greater of the asset's fair value less costs to sell and value in use.
When an impairment loss is subsequently reversed, the carrying amount of the property is increased to the revised estimate of its recoverable amount, but the increased carrying amount must not exceed the carrying amount that would have been determined. A provision is recognized when the Fund has a present legal or constructive obligation as a result of past events, it is possible that an outflow of resources involving economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. .
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 6 Revenue recognition (Continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 12 Net Assets (Equity) per unit
Financial assets
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 14 Financial instruments (Continued)
Financial assets (Continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 5.14 Financial instruments (continued) 5.14 Financial instruments (continued) . A) Financial assets (continued) Reclassification.
Financial assets (Continued) Reclassification
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 5.14 Financial Instruments (continued) 5.14 Financial Instruments (continued) . A) Financial resources (continued). Exposure at Default (EAD): This is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date, including principal and interest repayments and expected drawdowns. The carrying amount of the asset is reduced according to the above model and the loss is recognized in the consolidated statement of comprehensive income.
Receivables with associated compensation are written off when there is no realistic prospect of future recovery and all collateral has been realized or transferred to the fund. If the amount of the estimated impairment loss in a subsequent year increases or decreases due to an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced. If a write-off is later recovered, the recovery is recognized under other income in the consolidated income statement.
The gross book value of the financial asset is written off (either partially or fully) to the extent that there are no realistic possibilities for recovery. This is usually the case where the fund determines that the debtor does not have assets or sources of income that can generate sufficient cash flows to repay the amounts subject to the write-off.
Financial liabilities
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 15 IFRS 16 Leases (Continued)
- MANAGEMENT FEE, OTHER EXPENSES AND TRANSACTION FEE - MANAGEMENT FEE, OTHER EXPENSES
- CASH AND CASH EQUIVALENTS
- Cash balances includes current accounts held with Bank Muscat and other local financial institution
- RENT RECEIVABLE / UNEARNED RENTAL
- NET REALIZED AND UNREALIZED (LOSS) / GAIN FROM INVESTMENTS CARRIED AT FVTPL
- ISLAMIC FINANCING
- OTHER EXPENSES
- EFFECT OF NET ASSET (EQUITY) VALUE IF INVESTMENT PROPERTIES ARE FAIR VALUED
- EFFECT OF NET ASSET (EQUITY) VALUE IF INVESTMENT PROPERTIES ARE FAIR VALUED (CONTINUED)
- RISK MANAGEMENT
- FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
- FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) (a) Market risk
- FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) (b) Credit risk (Continued)
The Fund cancels a financial liability when its terms are changed and the cash flows of the modified liability are materially different. Based on the assessment, the above standard has no material impact on the fund's financial statements at the reporting date. The title to the fund's properties is kept as security for the loan amount.
The Fund Manager has used the average of the two valuations for the purpose of disclosing the fair value of the properties. Related parties of the Fund include "SICO Capital" which is the Fund Manager, (Bank Muscat is a shareholder of SICO Capital), with the underlying assets of the Fund held with Riyad Capital (being the custodian of the funds). Price risk arises mainly from the uncertainty regarding the future prices of the financial instruments that the Fund owns.
At the date of the statement of financial position, the Fund has invested in the SICO Capital Market Fund. The credit quality of the Fund's bank balance is assessed with reference to foreign credit ratings.
Note 31 December 2022 31 December 2021
- FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) (c) Liquidity risk (Continued)
- FAIR VALUE ESTIMATION (CONTINUED)
The fund seeks to limit its credit risk by monitoring credit exposures, limiting transactions with specific counterparties and continuously assessing the creditworthiness of counterparties. The fund uses the simplified IFRS 9 method for measuring expected credit losses, which uses a receivable for expected losses for receivables. With regard to interest-bearing financial assets consisting of time deposits, the fund uses the IFRS 9 general approach to measure expected credit losses.
On 31 December 2022, the fund calculated the ECL for the exposures mentioned above, but due to the minimum amount, it was not recorded in the financial statements. The fund manager already has adequate cash and liquid assets to settle his financial obligations when they fall due. Operational risk is the risk of direct or indirect loss arising from various causes related to the processes, technology and infrastructure supporting the fund's activities inside or outside the fund's service provider, and from external factors other than credit, liquidity, currency and market. risks such as those arising from legal and regulatory requirements.
The Fund's objective is to manage operational risk to balance the limitation of financial losses and damage to its reputation with the achievement of its investment objective of generating returns to unitholders. As of December 31, 2022 and 2021, the Fund's financial instruments consist of cash and cash equivalents, Investment carried at fair value through profit and loss, rent receivable, accrued management fee and accrued expenses and other liabilities.
Level 2 Level 3 Total Financial assets measured at
- FINANCIAL INSTRUMENTS BY CATEGORY
- EVENTS AFTER THE REPORTING DATE
- SIGNIFICANT STANDARDS ISSUED BUT NOT YET EFFECTIVE
- LAST VALUATION DAY
- Reclassification
- APPROVAL OF FINANCIAL STATEMENTS
The Foundation intends to adopt all applicable standards and interpretations when they become effective. The annual accounts were approved by the Foundation's board of directors on 30 March 2023 (Corresponds to 08 Ramadan, 1444H). We have fulfilled our responsibility to ensure the Foundation's compliance with Sharī`ah standards and guidelines approved by us and are pleased to issue this report.
Based on our (i) review and supervision of the Fund's affairs in relation to Shariah compliance and (ii) review of the activities carried out for the period, we report that, in our opinion, the Funds for the year ended 31 December 2022 are in in accordance with Shari'ah standards and guidelines approved by us. Issuance of fatwas, resolutions and opinions on matters submitted to the Supervisory Board in relation to the Fund's activities. Our responsibilities in relation to the fund's compliance with Shariah standards and guidelines include providing oversight, Shariah rulings, particularly in relation to the design of transactions (including approval of contracts, related documents, procedures, etc.).
We are also required to conduct a period-specific review of the Fund's state of compliance with Shariah standards and guidelines. Management has the responsibility to implement the Sharīʻah governance framework and to ensure that Sharīʻah compliance is embedded in the day-to-day functioning of the Fund.
SICO S AUDI REIT F UND
SHARI'A AUDIT REPORT
Part 1: Preface
- Introduction
- Standards and Guidelines
- Responsibility
- Procedures Performed
- Scope of Work
- Sampling Methodology
- Objectives and Notes
- Ratings
- Confidentiality
The audit was carried out in light of the Shariah guidelines issued by the Fund's Board of Directors, taking into account the Shariah standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions ("AAOIFI"). The procedures we selected for our Shariah audit and the resulting factual findings with respect to each of the aspects covered in this report depended on our judgment. The audit included a review of the Fund's operations and activities, including a review of related transactions to ensure that they are conducted in accordance with the guidelines and appropriate controls approved by the Supervisory Board.
The main objective of the report is to assess the products and control procedures related to the Shariah compliance and operation of the fund in the light of the Shariah directives and guidelines issued by the SC. Observations on the Fund's Shariah Compliance Environment The purpose of these observations is to assess the Fund's internal Shariah control system and improve the level of compliance in accordance with Shariah standards and supervisory board guidelines, and to ensure that policies and procedures have been formulated in accordance with the SC and other regulatory directives. These observations are the result of audit procedures carried out in the Shariah fund.
They show deficiencies in the implementation and execution of such investments in light of the directives approved by the Supervisory Committee. The identified issues have been classified based on our assessment of possible risks to the fund's Shari'a compliant investment.
Part 2: Observations
- Observations On the Environment of The Shari’a Compliance
- Observations on the Fund Operations
