Saudi's Al Rajhi Capital buys 2.37ha Lulu warehouse in Riyadh

The warehouse is fully leased by Abu Dhabi-headquartered supermarket giant Lulu Group

Al Rajhi REIT has bought a Lulu-leased warehouse facility in Riyadh for $13.9m, a Tadawul filing has revealed [representational image].
Al Rajhi REIT has bought a Lulu-leased warehouse facility in Riyadh for $13.9m, a Tadawul filing has revealed [representational image].

Saudi Arabia’s Al Rajhi Capital has bought a 2.37ha warehouse in Riyadh, leased by UAE hypermarket heavyweight Lulu Group, for $13.9m (SAR52.250m).

According to a Tadawul filing on 1 November 2018, the sale of Lulu Central Logistics, a purpose-built, high-specification warehouse facility on Al Kharj Road, Industrial Gate City in Riyadh, was completed on 31 October 2018.

The $13.9m price tag, the Saudi stock exchange read, was funded through the available Shari'ah-compliant debt facility for Al Rajhi Real Estate Investment Trust (REIT).

READ: PwC notes growth of Saudi Arabia's REITs in H1 2018

The property, featuring a dry warehouse, a cold storage facility, and a repacking unit, is fully leased to Lulu Saudi Hypermarkets – the Saudi arm of Abu Dhabi-headquartered supermarket giant Lulu Group.

The annual rent payment for the facility is $1m (SAR3.795m). According to the filing, this will be increased by 12% every five years, with Lulu Saudi Hypermarkets holding the current 15-year lease that began on 13 December 2016.

“This acquisition is expected to have a positive impact on Al Rajhi REIT’s financial performance going forward,” the bourse document read. "Al Rajhi Capital confirms that there are no related parties in the acquisition except the source of financing is from existing debt facility from Al Rajhi Bank."

Floated in January 2018, Al Rajhi REIT Fund is Al Rajhi Capital’s first REIT that offers investors exposure to the real estate market.

READ: ENBD REIT looks to nearly double non-residential, non-office assets

According to Al Rajhi in January, it was the largest REIT fund to be offered to date in the kingdom.

Speaking at the time, Gaurav Shah, chief executive officer of Al Rajhi Capital, said: “We will continue to focus on real estate assets with long term fixed contracts occupied by solid tenants in attractive sectors to deliver predictable returns in the years to come.”

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