capital raise prospectus riyad reit fund ˜˚˛ ˝˙˚ˆˇ˘ final v1 english_tc… · prestige...

Capital Raise Prospectus

Riyad REIT Fund"��وق "ا��اض ر

Fund Current Capital: 500,000,000 SARFund Current Size: 690,000,000 SARTargeted Fund Capital: 1,633,000,010 SARTargeted Fund Size: 1,753,000,000 SARNumber of offered Units: 121,697,101 new unitsNumber of offered Units for In-Kind Contributions: 67,991,408 new unitsNumber of offered Units for Cash Contributions: 53,705,693 new unitsOffer Price: 9.31 SAR

OverviewRiyad REIT is a close-ended traded real estate investment fund ("Fund") compliant with Shari'a. The fund operates in accordance with the regulations of real estate investment funds and the instructions for real estate investment traded funds issued by the Capital Market Authority. The Fund is listed on the Saudi Stock Exchange and its units are traded in line with the relevant regulations and rules. Fund current capital is 500,000,000 Saudi Riyals (5 hundred million Saudi Riyals), for 99 years (ninety-nine years), which can be extended as deemed appropriate by the Fund Manager after the approval of the Capital Market Authority.

Registration and listing of Riyad REIT Fund Units was approved by the Capital Market Authority on08/ 02/ 1428AH, 08/ 11/ 2016AD.

Investment and strategic objectivesThe main investment objective of the Fund is providing sustainable cash distribution with growth potential for unit owners through investing in income-producing real estate assets located mainly in Saudi Arabia. Fund Manager shall aim to distribute annual cash dividends to the units' owners, equaling no less than 90% of the net profits of the Fund. The annual profit amounts are expected to be increased during the Fund period, as the number of income-producing properties owned by the Fund increases.

The Fund will invest primarily in developed and ready-to-use real estate assets. However, it may also invest in real estate development projects, as long as (a) the Fund investment is not less than the value of a property developed with a rental income of 75% of the total value of the Fund's assets. This is according to the latest audited financial statements.

Fund ManagerThe fund is managed by Riyad Capital, a privately held company with a paid up capital of 200 million Saudi Riyals, under Commercial Registration No. 1010239234, as a "Licensed person" authorized by the CMA with license no. Layout and incorrect information. Prestige Center 6775 Takhsussi St. - Olaya Riyadh 3712- 12331 Saudi Arabia +966 920012299

Riyad Capital is the investment arm of Riyad Bank. The head o�ce of the company is in Riyadh. Riyad Capital o�ers its clients a wide range of financial services and solutions, including financial advisory, arrangement, custody, dealing, asset management and investment portfolios.

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Riyad REIT Investment Policy:Riyad REIT seeks to own and manage a real estate portfolio with stable occupancy levels and strategic locations in the major commercial areas, to be able to benefit from the competitive advantage of these areas. The fund invests in a limited number of development opportunities, with high potential for growth and meeting the needs of real estate of a specialized nature that has not been provided in some places. Investment in such types of development projects are expected to achieve a value to the investors on the medium term.

On the long term, the Fund's portfolio will continue to focus on the investment in o�ces, trade fairs, residences, hospitality facilities and warehouses, in order to create a stable and diversified asset base for the Fund's investors and achieve a reasonable increase in the value of the Fund.

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Current Sectorial Distribution of Leasing Portfolio:Riyad REIT Fund has a diversified rental base that is divided into a wide range of specific sectors of the economy, including small and medium-sized businesses, food and beverage and retailers.

The rental base has been developed as the portfolio includes a wide range of well-known brands. These types of brands provide stability.

Fund objectives: "Growth, diversity and quality"

1- Riyad REIT is one of the largest diversified REITs in Saudi Arabia.REITs are expected to become one of the largest sectors of the real estate market. Larger real estate investment funds usually have greater negotiating power during the acquisition and are able to attract more financing opportunities. As the real estate market in Saudi Arabia on the medium term does not have su�cient depth to accommodate specialized funds. The diversified acquisition approach will enhance acquisition and allow Riyad REIT to turn into one of the best models in the local real estate market.

2- Riyad REIT increases its sources of cash flows in order to achieve stable dividends distributionsThe Fund aims to continuously expand Riyad REIT asset base and increase the diversification of its rents that will reduce the risk of concentration, in terms of tenants, properties and geographical location. It will generate shareholder profits from wider sources and increase stability on long-term dividend distributions

3- Riyad REIT aims to attract high-quality institutional assetsRiyad REIT focuses on "leadership" regarding the type of assets acquired, which be high quality institutional assets. These assets have high competitive advantages in quality of buildings, services, commercial power of the site and providing parking spaces that help the entity on the long term to continue attracting tenants when there are vacancies.

Portfolio map

- Above percentages of the leasable area in each city are calculated on the total area available for lease in the portfolio.

EasternRegion19%

Dammam:8- Ansam Al Shatea Towers 8%

Al Khobar: 9 - Al Khobar Project 11%

Jeddah10- Ascot Tahlia Hotel 9%11- Omnia Center 10%

WesternRegion19%

10

11

1

24

6

53

7

8

9

Existing projects

Projects under development

Riyadh1- Al Motamayez 4% 2- Vivenda 2%3- Izdihar Trade Center 3%4- The Residence 4%5- Al Fursan Towers 5%6- Saudi Electronic University 11%7- Kempinski Hotel 33%

CentralRegion62%

5

Al Fursan5%

Al Motamayez4%

Izdihar3%

Boulevard3%

OmniaCenter

10%

Vivenda2%

TheResidence

4%

Al Shatea Towers8%

Ascot Jeddah9%

SaudiElectronicUniversity

11%

Ascot Al Khobar11%

Kempinski Hotel

31%

Asset allocation in the portfolio (by NLA):

Media and Communications

11%

Other8%

Commerce3%

Education%24 Health Care

5%

Hospitality%27

Real Estate5%

Travel and Tourism4%

Transportation%1

Oil & Gas1%

Construction3% Government

2%

Industry diversification of leasing portfolio (by NLA):

6

Current Brands:

7

Al ShateaTowers

Classification of origin / usecommercial

Land area2,000 m2

Number of tenants2 Leases

LocationTahlia Street - Jeddah City

Building area14,500 m2

To view the location, click here:https://goo.gl/maps/evMQMBRBhb12

To view the location, click here:https://goo.gl/maps/SYfrne5Tac52


Land area6,300 m2


LocationAl-Shatie Destrict - Dammam


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Current Portfolio

The Residence

��د ا��6 ��د إ��ار – 1 ��

To view the location, click here:https://goo.gl/maps/dNrAQ4AbEiS2

Ascot CornicheAl Khobar

Ascot TahliaJeddah Tower


Classification of origin / useResidential / Commercial

Land area2,800 m2

Number of tenantsOne operating contract

LocationCorniche – Al Khobar City

* Under construction and opening in the second half of 2018

To view the location, click here:https://goo.gl/maps/NTPRVX9c6qk

Building area15,350.50 m2


Land area15,000 m2

Number of tenants6 leases - 1 operating contract

LocationHittin District - Riyadh City

Vivenda MusaBen Nusair

Al MotamayezCenter

To view the location, click here:https://goo.gl/maps/VxgDgqvPN3n

To view the location, click here:https://goo.gl/maps/Pf5AwKfiKE22

Current Portfolio

9

Al Fursan Towers

Izdihar Trade Center

To view the location, click here:https://goo.gl/maps/MVA6YbkPGxz

To view the location, click here:https://goo.gl/maps/csCQrWhZ1fT2


Land area1,750 m2


LocationKing Fahd Road - Riyadh city




Land area2,800 m2

Number of tenantsOne lease

LocationMusa Ben Nusair - Riyadh city


Land area2,500 m2


LocationIzdihar - Riyadh City




Land area5,600 m2


LocationGranada - Riyadh city

Kempinski HotelComplex

To view the location, click here:https://goo.gl/maps/so75smyfnjH2

Omnia CommercialCenter

Building area19,714.6 m2

Classification of origin / useCommercial / residential

Land area10,000 m2


LocationSaud Al Faisal StreetJeddah city

New Acquisitions

To view the location, click here:https://goo.gl/maps/ZGAMcNzw1Nn

Saudi ElectronicUniversity Building

To view the location, click here:https://goo.gl/maps/3zs7Nf97JVs


Land area21,100 m2

Number of tenantsone lease and one operationalcontractLocationKing Fahd Road - Riyadh city



Classification of origin / useCommercial / educational

Land area14,200 m2

Number of tenantsOne lease

LocationAl-Rabee District - Riyadh City

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WAULTyears

Targeted Capital Structure

Debt

Equity 93%

7%

m2 BUA under construction

m2 Net Leasable Area

Property underConstruction

tenantTotal number of tenants

Construction Cost Incurred

Million SR

Total Acquisition Cost

Million SR

IncomeGenerating Properties

Occupancy rate of theleasing portfolio

Portfolio indicators after acquisitions:

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Ratio of Net Annual ReturnTargeted for Properties

Ratio of Total Annual ReturnTargeted for Properties

Property

Izdihar Trade Centre

Vivenda Hotel

Al-Fursan Towers

Al Tamayouz CenterThe

Residence

Al-Shatie Towers

Ascot Tahlia Jeddah

Electronic University

Kempinski Hotel 1

Omnia Centre

All Income-generating Properties

Ascot Corniche Al Khobar

All Properties under Construction

All Properties

2019

9.27%

8.54%

9.35%

8.46%

18.08%

8.72%

8.44%

8.72%

24.89%

9.11%

16.55%

17.76%

17.76%

17.78%

2020

9.27%

8.54%

9.35%

8.46%

18.74%

8.98%

8.44%

8.72%

25.78%

9.56%

17.05%

22.82%

22.82%

18.81%

2018

9.27%

8.54%

9.35%

8.46%

14.19%

8.72%

7.70%

8.72%

21.33%

9.11%

14.61%

4.74%

4.74%

14.54%

2019

8.69%

8.54%

8.67%

7.95%

9.68%

8.22%

8.44%

8.70%

8.35%

8.51%

8.51%

10.86%

10.86%

9.33%

2020

8.69%

8.54%

8.67%

7.95%

9.97%

8.47%

8.44%

8.70%

8.57%

8.94%

8.70%

13.10%

13.10%

9.75%

2018

8.69%

8.54%

8.67%

7.95%

8.07%

8.11%

7.70%

8.70%

7.28%

8.51%

7.84%

2.96%

2.96%

7.85%

2018

Ratio of Return of Targeted Fund Volume

2019 2020

Total Income Targeted for Properties

Net Income Targeted for Properties

Properties Total Income

Properties Net Income

Total Fund Expenditures

Expenditures of Murabaha Facilities

Net Target Dividends Yields

290,413,000

152,434,000

17.78%

9.33%

(1.44%)

(0.29%)

7.60%

307,131,740

159,173,340

18.81%

9.75%

(1.45%)

(0.29%)

8.01%

237,363,000

128,173,000

14.54%

7.85%

(1.41%)

(0.15%)

6.30%

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In-kind

Ratio of In-kind Contributionsto Current Volume of Fund

Additional Units 1.36per Current Unit

Issue of Units: In-kindTotal

633 Million Saudi Riyals68 Million Units

Sources of Capital Increase

Issue of Units: Cash

Cash

Ratio of Cash Contributions to Current Volume of Fund

1.07 Additional Unitsper Current Unit

Total500 Million Saudi Riyals

53.7 Million Units

Target Dividends Yields

7.60%6.30%Net Income

of the Fund (2020)Net Income

of the Fund (2019)Net Income

of the Fund (2018)

8.01%

20202018

8.01%

6.30%

7.60%

2019

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SubscriptionLaunch Price 9.31 SR Minimum Limit of Subscription: The minimum limit of cash subscription is 50 unitsequivalent to 465.50 SAR whereas this condition shall not be applied for in-kind contribution.

Maximum Limit of Subscription: The Maximum limit of cash contribution is 8,700,000 unitsequivalent to 80,997,000 SAR whereas this condition shall not be applied for in-kind contribution.

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By Fund’s Manager – Riyad Capital CompanyQualified investors can subscribe in the Fund capital increase provided the same shall have an active investment portfolio at any Financial Company working pursuant to a license issued by the Capital Market Authority. The qualified investor shall subscribe through electronic channels of the Fund’s Manager and the following Website: www.riyadcapital.com

Step One – Preparation of the Following Subscription Requirements:E-copy of Valid National ID Card / Resident CardBank Account No. (IBAN) in the investor’s name and an adequate amount for the subscription value shall be confirmed.

Step Two – Subscription Amount Transfer:The subscription amount shall be fully transferred within the subscription duration on the account mentioned in the subscription page at Riyad Capital:For example; if an investor seeks to subscribe with SAR 10,000; the same shall transfer 10,000 SAR.

The subscription amount shall be fully transferred from a bank account registered in the name of the qualified investor who applied for the investment in the Fund whereas the transfer Ref. No. shall be added in the subscription application within the third step indicated hereinafter; in addition to the attached copy of National ID/Resident Card. If the subscription application is not identical to the attached transfer amount and the Subscriber’s name, the Fund’s Manager shall have the right to reject the subscription application.

Step Three – Subscription Application Fill-in – Electronic Subscription:The investor shall get a subscription application through the Website of the Fund’s Manager www.riyadcapital.com The investor must resume the subscription application fully and send the same electronically after being approved using the electronic subscription. The investor shall also attach all the required documents which have been mentioned in the first and second steps.

Neither subscription applications nor bank transfers shall be approved after the subscription duration expiry. The investor could not amend the particulars mentioned in the subscription application after the same is sent. Subscription could be cancelled and a new application could be submitted. The subscription could not be cancelled after the same is approved and confirmed.

In all cases; investors; of di�erent categories, must comply with the fulfillment of the subscription requirements and documents and upload the same electronically.

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Step Four – Confirmation of Subscription Receipt:The Fund’s Manager shall send confirmation; regarding the receipt of the application for subscription in the Fund, to the Customer via E-mail or a text message on the mobile No. electronically registered; within 5 business days from the closing date of the subscription duration.

Step Five – Approval of Subscription Application:The subscription application shall be reviewed within 5 business days from the closing date of the subscription duration. If the requirements of the subscription application are not completely fulfilled or any remarks exist, the Customer shall be notified; via E-mail or a text message on the mobile No. electronically registered, in order to resume the requirements within one business day from the date of the notice sent to the Subscriber. If the application is fulfilled, the investor shall be notified about the approval of the subscription application.

Investors; including Companies, Investment Funds and Investment Portfolios, shall refer to one of the Branches of Riyad Capital Company.

SubscriptionThrough Recipients (Riyad Bank, National Commercial Bank,Al Rajhi Bank and Banque Saudi Fransi):

The investor could subscribe provided the same shall have a bank account at Riyad Bank, National Commercial Bank, Al Rajhi Bank or Banque Saudi Fransi; along with an active Investment Portfolio. The investor shall subscribe through the bank electronic channels or the branches thereof in the Kingdom of Saudi Arabia.

For subscription; the following documents shall be attached according to the investor’s category:Documents required from all Investors:Subscription Application (hardcopy, softcopy or pursuant to the status): Signed and fully completed along with an adequate balance for the subscription amount and charges.

Documents Required from Individuals:Copy of valid National ID Card of Saudis or Copy of valid Resident ID Card for Residents

1- Cancellation & Money Refund:The launch of new units may be cancelled whereas all the subscription amounts shall be refunded to the investors in any of the following situations (unless otherwise decided by the Capital Market Authority): a- Failure to fulfill the minimum limit of subscriptions with 630 Million Saudi Riyals within the increase of the Fund capital; orb- If the number of the Units’ Owners from the Public is lower than fifty owners of the units.c- If the number of the Units’ Owners from the Public is lower than 30 % of the owners of the total units in the Fund. d- If the ownership of the assets; which are sought to be transferred to the Fund, is not transferred.

First Stage of Allocation:The allocation priority of the new launched units for cash contribution shall be granted to the allocation beneficiaries (i.e. one unit for each owned unit) provided an application shall be submitted for the same and the required procedures shall be completed. Fractional units shall not be considered in the Allocation Mechanism; whereas the fractional units; if any, shall be allocated within the second stage.

Example of Allocation Mechanism within First Stage:If an investor owns 1000 units at the allocation due date and the launch price is assumed to be SAR 10 per unit (Allocation Rate is one unit for each current owned unit):

Second Stage of Allocation:The remainder of the units; in which the allocation beneficiaries subscribe neither totally nor partially - if any, in addition to the fractional units shall be allocated to all qualified investors; other than the allocation beneficiaries, and to the unitholders who subscribed with more than one new unit for each owned unit (Surplus after First Stage). The remainder of units shall be equally allocated to all Subscribers until the minimum limit (50 units) is covered. If the minimum limit is covered for all Subscribers, the remainder of the units shall be allocated according to a proportional basis related to the subscription amount applied for.

Example of Allocation Mechanism within Second Stage:If 10 Million units remain; after the first stage, with total value of 100 Million Saudi Riyals and at an assumed launch price of SAR 10 per unit in which the allocation beneficiaries did not subscribe totally or partially; in addition to fractional units:

Surplusafter

First Stage

Total No. ofUnits afterAllocation

AllocationEntitlement(New Unit)

No. ofOwned

Units before Launch

SubscriptionAmount

(SAR)

1000 Units

1000 Units

1000 Units

No. ofAllocatedUnits in

First Stage

AllocationRatio

100%

100%

50% 1,000 Units

1,000 Units

500 Units

2,000 Units

2,000 Units

1,500 Units

10,000 SR

N/A

N/A5,000.00

10,000.00

20,000.00

1000 Units

1000 Units

1000 Units

10 MillionUnits

10 MillionUnits

10 MillionUnits

AllocationAmount

No. ofAllocated

UnitsCash Surplus

No. ofUnsubscribed

Units

50 Million Units

100 Million Units

5 Million SR

100 Million SR

10 MillionUnits

10 MillionUnits

5 MillionUnits 5 Million Units

N/A

N/A

N/A

N/A

100 Million Riyals asSurplus Refunded

to Investors

After End of First Stage Second Stage

Public Subscription & Amounts

Amount Surplus

No. ofRemaining

Units

200 Million Units 100 Million SR

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Documents Investors; including Companies, Investment Funds and Investment Portfolios, shall refer to one of the Branches of Riyad Capital Company.

Documents Required from Companies:- Copy of commercial register sealed with Company’s Seal.- Copy of Memorandum of Association & Articles of Association sealed with Company’s Seal.- Copy of ID Card of Authorized Signatory sealed with Company’s Seal & signed by Signatory.

Documents Required from Investment Funds:- Copy of commercial register of Fund’s Manager sealed with Company’s Seal.- Copy of Memorandum of Association & Articles of Association of Fund’s Manager sealed with Company’s Seal.- Copy of Professional License of Fund’s Manager.- Copy of Terms & Conditions pertaining to the Fund.- Copy of Capital Market Approval regarding the Fund Launch.- Copy of ID Card of Authorized Signatory sealed with Company’s Seal & signed by Signatory.

Documents Required from Investment Portfolios:- Copy of ID Card of Investment Portfolio’s Owner.- Copy of commercial register of Portfolio’s Manager sealed with Company’s Seal.- Copy of Memorandum of Association & Articles of Association of Portfolio’s Manager sealed with Company’s Seal.- Copy of Professional License of Portfolio’s Manager.- Copy of Management Agreement pertaining to the Investment Portfolio.- Copy of ID Card of Authorized Signatory sealed with Company’s Seal & signed by Signatory.

Remarks:- The Customer shall ensure the authenticity of the registered particulars and submitted documents whereas Riyad Capital Company shall not be liable for any results of any frauds. - The Customer shall ensure that the subscription value in the application is identical to the executed bank transfers. If a difference exists; whether surplus or deficit, the subscription request shall be rejected. - If any amount is transferred from an account other than the account registered at the Fund’s Manager upon subscription in the Fund, the same shall be rejected/shall not be accepted. The bank account shall be in the customer’s name.- For any inquiries; please contact us on Tel. No.: 920012299 or via E-mail: [email protected]

DisclaimerThe main investment target of the Fund is the provision of a current income for the unitholders.

Total capital targeted for the Fund: SAR 1,633,000,010 – Fund Duration: 99 yearsApproval was issued; regarding the registration and listing of Riyad REIT Fund Units, by the Capital Market Authority on 081428/02/ AH. corresponding to 082016/11/ AD.

The value of investment in the Fund is variable whereas the same may increase or decrease; thus, the amounts received by the investor may be lower than what was invested by the same. Part of the invested capital may be used for the payment of this income. The previous performance may not be deemed an indication of the future outcomes.

Riyad Capital Company may provide investment services or it may have provided the same in advance within the previous 12 months to one of the Companies it deals with regarding Securities. Riyad Capital Company, the employees therein, one or more of the Subsidiaries or the Clients thereof may have financial interests in the relevant financial assets.

Charges and fees shall be applied as per what was mentioned in the terms & conditions.

Please refer to the disclosure mentioned in the terms & conditions regarding the main risks involved in the Fund. You should seek for consultation from consultants before the investment. These services are subject to the terms and conditions.

Terms & conditions and the Financial Reports of the Fund could be reviewed through the following link on the Website:http://www.riyadcapital.com/ar/asset-management/public-funds/reits/

Riyad Capital is a Saudi Closed Joint Stock Company with a paid up capital of SAR 200 million, under Commercial Registration No. 1010239234; licensed by the Capital Market Authority Law under No. 0707 -37, Corporate Head office: 6775 Takhassusi St. – Olaya, Riyadh 12331 -3712, Kingdom of Saudi Arabia

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