shuaa capital saudi arabia (scsa) presents · page | 1 shuaa capital saudi arabia (scsa) presents...

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SHUAA Capital Saudi Arabia (SCSA)

Presents

Disclaimer: This document has been translated on a best effort basis and the Arabic version of this document shall be deemed the official and formal version

for all purposes. In case of disparity, the Arabic version shall prevail.

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Terms & Conditions

SHUAA REIT FUND (A closed-end Shariyah-compliant real estate investment fund listed on the Capital Market Authority of Saudi Arabia)

Shariyah Approval No.: SLA-879-01-01-05-18

Fund Manager

SHUAA Capital Saudi Arabia (SCSA) is a closed joint stock company incorporated under the Saudi Companies Law, registered under

Commercial Registration No. 1010243538 and is licensed by the Saudi Arabian Capital Market Authority as an authorized person

under License No. 07056-37, in accordance with the list of authorized persons issued by the Capital Market Authority (“CMA”).

Custodian

Fund Size: 591,500,000 (Saudi Riyals)

Unites Offered to Public: 59,150,000 units

Unit price: SR 10 (Ten Saudi Riyals)

Amount Offered to Public (cash): 305,150,000 (Saudi Riyals)

In Kind Contribution: 286,350,000 (Saudi Riyals)

Total offering amount: 591,500,000 (Saudi Riyals)

Percentage of Unites Offered to Public from Fund Size: 51.59%

The Capital Market Authority assumes no responsibility for the contents of these terms and conditions and does not make any

representations as to the validity or completeness of these Terms and Conditions. The CMA shall not be liable for any financial loss

arising from the application of any provision of these Terms and Conditions or due to reliance thereon. Those wishing to subscribe in

the Fund units offered under this document, should investigate the validity of the information provided regarding the offered units. In

case the contents of this document are not understood, they must seek advice from an authorized financial advisor.

The Fund Manager shall be liable for the information contained in these Terms and Conditions and shall confirm, to the best of his

knowledge (after making reasonable effort to ensure the same), that they do not include any false or misleading statements and do

not omit any matters that should be included therein. The Saudi Arabian Capital Market Authority and Saudi Stock Exchange (Tadawul)

shall not be liable for the content of these Terms and Conditions and make no representations or warranties as to their accuracy or

completeness; and expressly disclaim any loss that may arise due to the approval which would void any part of these Terms and

Conditions.

Potential investors should undertake the necessary research to verify the investment opportunities offered under this document and

seek the help of a special advisor in matters of zakat and tax in respect of any zakat or taxes they may incur as a result of owning units

in the Fund, or trading units, or dispose them in any other form. Potential investors should not consider the views and estimates

provided by the Fund Manager in these Terms and Conditions as recommendations for investment in the Fund.

SHUAA REIT Fund has been approved as a Sharia-compliant investment fund permitted by the Fund's Shariyah Committee.

All investors should carefully read and review all documents and instruments related to the Fund prior to take a decision to invest.

Investor's investment in the Fund shall be deemed as an acknowledgment to having read and accepted the Fund’s Terms and

Conditions.

Omar bin Mohammed Saeb Al Jaroudi Lina Ismail Assaf

Chief Executive Officer Head of Compliance, AML& Terrorism Financing

Approved from Capital Market Authority on 25/02/2019

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TABLE OF CONTENTS Important Notice 4

Fund Manual 6

Terms and Conditions 17

A- Fund Name& Type 17

B- Address of the head office of the Fund Manager& website 17

C- Fund Term 17

D- Investment Fund Objectives 17

E- Summary of Fund Strategies 18

F- Fund-related Risk Factors 35

G- Subscription 48

H- Trading of Fund Units 53

I- Fund Termination 54

J- Fees, Expenses & Commissions 55

K- Fund Assets 59

L- Fund Board of Directors 61

M- Fund Manager 64

N- Custodian 68

O- Properties Managers 69

P- Auditor 69

Q- Financial Statements 70

R- Conflict of Interest 70

S- Reporting to Unit holders 71

T- Meeting of Unit holders 73

U- Rights of Unit holders 74

V- Other Information on the Fund 75

W- Amendments to the Terms and Conditions 78

X- Fund Manager Acknowledgments 78

Y- Governing Law & Disputes Resolution 78

Annex (A) Fund Manager Acknowledgments 79

Annex (B) summary of Financial Disclosure 82

Annex (C) Shariah Standards 85

Annex (D) Form of Power of Attorney 87

Annex (E) Subscription Form 88

Annex (F) Letter of Acknowledgment 89

Annex (G) Subscription Mechanism and Requirements 90

Annex (H) Example of Calculating the Recurrent Fees 93

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Important notice

These terms and conditions comprise detailed information with respect to SHUAA REIT FUND ("Fund") and the process of units

offering in the Fund ("Units"). Upon subscription in these units, the Investor shall be treated as having made a subscription only

based on the information contained in these Terms and Conditions, copies of which are available on Shuaa Capital Saudi Arabia's

website ("Fund Manager") www.shuaacapital.com, or the website of the Capital Market Authority ("the Authority"),

www.cma.org.sa or the website of the Saudi Stock Exchange ("Tadawul") (www.tadawul.com.s).

Potential investors shall read the Fund’s Terms and Conditions carefully and in full before purchasing units in the fund, where

investment in the fund involves a number of risks, which may not be suitable for all investors. Furthermore, investors shall be

willing to bear all the risks and liabilities associated with any investment in the Fund which are set forth in paragraph (f) of these

Terms and Conditions. The Unit holders' purchase of any of the Fund units shall be deemed as an acknowledgment that they have

read and accepted these terms and conditions.

These terms and conditions prepared by the Fund Manager in accordance with the provisions of the Real Estate Investment Funds

Regulations issued by the Authority Board of Directors pursuant to the provisions of Resolution No. 1-193-2006 dated

19/06/1427H (corresponding to 15/07/2006) ("Real Estate Investment Funds Regulations") and by virtue of the provisions of

traded real estate investment funds promulgated by the decision No. 6-130-2016 dated 23/01/1438H corresponding to

24/10/2016G, and amended by decision No. 2-115-2018 dated 13/02/1440H corresponding to 22/10/2018G. ("Instructions of

Traded Real Estate Investment Funds").

These Terms and Conditions contain the information provided in compliance with the registration requirements and the

acceptance of the listing of units according to the listing rules in the Saudi Stock Exchange as well as to the Real Estate Investment

Funds Regulations and the instructions of the Traded Real Estate Investment Funds.

The Fund Manager and the Fund's Board of Directors shall be liable for the information contained in these Terms and Conditions

and shall confirm, to the best of their knowledge (after making reasonable effort to ensure the same), that they do not include

any false or misleading statements and do not omit any matters that should be included therein by virtue of the Investment Funds

Regulation on the date of issuance of these Terms and Conditions and on the date of the last update thereof. However, certain

information contained in these Terms and Conditions (in relation to the real estate sector) were obtained from external sources.

While the Fund Manager and the Fund's Board of Directors have no reason to believe that such information, in tangible terms, is

inaccurate

The Capital Market Authority assumes no responsibility for the contents of these terms and conditions and does not make any

representations as to the validity or completeness of these Terms and Conditions. The Authority shall not be liable for any financial

loss arising from the application of any provision of these Terms and Conditions or due to reliance thereon.

These terms and conditions shall not be regarded as a recommendation by the Fund Manager to subscribe in the Fund. As well as,

the information contained in these Terms and Conditions is of a general nature and was prepared without taking into account the

individual investment objectives, financial situation or investment needs of the persons intend to investment in units offered.

Therefore, prior to take any decision to invest in the Fund, all those who have access to these terms and conditions shall be

responsible for seeking an independent advice from a financial advisor licensed by the Capital Market Authority in connection

with the offering process and shall rely on his own study to determine the suitability of both the investment opportunity and the

information contained in these terms and conditions to the individual objectives, financial position and needs of the investor,

including the advantages and risks of investing in the Fund. Investment in the Fund may be appropriate for certain investors only

and potential investors should not rely on the decision of others whether to invest or not to invest in the Fund as a basis for

advancing the investment therein.

http://www.shuaacapital.com/

http://www.tadawul.com.s/

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Subscription in units is available only to the following categories: (A) natural persons of Saudi nationality or the nationality of a

member state of the Gulf Cooperation Council (GCC); (B) establishments, companies, investment funds and other legal entities

existing in the Kingdom of Saudi Arabia and other GCC States; (C) Foreigners resident in the Kingdom of Saudi Arabia; (D) eligible

foreign investors under the rules organizing the investment of eligible foreign financial institutions in securities issued by the

Authority's Board of Directors under the resolution No. 42 dated 15/07/1436H corresponding to 04/05/2015G; (E) Other investors

permitted by the Authority to possess securities listed on the Saudi Stock Exchange (Tadawul). All recipients of these Terms and

Conditions shall have access to any legal or regulatory restrictions relevant to the offering and sale of units, and shall observe such

restrictions.

The information contained in these Terms and Conditions shall remain subject to change. The value of units may be affected by

future developments, such as inflation, taxes, or any other economic, political or other factors that the Fund Manager has no

control over (for further details, see paragraph (f) of these Terms and Conditions). These terms and conditions or any verbal or

written information regarding the units offered are not intended and should not be construed or relied upon in any way as

guarantee or confirmation of future profits, results or events.

These terms and conditions were prepared based on the information available to the Fund Manager at this date. The validity of

this information may be affected by future operating conditions and therefore there are no assurances, representations or

warranties regarding the validity of such information after that date. In the event of any future changes, the unit holders will be

notified through the announcement on the Saudi Stock Exchange (Tadawul) and the website of the Fund Manager.

Some of the terms in these Terms and Conditions constitute or may be construed as constituting "future assumptions". These

assumptions can generally be determined by the use of words or phrases expressing the future such as "plans," "estimates,"

"believes," "expects," "predicts," "may," "will, "shall", "expected" or negative thereof or other variations in these terms or

comparable terms.

Such terms of future reflect current point of view of the Fund Manager regarding future events, however they do not constitute

a guarantee of future performance. There are many risk factors that may cause the results, performance or actual achievements

of the Fund to vary significantly from any future results. Some of these risks are described in detail in other sections of these terms

and conditions (for further details, please refer to paragraph (f) of these terms and conditions). If these risks or uncertainties are

realized or any fundamental assumptions have been proved to be incorrect or inaccurate, the actual results of the Fund may differ

significantly from those reported in these terms and conditions as expected, believed, estimated, planned or anticipated.

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Fund Manual

Fund manager SHUAA Capital Saudi Arabia (SCSA) Hamad Tower, King Fahad Road, 27th Floor P.O. Box 8181. Riyadh 11482, Saudi Arabia. Tel.: +966114666990 Fax: +966114666993 [email protected] www.shuaacapital.com.sa

Custodian & IPO Agent

Al Bilad Capital Smart tower, 1st floor, Al Tahlia Road P.O. Box 140, Riyadh 12313 Saudi Arabia

Administrator SHUAA Capital Saudi Arabia (SCSA) Hamad Tower, King Fahad Road, 27th Floor P.O. Box 8181. Riyadh 11482, Saudi Arabia. Tel.: +966114666990 Fax: +966114666993 [email protected] www.shuaacapital.com.sa

Sub-administrator

APEX Fund Services (Dubai) Limited Office 101, 1st floor, Gate Village, Building No. 5 P.O. Box 506534, Dubai International Financial Center, Dubai, UAE. Tel.: +97144289221 Fax: +971551823406 www.apexfundservices.com

Receiving Bank Riyad Bank King Abdulaziz street- Al Muraba' district, Riyadh P.O. Box 22622, Riyadh 11416, Saudi Arabia Tel.: 920002470 Fax : 0112915101 www.riyadbank.com

Receiving Bank Al Rajhi Bank Olaya street, Riyadh 11411,Saudi Arabia Tel.: +966114629929 Fax: +966114624311 [email protected] http://www.alrajhibank.com.sa

mailto:[email protected]

http://www.shuaacapital.com.sa/



http://www.apexfundservices.com/


http://www.alrajhibank.com.sa/

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Receiving Bank National Commercial Bank (NCB) Al Maather Street- Al Muraba' district Riyadh 12624, Saudi Arabia Tel.: 920001000 Fax: 920007778 www.alahli.com

Auditors Crowe HorwathTM- Al Azem& Al Sudairy CPA's & Consultants Riyadh- headquarter P.O. Box 10504, Riyadh 11443, Saudi Arabia Tel.: +966112175000 Fax: +966112175000 [email protected]

Legal Consultant The Law Office of Mohammed Al-Ammar In affiliation with King & Spalding LLP Kingdom center, 20th floor, King Fahd Road P.O. Box 14702 Riyadh 11434, Saudi Arabia Tel.: +966114669400 www.kslaw.com

Technical Advisor White Cubes Real Estate Riyadh branch, Kingdom of Saudi Arabia P.O. Box 2955, Riyadh 11461 Tel.: +966112542126 Mobile: +966506437765 [email protected]

Feasibility Study prepared by

ValuStart Co. Riyadh branch, Kingdom of Saudi Arabia Tel. +966112935127 [email protected] 6th floor, southern tower, King Faisal Foundation Al Faisaliah Compound, Riyadh, Saudi Arabia. www.valustrat.com

Sharia advisor Shariyah Review Bureau Building No. 872, Office No. 41 & 42 Road 3618, Al Saif 436 Bahrain Tel.: +97317215898 www.shariyah.com

http://www.alahli.com/


http://www.kslaw.com/



http://www.valustrat.com/

http://www.shariyah.com/

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Real Estate Valuer1

White Cubes Real Estate Riyadh branch, Saudi Arabia P.O. Box: Al Muraba', 2955, Riyadh 11461 Tel.: +966112542126 Mobile: +966506437765 [email protected]

Real Estate Valuer2

ValuStart Co. Riyadh branch 6th floor, southern tower, King Faisal Foundation Al Faisaliah Compound, Riyadh, Saudi Arabia. Tel.: +966112935127 [email protected] ww.valustrat.com

Governing

Authority

Saudi Arabia Capital Market Authority Headquarter of Capital Market Authority P.O. Box 87171, Riyadh 11642, Saudi Arabia Tel.: 1111245800 [email protected] www.cma.org.sa

Trading Platform Saudi Stock Exchange (Tadawul) King Fahd Road- Olaya 6897, Unit No. 15 P.O. Box 112211, Riyadh 3388, Saudi Arabia Tel.: +966112189999 Fax: +966112189133 www.tadawul.com.sa




http://www.cma.org.sa/

http://www.tadawul.com.sa/

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Definitions

Fund

SHUAA REIT FUND, a closed-end real estate investment fund compliant with Islamic Shariyah rules, listed on the Saudi Arabian Capital Market Authority and operated by the Fund Manager. This fund incorporated under the laws and regulations circulated by the Capital Market Authority and hereby governed by the laws of the Kingdom of Saudi Arabia.

Fund Manager SHUAA Capital Saudi Arabia (SCSA) is a closed joint stock company registered under Commercial Registration No. 1010243538 and is licensed by the Saudi Arabian Capital Market Authority as an authorized person under License No. 07056-37.

Auditor Crowe HorwathTM- Al Azem& Al Sudairy CPA's& Consultants.

Regulations of

Authorized Persons

The regulations bears the same name issued by the Capital Market Authority under resolution No. 1-83-2005, dated 21/05/1426H, corresponding to 28/06/2005, as amended by the Capital Market Council Resolution No. 3-85-2017, dated 27/12/1438H, corresponding to 18/09/2017, and according to its amendments issued from time to time.

Business Day Any business day on which the Saudi banks are open to exercise their operation.

Tax or Taxes A financial obligation paid by the individual to the state or to a local public body, as a contribution to cover the public expenses, without having any special benefit in return for paying the tax.

Closing Date The date specified in the paragraph (G-6) of these Terms and Conditions, which is the date of the last day of the initial offering period. The closing date may be the last day of the initial placement after the extension.

Authority or Capital

Market Authority Capital Market Authority of the Kingdom of Saudi Arabia.

Custodian Al Bilad Capital.

Fiscal Year The period from 1 January to 31 December of each year, except for the first year of Fund Incorporation for which financial year starts from the closing date and ends on 31 December 2018.

Fund Term 99 years from the date of listing and shall be renewable for a similar period at the sole discretion of the Fund Manager following the approval of the CMA.

Total Rental Income The amount equivalent to gross income resulting from the rental of the Fund's properties before any deductions.

Offering Price The price by which the units are offered during the Offering Period, which is SR10 (Ten Saudi Riyals).

Offering Period The period within which the units are offered in accordance with the Real Estate Investment Funds and Traded Real Estate Investment Funds related instructions, which is 10 business days, starting from 25/03/2019 and lasts until 07/04/2019.

Primary Assets The assets described in paragraph (e) (1) (2-1) of the Terms and Conditions to be acquired by the Fund after the closing date in accordance with the terms of the relevant purchase agreements.

Minimum amount to

invest in the Fund SR 500

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Maximum amount to

invest in the Fund SR 29,000,000

Net Asset Value

Net asset value per unit is calculated by subtracting the total liabilities of the Fund, including any financial obligations, fees and expenses due to the Fund during the calculation period of the Fund's total assets. The output is divided by the number of units of the Fund for the same period. The result is the indicative value of the outstanding units of the Fund.

Initial Offering The initial public offering of units in accordance with these Terms of Conditions.

Ordinary Fund

Resolution

A decision requiring a positive vote of the Unit holders whose ownership exceeds 50% of units in the Fund, whether present in person or by proxy in a meeting of Unit holders or by modern technological means.

Unit holder of the

Public

A unit holder who is not subject to any of the following: (A) any Unit holder possess 5% or more of the units; and (B) the Fund Manager and its subsidiaries; (C) a member of the Fund's Board of Directors.

Real Estate

Investment Funds

Regulations

Real Estate Investment Funds regulations issued by the Capital Market Authority under the resolution No. 1-193-2006 dated 19/06/1427H corresponding to 15/07/2006 as amended from time to time.

Traded Real Estate

Investment Funds

related instructions

The Traded Real Estate Investment Funds related instructions issued by the Capital Market Authority in accordance with its resolution No. 6-130-2016, dated 23/01/1438H, corresponding to 24/10/2016G; As amended by its resolution no. 2-115-2018, dated 13/02/1440H, corresponding to 22/10/2018G.

Receiving Banks Any of following banks: Riyad Bank, Al Rajhi Bank or National Commercial Bank (NCB).

Related Parties

Means any of the following: (A) Fund Manager; (B) Custodian; (C) a developer appointed by the Fund manager with respect to the Fund; (D) any valuation company hired by the Fund to evaluate the Fund Assets; (E) the Fund's Auditor; (F) any of Unit holders possess more than 5% of the Fund units; (G) any person or entity controls in any of the mentioned parties or subordinate thereof; (H) any of the executive directors or any employees of the mentioned parties.

Saudi Riyals The official currency of the Kingdom of Saudi Arabia

sellers

Means the following:

- Al Mutlaq Holding Company. - Abdullah Ibrahim Al Khorayef Sons Co. - Khalid Bin Abdulaziz Bin Mohammed bin Nafjan. - Abdulaziz Bin Ibrahim Bin Abdullah Al Ajlan. - Wedad Bint Abdulaziz Bin Abdul Mohsen Al Twaijri.

Sharia Advisor Shariyah Review Bureau appointed as the Fund sharia advisor.

Sharia Rules Sharia rules related to the Fund and approved by the sharia advisor, and upon which the Fund specifies the investments authorities as stipulated in Annex (B).

Structurally

Developed Real

Estates

Developed ready-to-use real estates that meet the regulatory requirements, including residential, commercial, industrial, agricultural, office, retail, logistics, hospitality, healthcare and education.

Special Purpose

Company A limited liability company established by the Custodian to retain the ownership of the Fund's assets.

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Subscription

Amount The amount with which the unit holder subscribes upon subscription in the Fund.

Tadawul Saudi Stock Exchange.

Volume of Targeted

Public Offering

(Cash)

305,150,000 (Saudi Riyals).

Volume of Targeted

Offering (In kind) 286,350,000 (Saudi Riyals).

the Total Value of

the Assets of the

Fund or the Total

Assets of the Fund

The total value of the assets of the Fund shall be the total market value of all real estate assets, cash and dividends due from the Fund's investments, as well as all receivables and market value of all non-real estate investments in addition to the present value of any other assets owned by the Fund.

Total Amount of the

Fund The combination of the targeted offering amount (In cash) and the targeted offering amount (In Kind).

Unit A unit of the Fund by which its owner shall be granted a common right and a relative share in the Fund Assets.

Unit holders The investor who invests in one or more units by possessing thereof.

Unit's Assets Net Value

An indicative value per unit and is calculated by dividing the net asset value of the Fund by the number of the Fund current units.

Unit Price The market price for single unit as published by Saudi Stock Exchange (Tadawul).

Idle Lands Each empty land, undeveloped land and is subject to the tax regulations of Idle Lands.

Valuation Day The day outlined in paragraph (K) (4) of these Terms and Conditions.

Short-term Murabaha

Investment in bank Murabaha, compliant with Shariah Board regulations with a period of less than one year.

Money Market Funds

Investment funds whose objective is to invest in bank Murabaha compliant with Shariah Board regulations with a period of less than one year.

Debt instruments The bonds issued by the shareholding companies, governmental and semi-governmental entities or any other entity are entitled to issue any kind of debt instruments on condition that they be in compliance with Shariah rules.

Pre-emption It is right to give priority to a particular person in the purchase over other buyers

Due diligence Examination

It is the necessary care provided by the Fund Manager to ensure the validity and integrity of all information relating to a specific asset, project or any of the operations and transactions of the Fund.

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Fund Summary

Name & type of the Fund

SHUAA REIT FUND, a general traded closed-end real estate investment fund compliant with Islamic Shariyah rules, it was incorporated under the laws and regulation applicable in the Kingdom of Saudi Arabia and governed by the Saudi Capital Market Authority and in compliance with Listing Rules of the Saudi Stock Exchange ("Tadawul")

Fund Manager SHUAA Capital Saudi Arabia (SCSA) is a closed joint stock company registered under Commercial Registration No. 1010243538 and is licensed by the Saudi Arabian Capital Market Authority as a licensed person under License No. 07056-37;

Investment Objectives

The investment objective of the Fund is to invest in structurally developed real estates and through which periodic and rental income can be achieved. 90% of the net profit of the Fund is distributed to the unit holders in cash on a semi-annual basis at the end of December of each year during the Fund's period and the Fund Manager may increase distribution times to be quarterly if possible

Investment in Real Estates outside KSA

The Fund is entitled to invest in real estate outside the Kingdom with a value not exceeding 25% of the total value of the Fund's assets in accordance with the latest audited financial statements

Volume of Targeted Public Offering (Cash)

305,150,000 Saudi Riyals

Volume of Targeted Offering (In kind)


Total offering amount


Unit Price 10 Saudi Riyals

Minimum Investment

500 Saudi Riyals

Maximum Investment


Net targeted Yield of the Fund

6.94%

Prohibition Period on In kind Contributions

A full year from the date of commencement of trading in the units of the Fund.

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Investors Allowed to Invest in the Fund

Subscription in units is available only to the following categories: (A) natural persons of Saudi nationality or the nationality of a member state of the Gulf Cooperation Council (GCC); (B) establishments, companies, investment funds and other legal entities existing in the Kingdom of Saudi Arabia and other GCC States; (C) Foreigners resident in the Kingdom of Saudi Arabia; (D) eligible foreign investors under the rules organizing the investment of eligible foreign financial institutions in securities issued by the Authority's Board of Directors under the resolution No. 42 dated 15/07/1436H corresponding to 04/05/2015G; (E) Other investors permitted by the Authority to possess securities listed on the Saudi Stock Exchange (Tadawul).

The use of Proceeds

The Fund Manager intends to utilize cash proceeds from subscription in the Fund for the purpose of acquiring the initial assets and covering the costs of acquisition and organization as described in paragraph B-6 of these Terms and Conditions.

Fund Currency Saudi Riyals

Fund Period The period of the Fund shall be 99 years from the date of listing in Tadawul and shall be renewable at the discretion of the Fund Manager following the approval of the CMA;

Dividend Policy

The Fund Manager is committed to distribute cash dividends on investors not less than 90% of the annual net profit of the Fund, except for profits resulting from the sale of real estate assets and other investments, which can be reinvested in new assets as determined by the Fund Manager to serve the interests of unit holders, provided that the decision period shall not exceed 90 days from the date of sale of the asset. The dividends are distributed on a semi-annual basis at the end of December and June of each year during the Fund's period and the Fund Manager may increase distribution times to be quarterly if possible.

Financing On behalf of the Fund, the Fund Manager may obtain Shariah-compliant financing. The percentage of financing received shall not exceed 50% of the total value of the Fund's assets according to the latest audited financial statements of the Fund.

Compliance with Islamic Sharia

The Fund shall invest and implement its transactions and affairs in a manner consistent with the Sharia rules adopted by the Sharia Advisor.

Valuation & Times to be Performed

The net asset value of the Fund equivalent to the value of all assets less all the Fund's liabilities on the relevant valuation day. The valuation of Fund assets shall be conducted twice a year (once every six months) by two independent Saudi valuers accredited by the Saudi Authority for Accredited Valuers.

Management Fee

In order to consolidate the Fund Manager’s interests with the investors, management fees were divided into two parts where the Fund shall pay the Fund Manager an annual amount of 0.4% of the total value of the Fund's assets and an amount equivalent to 5% of the total rental income of the Fund on a semi-annual basis. Their total value will represent 0.8% of the total value of the Fund's assets according to the latest valuation of the Fund. Value added tax and all other taxes applied in the future shall be excluded from the amounts paid under Management Fees.

Subscription Fee Each investor applying to be subscribed in the Fund shall pay the Fund Manager a percentage of 2% of the subscription amounts allocated to him. Such fees are payable upon subscription in the Fund.

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Custody Fee

60,000 Saudi Riyals shall be paid by the Fund to the Custodian as a one-time service fees. The Fund also pays an annual amount of 0.025% of the total value of the Fund's assets. Such fees are payable quarterly. Value added tax and all other taxes applied in the future shall be excluded from the amounts paid under Custodian Fees.

Finance Structuring Fee

The Fund shall pay the Fund Manager from its assets an amount equivalent to 1.5% of the amount of the financing it receives and such fees shall be paid upon completion of any transaction to be entered into by the Fund. Value added tax and all other taxes applied in the future shall be excluded from the amounts paid under Finance Structuring Fees.

Brokerage Fee

Brokerage fees in amount of 2.5% of the acquired primary assets value shall be paid by the Fund to the Fund Manager in order to be paid by the Fund Manager to the Real Estate Brokers as per the contracts entered into therewith. In the event of the acquisition of future real estate assets, the same percentage will be paid in case of real estate brokers. Otherwise it will not be paid and there is no conflict of interests between the real estate brokers with the relevant parties in the fund. Value added tax and all other taxes applied in the future shall be excluded from the amounts paid under Brokerage Fees.

Transactions Fee

A fee of 1% of the purchase price of each asset acquired by the Fund and 2% of the sale price of each of the Fund's assets shall be paid by the Fund to the Fund Manager in return for the Fund Manager's conducting the necessary investigation, negotiation on the terms of sale and purchase and finalize the transaction. Such fees shall be payable after finalizing the purchase or sale of each real estate and shall not be applied to the Fund's primary assets. Value added tax and all other taxes applied in the future shall be excluded from the amounts paid under Brokerage Fees.

Sub-administrator Fee

The Fund pays an amount equivalent to US$ 4,000 (15,000 Saudi Riyals) to be paid once as preparation fees, to be charged to the Fund Manager on behalf of the fund. The Fund pays recurrent costs as follows: The Fund pays an amount equivalent to 2,550 US dollars (9,563 Saudi Riyals) per month in return for service represented in calculating the net asset value and the preparation of internal financial statements. The Fund also pays the equivalent of US$ 9,500 (SR 35,625) per annum in return for its service represented in preparing the Fund's financial statements. Thirteen months after the offering, the amounts would be increased by 3.5% per annum as inflation allowance. Value added tax and all other taxes applied in the future shall be excluded from the amounts paid under Sub-administrator Fees.

Certified Public Accountant's Fees

35,000 Saudi Riyals shall be annually paid by the Fund to The Certified Public Accountant. All payments of the Certified Public Accountant's fees are calculated to include VAT, withholding tax and all other taxes applied in the future.

Regulatory Fees (to be paid to CMA

A fixed fee of 7,500 SR per annum shall be paid by the Fund to the Capital Market Authority. Value added tax and all other taxes applied in the future shall be excluded from the amounts paid under Regulatory Fees.

Publishing Fees (to be paid to Tadawul)

A fixed fee of SR 5,000 per annum shall be paid by the Fund to Tadawul as publishing fees. Such fees shall be calculated at every day of valuation and payable upon request. Value added tax and all other taxes applied in the future shall be excluded from the amounts paid under Publishing Fees.

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Listing Fees (to be paid to Tadawul)

The Fund shall pay Tadawul the following listing fees: • SR 50,000 as primary listing fees. • 0.03% per annum of the Fund's market value (provided such fees shall not be less

than SR 50,000 and not exceeding 300,000 per annum) Value added tax and all other taxes applied in the future shall be excluded from the amounts paid under Listing Fees.

Registration Fees (to be paid to Tadawul)

The Fund shall pay Tadawul the following registration fees: • SR 50,000, in addition to SR 2 for each unit holder up to a maximum of SR 500,000,

in return for the issuance of a record for the unit holders; and • SR 400,000 in return for the operation of a record for the unit holders. Such fees

are subject to change based on the gross volume of Fund offering. Value added tax and all other taxes applied in the future shall be excluded from the amounts paid under Registration Fees.

Properties Management Fees

The Fund will ensure that fees paid to real estate managers are discussed on a commercial basis in all its aspects and in a manner consistent with market prices. Such fees are paid from the Fund's basic assets. The target is that annual property management fees for primary assets will not exceed 5% of the total annual rent for primary assets. All property management fees payments are calculated to include VAT, withholding tax and all other taxes applied in the future considering that there is currently only one property management contract for the fall warehouses and the value of this contract is equivalent to 2.5% of the total rents of warehouses, paid to the director of property after collection.

Development Fees

If the Fund is going to carry out development activities in the future of no more than 25% of the total value of the Fund's assets, the Fund shall ensure that any development fees incurred by the Fund and paid to the Developers shall be negotiated on a basis consistent with market prices. To avoid doubt, the Fund did not incur any development fees in respect of the primary assets.

Other Fees

The Fund may directly or indirectly incur other fees and charges, including but not limited to, service costs, property insurance fees acquired by the Fund, legal fees and zakat (if applied to traded real estate investment funds, excluding private zakat for unit holders) Municipal fees, government fees, valuation fees, engineering consultant fees, and fees of surveyors, architects and interior designs engineers. In all cases, only actual fees and expenses related to the Fund and its projects shall be deducted after the approval of the Fund's Board of Directors is obtained. Such expenses are expected not to exceed 1% of the total value of the Fund's assets per annum based on the latest audited financial statements. Such percentage must be updated periodically and published on the Fund Manager's website.

unit holders Liability

The liability of each unit holder shall be limited to the value of his investment in the Fund, and it cannot be recourse against the unit holder with respect to any of his other assets

Risk Level& Risk Factors

The risk level is medium to high. There are some risks associated with investing in the Fund. Paragraph (f) of these Terms and Conditions comprises examples of these risks, and the potential investor shall carefully consider thereof before taking a decision to invest in the units offered.

Page | 16

Governing Law & Disputes Settlement

The Fund shall be governed by the applicable laws of the Kingdom of Saudi Arabia and regulations issued by CMA. The Fund, in its investments, shall be committed to the statute of real estate ownership and investment by non-Saudis. Both the Fund Manager and each investor shall endeavor to resolve any dispute arising out of or in connection with these Terms and Conditions and any problems that may arise in this respect amicably. The dispute may be referred by either party to Securities Disputes Resolution Committee of the Capital Market Authority

Projected Schedule

Steps Expected duration

Finalize the acquisition of the primary assets and entering into a sale, purchase and leasing agreement, and Sukuk conveyance for the Fund.

60 days post-closing date

Start trading in the Fund's units in the Saudi Stock Exchange

First quarter of 2019

Offering period 10 working days starting from 25/03/2019) and ending in 07/04/2019

Extension of offering period

If the required amount is not collected, the Fund Manager will extend the subscription period for 20 working days after approval by the Capital Market Authority.

Announcing allocation of units During 15 working days post-closing date

Refund of surplus funds 5 business days after the announcement of the allocation of units

Dividends

The Fund Manager intends to distribute annual cash dividends to the investors not less than 90% of the Fund's annual net profit, provided to be at least two times at the end of June and December of each calendar year.

Page | 17

Terms and Conditions

This document comprises the terms and conditions related to SHUAA REIT FUND, a general traded closed-end real

estate investment fund compliant with Islamic Shariyah rules. The Fund is operated by SHUAA Capital Saudi Arabia

(“SCSA”) and is licensed by the Saudi Arabian Capital Market Authority as a licensed person under License No. 07056-

37, and these terms and conditions constitute the contractual relationship between the Fund Manager and the unit

holders under which the Fund was established.

The Fund's units will be listed on the Saudi Stock Exchange and the Fund's official currency will be the Saudi Riyal

pursuant to the approval of CMA and after the transfer of ownership of the primary assets in the Fund.

A. Name and type of the Fund

SHUAA REIT FUND, a general traded closed-end real estate investment fund compliant with Islamic Shari'a

rules, it was incorporated under the laws and regulation applicable in the Kingdom of Saudi Arabia and the

Saudi Arabian Capital Markets related instructions.

B. Address of the Head Office and Website of the Fund Manager

Address: SHUAA Capital Saudi Arabia (SCSA)

Hamad Tower, King Fahad Road, 27th Floor

P.O. Box 8181. Riyadh 11482

Riyadh, kingdom of Saudi Arabia.

Website: www.shuaacapital.com.sa

C. Fund Term

The period of the Fund shall be 99 years from the date of listing the units in Tadawul ("Listing Date") and made

them available for trading ("Fund Term"), and shall be renewable for a similar period at the discretion of the

Fund Manager following the approval of the CMA.

D. Investment Fund Objectives

The investment objective of the Fund is to invest in structurally developed real estates and through which

periodic and rental income can be achieved. 90% of the net profit of the Fund is distributed to the unit holders

in cash on a semi-annual basis at the end of December and June of each year during the Fund's period as a

minimum and the Fund Manager may increase distribution times to be quarterly if possible. Dividends do not

include profits arising out of the sale of the principal real estate assets and other investments that can be

distributed to the unit holders or reinvested in acquiring new assets or renewing existing assets (The decision

is made within 90 days of the sale of any of the Fund's assets) or investment in short-term Murabaha

transactions in Saudi riyals, and Funds of capital markets in the Kingdom of Saudi Arabia, debt instruments,

listed real estate companies or other real estate investment funds and Sharia-compliant investment funds,

provided that the Fund's investments shall not be less than 75% of the total value of the assets of the Fund in

real estate assets that have been developed in order to achieve rental and periodic income.

The Fund generally seeks to retain a diversified portfolio of income-generating real estate assets whether

inside or outside the Kingdom of Saudi Arabia (taking into consideration the restrictions in this respect

contained in the applicable regulations and in these Terms and Regulations), including but not limited to,

versatile real estate including residential, commercial, industrial, agricultural, office, retail, logistics,


Page | 18

hospitality, healthcare and education. Target sectors for primary assets include each of the commercial, office,

logistics and residential sectors.

Where the Fund will continue to invest mainly in the developed and ready-to-use real estate assets, however,

it may also seize the opportunity to invest in real estate development projects (including renewal of existing

real estate assets) with a value not exceeding 25% of the total value of the Fund's assets in accordance with

the latest audited financial statements in order to increase the investors' units value, provided that (1) the

Fund's investments shall not be less than 75% of the total value of the Fund assets in a structurally developed

real estate assets with a view to achieving rental and periodic income and (2) the Fund shall not invest in Idle

Land.

E. Summary of Fund Strategy

The Fund will strive to achieve its investment objectives and maximize the value of investors' units as high as

possible by:

(A) Reinvesting income in real estate investment assets; after distributing at least 90% of its annual net profit to

unit holders, excluding capital gains from the sale of real estate assets and other investments; and

(B) Optimizing the operational performance of fund assets to maximize returns.

The Fund intends to adopt investment criteria that have been carefully examined and planned, taking into

account the nature of the real estate sector, demand and supply, geographical and political factors and the

cyclical fluctuations of various categories of the real estate sector. The Fund intends also to invest mainly in

mixed use real estate as well as in residential, commercial, industrial, agricultural, office, retail, logistics,

hospitality, healthcare and education.

1- A description of the types of real estate assets in which the Fund will invest

1-1 General description of sectors where primary assets are located

Based on paragraph (e) of these Terms and Conditions, the Fund Manager will invest in properties

that take into account the Fund's investment strategy throughout the duration of the Fund,

including residential, commercial, industrial, agricultural, office, retail, logistics, hospitality,

healthcare and education. The target sectors for primary assets include each of the commercial,

office, logistics and residential sectors.

It is intended to maintain real estate investments consisting of versatile real estate through the

adoption of different strategies, including those listed below which are the main focus of the Fund:

- Acquire income-generating real estate; and

- Acquire income-generating real estate that are un-utilized optimally and then restoration and

renovation of real estate

1-2 Description of primary assets

The Fund intends to acquire the primary assets described in this paragraph below under a sale

and purchase agreement for this purpose. The Fund may acquire additional properties in the

future as the Fund Manager and Fund Board deemed in the benefit of the Fund.

The purchase price of the primary assets will be SR 572,700,000 (Five hundred seventy two million and seven hundred

thousand riyals), the details are as follows:

Page | 19

Asset Ownership Property

condition Location

Acquisition

Amount (SR)

Net Rent

(SR)*

% of the

Acquisition

Amount to

Fund Size

Elite Mall Freehold developed Riyadh 201,500,000 16.000.000 34.06%

Al Nada Center Freehold developed Riyadh 70,000,000 6.050.000 11.83%

Al Khorayef Warehouses Freehold

developed Riyadh 130,000,000 11,255,400 21.97%

EURO Residential

Compound

Freehold developed Riyadh 19,200,000 1,650,000 3.24%

Al Mutlaq Furniture

(Roomz)


Al Mutlaq Furniture

(Olaya)


Total 572,700,000 47,030,400 96.8%

** Acquisition fees (brokerage fees) 14,317,500 2.42%

*** Capital structuring fees 4,482,500 0.75%

Fund gross volume 591,500,000 100%

* The net rent is calculated after deducting all the property direct expenses (maintenance and property management expenses) ** Paid to independent real estate brokers who contributed to the acquisition according to the contracts signed with them. *** Paid to the Fund Manager

1-3 Summary of Fund Portfolio

A- Details of targeted returns for the unit holders:

Property Name 2019 2020 2021 2022

Elite Mall 16,000,000 16,000,000 16,000,000 16,000,000

Al Nada Trade Center 6,050,000 6,050,000 6,050,000 6,050,000

Al Khorayef Warehouses 11,255,400 11,255,400 11,255,400 11,255,400

EURO Residential Building 1,650,000 1,650,000 1,650,000 1,650,000

Al Mutlaq Furniture (Rooms) 8,000,000 8,000,000 8,000,000 8,000,000

Al Mutlaq Furniture (Olaya) 4,075,000 4,075,000 4,075,000 4,075,000

Total 47,030,400 47,030,400 47,030,400 47,030,400

Fund fees & expenses 6,006,490 6,006,490 6,006,490 6,006,490

% of fees & expenses from Revenue 1% 1% 1% 1%

Net returns after deducting all the Fund fees & expenses

41,023,910 41,023,910 41,023,910 41,023,910

% of Total returns before deducting the Fund expenses

7.95% 7.95% 7.95% 7.95%

% of Net returns after deducting the Fund expenses*

6.94% 6.94% 6.94% 6.94%

* The fees and expenses of the Fund were deducted from the total net rent proceeds (as shown in the table above), the net return was then divided on the Fund size which is SR 591.5 million.

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Description Number/ Value

Total number of properties to be acquired 6

Number of Freehold properties 6

Number of Lease Interest contracts 0

Number of fully developed properties 6

Properties under construction 0

% income generating properties out of total assets 100%

properties under construction out of total assets 0%

Total cost of property purchase (SR) 572,700,000

Amounts to be collected from the public (SR) 305,150,000

Total volume of the Fund (SR) 591,500,000

Geographical Distribution of Fund Assets Kingdom of Saudi Arabia

(Riyadh)

Total net rent for targeted assets for 12 months (2019) (SR) 47,030,400

Net income after deduction of all fund fees and expenses (2019) (SR) 41,023,910

% Net income after deduction of all fund fees and expenses (2019) (SR) %6,94

% leased area 100%

% of lease interest contracts 0%

% properties outside the Kingdom 0%

B- Summary of real estate assets: assets to be acquired

1st property: Elite Mall Location

Mixed use complex that contains F&B, Retail, and office spaces at Al Sulaimania District on Prince Abdul Aziz bin Musaed Bin Jalawi Street (Al Dhabab) near its intersection with Prince Mohammed Bin Abdul Aziz Street (Tahlia) in the center of Riyadh city. The complex comprises a ground floor and mezzanine containing 15 units of stores and restaurants with different areas, while the 2nd floor and annex include various office spaces, as well as more than 240 parking spaces serving the complex.

Asset information

Name of the property Elite mall

Type of the property Restaurants, Retail and offices

location Riyadh- Prince Abdul Aziz bin Musaed Bin Jalawi Street (Al Dhabab), Al Sulaimania District

Land area 9,600 square meters

Built area 21,929 square area

Page | 21

Landlord Khalid Bin Abdulaziz Bin Mohammed bin Nafjan.

Date of Building completion certificate

15/08/1439H

Asset operation date The shops were leased by the main tenant and will be officially opened on 1/1/2019G

Age of the property Less than 1 year

Number of floors Basement+ ground floor+ Mezzanine+ 1st floor+ annex

Asset purchase value 201,500,000 SR

Lease contracts

Current lease contracts 2 contracts

Main tenant

- Almashria AlOula Co. under a principal contract includes the ground floor, mezzanine with rental value of 12 million Saudi Riyals per annum.

- Mr. Adnan Bin Hamad Bin Homoud AL Khamis: principal contract includes the 1st floor, upper extensions and basement with rental value of 4 million Saudi Riyals per annum.

Lease payments are due to the Fund when the property is transferred to the Custodian of the Fund.

Leased area (m2) 11,142, The area is 13,672 with the addition of external leasable areas

Annual rental value (SR) 16,000,000

Price of leased meter (SR) 1,436

Contracts term Five years commences after transferring the asset ownership to the Fund

Sub-lease The tenant is allowed to sub-lease the property after a prior consent of the Fund Manager.

% asset occupancy 100%

Insurance

The Tenant shall pledge to the Lessor to insure the property and any item of an insurmountable nature, including all constants and fixtures of the Building, during the term of the Lease Contract against the Insured Risk, and shall be maintained in accordance with the requirements of the Lease Contract. The coverage extends to the full cost of restoring the building to its original condition, including the cost of permits, demolition and reconstruction costs.

Guarantees 7 semi-annual promissory notes (3.5 years), where the value of each lease is equal to 6 months as agreed in the lease contracts. These contracts cover 70% of the rental value for the lease period (five years)

Contracts terminations

Binding and irrevocable contract, and if the contract is terminated by either party for any reason, the tenant is obliged to pay the remainder of the lease under the Lease Contract. The tenant also has the right to renew the contract for a similar period provided that rental value is subject to increase 15% than the previous period.

Governing Law Laws and regulations applicable in the Kingdom of Saudi Arabia

Properties management contract

Properties manager The properties are managed by the tenants as per the service agency contracts entered with them.

Page | 22

Details of the contract Not applicable.

Rental income over the next three years Year 2019 2020 2021

Total rental value (SR) 16,000,000 16,000,000 16,000,000

Net operational income (SR) 16,000,000 16,000,000 16,000,000

Operational returns (%) 7.94% 7.94% 7.94%

The average rental valuation of the asset based on prevailing market prices according to the reports of the Accredited Valuators as of 26/11/2018 (to compare with the rental prices of the signed contracts)

Valuer: white cubes SR 17,443,089

Valuer: ValuStrat Co. SR 15,800,000

Average SR 16,621,544

Rental income over the next three years Not applicable as the real estate asset operation period being less than one year. Most of which have periods of grace for secondary tenants. The first year's rent will be paid by the main tenants when the title deed is transferred to the Custodian of the Fund.

2nd property: Al Nada Center Location

Retail, F&B, and office complex located at the intersection of Al Thumama Street with Othman Bin Affan Street north of Riyadh city next to Imam University. The complex consists of a ground floor and a Mezzanine that contains 10 stores, 2nd floor and an annex that contains 24 offices and 90 parking spaces serving the complex.

Asset information

Name of the property Al Nada Center

Type of the property Stores and offices

location Riyadh- intersection of Al Thumama Street with Othman Bin Affan Street, Al Nada District.

Land area 4,685 m2

Built area 9,742 m2

Landlord Wedad Bint Abdulaziz Bin Abdul Mohsen Al Twaijri.


26/10/1439H

Asset operation date 26/10/1439H Corresponding to 10/07/2018G

Age of the property Two years

Number of floors Basement+ ground floor+ Mezzanine+ 1st floor+annex

Asset purchase value SR 70,000,000

Page | 23

Lease contracts

Current lease contracts One principal contract

Main tenant(s) Ayar Real Estate Co. Lease payments are due to the Fund when the property is transferred to the Custodian of the Fund.

Leased area (m2) 7,664


Price of leased meter (SR) 789


Sub-lease The tenant is allowed to sub-lease the property


Insurance


Guarantees 7 semi-annual promissory notes (3.5 years), where the value of each lease is equal to 6 months as agreed in the lease contracts. These contracts cover 70% of the rental value for the lease period (five years)


Binding and irrevocable contract, and if the contract is terminated by either party for any reason, the tenant is obliged to pay the remainder of the lease under the Lease Contract. The tenant also has the right to renew the contract for a similar period provided that rental value is subject to increase 15% than the previous period.

Governing Law Laws and regulations applicable in the Kingdom of Saudi Arabia Properties management contract

Properties manager The properties are managed by the tenants as per the service agency contracts entered into with them.

Details of the contract Not applicable as the tenant is the responsible for managing the property.

Rental income over the next three years

Year 2019 2020 2021




The average rental valuation of the asset based on prevailing market prices according to the reports of the Accredited Valuators as of 26/11/2018 (in order to compare with the rental prices of the signed contracts)

Valuer: White Cubes SAR 7,327,094

Valuer: ValuStart Co. SAR 6,097,300

Average SAR 6,712,197


Not applicable as the real estate asset operation period being less than one year. The first year's rent will be paid by the main tenant when the title deed is transferred to the custodian of the fund.

Page | 24

3rd property: Al Khorayef Warehouses Location

Fully equipped and licensed typical warehouses located on Al-Kharj road in the industrial zone in Tiba district south of Riyadh city, contains 64 warehouses distributed on a land area of 85,000 square meters.

Asset information

Name of the property Al Khorayef Warehouses

Type of the property warehouses

location Riyadh- AL Kharj Road, Tiba District

Land area 85.000 m2

Built area 63.355 m2

Landlord Abdullah Ibrahim Al Khorayef Sons Co.

Date of Building completion Certificate

15/01/1439H

Asset operation date 15/01/1439H

Age of the property One year

Number of floors Single floor contains warehouses

Asset purchase value SR 130.000.000

Lease contracts Current lease contracts Two contracts

Main tenant(s)

- Al Khorayef Investment Co. (Limited Liability Company): a warehouses tenant with a total area of 23,090 square meters and an annual rental value of SAR 4,271,650.

- LSC Logistics and Ware housing (Closed Joint Stock Company): a warehouse tenant with a total area of 39,310 square meters and an annual rental value of SAR 7,272,350.

Lease payments are due to the Fund when the property is transferred to the Custodian of the Fund.




Contracts term

- Al Khorayef Investment Co. (Limited liability Company): five years binding start from 29/07/2018G.

- LSC Logistics and Ware housing (closed Joint Stock Company): five years binding start from 01/07/2017G.

Returns to the Fund shall be due upon the transfer of the deed to the ownership of the custodian appointed by the Fund

Sub-lease The tenant is allowed to sub-lease the property without prejudice to the terms of

Page | 25

the contract entered into with the landlord


Insurance The property will be insured by the tenant according to the signed contracts. The required coverage will include all constructional and structural damages.

Guarantees N/A

Contracts terminations Binding and irrevocable contract. Governing Law Laws and regulations applicable in the Kingdom of Saudi Arabia Properties management contract Properties manager Dar Al Idara Real Estate Company

Details of the contract

The properties manager is responsible for the property management as a whole and it includes (1) collection of rental value (2) leasing, renewing, implementing and enforce current lease contracts on behalf of the landlord. (3) Property management and follow-up. The contract period is 3 renewable years and shall be renewed unless the Properties Management Manager is otherwise notified by the Fund Manager. The Properties Manager shall have the right to receive a fees amounting to 2.5% of all rental value to be payable after collection.

Rental income over the next three years Year 2019 2020 2021






Valuer: ValuStart Co. SR 10,420,000


Rental income over the next three years Year 2016* 2017 2018**

Rental value N/A 9,672,000 11,544,000

* The asset was not operated ** As per the current contracts

4th property: EURO Residential Building Location

Residential building located in the center of Riyadh near King Abdulaziz Road with the intersection of Al Orouba Road in Sulaimania District in Riyadh city and contains 28 fully furnished apartments plus facilities allocated to the residents such as Gym and cafe. The building consists of a ground floor, a first and second floor and an extension, as well as 28 parking spaces to serve the inhabitants.

Asset information

Page | 26

Name of the property EURO Residential Building

Type of the property Residential Building

location Riyadh- Al Masoudi Street, Al Sulaimania District

Land area 900 m2

Built area 2,091 m2

Landlord Abdul Aziz Ibrahim Al Ajlan

Date of Building Completion Certificate

29/11/1436H

Asset operation date 29/11/1436H corresponding to 26/08/2015G

Age of the property Three years

Number of floors Ground floor+ 1st floor+ 2nd floor+ extension


Lease contracts


Main tenant(s) Abdul Aziz Ibrahim Al Ajlan Lease payments are due to the Fund when the property is transferred to the Custodian of the Fund.





Sub-lease The tenant is allowed to sub-lease the property.


Insurance


Guarantees 7 semi-annual personal promissory notes (3.5 years), where the the value of each lease is equal to 6 months as agreed in the lease contracts. These contracts cover 70% of the rental value for the lease period (five years)


Binding and irrevocable contract, and if the contract is terminated by either party for any reason, the tenant is obliged to pay the remainder of the lease under the Lease Contract. The tenant also has the right to renew the contract for a similar period provided that rental value is subjected to increase in percentage of 15% than the previous period.



Properties manager The properties are managed by the tenant as per the services agency contracts entered into thereto.

Details of the contract Not applicable as the tenant is the responsible for the property's management and maintenance.


Year 2019 2020 2021


Page | 27

Net operational income (SR) 1,650,000 1,650,000 1,650,000 Operational returns (%) 8.6% 8.6% 8.6%


Valuer: White Cubes SR 1,802,000

Valuer: ValuStart Co. SAR 1,876,000



Year 2016 2107 2018

Rental value 1,820,000 1,904,000 1,900,000

5th property: Al Mutlaq Furniture (Rooms) Location

Al Mutlaq Furniture Exhibition under the name of the brand Roomz, which belongs to Al Mutlaq Holding Company, is located on King Abdulaziz Street with the intersection of the Northern Ring Road in Al Mourooj District in Riyadh. The building consists of a basement, a ground floor, a first floor and a parking that can accommodate 120 visitors.

Asset information

Name of the property Al Mutlaq Furniture (Rooms)

Type of the property Commercial

location Riyadh- King Abdulaziz Road, Al Mourooj District

Land area 8,144 m2

Built area 7,752 m2

Landlord Al Mutlaq Holding Company


23/07/1431H


Age of the property Eight years

Number of floors Ground floor+ 1st floor+ extension


Lease contracts


Main tenant(s) Al Mutlaq Holding Company Lease payments are due to the Fund when the property is transferred to the Custodian of the Fund.


Annual rental value (SR) 8,000,000 with an increase of 3% every 5 years

Price of leased meter (SR) 1,107

Contracts term Fifteen years commences after transferring the asset ownership to the Fund

Page | 28

Sub-lease The tenant is allowed to sub-lease the property under a prior consent of the Fund Manager.


Insurance


Right of pre-emption The tenant shall have the right of pre-emption in purchasing the property if the Fund Manager intends to sell throughout the contract term.

Contracts terminations Binding and irrevocable contract for the first five years. The first five years are binding and not subject to termination.

Guarantees N/A




Details of the contract Not applicable as the tenant is the responsible for the property's management and maintenance.


Year 2019 2020 2021

Total rental value (SR) 8,000,000 8,000,000 8,000,000 Net operational income (SR) 8,000,000 8,000,000 8,000,000 Operational returns (%) 7.8% 7.8% 7.8%




Average SAR 7,875,000


Not applicable as the tenant is the landlord through which it practices its activities.

6th property: Al Mutlaq Furniture (Olaya) Location

Al Mutlaq Furniture Exhibition under the name of the brand Janet Al Mafroshat, which belongs to Al Mutlaq Holding Company, is located on Olaya Road opposite the Kingdom Tower in Al Worood District in Riyadh. The building consists of a ground floor, a first floor and a parking that can accommodate 66 visitors.

Asset information

Page | 29

Name of the property Al Mutlaq Furniture (Janet Al Mafroshat)

Type of the property Commercial

location Riyadh- Al Olaya Road, Al Worood District

Land area 4,144 m2

Built area 4,960 m2

Landlord Al Mutlaq Holding Company


There is no construction completion certificate as the building was constructed at a time where the construction completion certificates were not yet adopted. However, given that the operating licenses and government permits required to operate the asset are in hand & valid.

* The Fund Manager undertakes to issue a construction certificate of completion for the Asset within the 12 months after the CMA’s approval of the Fund. If it is unable to do so, the Fund Manager shall be liable to the Fund and to the unit holders in the event of damage due to the non-issuance thereof.


Age of the property 30 years

Number of floors Ground floor+ 1st floor


Lease contracts


Main tenant(s) Al Mutlaq Holding Company Lease payments are due to the Fund when the property is transferred to the Custodian of the Fund.


Annual rental value (SR) 4,075,000 with an increase of 3% every 5 years


Contracts term Fifteen years commences after transferring the asset ownership to the Fund

Sub-lease The tenant is allowed to sub-lease the property under a prior consent of the Fund Manager.


Insurance


Guarantees N/A

Right of pre-emption The tenant shall have the right of pre-emption in purchasing the property if the Fund Manager intends to sell throughout the contract term.

Contracts terminations Binding and irrevocable contract for the first five years




Details of the contract Not applicable as the tenant is the responsible for the property's

Page | 30

management and maintenance.


Year 2019 2020 2021

Total rental value (SR) 4,075,000 4,075,000 4,075,000 Net operational income (SR) 4,075,000 4,075,000 4,075,000 Operational returns (%) 8.15% 8.15% 8.15%






Not applicable as the tenant is the landlord through which it practices its activities.

The Fund intends to acquire primary assets directly or indirectly through a holding company as the Fund Manager deems it in the interest of the Fund and the unit holders.

The Fund Manager acknowledges that the primary assets are free of any irregularities that prevent or may result in the non-utilization or operation of the real estate. It also undertakes the safety of the real estate from the technical point and is free of any major engineering faults or defects that may prevent or may result in the non-utilization or operation of the real estate or which in turn lead to costly restorations and major changes.

2- Investment Concentration Policy

The Fund will invest in accordance with the concentration limits of the following investments:

Type of Investment % Allocation

Income generating investments in versatile real estate and real estate uses in residential, commercial, industrial, agricultural, office, retail, logistics, hospitality, healthcare and education.

Not less than 75% to 100% of the total value of the Fund's assets in accordance with the latest audited financial statements.

• Investments in real estate development activities. • Investments in capital markets in the Kingdom of Saudi

Arabia and in debt instruments. • Investment in real estate companies listed on the

Saudi Stock market • Investment in other real estate investment funds

listed on the Saudi stock market, and in real estate investment funds licensed by the Capital Market Authority and in compliance with Shariah Board regulations.

• Investment in real estate outside the Kingdom of Saudi Arabia.

Not exceeding 25% of the total value of the Fund's assets in accordance with the latest audited financial statements

Page | 31

Investment in short-term Murabaha transactions in Saudi Riyals. The rating of each counterparty to the Murabaha and the issuer of the Fund shall not be less than A-3 (issued by Standard & Poor's Ratings Agency) and not less than the rating of P-3 (issued by Moody's credit rating agency) or F3 rating by any Fitch agency For credit rating.

Invest 25% as a maximum of the total value of the Fund's assets in accordance with the latest audited financial statements, however, it can be increased up to 100% of the Fund assets total value and if the Fund sells its principal assets and cash proceeds are invested on a short-term basis in Murabaha investments until such proceeds are invested in alternative assets or to be distributed to unit holders. The decision period to either distribute or reinvest is 90 days.

Idle lands The Fund shall not invest in any Idle lands.

3- Historical and Targeted lease Income

The following is a schedule summarizing the historical rental income of the primary assets (over the last three years) and those targeted after acquisition thereof by the Fund:

Property Name 2016 2017 2018 2019* 2020* 2021*

Elite Mall N/A N/A N/A 16.000.000 16.000.000 16.000.000

Al Nada Trade Center N/A N/A N/A 6.050.000 6.050.000 6.050.000

Al Khorayef Warehouses* N/A 9,672,000 11,255,400 11,255,400 11,255,400 11,255,400 EURO Residential Building 1,820,000 1,904,000 1,960,000 1,650,000 1,650,000 1,650,000

Al Mutlaq Furniture (Rooms) N/A N/A N/A 8,000,000 8,000,000 8,000,000

Al Mutlaq Furniture (Olaya) N/A N/A N/A 4,075,000 4,075,000 4,075,000

* The net rental value after acquisition as per the contracts entered into

4- Rights of access to financing, and policies of the Fund Manager in this regard

The Fund Manager may, on behalf of the Fund, access to sharia-compliant financing. The percentage of

financing obtained shall not exceed 50% of the total value of the Fund's assets at the time of financing in

accordance with the latest audited financial statements.

The Fund's assets may be mortgaged to a financial institution financed by the Fund in order to secure the

financing, according to SAMA regulations and circulars at the time of financing. The terms of any financing

will be based on a non-recourse basis against the unit holders for this financing. The maximum liability of

each unit holder to the Fund shall not exceed the value of its investment in the Fund.

5- Methods and How to invest cash available in the Fund

The Fund may invest cash available in the Fund in temporary Murabaha transactions, provided that such

investment does not exceed 25% of the total value of the Fund's assets according to the latest audited

financial statements, but it may be increased to 100% of the total value of the Fund's assets if the Fund sells

its principal assets and invests the cash proceeds on a short-term basis in Murabaha investments until such

proceeds are invested in alternative assets or to be distributed to the unit holders, providing that the

decision period shall not exceed 90 days from the sale of the property.

Such temporary investments may be executed with any bank controlled by the Saudi Arabian Monetary

Authority (SAMA) or in Sharia-compliant public Funds managed by the Fund Manager (they will be

exempted from fees) or by any other Investment Fund manager authorized by the Capital Market Authority.

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To avoid doubt, the rating of each party related to the Murabaha and the issuer of the Fund should not be

less than A-3 issued by S&P and at least P-3 by Moody's or any F3 rating by Fitch Ratings.

Furthermore, the Fund's investments in Saudi money market funds, debt instruments, shares of real estate

companies listed on Saudi money market and in sharia-compliant investment Funds shall not exceed 25%

of the total value of the Fund's assets as per the latest audited financial statements.

6- How to use IPO proceeds

The Fund Manager will use the IPO proceeds amounting to SR 591,500,000 in order to acquire the primary assets and covering the acquisition and structuring costs as follows, and as summarized in the schedule hereunder:

1) SR 286,350,000 cash of the IPO proceeds to be allocated to be paid for the primary assets sellers. 2) SR 286,350,000 through the issuance of units in the Fund in exchange for the in-kind contribution of the

primary assets sellers. 3) SR 18,800,000 to cover the expenses of capital structuring fees & brokerage fees any remaining balance shall

be used to pay the expenses of the working capital.

In-kind contribution 48.41%

Cash contribution 51.59%

Total offering amount SR 591,500,000

Targeted offering volume (cash) SR 305,150,000

Targeted offering volume (in-kind) SR 286,350,000

Acquisition of primary assets SR 572,700,000

Capital Structuring fees & Brokerage fees SR 18,800,000

7- Percentages of subscription against In-kind and cash contributions

The Fund offers 59,150,000 units for the unit holders from the public at an initial offering price of SR 10 (Ten Saudi Riyals) per unit. The targeted offering volume shall be an amount of SR 591,500,000 where an amount of (SR 305,150,000) in the form of in kind contributions. A period of 12 months from the date of listing will be applied to owners who own 5% or more at the time of placement. The amount of the offering is intended to be distributed as follows:

unit holders No. of Units Units value (SR) % from Fund total volume

Method of Subscription

Khalid Bin Abdulaziz Bin Mohammed bin Nafjan 10,075,000 100,750,000 17.0329% In-kind

Wedad Bint Abdulaziz Bin Abdul Mohsen Al Twaijri 3,500,000 35,000,000 5.9171% In-kind

* Abdullah Ibrahim Al Khorayef Sons Co. 6,500,000 65,000,000 10.9890% In-kind

Abdulaziz Bin Ibrahim Bin Abdullah Al Ajlan 960,000 9,600,000 1.6229% In-kind

** Al Mutlaq Holding Company 7,600,000 76,000,000 12.8486% In-kind

unit holders from the public 30,515,000 305,150,000 51.59% Cash

Total 59.150.000 591,500,000 100% Cash/ In-kind

* Abdullah Ibrahim Al Khorayef Sons Co. is owned by Saad Abdullah Ibrahim Al Khorayef, Hamad Abdullah Ibrahim Al Khorayef, Mohammed Abdullah Ibrahim Al Khorayef, Bandar Abdullah Ibrahim Al Khorayef and 14 other shareholders.

** Al Mutlaq Holding Company is owned by Mohammed Abdullah Al Mutlaq, Thamer Mohammed Abdullah Al Mutlaq, Abdullah Mohammed Abdullah Al Mutlaq, Fahd Mohammed Abdullah Al Mutlaq, and Faisal Mohammed Abdullah Al Mutlaq

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8- Active management

The Fund Manager relies on an experienced investment team, advisors and external consultants to evaluate the most attractive sectors of the real estate investment market. The Fund's assets will be managed by an experienced team of real estate investment professionals. In addition, the Fund Manager intends to appoint well versed managers to manage the Fund's investments, and property managers may also be tenants of Fund related real estates.

9- Investment decision-making process

In the course of seeking new opportunities in the real estate market, the Fund Manager will adopt an investment process to identify opportunities and execute transactions effectively in line with the internal policies set by the Fund Manager's investment team. The Fund Manager shall evaluate any new investment opportunities by adopting the following procedures: The Fund Manager shall undertake a thorough due diligence study of each potential investment, including primary assets, consistent with the process described hereunder:

Transaction Identification

The Fund Manager will identify the real estate investment opportunities available to the Fund through its business relations network and joint venture partnerships. This network includes, but is not limited to, subsidiaries, real estate professionals, brokerage firms, real estate developers, trusted advisors and high net worth individuals. All carefully identified investment opportunities are examined and selected to be subjected for further action in accordance with the Fund's investment objectives and policies.

Initial review and approval of internal investment memorandum

The Fund Manager's investment team, once a potential investment opportunity has been identified, shall conduct an initial review of the potential opportunity to understand the risks and factors affecting the transaction value to determine their suitability and compatibility with the Fund. The initial review requires a thorough analysis of the fundamentals of potential investment, market conditions and expectations, the regulatory environment, competition and growth drivers with a view to assist the Fund Manager's investment team in developing a business plan and financial model. The team then shall carry out further negotiations with the vendor to secure the transaction based on investment criteria.

Based on the positive results of the initial review and the decision to pursue the concerned investment opportunity, the Investment team prepares a note on the specific opportunity for approval by the Fund Manager. The note refers to the investment justifications and strategies, analytical study of the market, exit strategy of investment in addition to risks and ways of mitigating its impact, target returns, capital requirements and budget for various studies. The initial approval of the note allows the investment team to secure the transaction based on investment criteria.

Negotiation of the transaction

At this stage, the Fund Manager's representatives pursue negotiations with the seller in order to reach an

agreement on the main terms and conditions of the relevant transaction in accordance with the investment

approved criteria. The transaction terms and conditions will include commercial elements (e.g. pricing, terms

of payment, lease agreements and management agreements) and contractual details (e.g. undertakings and

guarantees) that will constitute the basis of transaction related agreements.

Once an agreement is concluded between the Fund Manager and the seller on the main terms and conditions of the transaction, the parties enter into a binding initial agreement consisting of a list of conditions to be fulfilled in advance as determined by the Fund Manager. The completion of the transaction will be subject to

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the conditions to be met in advance through a thorough, due diligence tracing process conducted by the Fund Manager or its representative during the exclusive period (if any) in accordance with the initial agreement.

The Fund Manager receives two appraisals conducted by two independent valuers accredited by the Saudi Authority for Accredited Valuers for any type of assets that are proposed to be acquired by the Fund in order to identify the fair market value in accordance with the evaluation criteria approved by the Saudi Authority for Accredited Valuers. Then, the Fund Manager shall negotiate with the seller guided by the values of the both reports with the aim that the purchase price of any acquisition shall not exceed the greater value of either independent valuations in line with the investment objective and the asset nature.

Due diligence facts-finding and final approval

The investment team of the Fund Manager shall carry out a thorough due diligence fact-finding process in order to ascertain and verify the key elements of the business plan. The due diligence fact-finding process will involve a detailed assessment of the potential investment, as well as the appointment of a specialist and the experts, and will include (but not be limited to) the following aspects:

Financial and financing analysis Legal and organizational aspects Tax advice Market research Evaluation; Environmental issues Engineering and Technical Review Organizational and planning matters

The investment team, subsequent to the positive outcomes of the due diligence fact-finding process and the fulfillment of the preconditions in accordance with the initial agreement, shall submit an investment note for the final approval of the Fund Manager. The investment note will provide a full summary of the outcomes of due diligence fact-finding process, in addition to a recommendation to proceed with the transaction as well as final steps and capital requirements to finalize the transaction. The final approval of the investment team allows the transaction to be completed and closed.

Close the transaction

During the transaction closing stage, the investment fund shall complete the investment transaction through concluding the transaction related agreements (e.g. sale and purchase agreements), execute the transaction and the financial structures, exploiting the capital required from the Fund in accordance with the terms and conditions agreed upon and withdrawal of funds based on bank facilities (if any).

Assets management

The objective of asset management is to extract additional value from all investments made by the Fund during the investment retention period. The Fund Manager, supported by relevant real estate managers and other independent asset managers (where applicable), will be responsible for the ongoing management and monitoring of risks associated with the Fund's investment portfolio against the action plan, as well as the development of value addition strategies to maximize returns to unit holders through a comprehensive and serious program to oversee investments.

Exit strategy of investment

The Fund Manager shall have specific and estimated exit paths from investments in order to maximize the value of the investment disposition in accordance with prevailing market conditions and the predetermined exit strategy. The valuation process takes into account the current state of the real estate market, the

Page | 35

investment environment, asset marketability, maturity of the asset cycle and any productive disposition process that results in higher performance of the Fund.

After specifying the exit opportunity of a certain investment, the exit and disposition of the Fund assets may be carried out at any time during the Fund period if the Fund Manager believes that this will enhance the returns to the Fund.

The Fund Manager may, as a part from the process of taking investment decisions, outsource advisory services, if needed, for such services.

Authorized persons participating in the Fund's investment decision-making process are as follows:

- Omar Al Jaroudi: CEO, Shuaa Capital Saudi Arabia - Basel Barqawi, Chief Operating Officer, Shuaa Capital Saudi Arabia - Faisal AlZaqdi, Associate, Real Estate Asset Management, Shuaa Capital, Saudi Arabia

10- Ownership structure

The Fund Manager appointed a Custodian to retain the ownership of Fund assets. The assets ownership will be registered in the name of a company or more with a certain purpose to be incorporated by the Custodian for the separation between the Fund owned assets ownership and those owned by the custodian. The Fund may access to financing from one or more financial institution. In this case, the Fund assets can be mortgaged for the benefit of the financing entity under the terms and conditions of financing documents.

11- Compliance with the Laws

The Fund and its investments shall comply, at all times, with the laws and regulations governing the ownership of real estate in the Kingdom, including the Statute of real estate ownership and investment by non-Saudis.

12- Principal Risk of investing in the Investment Fund

The investment in the Fund involves many risks and is suitable only for investors who fully understand the risks of such investment and can afford such risks. Potential investors shall carefully evaluate the considerations listed hereunder and other considerations when making their decision. There may be other risks and uncertainties that are not known to the Fund Manager on the date of these Terms and Conditions, or which may be faced by the Fund and may adversely affect – in case of occurrence – the investment returns and the NAV of the Fund. No guarantee can be made that the Fund will be able to achieve the investment objective or that investors will receive a return on their capital. Investing in the Fund does not imply a guarantee of profit or loss, and therefore each potential investor must take the factors below into consideration before purchasing units in the Fund. Investors are solely responsible for any material loss arising out of or in connection with investing in the Fund unless it is the result of fraud, negligence or misconduct by the Fund Manager in accordance with the Real Estate Investment Funds Regulations.

F. Fund-related risk factors

Risks of no guarantee of investment returns

The Fund does not provide guarantees that it will be able to achieve returns to its investors or that the returns will be commensurate with the investment risks in the Fund and the nature of the transactions described in these Terms and Conditions. The value of the units may be reduced or the investors may lose some or all of the capital they have invested. A guarantee that the Fund's targeted returns will be achieved cannot be made and all the figures and statistics contained in these terms and conditions are indicative

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only and do not represent profit projection. The actual proceeds cannot be forecasted and may vary than the statistics outlined in these terms and conditions.

Risks of transferring ownership of the Fund's assets to the Custodian

The Fund may face difficulties in transferring assets to the Fund, which may lead to delays in the listing and trading of the Fund's units.

Fund Assets Risks

The Fund may have certain risks related to the Fund's assets such as concentration of rents on one tenant, early termination of lease contracts that have no collateral and risks that may arise due to the lack of a certificate of completion of one of the Fund's assets and the risk of not obtaining municipal and governmental approvals Required to operate any asset in the future.

Risks of limited performance record

The Fund does not have a prior performance record through which the potential investors can judge the performance and success of the Fund. Although the Fund Manager has extensive experience in fund management (including asset management), however, the nature of future investments in the Fund and the nature of the risks associated therewith may differ materially from those previously undertaken by the Fund Manager. It is not necessarily that the previously achieved outcomes by the Fund Manager are a function of future performance.

Liquidity risks

The Fund intends to apply for the Units to be accepted for trading on the Saudi Stock Exchange (Tadawul). The acceptance of this request shall not be regarded as a guarantee or indication that there will be a liquid market for the units or that they will evolve, or that if they do not develop, they will continue indefinitely following acceptance. In the absence of a high liquidity market, unit trading prices may be adversely affected. In addition, if this market was not opened, the relatively small transactions or transactions on the planned units may have a significant negative impact of the Units market price. Therefore, it will be difficult to execute the operations or operations to be liquidated related to a large number of units at a fixed price due to the volume and level of liquidity in the existing market. Limited number of units and/or unit holders may mean limited liquidity in these units and may adversely affect: (i) the investor's ability to achieve some or all of his investments; and/ or (ii) the price at which the investor may affect such an entitlement; and/ or (iii) the price at which such units are traded on the secondary market. In addition, a large proportion of units may be issued to a limited number of investors, which may adversely affect the creation of an active and liquid market for units.

Risks of Unit Price Fluctuations

There are many factors that may negatively affect the market price of units, including general movement in local and global stock markets, real estate markets, prevailing economic conditions, interest rates, financing costs, investor trends and general economic conditions. The unit market may fluctuate and the lack of liquidity would adversely affect the market value of the units. Accordingly, the purchase of these units is only suitable for investors who can bear the risks associated with these investments.

Risks of changes in general economic conditions

Changes in economic conditions, including interest rates, employment conditions, competition, technological developments, political and diplomatic events and trends, and tax systems, would significantly and adversely affect the Fund's future performance. In particular, increases in interest rate may cause investors to seek higher returns to be compensated for the increases in the cost of money and

Page | 37

the cost of opportunities. As a result, the comparative attractiveness of units may also be affected as an investment, and therefore the level of demand for units may decline which may affect the market price of units. The Fund may use finance and thus increases in interest rates in debt markets may affect the cost of funding the Fund. Changes in interest rates may also affect capital prices, which in turn may generally affect valuations in the real estate sector.

Trading risk at a price lower than the IPO price

Units may be traded at a price lower than the offered value and the unit holders may not be able to recover

the value of their investments in full. Units may be traded at a lower rate than the value offered, and unit

owners may not be able to recover the full value of their investment. Units may be traded at a lower price

for several reasons, including unfavorable market conditions, weak expectations of investors about the

feasibility of the Fund's strategy and investment policy, increased supply than demand of units, and a lower

valuation of the Fund principal assets.

Dividends risk

if we take into consideration that the Fund shall, in accordance with the relevant regulations, distribute at

least 90% of its annual net profit to the unit holders, there is no guarantee that the distributed amounts

will remain at the same level where the Fund may be subject to an increase in costs (which includes capital

expenditures in the event of a need for large-scale renovation) or a decrease in revenues (for example, in

the event that the income amounts of rents are not collected).

In addition to making distributions sequential, the Fund's freedom to make any distributions at all by

financiers may be restricted in accordance with financing agreements (where interest must be paid to the

bank before distributing the dividends) or otherwise. Fund financiers, under certain circumstances, (such

as following the occurrence of default under any financing arrangements) may have the right to control the

Fund cash flows and to use such cash flows to settle the original amounts due under the financing

arrangements. Stopping of distributions or declining the amount of distributions to unit holders may result

in a decline in the value and the unit trading price of the Saudi Stock Exchange (Tadawul).

Risks of increase in management fees for the Fund's income

The Fund shall pay administrative fees to the Fund Manager equivalent to a percentage of the total value

of the Fund's assets in cases where the rental income attributable to the Fund is fixed for a certain period

of time. The total value of the Fund's assets is expected to change from time to time and may result in a

decrease or increase in management fees paid to the Fund Manager. In the event of an increase in the total

value of the Fund's assets, management fees will increase as a percentage of the Fund's fixed annual

income which may adversely affect the periodic returns of the Fund's units.

Risks of significant sell-off the Fund units

Subsequent sales by unit holders for a large number of units may significantly reduce the unit price. Any

sell-off of a large number of units in the public market or the belief that such sales would have a negative

and significant impact on the units' market price.

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Risks of reflecting the Fund investments' principal value

The traded market price of units may not reflect the value of the Fund's principal investments. Financial

markets may also subject to large fluctuations in prices and volume of transactions from time to time. In

addition to economic, political and other circumstances, this may lead to a significant negative impact on

the market price of units. As a general trading Fund, the unit price may be affected by a large number of

factors, many of which are outside the control of the Fund or the Fund Manager. Some of these factors

relate to the Fund and its operations where some of which would generally affect real estate investment

or equity markets.

Risks of recurrent calculation of Net Asset Value (NAV)

The value of the Fund's real estate assets is determined at least once every six months. However, the value

of the Fund's principal investments may change between the dates of the assessments. Accordingly, the

market price of the units may be based on historical information and this price may not reflect the present

value of the Fund's principal investments. Moreover, all fees and charges are not adjusted until the next

valuation date. In such a case, unit holders may not know the value of the Fund's updated assets during

this period and therefore they may dispose of the units in a manner that may adversely affect the

investment income and returns.

Risks of restricted access to finance for future acquisitions

The distribution requirements and funding constraints under the regulations governing the traded real

estate investment Funds and regulatory restrictions on new equity issues may limit the Fund's flexibility

and ability to grow through acquisitions. The Fund is supposed to distribute at least 90% of its annual net

profit to the unit holders. In addition, in order to maintain the status of the Fund as a traded real estate

investment Fund, the financing ratios of the Fund shall not exceed 50% of the total value of the Fund's

assets according to the latest audited financial statements. As a result, the Fund has limited capacity to

improve its real estate investments or to achieve growth through the acquisition of additional properties.

If the Fund intends to increase the offering total amount, it may need to offer units according to the

regulations of CMA and Saudi Companies Law. The process of increasing the offering total amount to a real

estate investment Fund is a process that has not yet been tested, may prove to be a time consuming process

and adversely affects the market price of the units.

Risks of Sharia restrictions

The Fund investments shall be sharia-compliant as determined by the sharia advisor. These principles apply

to the Fund's investment structure and to some extent to the Fund's activities and the diversification of its

investments. The Fund, to comply with these principles, may be forced to abandon the investment, a part

thereof or part of its income if the investment or investment structure is contrary to the principles of Islamic

Sharia. In addition, when adhering to Sharia principles, the Fund may not consider the possibility of

exploiting investment opportunities if the Sharia Supervisory Board decides that there is any investment

proposal that is contrary to Islamic Shariah rules and therefore cannot be considered by the Fund. Such

factors, under certain circumstances, may adversely affected the Fund's financial performance or

investments compared to the material results that could be achieved if the Fund was not constrained by

Sharia rules.

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In addition to the aforementioned, there can be no assurance as to the legitimacy of the Fund, any

investments of the Fund (including its financing) and the tenants occupying any of the Fund assets. The

Fund or the Director of the Fund shall make no undertaking in this respect. Unit holders should be reminded

that, as with any legitimate views, differences of opinion are not normal. Therefore, unit holders must have

their own independent sharia advice regarding the legitimacy of the Fund and the proposed investments.

Risk of changes in market conditions

The future performance of the Fund depends largely on changes in the supply and demand situation in the

relevant real estate sector, which may be affected by regional and local economic and political conditions,

increased competition that get rise to lower real estate values, limited availability of mortgage funds, higher

mortgage prices and changes in supply and demand. Such changes in market conditions may affect the

value of the Fund's major investments and investors' returns.

Risk of false expectations

The Fund's decision to enter into some investments may be based on some of the expectations prepared

and put forward by the Fund Manager. The false expectations of the Fund Manager in relation to any of

the aforementioned market conditions will have a negative impact on the performance of the Fund and

the returns to the unit holders.

Risks of not participating in the management of the Fund: In general, investors will have no right or

authority to participate in the management of the Fund or to influence any of the Fund's investment

decisions. The responsibilities relevant to the Fund management will be vested in the Fund's Board of

Directors and the Fund Manager.

Risks of reliance on the Fund Manager employees

The success of the Fund's development depends mainly on the success of its management team, thus it

may be affected by the loss of any member linked to the activity of the Fund (whether due to resignation

or otherwise) or the inability to attract and recruit additional staff to the Fund's activity and system. The

lack of a successful management team for the Fund may adversely affect the ability of the Fund to manage

its real estate and assets and its ability to negotiate for the benefit of the Fund, which may affect the Fund's

revenues and the value of its units.

Potential risks of conflict of interest

The Fund may face various conflicts of interest given the fact that the Fund Manager, its subsidiaries,

directors, employees and partners may participate directly or indirectly in a wide range of real estate and

other business activities similar to those of the Fund. Therefore, to the extent that the interests of the Fund

Manager, its subsidiaries, directors, employees and partners conflict with the interests of the Fund, this

may affect the ability of the Fund Manager to manage the Fund objectively and may affect the Fund's

principal investments and the proceeds of the unit holders.

Risk of staff dedication

The Parties appointed by the Fund (including the Fund Manager and the Managing Director of the Fund)

are not required to devote all their resources to the Fund. Therefore, insofar as a designated official devotes

Page | 40

a number of staff to performing business and interests other than the work of the Fund, this will adversely

affect the Fund's ability to achieve its investment objective and may affect distributions to unit holders.

1) Fund assets related risk factors

Risks of lack of suitable investments

The Fund Manager has selected some, but not all, of the Fund's investments at the date of these Terms and

Conditions. Investors in the Fund have not been given an opportunity to assess the economic, financial and

other relevant information relating to future investments. The evaluation is limited to the Fund Manager as

set forth in these Terms and Conditions. There can be no assurance that the Fund Manager will be able to

identify future investments that meet investment objectives, especially in the current market environment.

There is also considerable competition in identifying and structuring appropriate investments for the Fund,

which involves a high degree of ambiguity. Accordingly, the Fund's inability to identify the investments that

suit thereto can significantly affect the Fund's ability to achieve the desired returns and thus lower returns to

investors.

Risks of real estate market

The Fund's investments can include investments in versatile real estate sectors such as commercial real estate,

service real estate and residential facilities. The performance of investments in this sector will depend heavily

on changes in demand and supply levels, which in turn will be mainly influenced by economic, political,

security, regional and local factors, as well as by increased competition from other similar real estate. The

Fund's ability to generate rental income and to maintain real estate value depends largely on the ability of the

Fund's real estate to compete effectively with similar properties. If similar real estates are able to attract

tenants better than the fund, the net rental income of the fund may be decline in the future due to lower

demand by tenants. The decline in net rental income may result in lower dividend payments to unit holders

and may result in a lower unit trading value and the price in Tadawul market.

Risk of real estate value fluctuation and other real estate in general

Investments in the Fund's real estate will be subject to risks related to the ownership, lease and/ or

development and/ or redevelopment of the properties. Such risks include, but are not limited to, those risks

associated with the overall domestic economic climate, local real estate conditions, changes in supply and

demand for competing real estate in an area (as a result of over-construction as an example), a lack of energy

supplies and various uninsured and uninsurable risks, nature disasters and government regulations (e.g. rent

control), changes in property taxes, changes in rates of return, and the availability of mortgage funds that may

offer sale service of difficult or impractical real estate or refinancing thereof, environmental obligations and

potential obligations associated with disposition of assets, terrorist attacks, wars and other factors that fall

outside the control of the Fund Manager. There is no guarantee that there will be a market ready for resale of

investments because investments in general will not be liquid. Liquidity may result from the absence of an

existing market for investments, in addition to the legal contractual restrictions on resale thereof (including

any restrictions on the disposition of investments by financiers who have provided financing for the acquisition

of related investments).

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In addition, adverse changes in the operation of any real estate or in the financial position of any tenant may

have a negative impact on the rental payments received by the Fund and, consequently, on the value of the

dividends distributed to the unit holders. A tenant may, from time to time, be subject to a recession which

may impair its financial position and result in defaults on payment of rental dues as they fall due. Any tenant

may, at any time, seek protection against the bankruptcy or insolvency laws in force, which may give rise to

the refusal or termination of the lease or any other negative consequences, thereby reducing the Fund's

distributable cash flow. No guarantee can be made that tenants will not file claims for protection from

bankruptcy in the future, and if they do so, the lease will continue to be valid.

Investments’ concentration risks in real estate sector: The fund may invest in assets concentrated in a specific

sector, for example in commercial real estate and multi-service real estate such as the office real estate sector

and/ or the logistics facilities sector. If the fund concentrated its investments in one or more sectors, this

matter may expose the Fund to the risk of economic recession in the sector in question and this on a larger

scale than if the Fund's portfolio includes assets in another sector(s). As a result, this recession may adversely

affect the financial position of the Fund, its operating deliverables, its cash flows and its ability to provide

dividends to investors.

Risks of real estate expropriation

Government authorities can confiscate real estate for the public interest, when necessary (for example, for

the construction of highways). Through practical experience in this domain, the purchase price is usually equal

to market value. In the case of expropriation of real estate, a real estate is acquired after a period of notice

which is indefinite period in the law; however it applies in accordance with a specific law. Although

compensation may be paid, there is a risk that the level of compensation will not be sufficient compared to

the investments invested by the Fund and with the loss of profit/ increased investment. If the above

mentioned risks occur, the unit holders' dividend may be decline and the unit trading value may decline in

Tadawul and thus the unit holder may lose all or part of the invested capital.

Risks of reliance on rental income

The Fund may acquire investments by exploiting the revenues amounts obtained from the tenants of Fund's

principal real estate. There is no guarantee that the vacant areas will be rented, that the expired rents will be

renewed or there will be an increase in rent value over time. If a tenant is in recession in his business or any

other type of financial crisis, he or she may be unable to pay the rental dues in time or renew the rental

contract. Some tenants may occupy large portions of the relevant principal real estate assets. Therefore, as

long as the Fund's investments are concentrated in these assets, the financial position of the Fund, its

operating results, cash flows and its ability to provide dividends to investors may be adversely affected by any

negative circumstances affecting such key tenants.

Liquidity risks of principal assets

As a type of asset, real estate assets are relatively illiquid assets. Thus, it may be difficult or impossible for the

Fund to sell a certain real estate asset at the desired price at any given time. The Fund's portfolio consists

mainly of real estate assets. Therefore, it may be difficult for the Fund to sell its real estate assets (especially

at times of market recession, especially those that are considered large real estate assets). The price may be

subject to a substantial decline, especially if the Fund has to dispose of any of its assets within a short period

Page | 42

of time for any reason, including the urgent need for cash to make additional investments. This may reduce

the value of the units and adversely affect the performance of the Fund.

Development risks

Although development projects will not make up a large proportion of the fund's portfolio, real estate

developments in the Kingdom face many risks. The risk of participating in the construction and marketing of a

new real estate project includes, but is not limited to, the following: (1) delays in work completion in a timely

manner, (2) exceeding specified costs, (3) inability to achieve leases at target levels, (4) Force majeure caused

by factors outside the control of the Fund relating to the construction sector (including weather conditions,

poor environmental conditions and lack of building materials on the market), which impede the completion of

development projects. Starting a new project also involves other risks, including government approvals and

permits for land division and occupancy, and other governmental approvals and permits. Successful

completion of these projects will have a direct and significant impact on the value of the units and any failure

to do so would result in reduced dividends to investors and net asset value of the Fund.

Financing Risks

The Fund is likely to access to financing to finance the assets of the Fund and such financing may adversely

affect the income generated by the Fund or result in a loss of the original capital. When the financing is used

by the Fund, increases and decreases in the value of the Fund's portfolio will be maximized. For example,

financing may cause random changes in the value of the Fund's assets or may give rise to a loss that exceeds

the amount of its investment. The financing utilization would create an opportunity for increased returns but

at the same time involves a high degree of financial risk and may expose the Fund and its investments to other

factors such as the increased financing costs and economic recession. Furthermore, the assets of the Fund may

be mortgaged to a financier solely for the benefit of the Fund, and such financier may claim the assets

immediately upon default in payment (as stipulated in the financing documents) by any special purpose

company or by the Fund Manager or the Fund itself.

Risks of competitors' actions in the market

The Fund competes with other real estate owners, operators and developers in the Kingdom of Saudi Arabia,

and some of them may own real estate similar to those owned by the Fund in the same area in which the real

estate are located. If the Fund's competitors rent or sell real estate similar to those owned by the Fund at a

lower value than the Fund's valuation of comparable assets, the Fund may not be able to rent its real estate

at reasonable rates or on appropriate terms or may not succeed at all. Consequently, the Fund may incur

additional costs and expenses for maintenance of un-leased real estate and may be subject to loss of potential

income as a result of non-occupancy of the principal real estate. Accordingly, the expected income of unit

holders may be adversely affected.

Risks of selling certain real estate of the Fund

In respect of the disposition of the Fund's principal real estate, the Fund may be required to provide business

and financial data for such real estate that are similar to those required in the case of the sale of real estate in

general. The Fund may be required to compensate real estate purchasers to the extent that such data or

information is inaccurate about the properties sold. Such arrangements may result in contingent financial

Page | 43

obligations, which may reduce returns to unit holders or ultimately be financed by the Fund. In addition, the

documents to which the Fund is governed stipulates that the Fund shall indemnify the Fund Manager and its

subsidiaries, including their officers, directors, partners, employees, shareholders, members and other agents,

for certain claims, losses, damages and expenses arising out of their activities on behalf of the Fund. Such

financial compensation obligations may materially affect the proceeds of the unit holders.

Risk of inability to sell the Fund's real estate and assets on good terms

The Fund will sell its real estate and other assets when the Fund Manager considers that such sale is

appropriate and in the interest of investors. The Fund's ability to dispose of properties on favorable terms

relies on factors beyond its control, such as competition from other vendors and the availability of financing

solutions that attract potential purchasers. If the Fund is unable to sell its assets on the terms it prefers or at

the time that the Fund Manager considers fit to dispose of the assets, its financial position, operating results,

cash flow and its ability to distribute dividends to unit holders may be adversely affected.

Risks of the Fund's inability to structure and attract Shariah compliant financing

The Fund Manager may attract certain amount of Shariah-compliant financing for the purpose of acquiring

and developing real estate and investment properties. The Fund or its subsidiaries may sometimes find it

difficult to access to the required financing for its investments on such terms as the Fund Manager considers

acceptable financing terms. In this case, some investments may need to be reduced or delayed which affects

the Fund's deliverables.

Risk of tenants' inability to meet their rental obligations

Fund deliverables may be adversely affected if a large number of tenants are unable to meet their rental

obligations. Furthermore, if a tenant resorts to declare its bankruptcy, insolvency or similar systems, he may

terminate the private lease and this gives rise to a decrease in the Fund's cash flow. In the event of a large

number of defaults and/ or bankruptcies by tenants, the cash flow of the Fund as well as the ability of the Fund

to implement distributions to unit holders may be adversely affected.

Risk of non-leasing or non-renewal of leases

The most income of the Fund will be derived from rental payments paid by real estate tenants. Accordingly,

the financial position of the Fund, the operations deliverables and cash flow as well as the ability of the Fund

to implement distributions to investors may be adversely affected if the Fund is not able to re-letting the real

estate immediately, renew the lease agreements or if the rental value upon renewal or re-letting return is

much lower of the targeted value. Upon termination of any lease, there is no guarantee that the contract will

be renewed or that the tenant will be replaced. The terms of any subsequent lease may be less beneficial to

the Fund than the current lease. In case of default by any tenant, the lessor may face delays or limitations in

the execution of the rights and may incur considerable costs to protect the Fund's investments. In addition,

the Fund's ability to rent the rental space as well as its rental value is affected not only by tenants' demand

but also by the number of other real estate competing with the Fund's real estate to attract tenants.

Risk of Uninsured Losses

The Fund will provide, at its expense, insurance for commercial liability, on property insurance and other types

of insurance covering all properties owned and managed by the Fund, this will be under the type and limits

that are believed to be adequate and appropriate in view of the relative risks applicable to the real estate and

Page | 44

the appropriate cost of coverage while applying good industry practices. It is also possible to insure against

certain losses, such as those arising out of terrorist acts, storms, floods or seismic events, taking into account

certain limitations, including large discounts or co-payments and insurance policy restrictions. Therefore, the

Fund may incur material losses exceed insurance proceeds and may become unable to continue to access to

insurance coverage at commercially reasonable rates. If the Fund encounters uninsured loss or loss beyond its

insurance limits in respect of ownership of one or more real estate, it is probable that the Fund will lose the

capital invested in the damaged properties as well as the future proceeds from the properties. Any such loss

is likely to adversely affect the Fund's financial position, operations deliverables, and the resulting cash flows,

and then the ability of the Fund to provide distributions to investors.

Risks of inaccurate valuation of real estate

In addition to valuations conducted by two independent Saudi valuers accredited by the Saudi Authority for

Accredited Valuers, as of 30 June and 31 December of each calendar year, the Fund Manager will use internal

evaluations in many cases for the Fund. The valuations performed by the Fund Manager will be for the purpose

of estimating the value of a real estate only and not a precise measure of the value that can be accessed to

when selling the property, as the matter relies on negotiation between the buyer and the seller as well as the

final verification of the property market value depends largely on the economic circumstances and other

circumstances beyond the control of the Fund and the Fund Manager, including, but not limited to, market

conditions in general.

Furthermore, valuations do not necessarily reflect the price at which the property can be sold, taking into

consideration that the selling prices of the Fund's property can be determined only by negotiation between

the buyer and the seller. If the Fund decides to liquidate its assets, the realized value may be more than or less

than the estimated value of these assets. In periods of economic volatility, where uncertainty increases with

respect to value estimates, and comparable transactions against which the value can be measured are decline,

the difference increases between the estimated value of a particular real estate asset and the ultimate market

value of that asset. Moreover, the relative uncertainty of cash flows in a troubled market could adversely affect

the accuracy of the real estate value estimates and the negotiations between the buyer and the seller and,

consequently, the final returns of the unit holders.

Risk of the insurance unavailability against losses arising out of certain disasters

Some disastrous losses, such as wars, earthquakes, hurricanes, terrorism or other similar events, may be

uninsured or insurable but at high insurance rates to maintain adequate insurance coverage from which would

adversely affects any relevant investments. In general, terrorism-related losses have become more difficult

and costly to insure against thereof, and some insurance companies refuse to insure against terrorist acts in

their own insurance policies which include all risks. In some cases, insurance companies provide very limited

coverage against terrorist acts in return for additional premiums which may heavily increases the total costs

of insurance against investment related events. For these reasons, investments may not be insured against

terrorist acts or against other risks. In the event of a large uninsured loss, the Fund may lose both the capital

invested in the Fund and the expected profits from the affected investments. In general, Fund will have no

control over the type and level of insurance coverage provided or whether insurance will be provided in the

first place.

Page | 45

Risks of environmental obligations

The Fund may be exposed to significant risk of loss arising out of environmental claims resulting from hidden

or unknown matters or from environmental, health or occupational safety issues or problems related to

insufficient reserves, inadequate insurance or insufficiency of insurance proceeds against problems have

previously identified, as well as the risks arising from occupational safety issues and problems. Under various

applicable laws and regulations, the real estate landlord may be responsible for the costs of disposal, removal

or treatment of certain hazardous or toxic substances on or within such real estate. Joint and individual liability

laws and regulations may be imposed that would oblige a party to pay more than its share or even its entire

share of the financial liability pertaining to such risks. Such an obligation may also be imposed without regard

to whether the landlord is aware of or has caused the presence of such hazardous or toxic substances. The

cost of any remedy required and the landlord's responsibility for any real estate is generally not limited liability

under such laws and regulations and such cost may exceed the total value of the landlord's properties and/ or

assets. The existence of such substances or the non-treatment of pollution caused by such substances may

adversely affect the ability of the Fund to sell, lease or earn income from any real estate or to enter into

financing arrangements using such properties as collateral for financing which adversely affects the Fund's

income from such properties. Environmental claims for a particular real estate may exceed the value of such

real estate and, under certain circumstances; the Fund may be forced to use its other assets to meet those

obligations.

Risks of investment in Murabaha, Murabaha transactions, listed equities and other real estate Funds

The Fund may invest in Murabaha transactions in Saudi Riyals, Sharia-compliant real estate Funds or in real

estate funds traded in the market. The value of such investments may decline as they are not bank deposits

(except for Murabaha transactions) while insuring minimum level of returns, and therefore such transactions

may have an impact on dividends to the unit holders.

Risks of impact of government policies on the Saudi real estate market

A tax on undeveloped land plots developed in urban areas of the Kingdom has been recently imposed by the

government. The tax, known as the "Idle land tax", provides an incentive for other developers to develop

undeveloped land plots but that may lead to increased competition in the real estate market. Any future

decline of current government assistance for electricity and water services, changes in expatriate tax, taxes

imposed on expatriate remittances and the introduction of any new fees on expatriate workers and their

escorts may reduce the income and may reduce demand for the Fund's properties. Furthermore, any increase

in rent value by the Saudi government would adversely affect real estate income and therefore on cash

dividends and market value of the Fund's units.

2) Other risks factors

Risks of legal status

The Fund represents a contractual arrangement between unit holders and the Fund Manager. This contractual

arrangement is governed and supervised by the Capital Market Authority. The Fund does not have its own

legal personality and therefore the degree of support of any Saudi government or Saudi court for this

Page | 46

difference between the legal status of the Fund and the legal status of the Fund Manager is unclear and

untested to the best of our knowledge.

Risks of Changes in Regulatory and Legal Legislation

The information contained in these Terms and Conditions is based on existing and declared legislations. There

may be legal and regulatory changes in the Kingdom or elsewhere during the term of the Fund, which could

adversely affect the Fund or its investments. The Fund's ability to resort to legal methods in the event of

conflict may be limited, and it may be necessarily to resort to the courts of Saudi Arabia to pursue legal

remedies. The enforcement of rental contracts and other contracts through the Kingdom's judicial system is a

long and unpredictable process, which may have a negative impact on the Fund and on dividend distributions

to unit holders.

Risks of zakat and taxes

Zakat and tax: Investment in the Fund involves various zakat and tax risks, some of which apply to investment

in the Fund itself and others apply to certain circumstances that may or may not be relevant to a particular

investor. The Fund's incurring of such Zakat and taxes reduce the cash amounts available for the Fund's

operations as well as potential distributions to investors. Zakat and taxes incurred by investors will necessarily

decline the returns associated with investing in the Fund. Potential investors should seek professional advice

regarding zakat, taxes pertaining to investing, owning and selling units. There are currently no Zakat and/ or

taxes imposed on Funds subject to the Capital Market Authority within the Kingdom of Saudi Arabia., and local

zakat and tax authorities reserve the right to estimate zakat and tax on all unit holders.

Risks of value added taxes (VAT)

Investment in the Fund is not subject to income tax, withholding tax, capital gains tax or any other relevant

tax, as at the date of these Terms and Conditions. The value added tax was applied in the Kingdom in January

2018. Under the VAT regulations recently enacted in the Kingdom, investment in the Fund is not expected to

be subject to value added tax; however, investors should seek advice on the impact of VAT on their investment

in the Fund.

The Fund Manager is expected to be subject to Value Added Tax (VAT) in respect of his own activities and

business, thus the payments due to the Fund Manager shall be adjusted so as the VAT to be taken into account.

In this regard, payments payable to the Fund are subject to VAT at a rate of 5% of the value of the installment,

while any sale of any of the Fund's real estate assets is subject to VAT at 5% of the relevant selling price.

Risks of tax withholding

Under Saudi Arabian tax regulations, payments transferred by a resident (whether tax payer or not) to a non-

resident should be taxed. Therefore, dividends distributed by an investment Fund to a non-resident investor,

including market-traded real estate funds, must be subject to a tax withholding of 5%. Under the current laws,

Funds are not subject to taxes on payments made by the Fund to unit holders. The Zakat and Income Tax

Authority has not issued any official directions would confirm that this transaction is a correct procedure and

therefore any tax that may be imposed on the Fund's profits will necessarily decline the returns from investing

in the Fund. Hence, potential investors should seek advice of their tax advisors regarding the tax implications

of investing, possessing and selling Funds.

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Risks of government and municipal approvals:

The Fund may not succeed in achieving its investment objectives in the event of refusal to issue any required

municipal accreditation or approval or granted on unreasonable or unacceptable terms. In such a case, the

Fund may not be able to complete an investment or development of a real estate project which may adversely

affects the value of the units where the projected returns from the units will not be realized in a timely manner.

Risk of litigation with third parties

The Fund's activities expose it to the risk of involvement in litigation with third parties. The Fund will incur

defense charges against third parties claims and settlement amounts or judgments which would reduce the

Fund's assets and cash available for distribution to unit holders. The Fund Manager and others are entitled to

compensation from the Fund in respect of litigation matters, provided this shall be subject to certain

restrictions.

Risks of liability identification and compensation

The terms and conditions of the Fund shall specify the circumstances in which the Fund Manager, its directors,

officers, employees, agents, affiliates, personnel, custodian and any property manager, sharia advisor and the

Board of Directors of the Fund shall be liable to the Fund. As a result, the right of investors to act in certain

cases is limited compared to cases where such conditions are not stipulated. In addition, the Terms and

Conditions provide that the Fund will indemnify such parties for certain claims, losses, damages and expenses

arising from their actions on behalf of the Fund. Such compensation liability could adversely affect the unit

returns. However, the investor's liability to the Fund should not exceed the amount invested in the Fund.

Sovereign and political risk

The value of the Fund and its investments may be adversely affected by political or diplomatic developments,

social instability, changes in government policies and other political and economic developments.

Risks of in-kind distributions

The Fund may, subject to the compliance with regulatory requirements, make in-kind distributions of real

estate or quotas in other companies in the event of liquidation of the Fund. In the case of in-kind distribution,

unit holders may receive quotas in any asset or company, which are difficult to be sold or disposed thereof of

and converted into cash. As a result, unit holders can conduct collective possession in any real estate company

or in-kind distributed shares. The in-kind distribution of any assets may impose administrative costs and

burdens that investors cannot bear if the fund distributes cash dividends only.

Risks of future data

These Terms and Conditions may contain forward-looking statements relating to future events or future

performance of the Fund. In some cases, future data can be defined in terms such as: "expect", "believe",

"continue", "appreciate", "await", "intend" "" will, "" target, "or vice versa of these terms or other similar

terms. Such data indicate projections only while actual events or results may differ substantially. The investors

shall, when evaluating these data, specifically consider number of various factors, where such factors can make

the actual events or results differ materially from any future data. The Fund Manager shall not be liable for

the updating of any future statements after the date of these Terms and Conditions in order to match these

data with actual results or changes in expectations.

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The cited above risks shall not constitute a summarized and thorough interpretation of all risk factors in

investment in the Fund units. It is strongly recommended that all potential investors seek independent advice

from their respective advisors.

The investment in the Fund does not make any guarantee that the investment will generate profits or that

investors will not incur any loss. Therefore, each potential investor shall take the above factors into

consideration before investing in the fund. The unit holders shall bear full liability in the event of any material

losses arising out of their investment in the Fund unless such losses result from the Fund Manager's fraud,

gross negligence or abusive behavior.

G. Subscription

1) Initial public offering (IPO)

The Fund offers 305.150.000 units for the public at an initial offering price of SR 10 (Ten Saudi Riyals) per

unit. The targeted offering volume shall be an amount of SR 591.500.000 where an amount of (SR

305.150.000) in the form of cash contributions and an amount SR 286.350.000 in the form of in-kind

contributions.

2) The Fund manager's investment in the Fund

The Fund manager and affiliates shall be entitled to subscribe in the Fund in the initial offering period or after

listing date, provided that such subscription does not exceed 25% of the total value of the Fund's assets as

per the latest audited financial statements. A one-year ban will be applied from the date of listing if the Fund

Manager or any of its affiliates participate in the initial offering and the total investment exceeds 5% of the

Fund's size. The Fund Manager's employees, managers and agents, special Funds and portfolios under its

management, with the exception of the Fund manager's employees who are members of the Board of

Directors of the Fund, shall have the right to subscribe in the Fund and to acquire and dispose of units in the

Fund from time to time. The Fund Manager shall disclose any investment in the Fund at the end of each year

in financial disclosure summary.

3) Adherence to the statute of real estate ownership and investment by non-Saudis

The Fund Manager ensures that units' ownership and the Fund assets are consistent with the statute of real

estate ownership and investment by non-Saudis.

4) Minimum subscription

The investors shall, during the IPO period, subscribe at least 50 units at a subscription price of SAR 10 per

unit and a total subscription amount of not less than SAR 500 (the "minimum investment amount").

5) Maximum subscription

The maximum cash subscription during the IPO period is 2,900,000 Units (1,000 Units) at a Subscription Price

of SAR 10 per Unit and a total Subscription Amount not exceeding SR 29,000,000. This maximum limit does

not apply to investors who receive in-kind units from subscription in a primary asset in the Fund (the

"maximum investment amount").

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6) IPO and subscription procedures

The units will be offered through a public offering in accordance with the regulations of real estate

investment Funds and the instructions of the traded real estate investment Funds during the period of IPO

which will last for 10 working days starting from 25/03/2019 and continuing until 07/04/2019 ("closing

date"). If the total amount of the IPO is not covered, the Fund Manager may extend the IPO period for 20

working days after obtaining the approval of the Fund Board of Directors and the Capital Market Authority.

To subscribe in the IPO, each Subscriber shall follow the Subscription Mechanism and satisfy the

requirements contained in Appendix G of these Terms and Conditions. Investors must subscribe in the units

and fill in a subscription form as set out in Appendix E of these Terms and Conditions. Copies of the Terms

and Conditions and the Subscription Form are available on the Fund Manager's website

(www.wpa.shuaacapital.com.sa) or those relating to the receiving banks.

Each of the Fund's subscribers shall have an active investment portfolio with any of the persons licensed

under the Licensed Persons Regulations, where the units in which subscription are made in the Fund will be

directly listed in the Investor's Investment Portfolio.

Where the subscription in the Fund is only through the receiving banks, the subscriber shall have a bank

account with a receiving bank and an active investment portfolio with any of the licensed persons. Subject

to the availability of both accounts, any investor can then subscribe through the electronic channels of a

receiving bank after agreeing to the Terms and Conditions or through the Bank's branches after submitting

a signed copy of the Terms and Conditions.

The investor will read and sign the terms and conditions, fill in the subscription form and sign thereon, and

attach a copy of the identity document after signing and delivering all thereof via the website of a receiving

banks. The customer can subscribe to any business day during the IPO period.

If the desired amount is not entirely covered, the subscription amounts will be returned without any

deduction unless the approval of the Saudi Stock Exchange (Tadawul) is taken to extend the IPO period. The

recipient bank reserves the right to refuse any subscription if the subscriber fails to meet the requirements

according to the terms and conditions during the IPO period or if it fails to fill in and complete the required

data in the application form and sign it during the IPO period. A subscription of any investors will be refused

if the required subscription fees and amounts are not added to the subscriptions account during the IPO

period. All refused amounts will be returned without deduction of any expenses within (5) working days after

the announcement of the allocation except for any bank charges incurred.

7) Cancellation of the Fund IPO and funds redemption

The IPO is cancelled and subscription amounts are refunded to investors in the following cases (unless

Tadawul decides otherwise):

A) The Fund was unable to attract the public targeted IPO volume (in cash) of SR 305.150.000.

B) if the number of unit holders of the public is less than 200 unit holders;

C) If less than 30% of the units are subscribed by the unit holders from the public;

D) If the ownership of the ownership of the primary assets has not been transferred;

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E) If the Fund Manager wishes to cancel the IPO after receive the approval of the Saudi Stock Exchange

(Tadawul). The Fund shall decide this within a period not exceeding 30 working days after obtaining the

CMA’s approval.

F) If the deal was not sealed with one of the in-kind owns.

If the IPO is cancelled, all subscription amounts received for the Investor's Investment Account, which is specified in

the Subscription Form, will be refunded within 5 working days of the cancellation date (less any bank charges, bank

transfers or currency exchange fees).

8) In-kind subscription

The primary assets sellers will access to units in the Fund during IPO against their shares in the Initial Assets.

The in-kind contributions are expected to equal [SR 286,350,000] and the sellers will receive the primary assets

28,635,000 units (about (48.41%) of the total units) divided as follows:

Unit holders No. of Units

Khalid Bin Abdulaziz Bin Mohammed bin Nafjan 100,075,000

Wedad Bint Abdulaziz Bin Abdul Mohsen Al Twaijri 3,500,000

Abdullah Ibrahim Al Khorayef Sons Co. 6,500,000

Abdulaziz Bin Ibrahim Bin Abdullah Al Ajlan 960,000

Al Mutlaq Holding Company 7,600,000

Total 27,635,000

9) Allocation of units to investors

Each investor shall be notified by the receiving banks within 5 working days of the closing date with the

application acceptance or rejection. If the application is accepted, a confirmation will be sent to the

subscribers, including the amount of the approved subscription, which may change after the final allocation

of the units. If the subscription amount of certain customer is rejected or reduced according to the final

allocation, the unacceptable portion of the subscription amount will be refunded to the investor within 5

working days of notification to the investor or the allocation announcement (less bank charges, bank

transfers or currency exchange charges).

Regardless the units allocated to the sellers against the primary assets, the units shall be allocated after the

closing date in accordance with the following mechanism:

A) if the total amount of cash subscription applications submitted by all investors is less than SAR

305,150,000, then all subscription amounts will be returned to investors (without charging any fees to

the investors) within 15 working days of the closing date;

B) If the total amount of cash subscription applications submitted by all investors is equal to the targeted

IPO volume (on cash) SAR 305,150,000, then the units will be allocated to investors in proportion to their

subscription amounts.

C) If the total amount of cash subscription applications submitted by all investors exceeds the targeted IPO

volume (in cash) SAR 305,150,000, then the units will be allocated as follows:

Page | 51

A. [50] Units will be allocated to each investor.

B. If there is an excess of unallocated units, the remaining units will be allocated on a pro rata basis,

taking into account the total amount of the contribution per investor.

D) If the number of subscribers exceeds 610,300 investors, then a number of units below the minimum

investment amount may be allocated equally to all subscribers. Therefore, the Fund Manager does not

guarantee the allocation of the minimum subscription of 50 units.

The Fund Manager has the right to refuse the subscription of any investor in the Fund in the event that such

subscription violates these terms and conditions or the Real Estate Investment Funds Regulations or the

instructions of the Traded Real Estate Investment Funds or any other regulations that are applied from time

to time by the Saudi Stock Exchange (Tadawul) or any other regulatory body.

The Fund Manager shall take all reasonable measures that may be necessary to ensure at all times:

A. That the Fund shall include at least 200 unit holders from the public;

B. At least 30% of the unit holders from the public;

10) Eligible investors

Subscription in the units shall be available only for the following categories:

A) Natural persons of Saudi nationality or the nationality of a member State of the Gulf Cooperation

Council;

B) Institutions, companies, investment funds and other legal entities based in the Kingdom of Saudi Arabia

and other GCC States;

C) Expatriates resident in the Kingdom of Saudi Arabia;

D) Eligible expatriate investors under the rules governing the investment of foreign financial institutions

eligible in securities issued by the Authority Board of Directors under decision No. 1-42-2015 dated

15/07/1436corresponding to 04/05/2015;

E) Other investors authorized by the Authority to possess securities listed on the Saudi Stock Exchange.

All recipients of these Terms and Conditions shall have access to any legal or regulatory restrictions

relevant to the IPO and Sale of Units, as well as considering such restrictions.

11) Fund Calculation

The Fund Manager will open a bank account (or more) with a receiving bank or banks in the name of the

Fund. All the proceeds of the subscription from investors and the Fund incomes will be deposited in this

account. The Fund Manager may open an additional operating account. All expenses due for the operation

and management of the Fund will be withdrawn from this account

12) Timetable

The following table outlines the steps taken and the proposed time period from the IPO period until the

distribution of dividends to the unit holders:

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Steps Projected time period

Finalize the acquisition of the primary assets,

signing sale, purchase and lease agreement and

conveyance the Sukuk for the Fund

60 calendar days after the closing date

Launch the trading of the Fund units in the Saudi

Stock Exchange 2nd quarter of 2019

IPO period 10 working days starting in 25/03/2019 and ending in

07/04/2019

Extension of IPO period

If the required amount was not collected, the Fund

manager shall extend the subscription period for 20

working days after the approval of the Saudi Stock

Exchange

Units allocation disclosure During 15 working days after the closing date

Refund the surplus amounts After 5 working days of units allocation disclosure

Dividends

The Fund manager targets the distribution- twice at least

at the end of June and December of each calendar year-

annual cash profits to the investors not less than 90% of

the Fund net profits per annum.

13) Increase the Fund Volume

How to increase the Fund volume

If the Fund Manager determines that the Fund is in need to additional funding through the subscriptions

of Unit Holders, the Fund may increase its volume through cash or in-kind contributions (or both) upon

approval from the Capital Market Authority and the Saudi Stock Exchange (Tadawul), as follows:

1. The Fund Manager shall apply for the approval of Saudi Stock Exchange to offer additional units in

the Fund through cash or in-kind subscription (or both).

2. After access to the approval of the Capital Market Authority referred to in (1) above, the Fund

Manager shall seek the unit holders approval to offer additional units against cash or in-kind

subscriptions (or both) under an ordinary resolution.

3. In case of units' additional IPO in the Fund through cash or in-kind contributions, the IPO period shall

not be less than (5) days, and the IPO shall be made within a period of (6) months after the approval

of the Capital Market Authority to increase the volume of the Fund.

4. If the IPO minimum amount is increased, the units offered to the unit holders registered on the day

of the unit holders' meeting, shall be allocated first, and then the remaining units (if any) shall be

allocated to the public and any access amounts of subscription process shall be refunded to the unit

holders in cash (if any) within 15 working days of the end of the IPO period as defined in these Terms

and Conditions. The ownership of any in-kind contributions shall be transferred to the Fund and the

Page | 53

new units shall be listed on the market within a period not exceeding (60) days prior to the date of

unit holders' approval.

Units that have been allocated to subscribers in the form of 5% or more, may not be disposed by

increasing the total value of the Fund's assets for a period of 12 months from the date of listing in

accordance with the provisions of the traded real estate funds.

5. If the Fund volume increases through the acceptance of in-kind subscriptions, the additional units

shall be immediately allocated to the shareholders who have made in-kind contributions after the

unit holders approval is obtained as noted above, taking into account transfer of ownership of any in-

kind contributions to the Fund within a period not exceeding 60 years prior to the unit holders'

approval.

6. If the minimum IPO amount was not secured during the above period, the Fund Manager will cancel

the increase of the Fund volume and return all amounts to the unit holders within (5) days from the

end of the IPO Period.

Units issuance standard Upon any increase in the IPO amount, the Fund Manager shall offer units in the Fund if it deems

that the existence of added or supplementary value is in the interest of existing unit holders. The

Fund Manager takes the following factors into consideration when issuing units in the Fund in the

future.

- The Fund net assets value (NAV) as specified according to the last valuation of the Fund

assets.

- The market price of the Fund units and historical average rates.

- Added and/ or supplementary value arising out of units' issuance.

- Market and economic conditions, status of real estate investment sector and levels of cash

liquidity.

Procedures of increase the Fund volume:

The Fund manager shall take the following procedures to increase the Fund value:

1) Call for the unit holders meeting as specified in paragraph (t) (3) of these Terms and Conditions;

2) Review the meeting agenda and provide explanation on the Fund volume increase grounds, units

issuance criteria and the practical steps to be taken;

3) Issue and publish the approval resolution to increase the Fund volume after the approval of CMA is

obtained.

H. Trading in Fund units

When the fund is listed on the market, units can be traded in the same way as other real estate investment funds

units traded on the Saudi Stock Exchange (Tadawul). Therefore, unit holders and investors may trade during

normal trading hours specified by Tadawul and through their licensed brokerage firms. The relevant parties may

also trade their units during the Fund period. Trading in Fund units shall be free and not subject to the prohibition

in Article 16 (a) of the Real Estate Investment Funds Regulations on the trading of "related parties" in the units of

Page | 54

the Fund. Notwithstanding the above, primary asset sellers are prohibited from disposing of any of the units they

hold in the Fund at the commencement of trading for six (6) from the Fund units trading commencement date.

The access to units from Tadawul shall be deemed as acknowledgement by the buyer that he has read and

accepted these terms and conditions.

Trading in units may results in Tadawul fees or commissions to be paid at prevailing market rates. The unit holders

will be responsible for Tadawul fees or commissions.

The Authority may suspend the trading of the Fund units or cancel listing thereof at any time as it deems fit in any

of the following cases

A. If it deems it necessary to protect investors or to maintain a regular market.

B. If the Fund Manager or the Custodian has committed a material default, from the Authority's viewpoint, in

complying with the CMA' laws and executive regulations.

C. If the liquidity requirements mentioned in the instructions for the traded real estate investment Funds are

not met.

D. If it considers that the Fund's level of operations or assets does not justify the continuous trading of the

Fund's units in the Market.

E. If the Fund Manager has requested the Authority in writing to temporarily suspend the units trading or to

cancel thereof and the Authority has the right to accept or reject the request or to accept thereof on such

terms and conditions as it deems fit.

I. Fund termination

The Fund is terminated in any of the following cases (each thereof is deemed "termination event")

A. Upon expiry of the Fund term;

B. After the approval of the Fund's Board of Directors and Sharia Advisor on the Fund's disposition of all its

assets or selling thereof, and distribute all the sale proceeds to the unit holders;

C. In case of any change to the laws, regulations, other regulatory requirements or significant changes to the

market conditions in the Kingdom and the Fund manager deemed this a justification for the termination of

the Fund; or

D. If the termination is required under the authority decision or under its regulations.

The unit holders, the CMA and the Saudi Exchange Stock (Tadawul) shall be notified within 30 days of the

termination event. In all cases, the approval of the Fund Board of Directors, the Capital Market Authority and

the Saudi Exchange Stock (Tadawul) shall be obtained regarding the termination of the Fund.

If the Fund termination for any reason other than the occurrence of the Termination Event, prior approval must

be obtained from the unit holders, the Fund Board of Directors, the Sharia Advisor and the Capital market

Authority.

If the Fund is terminated, under a notification and CMA approval, if necessary, the Fund Manager shall, within

15 working days, 1) request Tadawul to write-off the units and require the CMA to cancel the Fund, 2) Announce

a timetable for the liquidation of the Fund on the Fund Manager's website and start liquidation procedures. The

Page | 55

Fund Manager shall appoint a Liquidator to liquidate the Fund's assets and distribute the liquidation amount to

the unit holders.

J. Fees, Expenses and commissions

Except for the subscription fees paid by the unit holders upon their subscription in the Initial Public Offering,

the Fund shall incur and pay from its assets all charges, fees, commissions and expenses described in this

paragraph. The Fund Manager is fully responsible for the calculation of fees other than those mentioned in

the table below:

Charges and fees

1. Fund's charges and fees

Charges/ fees Amount in

SR or % Method of calculation Payers Paying recurrence

A. Management fee

0.4% of Fund assets & 5% of total rental income

In order to consolidate the Fund Manager’s interests with the investors, management fees were divided into two parts where the Fund shall pay the Fund Manager an annual amount of 0.4% of the total value of the Fund's assets and an amount equivalent to 5% of the total rental income of the Fund on a semi-annual basis. Their total value will represent 0.8% of the total value of the Fund's assets according to the latest valuation of the Fund.

The Fund

To be paid on a semiannual basis

B. Subscription fee

2% 2% of the allocated subscription amounts (excluding in-kind investors)

The investor

Upon subscription in the Fund

C. Custody fee 0.025%

0.025% of the Fund assets total value. The amounts paid under Custodian Fees do not include value added tax and all other taxes applied in the future.

The Fund

To be paid on a quarterly basis

D. Capital

Structuring Fee

SR 4,482,500

The Fund Manager shall be entitled to such amount in return for the establishment of the Fund and the structuring of its capital, as well as for carrying out all establishment expenses of the Fund, which may exceed this amount and shall be paid from the Fund to the Fund Manager once.

The Fund

To be paid once after receiving the subscription

proceeds

E. Debt

Arrangement Fee

1.5%

The Fund shall pay the Fund Manager from its assets an amount of 1.5% of the amount of the financing it receives and such fees shall be paid upon completion of any transaction to be entered into by the Fund. All payments of finance structuring fees shall be calculated as to include value added tax, withholding tax and all other taxes to be applied in the future.

The Fund

Upon finalizing any financing transaction

entered into by the Fund.

Page | 56

F. Brokerage fee 2.5%

2.5% of the assets value to be paid by the Fund manager for the real estate brokerages and the amounts paid under acquisition fees do not include value added tax and all other taxes applied in the future.

The Fund

Such fees shall be paid after receiving the proceeds of subscription against the brokerage fees and shall be paid for the fund manager who in turn will distribute thereof to the real estate brokerage according the contracts entered into with them. And shall be paid in the event of having brokers for any future acquisitions of the Fund.

G. Transactions fee

1% for acquisition

2% for

disposition

The Fund manager shall be paid by the Fund 1% as fees of the purchase price of each real estate asset to be acquired by the Fund and 2.5% fees of the sell price of each real estate asset of the Fund in exchange for the Fund Manager conducting the required fact-finding, negotiation on the terms of sale and purchase and finalize the process, and the fees shall be payable after the sale and purchase process of each real estate asset is finalized and shall not be applied on the Fund initial assets. The amounts paid under transactions Fees do not include value added tax and all other taxes applied in the future.

The Fund

Upon purchasing or selling of any asset after listing.

H. Sub-

administrator fee

US$ 4,000 (SR 15,000)

The Fund pays an amount equivalent to 4,000 US $(15,000 Saudi Riyals) as preparation fees, paid once and shall be charged to the Fund Manager on behalf of the fund. The Fund pays recurrent costs as follows: The Fund pays an amount equivalent to 2,250 US dollars (8.450 Saudi Riyals) per month in return for calculating the net asset value and the preparation of internal financial statements. The Fund also pays the equivalent of US $ 8.000 (SR 30.000) per annum to prepare the Fund's financial statements. Thirteen months after the offering, the amounts would be increased by 3.5% per annum as inflation allowance. Value added tax and all other taxes applied in the future, as the case may be, shall be excluded from the amounts paid under Sub-administrator Fees.

The Fund

To be paid annually

Page | 57

I.

Certified Public

Accountant's Fees

SR 35,000

All payments of the Certified Public Accountant's fees are calculated to include VAT, withholding tax and all other taxes applied in the future

The Fund

To be paid annually

J. Regulatory Fees (to be

paid to CMA) SR 7,500

A fixed amount to be paid once. Value added tax and all other taxes applied in the future, as the case may be, shall be excluded from the amounts paid under Regulatory Fees.

The Fund

To be paid for CMA at the end of each year

K.

Publishing Fees (to be paid to Tadawul)

SR 5,000

A fixed amount, all payments of Publishing Fees shall be calculated as to include value added tax, withholding tax and all other taxes applied in the future.

The Fund

To be paid when requested

L. Listing Fees (to be paid to Tadawul)

SR 50,000 as primary listing

fee.

Fixed amount to be paid once. All payments of Listing Fees shall be calculated as to include value added tax, withholding tax and all other taxes applied in the future, as the case may be.

The Fund

To be paid once prior to listing the Fund units

M.

Fund units Registration Fees (to be paid to Tadawul)

SR 50,000, in addition to SR 2 for each unit holder up to a maximum of SR 500,000, in return for the issuance of a record for the unit holders. SR 400,000 in return for the operation of a record for the unit holders.

Fixed amount to be paid once. All payments of Registration Fees shall be calculated as to include value added tax, withholding tax and all other taxes applied in the future, as the case may be.

The Fund

To be paid once.

N. Properties Management Fees

The Fund will ensure that fees paid to real estate managers are discussed on a pure and independent commercial basis in all its aspects and in a manner consistent with market prices. Such fees are paid from the Fund's related assets. It is expected that annual property management fees for primary assets will not exceed 5% of the total annual rent for primary assets. All property management fees payments are calculated to include VAT, if any. The properties management fees of the principal assets can be summarized as follows: 2.5% of the total rental value of Al Khorayef warehouses. With respect to other primary assets, they will be managed by the tenant.

O. Development Fees

If the Fund is going to carry out development activities in the future of no more than 25% of the total value of the Fund's assets, the Fund shall ensure that any development fees incurred by the Fund and paid to the Developers shall be negotiated on a pure and independent commercial basis consistent with the prevailing market prices. To avoid doubt, the Fund did not incur any development fees in respect of the primary assets. All payments of Development Fees shall be calculated as to include value added tax, withholding tax and all other taxes applied in the future, as the case may be.

Page | 58

P. Other fees

The Fund may directly or indirectly incur other fees and charges, including but not limited to operation management costs, service costs, property insurance fees acquired by the Fund, legal fees and zakat (if applied to traded real estate investment funds, excluding private zakat for unit holders) Municipal fees, government fees, valuation fees, engineering consultant fees, and fees of surveyors, architects and interior designs engineers. In all cases, only actual fees and expenses related to the Fund and its projects shall be deducted after the approval of the Fund's Board of Directors is obtained. Such expenses are expected not to exceed 1% of the total value of the Fund's assets per annum based on the latest audited financial statements. Such percentage must be updated periodically and published on the Fund Manager's website.

2. An example of calculating recurrent charges

The annex (H) includes an example of calculating the charges and fees recurrent on the Fund.

3. Responsibility

The Fund Manager shall take all the necessary measures to achieve the best interests of the unit holders

to the best of his knowledge. The Fund Manager along with the directors, the officers, the employees, the

agents, the consultants, the affiliates, the custodian, the legal advisor and the board of directors, shall

exercise reasonable diligence and act in good faith in order to meet the unitholders’ best interest.

However, the fund may suffer a loss (of any kind) due to any unintentional act or omission by any of the

aforementioned parties in connection with the management of the Fund. In this case, any of the

aforementioned parties shall not be liable for such loss, provided that they acted in good faith and in a

manner that achieves the best interests of the Fund and such act does not involve gross negligence, fraud

or intentional misconduct.

The Fund Manager undertakes to bear any fee not mentioned in Schedule J-1. This shall not apply to any

taxes or fees that may be imposed in the future by any of the legislative authorities.

4. Value Added Tax

Based on the Fund Manager’s discussions with the General Authority for Zakat and Income, the investment

in this fund is not subject to income tax, deduction tax, capital gains tax or any other related tax until the

date of issuing these terms and conditions, given that Value Added Tax (“VAT”) has been applied in the

Kingdom as of January 2018. Accordingly, the Fund Manager has not calculated the value added tax on

the value of the acquisition of the initial real estate assets. - It should be noted that the Zakat and Income

Tax Authority may later re-subject this process to tax. In general, if the acquisition of real estate is subject

to VAT, The tax paid is refundable in cash or deducted through subsequent tax returns. If the General

Authority for Zakat and Income Tax determines that the value added tax should be applied to the

acquisitions of the Fund, this may adversely affect the cash dividends of the Fund if the tax is paid from

the Fund's resources. The Fund may obtain bank financing that is compliant with Shariah Board

regulations, or increase the Fund's capital by the applicable tax value, so that this does not have any effects

unless otherwise indicated. All fees and charges in these terms and conditions shall be referred to without

VAT, and therefore, if VAT is payable on any service or commodity provided by third parties in favor of the

Fund or the Fund Manager as Fund Manager, The Fund Manager is obliged to take the tax dues into

account where the amount paid by the Fund to the relevant service provider is increased by the value

Page | 59

equivalent to the value added tax payable by the Fund. Accordingly, investors should take into

consideration how to apply the value added tax to the amounts due to the Fund or to the Fund.

All fees and charges mentioned in these terms and conditions are referred to on the basis of exclusive VAT

unless otherwise indicated. Therefore, if VAT is payable as to the provision of any goods or services from

third parties in favor of the Fund or the Fund Manager (acting as Fund Manager), the Fund Manager will

ensure that the amounts due as a tax are taken into account and the amount due from the Fund is equal

to VAT due from the Fund.

In addition, to the extent implied by these Terms and Conditions, any person (including, but not limited

to, the entitled party) may be refunded or compensated for loss, cost, expenses or charges paid in respect

of the Fund. In the first place, the payment of the compensations or profits shall be deduced by an amount

equal to the amount of tax due on the relevant payment.

5. Financial disclosure summary

Fees, expenses and charges that are expected to be afforded and incurred by the Fund are identified in

the financial disclosure summary in Appendix B to these Terms and Conditions.

K. Fund Assets

1. Fund assets registration

The Fund assets will be recorded in the name of a special purpose company under the name of SHUAA

REIT One - Limited Liability Company incorporated by the Custodian to register the Fund's principal assets

in its name.

2. Appointment of the Valuer

White Cubes Real Estate and ValuStart Co. have been appointed to evaluate the Fund assets.

3. How to Valuate Fund Assets

The Fund Manager shall valuate the Fund based on valuations prepared by independent real estate valuers

licensed by the Saudi Authority for Accredited Valuers. The Fund Manager may change a certain valuer or

appoint a new valuer to the Fund without prior notice to the unit holders. The appointment shall be made

by the Fund Manager taking into account its liability to the unit holders.

Net asset value per unit is calculated by subtracting the total liabilities of the Fund, including any financial

obligations, fees and expenses due to the Fund during the calculation period of the Fund's total assets.

The outcome is divided by the number of units of the Fund for the same period and the outcome is the

indicative value of the existing units of the Fund.

The Fund's total assets value shall comprise all shares, real estate and cash assets, accrued profits, other

receivables and market value of all non-real estate investments owned by the Fund. The Fund Manager

shall exercise reasonable judgment in determining the values of the Fund's assets and requirements,

provided that it acts in good faith in the interest of the Fund. For purposes of determining the value of real

estate assets, the Fund Manager adopts the average valuations performed by two or more independent

valuers licensed by the Saudi Authority for Accredited Valuers.

Page | 60

The Fund Manager has conducted a valuation for each of the Fund assets through the appointment of two

independent valuers accredited by the Saudi Authority for Accredited Valuers.

The valuation carried out by the appointed valuers can be summarized as follows:

Real

estate

White Cubes

Real Estate

Valuation date ValuStart Co. Valuation

date

Valuation

average

Acquisition

value

Difference

between

acquisition value

& valuation

average

Elite

Mall

206,000,000 26/11/2018 205,000,000 26/11/2018 205,500.000 201,500,000 2%

Al N

ad

a

Trade

Ce

nte

r

76,000,000 26/11/2018 71,180,000 26/11/2018 73,590.000 70,000,000 7%

Al K

ho

rayef

Ware

ho

use

s

145,600,000 26/11/2018 133,000,000 26/11/2018 139.30.000 130,000,000 7%

EUR

O

Re

side

ntial

Bu

ildin

g

19,421,986 26/11/2018 19,400,000 26/11/2018 19,410,993 19,200,000 1%

Al M

utlaq

Furn

iture

(Ro

om

z)

110,000,000 26/11/2018 106,700,000 26/11/2018 108,350,000 102,000,000 6%

Al M

utlaq

Furn

iture

(Olaya)

53,000,000 26/11/2018 54,300,000 26/11/2018 53,650,000 50,000,000 7%

Total 610,021,986 58,580,000 599,800,993 572,700,000 4.7%

4. Number and time valuations

The net asset value shall be declared by the Fund Manager (once every six months) and at any other time

as necessary (such day shall be referred to as "Valuation Day"). The Fund Manager may postpone the

valuation of the Fund's assets after the approval of the Capital Market Authority is obtained in accordance

with Article (22) of the Real Estate Investment Funds Regulations.

All the contents of the circular issued by the Authority No. T /1/6/3/16 dated 22/4/1437H and scheduled

on 21/4/1439H will be complied with, so that all evaluation reports will be published on the website of

the Fund Manager and the Saudi Stock Exchange (Tadawul) as required by the regulations of the circular.

5. How the NAV is declared

Page | 61

The net value of the Fund's asset units of the Fund assets shall be declared within 30 working days of the

Valuation Day. The unit holders will be notified of the valuation through periodic reports available on the

Saudi Stock Exchange website and the Fund Manager's website.

L. Fund Board of Directors

The Fund Manager appoints the Fund's Board of Directors to monitor the Fund's specific actions and act as an agent

for the Fund and the unit holders. The Board of Directors works with the Fund Manager to ensure the success of the

Fund.

1. Formation of the Board of Directors

The Fund Board made up of five members to be appointed by the Fund Manager; two directors of the

Board will be independent directors. The unit holders shall be notified with any change in the BOD's

formation via the Fund Manager's website and Tadawul website.

Set out below are brief biographical details of each of the members of the Board:

Name Position BOD brief biographical details

Om

ar M

oh

amm

ed

Sae

b A

l Jar

ou

di

CEO

- SH

UA

A C

apit

al S

aud

i Ara

bia

Ch

airm

an o

f B

oar

d

Mr. Omar Mohammed Saeb Al Jaroudi is the Chief Executive Officer of Shuaa Capital Saudi Arabia. He is also a Board Member of several major companies, including Gulf Finance Corporation, Albany Real Estate Development Company, Opeligato Hotels Ltd., and many others. Mr. Omar Al Jaroudi has over 33 years of experience in the field of commercial and banking investments. During this period, he gained extensive experience about the region of the Middle East and Europe in the fields of investment banking, private property, assets management, local and regional financial intermediation, and distribution. Mr. Omar Al Jaroudi started his professional career in 1984 through his work with Banque Saudi Fransi, where he started his business in commercial banking and later moved on to investment banking. In 1995, Al Jaroudi contributed to the establishment of the investment bank, "Lebanon Invest", a banking institution which merged in 2000 with Bank Audi SAE, and later joined Shuaa Capital in 2007. Mr. Al-Jaroudi holds a Master's degree in Economics from Syracuse University in New York and Bachelor degree in Business Administration from the American University of Beirut, and holds The General Securities Qualification Certificate (CME-1).

Bas

il M

oh

amm

ed

So

bh

i Bar

qaw

i

CO

O-

SHU

AA

Cap

ital

Sau

di A

rab

ia

Exe

cuti

ve m

em

be

r

Mr. Basil Mohammed Sobhi Barqawi is the Chief Operation Officer of Shuaa Capital Saudi Arabia. Mr. Basil Barqawi began his career at City Private Bank" where he spent nine years, followed by two years at "Credit Suisse", therefore he has a diverse track record of investment experience including investment transactions in private equity and real estate (aggregate transaction values over $ 5.2 billion), capital markets, portfolio management and liquid investments. Mr. Basil Barqawi joined SHUAA Capital Saudi Arabia in 2017 as Head of Investor Relations and Corporate Banking with a major focus on managing and developing relations with investors and banks respectively. He was appointed in the position of Chief Operating Officer at SHUAA Capital Saudi Arabia in 2018. Mr. Basil Barqawi holds a bachelor's degree in banking and financing sciences from the University of Central Florida in Orlando, United States. He also holds The General Securities Qualification Certificate (CME-1).

Page | 62

Ab

du

llah

Mo

ham

me

d

Ab

du

llah

Al M

utl

aq

CEO

of

The

Fac

tory

Co

.

and

a b

oar

d m

em

be

r o

f

Al M

utl

aq H

old

ing

Co

mp

any

No

n-i

nd

ep

en

de

nt

me

mb

er

Mr. Abdullah Mohammed Al Mutlaq is the CEO of "The Factory Furniture, which operates in the local, regional and international markets through exporting to all the GCC countries, Jordan, Iraq, Canada and China. Mr. Abdullah Al Mutlaq is a member of the Board of Directors of Al Mutlaq Holding Company and has held several senior leadership positions in Al Mutlaq Holding Company including marketing manager, and also the director of communications and trademarks. Mr. Abdullah Al Mutlaq holds bachelor degree in business administration (Sub-major in marketing) from the American University in Denver (ANU) in 1997.

Fais

al B

in S

ult

an B

in

Mo

ham

me

d B

in S

ult

an

De

pu

ty G

en

era

l Man

age

r -

Sale

hiy

a M

ed

ical

Ind

ep

en

den

t M

em

be

r

Mr. Faisal bin Sultan served as Deputy General Manager at Salehiya Trading Company

(Salehiya Medical) in Riyadh, prior to that, he held several senior positions within the

company, most notably the position of Chief Financial Officer, Deputy Executive Director.

Mr. Faisal Bin Sultan started his career in 2004 at the National Commercial Bank in Riyadh,

where he worked in treasury department. He joined North Sound Capital Co. in 2007 where

he worked as a trading officer.

Mr. Faisal holds a bachelor's degree in finance and marketing (dual specialization) from the

University of Salve Regina- USA. Noting that it was among the list of the first superior students

at the university level.

Yaz

id A

bd

ul A

ziz

Al

Mo

hai

me

ed

Vic

e C

hai

rman

of

Yas

ser

Al M

oh

aim

ee

d

Law

Fir

m

Ind

ep

en

den

t M

em

be

r Mr. Yazid Bin Abdul Aziz Al Mohaimeed is the Vice President of Yasser Al Mohaimeed Law

Firm, as well as the management and development of various real estate projects such as the

sale of idle land, construction and rental of public compounds and yards, which has attracted

a number of the most important tenants in the Kingdom.

Mr. Yazid Al-Mohaimeed holds a diploma in sales and marketing program from the

Administrative Institute in Riyadh in 2000.

2. Qualifications of the Board members

The Fund Manager acknowledges that all members of the Fund's Board of Directors:

- Not subject to any bankruptcy or liquidation proceedings.

- They have never committed any fraudulent, dishonorable or involving fraud acts.

- Have the necessary skills and experience qualifying thereof as members of the Fund's Board

of Directors.

The Fund Manager acknowledges that each independent member of the Board of Directors of the Fund

complies with (A) The definition of the independent member included in the Glossary used in CMA

regulations and rules, and (B) the requirements contained in the Real Estate Investment Funds Instructions

regarding the Independent Member of the Board of Directors.

3. Allowances and remunerations of the Board members

Each independent member of the Fund's Board of Directors shall receive an amount of SR 5,000 for each

meeting and a maximum of SAR 20,000 per annum. Non-independent Board members will receive no

remuneration. However, the Fund shall bear all actual travel and accommodation costs reasonably incurred by

each Member to attend such meetings, which are expected not to exceed a total of SR 5,000 per annum to the

Fund's Board of Directors.

Page | 63

4. Responsibilities of the Board members

The responsibilities of the Board members of the Fund include:

A) Ensure that the Fund Manager carries out its responsibilities to the best interest of the unit holders in

accordance with these terms and conditions, the Traded Real Estate Investment Funds Regulations and the

resolutions of the Fund Sharia Supervisory Committee;

B) Approve all contracts, resolutions and material reports to which the Fund is a party, including, but not

limited to: approval of development contracts, custodian contract, marketing contract, and valuation;

C) Approve these terms and conditions and any amendments thereto;

D) Supervise and, where necessary, approve any conflict of interest disclosed by the Fund Manager in

accordance with these Terms and Conditions and all applicable regulations;

E) Approve the appointment of the Fund's certified public accountant nominated by the Fund Manager;

F) Convene meetings , at least (twice) annually, with the Compliance Officer and the Money Laundering and

Terrorist Financing Reporting Officer of the Fund Manager to ensure that the Fund Manager complies with

all applicable laws and regulations;

G) Ensure the Fund Manager's obligation to disclose material information to unit holders and other

stakeholders;

H) Act honestly and perform their duties and responsibilities faithfully towards the Fund and the unit holders,

including showing loyalty, reasonable care and attention towards the Fund's unit holders.

The Fund Manager shall provide all necessary information relating to matters of the Fund to all the Fund Board

members to assist them in carrying out their duties. No member of the Fund Board shall be liable to any of the unit

holders for any damages, losses, costs, expenses or other obligations incurred or suffered by the unit holder or Fund

Assets, unless this is the result of deliberate misconduct, bad faith or willful negligence on their own part.

5. Other Funds operated by the Fund board members

Omar Mohammed Saeb

Al Jaroudi

- SHUAA Saudi Hospitality Fund I

- Jeddah Centro Fund I

- Dammam Rayhaan Fund I

- SHUAA Wadi AL Hada Fund I

- SHUAA Hospitality Fund I

- Cayan Real Estate Development Fund I Reaming Board Members N/A

6. Meetings of the Fund's Board of Directors

The Board of Directors of the Fund shall convene a meeting under an invitation from the Chairman of the Board and is expected to be at least twice during the fiscal year. The Chairman may convene an urgent meeting of the Fund's Board of Directors whenever he deems it necessary. The BOD shall convene the meeting whenever requested by the Fund Manager or any two (2) members of the Fund Board of Directors. The meeting of the Fund Board of Directors shall be valid only if attended by a majority of its members.

Decisions of the Council shall be passed by a majority vote of the members. In case of equal votes, the President of the Council shall have a casting vote.

Page | 64

The Board of Directors of the Fund may expeditiously approve the decisions by passing by fax or e-mail, provided that any such decision shall be submitted to the Fund Board of Directors at the first subsequent meeting for formal documentation.

Meetings of the Fund Board of Directors, voting and the participation of members of the Board in its deliberations and voting on its decisions may be held via electronic means.

The Fund Board of Directors shall document its meetings, prepare minutes of deliberations and discussions, including voting processes, and retain such records duly managed and organized for easy reference.

A member of the Fund Board of Directors of the Fund may not vote on any resolution having an interest therein, whether directly or indirectly. Such interest shall be disclosed to the Board of Directors of the Fund.

M. Fund Manager

1. Name and address of the Fund Manager

Name: SHUAA Capital Saudi Arabia (SCSA)

Address: Hamad Tower, King Fahad Road, 27th. Floor

P.O. Box 8181. Riyadh 11482

Riyadh, kingdom of Saudi Arabia.

Website: www.shuaacapital.com.sa

2. Fund Manager as a licensed person

The fund is managed by SHUAA Capital Saudi Arabia, it is a closed joint stock company incorporated under

the Saudi Companies Law, registered under Commercial Registration No. 1010243538 and is licensed by

the Saudi Arabian Capital Market Authority as a licensed person under License No. 07056-37 to practice

the activities of (1) arrangement (2) provide advisory services (3) manage the private Investment Funds

and Investment Portfolios (4) Custody activities.

The Fund Manager provides Sharia-compliant investment management and advisory services to high net

worth individuals and individuals across a range of asset classes aimed at achieving a broad range of

investment objectives.

3. Services of the Fund Manager

A manager of an investment portfolio registered with the Capital Market Authority shall be appointed by the Fund Manager in accordance with the list of authorized persons issued by the CMA to supervise the management of the Fund.

The Fund Manager will provide the Fund the following administrative services and other services

including, but not limited to, the following:

A. Identify investment opportunities and carry out the sale and purchase of Fund assets;

B. Develop decision-making procedures to be followed in the implementation of Fund's business and

projects;

C. Inform the CMA of any material facts or developments that may affect the work of the Fund;

D. Comply with all laws and regulations applicable in the Kingdom of Saudi Arabia relating to the Fund

business;

E. Manage the Fund assets in a manner serves the interest of investors in accordance with the terms

and conditions;

F. Ensure the legality and validity of all contracts entered into in favor of the Fund;


Page | 65

G. Carry out the Fund strategies outlined in these Terms and Conditions;

H. Arrange, negotiate and execute Shariah-compliant debt facilities documents on behalf of the Fund;

I. Appoint the Fund's Sharia Advisor and his approval that these Terms and Conditions are in compliance

with Islamic Shariah principles shall be obtained;

J. Supervise the performance of the third parties with whom the Fund is contracted;

K. Arrange the Fund liquidation upon its expiry.

L. Provide the Fund Board with all the necessary information relating to the Fund to enable the

members of the Board to discharge their responsibilities entirely;

M. Consult with the Fund's Board of Directors to ensure compliance with the regulations of the CMA, the

Saudi Stock Exchange (Tadawul) and these terms and conditions.

4. Fund Manager's Removal and/or replacement

The Authority shall have the right to remove the Fund Manager in respect of the Investment Fund and to

take any action it deems appropriate to appoint an alternative Fund Manager for the Fund or to take any

other measure it deems appropriate in case of any of the following cases:

A. The Fund manager ceases to practice the management activities without notifying the Authority under

the Authorized persons Regulations.

B. Cancellation of the Fund Manager's license to exercise the management activity or to withdraw or

suspend it by the Authority.

C. A request submitted by the Fund manager to the Authority for the cancellation of the license to

exercise the management activity.

D. If the Fund Manager breaches- in the manner that the Authority deems essential- the obligation of

the Law or the Implementing Regulations.

E. The death, disability or resignation of Investment Portfolio Manager in addition to the lack of a person

registered at the Fund Manager who is qualified to manage the Investment Fund Assets or Funds

assets operated by the Fund Manager

F. A special decision is issued by the unit holders requiring the Authority to dismiss the Fund Manager

due to a material breach of the Fund terms and conditions and/ or the Capital Market Law and its

Executive Regulations. The Authority shall have the authority to verify by such means as it deems

appropriate to achieve the condition of breach.

G. Any other case that the Authority considers- on reasonable grounds- to be of fundamental

importance.

The Fund Manager shall notify the Authority with any of the cases referred to in the paragraph (E) above

within two working days from its occurrence.

If the Authority exercised any of its powers and dismissed the Fund Manager, the Fund Manager shall fully

cooperate to facilitate the smooth transfer of responsibilities to the Alternate Fund Manager within the

initial 60 days of the appointment of the Alternate Fund Manager.

If a Fund manager is dismissed, it shall cease making any investment decisions pertaining to the Fund once

the alternative fund manager is appointed or at any time determined by the Authority.

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5. Material Conflict of Interests

Until the date of preparing these Terms and Conditions, there were no transactions involving a material conflict of interest between the interests of the Fund and the interests of the Fund Board of Directors or any other parties. The Fund Manager has identified possible cases of conflicts of interest between the Fund Manager and the Fund as described in paragraph (r) of these Terms and Conditions.

The Fund Manager shall have no interest in the Fund's assets or claims against it, except to the extent that it possesses units in the Fund.

The Fund Manager's creditors shall have no benefit in any of the Fund assets.

In the event of a material conflict between the Fund Manager and the Fund, the Fund Manager shall disclose such inconsistency without delay to the Fund Board and shall work with the Fund Board to resolve this inconsistency by exercising due diligence and good faith and considering the interests of the Fund and the unit holders as a whole

6. Authorization of third parties

The Fund Manager shall be responsible for the management of the Fund and shall be responsible for the

appointment of any party (including its affiliates) to perform any of its responsibilities. The Fund Manager

may appoint third parties to provide services with view to enhance the performance of the Fund.

7. The Fund Manager's Investment in the Fund

The Fund Manager and its affiliate are entitled to subscribe in the Fund in the Initial Offering Period or

after the Listing Date, provided that such subscription does not exceed 25% of the total value of the Fund's

assets according to the latest audited financial statements. A one-year prohibition period will be applied

from the date of listing if the Fund Manager or any of its affiliates participate in the initial offering and

the total investment exceeded 5% of the fund size.

Employees, directors, and agents of the Fund Manager, private funds and portfolios under its

administration, with the exception of Fund Manager employees who are members of the Fund Board, has

the right to subscribe in the Fund, access to units in the Fund and to dispose of them from time to time.

The Fund Manager shall disclose any investment in the Fund at the end of each year in the financial

disclosure summary.

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8. Organizational Chart of the Fund manager

* The team of the Asset Management Department is supported by 9 persons registered and licensed by the

CMA.

9. Company profile

The fund is managed by SHUAA Capital Saudi Arabia, it is a closed joint stock company licensed by the

Saudi Arabian Capital Market Authority as a licensed person under License No. 07056-37 to undertake

financial investments including underwriting, other financial activities related to corporates, investment

consultancy services, assets and portfolios management and financial intermediation operations, and it

is the investment arm of SHUAA Capital in the Kingdom of Saudi Arabia.

51.64%

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N. Custodian

1. Name and Address of the Custodian and its License Number

Name: Al Bilad Capital

Address: Smart tower, 1st floor, Al Tahlia road

P.O. Box 140, Riyadh 12313, Saudi Arabia

Website: [email protected]

The Custodian is licensed by the CMA as a "Licensed Person" under License No. 37-8100. The Custodian will incorporate one or more Saudi limited liability companies (each of which will be a "private purpose company") to retain the ownership of the Fund's assets. Such a structure will maintain tax efficiency and regulatory compliance and will provide the greatest degree of legal protection for investors. The Custodian will have no interest in the Fund's assets or claims against thereof, except to the extent that it possesses units in the Fund. The Custodian's creditors shall have no interest in any assets of the Fund. However, the assets of the Fund may be mortgaged to a third party financed by the Fund in the event that the Fund enters into any financing arrangements with third-party financiers.

2. Custodian's Tasks, Duties and Responsibilities

The real estate assets of the Fund shall be registered in the name of one or more companies of special purpose related to the Custodian.

The Custodian will take all necessary measures to separate the assets of the Fund from any other assets independently, including those of the Custodian.

The Custodian shall keep all the necessary records and other documents that confirm its performance of performance obligations.

3. Removal of the Custodian by the Authority

The Authority has the right to remove the Custodian appointed by the Authority, in case of the following cases:

A) The Custodian ceases to practice the Custodian activities without notifying the Authority under the Authorized persons Regulations.

B) Cancellation of the Custodian's license to exercise the Custodian activities or to withdraw or suspend it by the Authority.

C) A request submitted by the Custodian to the Authority for the cancellation of the license to exercise the Custodian activity.

D) If the Custodian breaches- in the manner that the Authority deems essential- the obligation of the Law or the Implementing Regulations.

E) Any other case that the Authority considers- on reasonable grounds- to be of fundamental importance. F) If the Authority exercised any of its powers and dismissed the Custodian, the concerned Fund Manager

shall appoint a replacement Custodian in accordance with the instructions of the Authority. The Fund Manager and the dismissed Custodian shall fully cooperate to facilitate the smooth transfer of responsibilities to the Alternate Custodian within the initial 60 days of the appointment of the Alternate Custodian.

4. Removal of the Custodian by the Fund manager

The Fund Manager may remove the custodian appointed by it by written notice if it reasonably considers that the removal of the custodian is in the interest of the unit holders, and the Fund Manager shall notify the Authority and the unit holders thereof immediately and in writing.

Upon the removal of the Custodian, the Fund Manager shall appoint an alternate within 30 days of receiving the written notice issued in accordance with the above paragraph. The removed custodian shall fully


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cooperate with the Fund Manager to facilitate the smooth transfer of responsibilities to the alternate custodian. The Fund Manager shall immediately disclose the appointment of an alternative custodian on its website and the website of the Market.

O. Property Managers

1. Details of property managers

Property name Property manager name Property manager address

Al Khorayef warehouses Management House Real Estate Company as

per C.R. No. 1010506728

Riyadh, Al Maather northern,

Takhassusi Road, 397120

Remaining properties

The properties are managed by the tenants

as per the service agency contracts entered

into with them.

N/A

2. Responsibilities of Property Managers

The Fund Manager is entitled to appoint a Property Manager for each property to be responsible for the

administrative affairs of the property, develop management rules and policies, permanent follow-up of

the property and tenants' affairs, follow-up rents collection, and follow-up periodic maintenance and

property exploitation in order to achieve the best returns. The Fund Manager has the right to change the

property Manager from time to time based on his performance. To avoid doubt, the Property Manager is

appointed after approval by the Fund Board and notifying the unit holders thereof.

3. Investment of property managers in the Fund

The Property Manager is an in-kind investor in the Fund as the Property Manager appointed for AL

Khorayef Warehouses owns one of the properties to be acquired by the Fund, namely Euro Residential

Building. The in-kind investment amounts 1.6% of the Fund volume.

P. Auditors

Name: Crowe Horwath International / Al Azem & Al Sudairy CPA's & Accountants Address: Riyadh – headquarter

P.O. Box 10504, Riyadh 11443, Saudi Arabia

Tel.:+966112175000

Fax: +966112175000

Website: [email protected]

The Fund Manager may, from time to time, change the Fund auditor based on the approval of the Fund Board. The

unit holders and CMA shall be notified upon change.

The auditor will be responsible for, but not limited:

- Review the interim financial statements (semi-annual) of the Fund;

- Audit the annual financial statements of the Fund.


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Q. Financial Statements

The fiscal year of the Fund (the "fiscal year") starts in 1 January and ends in 31 December of each year, except

for the first year of the Fund incorporation, for which the fiscal year starts in the closing date and ends in 31

December 2018.

The Fund Manager shall prepare the financial statements of the Fund on a semi-annual basis (unaudited

statements) and annually to the standards of the Saudi Organization for Certified Public Accountants (audited

statements) in accordance with any amendments thereto from time to time. The annual financial statements

are audited by the Fund's Auditor.

The Fund Board shall review the financial statements of the Fund and are made available to the Capital Market

Authority as soon as they are approved and provided to the unit holders without fees within 25 days from the

end of the period covered by the unaudited financial statements and 40 days from the end of the period

covered by the audited financial statements, through publishing thereof on the websites of the Fund Manager

and the Saudi Stock Exchange (Tadawul).

R. Conflict of interests

Until the date of these Terms and Conditions preparation, there were not any transactions involving conflict of

interests between the benefits of the Fund, benefits of the Fund Board or any third parties.

A conflict of interest may arise or occur from time to time between the Fund on the one hand and the Fund

Manager or its subsidiaries, directors, officers, employees and agents on the other, and other funds sponsored

or managed by them. If the Fund Manager has a material conflict of interest with the Fund, it has to disclose

thereof to the Fund Board as soon as possible. The Fund Manager and the Fund Board will try to resolve any

conflicts of interest by exercising wisdom, good faith and taking into account the interests of investors and

affected parties as a whole.

In the first place, the Fund Manager has identified the following potential conflict of interests:

A- Similar investments managed by SHUAA Capital Saudi Arabia

SHUAA Capital Saudi Arabia manages its private real estate portfolio, which is expected to continue under

its management, and also manages investments with similar objectives in one way or another for the

Fund's objectives, including other Funds managed by SHUAA Capital Saudi Arabia, or which SHUAA Capital

Saudi Arabia or one of its subsidiaries may own a share of the capital therein.

Furthermore, subject to the restrictions set forth in these Terms and Conditions, SHUAA Capital Saudi

Arabia and its future subsidiaries may sponsor other funds or investments or act as Fund Manager,

Investment Manager or General Partner in private investment funds or collective investments, and may

invest one or more in projects similar to those in the Fund's portfolio, provided that such other activity

does not prejudice the success of the Fund.

B- Conflicts of interest in transactions with the Fund Manager and its subsidiaries

The Fund may enter into transactions with the Fund Manager or its affiliates or with other entities in which

SHUAA Capital Saudi Arabia has direct or indirect rights. For example, some subsidiaries of SHUAA Capital

Saudi Arabia may provide certain services to the Fund such as administrative services. The Fund Manager

shall disclose all transactions among the Fund, the Fund Manager, its subsidiaries, other Funds managed

by the Fund Manager and entities in which SHUAA Capital Saudi Arabia has direct or indirect rights to the

Fund Board. However, the Fund Manager and the Fund Board shall make reasonable efforts in good faith

Page | 71

to prepare the terms of the agreements between the Fund Manager and its subsidiaries (including the

other Funds managed by the Fund Manager) on one hand and the Fund on the other hand on a pure and

independent commercial basis and consistent with the standard terms of the market.

C- Fund Board of Directors

The Board of Directors shall supervise and Settle any conflict of interest. The Board of Directors shall be

composed of members appointed by the Fund Manager as of the date of these Terms and Conditions.

Members of the Board of Directors shall be obliged to exercise the due diligence for the investors in the

Fund under the Real Estate Investment Funds Regulations, in addition to make the utmost effort to resolve

conflicts of interest in good faith as they deem it appropriate.

D- Transactions with related parties

The Fund may, from time to time, enter into transactions with related parties and subsidiaries to provide

services to the Fund. Such transactions shall be disclosed to the Fund Board and shall be based on prevailing

market conditions. If a related party or an affiliate, including any fund or other investment fund

incorporated by the Fund Manager, wishes to enter into a transaction with the Fund or the Fund Manager,

the approval of the Fund Board shall be accessed. If the Fund buys or sells a property from or to the related

party or a subsidiary, the purchase price paid or received by the Fund shall be consistent with independent

valuations.

The foregoing does not contain a full and comprehensive interpretation and summary for all potential

conflict of interests involved in the investment in the Fund units. It is strongly recommended that all

potential investors seek independent advice from their respective advisors.

S. Reporting to unit holders

The Fund Manager, through electronic means and publications on the Fund website and Tadawul website,

shall submit reports to the Capital Market Authority and unit holders and shall disclose the information

immediately and without delay:

1. Valuation reports on the Fund assets: (1) the valuation reports related to the primary assets once the

approval of CMA is obtained to include units in the Fund; (2) evaluation reports issued during the Fund

period shall be published within 15 working days of the issuance of the valuation report.

2. Any significant developments that fall within the scope of its activity, the knowledge of which is not

available to the general public, and may affect the Fund assets, obligations, financial position, general

course of business, or any change can affecting the Fund position and give rise to a voluntary

withdrawal of the Fund Manager from the position of Fund Manager would reasonably result in a

change in the price of the listed unit or would have a significant impact on the ability of the Fund to

meet its debt instrument obligations;

3. Any transaction for the purchase, sale, lease or mortgage of an asset at a price equal to or greater than

10% of the total value of the Fund assets in accordance with the most recent reviewed interim financial

statements or audited annual statements whichever is latest;

4. Any losses equal to or greater than 10% of the net asset value of the Fund in accordance with the most

recent reviewed interim financial statements or audited annual statements whichever is latest;

5. Any changes in the composition of the Fund Board or the Fund (if any);

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6. Any dispute including any litigation, arbitration or mediation proceedings where the value involved is

equal to or greater than 5% of the Fund net asset value in accordance with the most recent reviewed

interim financial statements or audited annual statements;

7. Any increase or decrease in the Fund net asset value equal to or greater than 10% in accordance with

the most recent reviewed interim financial statements or audited annual statements;

8. Any increase or decrease in the Fund total interest equivalent to or greater than 10% according to the

latest audited annual data;

9. Any transaction between the Fund and a related party or any arrangement under which the Fund and

the related party invest in any project or asset or provide financing thereto if such transaction or

arrangement is equal to or greater than 1% of the total income of the Fund in accordance with the

latest audited annual financial statements;

10. Any disruption in the Fund's core activities is equal to or greater than 5% of the total income of the

Fund in accordance with the most recent audited annual data;

11. Any change to the Fund's legal accountant;

12. Any appointment of an alternate custodian of the Fund;

13. Issuance of any judgment, decision, order or declaration by any court or arbitration tribunal, whether

in the first instance or appeal, which may adversely affect the exploitation by the Fund of any part of

its assets with a total value exceeding 5% of net asset value in accordance with the most recent

reviewed interim financial statements or Annual audited data, whichever is latest;

14. Any proposed change in the volume of the Fund.

Quarterly Reports

- Unit price at the end of the financial quarter;

- Rental income per unit;

- Fees and expenses ratio;

- Performance of the price per unit;

- A list of the properties owned by the Fund and their proportion of the Fund's total portfolio;

- Borrowing ratio from the Fund net asset value

Semi-annual Reports

In addition to the foregoing, the Fund shall disclose the following information at least once every six months:

- Any changes to the terms and conditions;

- Any fundamental, significant or important changes affecting the Fund operations;

- Statement of distributions showing amounts distributed to unit holders.

Annual reports

The Fund manager shall prepare annual reports and submit thereof to the unit holders includes the following

information:

1. the principal assets in which the Fund invests;

2. the assets which the Fund targets to invest therein;

3. Outlining of the leased and non-leased properties in relation to the total assets owned by the Fund;

Page | 73

4. A comparative explanation covering the Fund performance over the previous three financial years (or since

the inception of the Fund) explains the following:

- Net asset value of the Fund at the end of each financial year;

- Net asset value per unit at the end of each financial year;

- The highest and lowest net asset value per unit at the end of each financial year;

- Number of units issued at the end of each financial year;

- Income distribution per unit;

- Rate of expenses afforded by the Fund.

5. Performance record shows:

- Total revenues for one, three and five years (or since the inception of the Fund);

- Total annual revenues for each of the last 10 years (or since the inception of the Fund);

- A table showing the expenditures of services, commissions and fees paid by the Fund to external parties throughout the year and ratio of total expenses and in addition, the record discloses any circumstances that oblige the Fund Manager to waive or reduce any fees.

6. In the event of significant changes during the relevant period and affected the performance of the Fund;

7. Annual Report of the Board of Directors of the Fund, which includes, but is not limited to, the topics

discussed by the Fund Board as well as the resolutions it has issued, including matters relating to the Fund

performance and its objective achievement;

8. A statement of the special commissions received by the Fund Manager during the relevant period clearly

indicates the purpose of the commissions and their exploitation.

9. Any amendments to the Terms and Conditions.

Summary of Financial Disclosure

The Fund Manager publishes a quarterly financial statement on its website and on Tadawul website

(summary of financial disclosure). The statement should include, but is not limited to, unit price at the end

of the quarter, rental income on unit price, percentage of total fees and charges, unit price performance,

list of names and percentage of properties in the Fund's portfolio and percentage of financings to the Fund

net assets

T. Meetings of Unit Holders

1. The Fund Manager may call for the meeting of the unit holders on his own initiative.

2. The Fund Manager shall convene the meeting of the unit holders within 10 days of receipt of a written

request from the Custodian.

3. The invitation to convene the unit holders' meeting through the announcement on the website of the Fund

Manager and the website of the Saudi Stock Exchange (Tadawul) and by sending written notice to all the

unit holders and the Custodian within a period not less than 10 days and not more than 21 days before the

date of the meeting, provided that the notice and announcement shall clarify the meeting's date, place,

time and the proposed resolutions and the Fund Manager, in the event of sending a notification to the unit

holders of any meeting, shall send a copy thereof to the Capital Market Authority.

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4. The Fund Manager shall convene the meeting of the unit holders within 10 days of receipt of a written

request from one or more of unit holder or investors who, collectively or individually, own at least 25% of

the value of the Fund's units

5. The meeting of the unit holders shall not be valid unless attended by a number of unit holders who

collectively hold at least 25% of the value of the units of the Fund.

6. If the quorum identified in the paragraph (5) above is not present, The Fund Manager shall call for a second

meeting by announcing on its website and the website of the Saudi Stock Exchange (Tadawul) and by

sending written notice to all unit holders and custodian prior to the second meeting with a period of not

less than 5 days. The second meeting shall be valid regardless of the percentage of ownership of units

represented at the meeting.

7. Each unit holder may appoint an agent to represent him at the meeting of unit holders in a manner

consistent with the POA form outlined in Annex (D).

8. Each unit holder shall have a single vote at the meeting of unit holders.

9. Meetings of unit holders may be convened, participating in its deliberations and voting on its decisions by

means of modern technology in accordance with the regulations established by the Capital Market

Authority.

10. The decision of the unit holders shall be in force subject to the unit holders approval who own 50% of the

Fund total units and those present at the meeting either in person or through a proxy or via modern

technical means.

U. Rights of Unit Holders

The unit holders have the right to exercise all their rights under these Terms and Conditions, including:

1) Attend meetings of unit holders and vote on issues raised by unit holders during the meeting;

2) The approval by majority of unit holders who hold more than 50% of the value of the units in respect of

any fundamental change to the Fund should be reached, including the following:

Each material change in the nature of the Fund's business or its investment purposes;

Any change that may have a material adverse effect on the unit holders or their rights with respect to

the Fund;

Each change has an impact on the nature of the Fund's risks;

Each increase in the Fund volume, either through the issuance of rights or the acceptance of in-kind

contributions.

3) Subscription in the Units issuance in exchange for in-kind and/or cash contributions with a view to increase

the Fund volume;

4) Accept the dividends in accordance with these terms and conditions;

5) Accept periodic reports and updates in line with these Terms and Conditions.

6) Except as expressly provided in this paragraph, unit holders are not entitled to administrative rights with

respect to the Fund management

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V. Other information on the Fund

1) Know your customer (KYC) requirements

As an authorized person of the CMA, the Fund Manager shall comply with know your Customer (KYC)

requirements with respect to the unit holders acceptance of investing in the Fund. In compliance with the

applicable CMA regulations, as requested by the Fund manager, each unit holder provide the receiving bank

with certain information and documents in order to fulfill know your customer requirements. The receiving

bank will be responsible for all the procedures and requirements of know your customer during the period of

units IPO until the closing date of the IPO, while the authorized person of the Capital Market Authority shall

apply all know your customer procedures and requirements starting on the date of listing the Fund is in the

market.

2) Administrative Manager

SHUAA Capital Saudi Arabia is the administrative manager of the Fund. The administrative manager shall be

responsible for processing subscription applications and documents related to the verification of the "Know

Your Customer" principle, updating unit holders record and preparing notices to the Unitholders during the

IPO Period. The administrative manager is also responsible for calculating net asset value per unit.

The Administrative Manager intends to appoint APEX Fund Services (Dubai) Limited as a sub-administrator to

provide certain accounting, support and other administrative services.

The sub-administrator is a company licensed by the Dubai Financial Services Authority (DFSA). Each investor

hereby acknowledges and agrees that the Sub-administrator may share some confidential information that

may be shared outside Kingdom of Saudi Arabia. The Fund Manager and the administrative manager reserve

the right to change the Fund's sub-administrator.

3) Sharia advisor

The Fund Manager has appointed the Shariyah Review Bureau as the sharia advisor to the Fund ("the Sharia

Advisor"). The Shari'a advisor appoints a panel of two Sharia experts who will monitor the business,

operations, investments and the Fund related funding to ensure compliance with Sharia principles. The Fund

Manager shall perform Sharia supervision duties of the Fund investments, including:

ensure the Fund's commitment to Sharia rules through periodic review;

Review of agreements and contracts relating to the Fund's transactions;

Follow up the Fund operations and review its activities from the sharia aspect and consider the extent

of compliance with the sharia rules and the direction of the sharia advisor;

Bring the matter to the sharia advisor in the event of any possible sharia violations;

Prepare and follow-up the necessary endorsement funds for the financial clean-up funds approved by

the sharia advisor;

The sharia advisor will oversee the commitment of the Fund's activities to sharia investment rules and provide

related advisory services. The Sharia Supervisory Committee may consist of the following members:

• Sheikh Ismail Ibrahim Desai:

Sheikh Ismail Ibrahim Desai is currently the Sharia Advisor to several Islamic financial institutions and

educational institutions around the world, and a number of Islamic banks and investment institutions.

Page | 76

Sheikh Ismail has developed a number of Shariah Auditing Standards, Corporate Governance and Risk

Management Standards for Islamic Financial Institutions, and issued several specialized jurisprudential

opinions (fatwas) with special emphasis on Islamic Finance and Economics.

Sheikh Ismail attended and presented several topics at international conferences and participated in

developing the first sharia-compliant forms for loans, structured finance and currency trading.

Career history

- Sharia Advisor of Shariyah Review Bureau (Bahrain)

- Sharia Advisor of Ithaca Islamic Finance Company (United Arab Emirates)

- Sharia Advisor of Pegasus Agriculture (United Arab Emirates)

- Sharia Advisor of Infiniti Consultants (India)

- Sharia Advisor of HBZ Islamic Bank

- Sharia Advisor of Al Mabrour Investment Company (RSA)

- Sharia Advisor of Mittal Finance Company (RSA)

- Sharia Advisor of Zero Mortgage Company (Canada)

- Sharia Advisor of Al-Hejaz Financial Services (Australia)

- Sharia Advisor of Lindcor (RSA)

- Sharia Advisor of Advanced Islamic Economy Center (Pakistan)

- Founder and Executive Director of the Russian Islamic Financial Services Council (7000 members).

Educational qualifications:

- Holds a master's degree in Islamic finance and banking qualification.

- Holds a master's degree in Islamic theology.

- Holds other honorary and academic certificates and qualifications.

• Sheikh Faraz Adam:

Sheikh Faraz Adam has worked in the field of Islamic finance over the past five years as an independent mufti

and sharia advisor on the website www.darulfiqh.com. During this period, he reviewed a number of contracts

and provided sharia advisory services to consumers and customers.

Career history

- 2011 to the date, director and founder of www.darulfiqh.com

- 2017 to the date, sharia advisor in Shariyah Review Bureau

- 2013-2014, Deputy Executive Director of AL Mahmoudiah Institute.

- 2013-2016, Lecturer in Jurisprudence and Arabic at Dar Al Uloom Leicester.

- 2013-2015, Editor and translator of Al Nasihah publications.

- 2013-2016, teaching the Holy Quran in Leicester.

- 2013 to the date, lecturer in the Holy Quran Academic.

- 2015 to the date, President of the Dal Al Fatwa in Leicester (Institute of Islamic Jurisprudence and Research).

- 2016 to the date, member of the Fatwa Department of the National Zakat Foundation.

- 2016 to the date, Member of the Zakat Committee in the National Zakat Foundation.

http://www.darulfiqh.com/

http://www.darulfiqh.com/

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Educational Qualifications

- Holds PhD degree from Dar Al Uloom, Leicester.

- 2012, Master of Arts in Islamic Theology with majoring in the sharia provisions (Iftaa).

- 2012, Master degree in Islamic Finance from Dar Al Iftaa Al Mahmoudiah, Durban, South Africa.

- 2015 to the date, Master of Arts in Islamic Finance, Banking and Management from the Markfield Institute of Higher Education.

The Sharia Advisor reviewed these terms and conditions and approved structure of the Fund and units IPO

during the Fund incorporation. The Fund will comply with the approved Islamic Sharia Principles.

If the investment returns or other funds received by the Fund are inconsistent with the principles of Islamic

Sharia, the Fund shall make arrangements to "clean-up" these funds in accordance with the procedures

specified by the Sharia Advisor from time to time. The clean-up percentage shall be determined by the sharia

advisor.

4) Other service providers

The Fund Manager may, from time to time, outsource additional advisors, consultants and other service

providers with respect to one or more assets, including, but not limited to, Developers, facilities managers,

project managers, contractors, architects, designers, legal advisors and others. Any external party will be

outsourced under an agreement negotiated thereon on a pure commercial and independent basis.

5) Important contracts

- Custodian Agreement: The Fund has appointed Al Bilad Capital under an agreement to custody the

Fund's assets through special purpose companies.

- Chartered Public Accountants Agreement: The Fund has appointed Crowe HorwathTM- Al Azem& Al

Sudairy CPA's& Consultants to review the Fund financial statements semi - annually (unaudited

statements) and annually (audited statements) in accordance with the standards of the Saudi

Organization for Certified Public Accountants.

- Legal Consultancy Agreement: The Fund has appointed The Law Office of Mohammed Al-Ammar (In

affiliation with King& Spalding LLP) to provide legal consulting to the Fund in a non-exclusive manner

if the Fund Manager considers the need for legal consulting with regard to increasing the Fund volume,

regulations and instructions issued by the Capital Market Authority, obtain bank financings and due

diligence examination when purchasing new real estate assets. The Fund Manager negotiates with the

legal advisor regarding the legal advice.

- Property Management Agreement: The Fund has appointed Dar Al Idara Real Estate Company to

manage Al Khorayef warehouses for a fee of 2.5% of the total rental revenues of the warehouses.

- Valuation agreements: The Fund has appointed White Cubes Real Estate and ValuStart Co. as

independent entities to provide valuation services for real estate assets.

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6) Complaints procedures

If any unit holder has any inquiries or complaints regarding the Fund's operations during the term of the

Fund, the concerned Unitholders should contact the Compliance and Anti-Money Laundering Department

of SHUAA Capital Saudi Arabia on +966 11 4666990, e-mail: [email protected].

SHUAA Capital Saudi Arabia adopts a documented complaints management policy and uses it with its

current customers. The Fund Manager intends to use this policy and apply thereof to Unitholders in this

Fund. Potential investors and Unitholders wishing to access to a copy of this policy should contact the

Compliance and Anti-Money Laundering Department of SHUAA Capital Saudi Arabia on+966 11 466 6990,

e-mail: [email protected] or visit the website www.shuaacapital.com.sa.

W. Amendments to the Terms and Conditions

The provisions of Part 6 and 7 of the Real Estate Investment Traded Funds Instructions shall be complied with

when any fundamental change is made, which includes any of the following cases:

1. a change which significantly changes the purposes of the fund;

2. a change which may have a material adverse effect on the unitholders or their rights in relation to

the fund;

3. a change which alters the risk profile of the fund; or

4. Increasing the fund's total assets value by accepting cash or in-kind contributions or both in

accordance with the provisions of paragraph (l) of part (3) of these Instructions.

X. Fund Manager Acknowledgments

The Fund Manager submits the acknowledgements set forth in Annex (A) of these Terms and Conditions.

Y. Governing Law & Disputes Settlement

These Terms and Conditions constitute a unit holder contract. Subscription to and purchase of units shall be

deemed as an implicit approval on these Terms and Conditions.

These Terms and Conditions shall be governed and construed in accordance with the Laws and Regulations in

force in the Kingdom.

The Fund Manager and each Investor shall endeavor to resolve any dispute arising out of or in connection with

these Terms and Conditions and the matters contained in these Terms and Conditions. In case of an unresolved

dispute, such dispute may be referred by either party to the Committee for Resolution of Securities Disputes

affiliated to the Capital Market Authority.




Page | 79

Annex (A) Fund Manager Acknowledgments

(1) The Fund Manager acknowledges that the terms and conditions of the SHUAA REIT Fund have been

prepared in accordance with the Real Estate Investment Funds Regulations and the instructions of the

Traded Real Estate Investment Funds issued by the Saudi Arabian Capital Market Authority.

(2) The Fund Manager shall, after conducted all reasonable inquiries and upon his knowledge and belief,

acknowledge that there are no other facts which, if not included in this document, may render any statement

contained therein misleading. The Capital Market Authority of Saudi Arabia and the Saudi Stock Exchange are

not responsible for the content of these terms and conditions.

(3) The Fund Manager acknowledges that the property is free of any irregularities that prevent or may render the

property not exploited or operated, as well as the safety of the property technically and free from any major

engineering defects or malfunctions that may prevent or may cause the building not to be used or operated

or may give rise to costly major repairs and changes.

(4) Taking into account the disclosures mentioned in these Terms and Conditions, the Fund Manager

acknowledges the lack of direct or indirect conflict of interest between:

A. The Fund Manager

B. The Fund related property manager/ managers

C. The Fund related property landlords who are tenants of primary assets after transfer of ownership to the

Fund.

D. Tenants of a property affiliated to the Fund whose revenues account for 10% or more of the Fund total

rental revenues.

(5) The Fund Manager acknowledges the lack of any bankruptcy, insolvency, proceedings of bankruptcy or

liquidation are instituted against all the Fund Board members, nor have they committed any fraudulent,

dishonorable or involving fraud acts, nor have they committed any breach involves fraudulent or any act would

prejudice to Integrity and honesty, and they have the necessary skills and experience to qualify them as Board

members.

(6) The Fund states warrants and represents that the two independent members are identical to the definition of

the independent member included in the Glossary used in CMA regulations and rules, as well as to any

independent member appointed by the Fund Manager throughout the term of the Fund.

(7) The Fund undertakes that the Fund Board members do not have business activities or other significant interest

in SHUAA Capital Saudi Arabia, which are likely to conflict with the interests of the Fund.

(8) The Fund Manager acknowledges that there is no conflict of interests that would affect the Fund Manager in

carrying out its duties to the Fund.

(9) The Fund shall undertake that there are no fees other than those mentioned in the schedule of fees and

charges mentioned in paragraph (j) (1) of these Terms and Conditions.

Page | 80

(10) The Fund Manager declares that the Fund will not be listed unless the transfer of property ownership in favor

of the Fund is finalized. If this is not finalized within 60 working days of the Closing Date, the full subscription

amount will be refunded to the investors.

(11) The Fund Manager acknowledges that no member of the Board of Directors may have a direct or indirect

interest in the business and contracts made for the benefit of the Fund. The Fund Manager will oblige Fund

Board members to inform the Board of their direct or indirect personal interests in the business and contracts

made for the Fund's account and shall be recorded in the minutes of the meeting. The Fund Manager will

ensure that the concerned member will not subscribe in any vote on decisions made in this respect.

(12) The Fund Manager acknowledges that all significant contracts and agreements relating to the Fund's ongoing

operations and may affect the investors' decisions to subscribe in the Fund have been disclosed.

(13) The Fund Manager acknowledges that Unitholders are entitled to vote on matters to be brought before them

in the Unitholders' meetings. In addition, the approval of the majority of the Unitholders who hold more than

50% of the value of the units should be reached in respect of any fundamental change to the Fund, which

includes the following:

A. a change which significantly changes the purposes of the fund;

B. a change which may have a material adverse effect on the unitholders or their rights in relation to

the fund;

C. a change which alters the risk profile of the fund; or

D. Increasing the fund's total assets value by accepting cash or in-kind contributions or both in accordance

with the provisions of paragraph (l) of part (3) of these Instructions.

(14) The Fund Manager acknowledges that it will take all necessary steps for the benefit of the Unitholders, to the

best of his knowledge with due and reasonable diligence. The Fund Manager, directors, officers, agents,

advisors, Affiliates, custodian, sharia advisor and Fund Board shall endeavor to exercise due and reasonable

diligence and act in good faith in course of achieving the interests of Unitholders; however, the Fund may be

subject to loss as a result of any unintentional action by any of the said parties in connection with their

management of the Fund. Then such parties shall not be liable for such loss provided that they have acted in

good faith and good faith should be proved in the lack of any conduct, decision or correspondence indicating

prior knowledge of the negative consequences of such conduct and in a manner believed to serves the

interests of the Fund optimally and such act does not involve gross negligence, fraud or deliberate misconduct.

(15) The Fund Manager acknowledges that all transactions with related parties have been made in a systematic,

legal and fair commercial manner and will not adversely affect in any way the performance of the Fund and

its owners.

(16) The Fund Manager acknowledges that no commissions, discounts, brokerage fees or any monetary or non-

monetary compensation have been given to any of the parties in or outside the Fund other than as stated in

the Terms and Conditions.

Page | 81

(17) The Fund Manager acknowledges that all contracts and agreements relating to the Fund have been disclosed

which may affect the investors' decisions to participate in the Fund and that there are no contracts and

agreements other than those mentioned in these Terms and Conditions.

(18) The Fund Manager acknowledges that all terms, conditions and information that may affect the decision to

participate in the Fund and its investors have been disclosed.

(19) The Fund Manager acknowledges that existing owners and tenants of properties are not subject to

reservations or reservations on property or accounts.

Page | 82

Annex (B)-Summary of Financial Disclosure

Name & type of the

Fund

SHUAA REIT FUND, a general traded closed-end real estate investment fund compliant with

Islamic Shari'a rules, it was incorporated under the laws and regulation applicable in the

Kingdom of Saudi Arabia and governed by Capital Markets Authority of Saudi Arabia

Management Fee

In order to consolidate the Fund Manager’s interests with the investors, management fees

were divided into two parts where the Fund shall pay the Fund Manager an annual amount

of 0.4% of the total value of the Fund's assets and an amount equivalent to 5% of the total

rental income of the Fund on a semi-annual basis. Their total value will represent 0.8% of

the total value of the Fund's assets according to the latest valuation of the Fund. Value

added tax and all other taxes applied in the future shall be excluded from the amounts paid

under Management Fees.

Subscription Fee Each investor applying to be subscribed in the Fund shall pay the Fund Manager a

percentage of 2% of the subscription amounts allocated to him.

Custody Fee

The Fund pays an annual amount of 0.025% of the total value of the Fund's assets. Such

fees are payable quarterly. All payments of custody fees shall be calculated as to include

value added tax, withholding tax and all other taxes to be applied in the future, as the case

may be.

Debt Arrangement

Fee

The Fund shall pay the Fund Manager from its assets an amount of 1.5% of the amount of

the financing it receives and such fees shall be paid upon completion of any transaction to

be entered into by the Fund. All payments of finance structuring fees shall be calculated as

to include value added tax, withholding tax and all other taxes to be applied in the future.

Brokerage Fee

Brokerage fees in amount of 2.5% of the acquired primary assets value shall be paid by the

Fund to the Fund Manager in order to be paid by the Fund Manager to the Real Estate

Brokers as per the contracts entered into therewith. In the event of the acquisition of future

real estate assets, the same percentage will be paid in case of real estate brokers.

Otherwise, it will not be paid. There is no conflict of interests between the real estate

brokers with the relevant parties in the fund. Value added tax and all other taxes applied

in the future shall be excluded from the amounts paid under Brokerage Fees.

Transactions Fee

A fee of 1% of the purchase price of each asset acquired by the Fund and 2% of the sale

price of each of the Fund's assets shall be paid by the Fund to the Fund Manager in return

for the Fund Manager's conducting the necessary investigation, negotiation on the terms

of sale and purchase and finalize the transaction. Such fees shall be payable after finalizing

the purchase or sale of each real estate and shall not be applied to the Fund's primary

assets. All payments of transaction fees shall be calculated as to include value added tax,

withholding tax, and all other taxes to be applied in the future.

Page | 83

Capital Structuring

Fees

The Fund Manager shall be entitled to such amount in return for the establishment of the

Fund and the structuring of its capital, as well as for carrying out all establishment expenses

of the Fund, which may exceed this amount and shall be paid from the Fund to the Fund

Manager once. It is considered part of the Fund's capital and amounts to SR 4,482,500.

Sub-administrator

Fee

The Fund pays an amount equivalent to US$ 4,000 (15,000 Saudi Riyals) to be paid once

as preparation fees, to be charged to the Fund Manager on behalf of the fund. The Fund

pays recurrent costs as follows: The Fund pays an amount equivalent to 2,550 US dollars

(9,563 Saudi Riyals) per month in return for service represented in calculating the net

asset value and the preparation of internal financial statements. The Fund also pays the

equivalent of US$ 9,500 (SR 35,625) per annum in return for its service represented in

preparing the Fund's financial statements. Thirteen months after the offering, the

amounts would be increased by 3.5% per annum as inflation allowance. Value added tax

and all other taxes applied in the future shall be excluded from the amounts paid under

Sub-administrator Fees.

Certified Public

Accountant's Fees

35.000 Saudi Riyals shall be paid by the Fund to The Certified Public Accountant. All

payments of the Certified Public Accountant's fees are calculated to include VAT and all

other taxes applied in the future.

Regulatory Fees (to

be paid to CMA A fixed fee of 7,500 SR per annum shall be paid by the Fund to the Capital Market Authority.

Publishing Fees (to

be paid to Tadawul)

A fixed fee of SR 5,000 per annum shall be paid by the Fund to Tadawul as publishing fees.

Such fees shall be calculated at every day of valuation and payable upon request. All

payments of the publishing fees are calculated to include VAT, withholding tax and all other

taxes applied in the future, as the case may be.

Listing Fees (to be

paid to Tadawul)

The Fund shall pay Tadawul the following listing fees:

• SR 50.000 as primary listing fees. • 0.03% per annum of the Fund's market value (provided such fees shall not be less

than SR 50,000 and not exceeding 3,000 maximum per annum. All payments of the listing fees are calculated to include VAT, withholding tax and all other

taxes applied in the future, in case such taxes apply.

Registration Fees

(to be paid to

Tadawul)

The Fund shall pay Tadawul the following registration fees:

• SR 50,000, in addition to SR 2 for each unit holder up to a maximum of SR 500,000 in return for the issuance of a record for the Unitholders; and

• SR 400,000 in return for the operation of a record for the Unitholders. Such fees are subject to change based on the gross volume of Fund.

All payments of the publishing fees are calculated to include VAT, withholding tax and all

other taxes applied in the future, as the case may be.

Page | 84

Property

Management Fees

The Fund will ensure that fees paid to real estate managers are discussed on a commercial

basis in all its aspects and in a manner consistent with market prices. Such fees are paid

from the Fund's basic assets. The target is that annual property management fees for

primary assets will not exceed 5% of the total annual rent for primary assets. All property

management fees payments are calculated to include VAT, withholding tax and all other

taxes applied in the future, as the case may be, considering that there is currently only one

property management contract for the fall warehouses and the value of this contract is

equivalent to 2.5% of the total rents of warehouses, paid to the director of property after

collection.

Development Fees

If the Fund is going to carry out development activities in the future of no more than 25%

of the total value of the Fund's assets as per the latest audited financial statement, the

Fund shall ensure that any development fees incurred by the Fund and paid to the

Developers will be on a pure independent commercial basis consistent with the prevailing

market prices. To avoid doubt, the Fund did not incur any development fees in respect of

the primary assets. All development fees payments are calculated to include VAT,

withholding tax and all other taxes applied in the future.

Other Fees

The Fund may directly or indirectly incur other fees and charges, including but not limited

to service costs, property insurance fees acquired by the Fund, legal fees and zakat (if

applied to traded real estate investment funds, excluding private zakat for Unitholders)

Municipal fees, government fees, valuation fees, engineering consultant fees, and fees of

surveyors, architects and interior designs engineers.

In all cases, only actual fees and expenses related to the Fund and its projects shall be

deducted after the approval of the Fund's Board of Directors is obtained. Such expenses

are expected not to exceed 1% of the total value of the Fund's assets per annum based on

the latest audited financial statements. Such percentage must be updated periodically and

published on the Fund Manager's website.

Page | 85

Annex (C)-Shariah Rules

Sharia Standards & Rules

A. Sharia standards of Fund Manager's remunerations

• The Fund Manager may be remunerated by the investor for his contribution, as it deemed a compensation for

benefits that are legally denominated, whether the remuneration is a lump sum or a discount of the value of

the purchased unit, provided that such remunerations are stipulated in the Fund terms and conditions.

• The performance incentives may be deducted by the Fund Manager, such an additional fee which the Fund

Manager required the investor to pay thereof in the event of an increase in the level of profits from a certain

agreed amount; as they are part of the remunerations are doomed to be known and do not give rise to dispute,

provided that the percentage shall be specified and known to the investor in the Fund Terms and Conditions.

B. Sharia standards of the Fund management and marketing

• The Fund Manager shall make the utmost efforts to invest the funds of the Fund in the best manner and in the

best interests of investors.

• The Fund Manager shall invest the funds of the Fund in the purpose for which the Fund was incorporated. The

Fund Manager may not invest in whatever not stipulated in the Fund's Terms and Conditions unless investors

being notified.

• The Fund Manager may specify the expected percentage of profit from the subscription in the Fund based on

the market study, provided that this is in the form of approximation and expectation.

• The Fund manager shall fully disclose all expenses charged to the Fund.

• All documents including contract and other forms consistent with the sharia provisions, rules and standards.

• All agreements related to the Fund must be submitted to the Shari Supervisory Committee for review and

approval before proceeding with signing thereof with other parties.

• The Fund Manager may not enter into any contract for which usurious interests or dues are payable and it

may take judicial proceedings to collect its entitlements.

C. Sharia standards for lease and sale the Fund Assets

• The Fund invests its funds in real estate projects that are legally permissible and do not entail any usurious

interest.

• The Fund may not calculate any usurious interest if any party delayed in the payment of its obligations and it

may take appropriate judicial proceedings to collect its dues.

• The Fund Manager may lease the property provided that it does not lease thereof to whoever practices an

activity that is legally prohibited, such as renting on usurious banks.

• The Fund Manager shall not invest in real estate in which the activities of the tenants are concentrated in the

following prohibited activities:

- Gambling.

- Selling and producing alcohol.

- Tobacco production.

- Making weapons.

- Prostitution.

Page | 86

- Drugs.

- Commercial insurance and usurious financing institutions.

- Any other non-compliant activities determined by the Sharia Supervisory Committee.

• The Fund Manager may invest in leased properties to companies or persons that do not comply with the above

standards including banks, insurance companies, gambling, alcohol, etc., provided that the rent collected from

these entities represents 5% or less of the total rents collected from the property taking into account the

following conditions:

o The revenues obtained from these entities shall be offered to the charitable associations after taking

the approval of the Sharia Supervisory Committee.

o If the Fund Manager can replace the Tenant with an inconsistent activity with another tenant engaged

in a sharia rules and regulation compliant-activity without causing damage to the Fund financially and

legally, it shall proceed to replace the Tenant after giving him a 3 months written warning.

o If the abovementioned procedure would cause financial or legal damages to the Fund, in such case

the Tenant will be left until the lease term ends and the contract shall not be renewed.

o If the Fund Manager invests in a vacant property or all the tenants are practice sharia rules and

regulations compliant-activities, the Fund Manager may not lease the property to a tenant, whose

activity is incompliant with the Sharia rules and regulations, even if the lessee's income is less than 5%

of the total rents.

Page | 87

Annex (D) Form of Power of Attorney

Appointing of the agent

I,…………………………, …………………..nationality, holds ID No. ……………., in my capacity the legal

representative of ………………… ("Unitholder"), and as the register and legal owner of (……) unit with value

(……….) in SHUAA REIT FUND ("The Fund"), Mr. (…………….), .…………. Nationality, holds ID No.

………., to represent (me/ represent the unit holder) and (my/ his) agent with respect to the units in the Fund,

and he shall have the power to attend and vote in all meetings of Unitholders from the date until otherwise

determined, or [the unit holder issues/ issued instructions otherwise] or to lose my capacity as a unit holder

in the Fund/ the unit holder loses his capacity as a unit holder in the Fund.

In witness whereof, I have caused this instrument to be duly executed on [……….], from the time of entry

into force

Name : ……………………

Signature: …………………….

Page | 88

Annex (E) Subscription Form

SHUAA REIT Subscription application

SHUAA REIT FUND A closed-end real estate investment fund compliant with Islamic

Sharia rules

Fund Manager: SHUAA Capital Saudi Arabia, CMA license No. 07056-

37 Application No. Recipient code Branch code Date:

Subscriber data- for individuals

Authorization

For those who have a bank account:

………………………………

I authorize the receiving entity to deduct the amount

from my account therein.

Subscriber/ agent signature:

………………………………………….

For official use:

We received from the abovementioned subscriber an

amount of (………………………Saudi Riyal only).

In words:

…………………………………………………………………

…………

Deducted from his account with us No.

…………………………….

In words:

…………………………………………………………………

…………

The subscriber/subscribers personal data contained in

the identity and instructions related to this subscription

were reviewed.

Bank: ……………….. Branch: ………………..

Date: ………………..

Officer in charge:

Name: ………………………………………………………

Signature: ……………………………………………………

Seal of receiving entity:

Important Notes

• The customer shall ensure the validity of the data included in the documents to be

submitted and that SHUAA Capital Saudi Arabia shall not be liable for any errors.

• The customer shall take into account the matching between the value of subscription

value with the executed bank transfers, the subscription application shall be rejected

in case of any discrepancy whether by decrease or increase.

• Any amount to be transferred through an account other than the account recorded in

the Fund subscription application will be rejected/ disapproved. The bank account

shall bear the subscriber name.

• Any subscription application or bank transfer after the end of last working day of

subscription days will be rejected. The investor will not be able to amend the data

included in in the subscription form after being sent or delivered. The subscription

cannot be cancelled through submitting a new application and the subscription

cannot be cancelled after being approved and confirmed.

• The Fund Manager will inform each investor with the subscription application's

acceptance/ rejection, whether in whole or in part, within three (3) working days from

the date of receiving the subscription application. The surplus cash subscriptions

shall be refunded without any deductions after deducting the value of allocated units

and subscription fees within fifteen (15) working days from the date of notifying the

investor with the number of allocated units.

• In case of any inquiries, kindly contact us on Tel. No.

+966 11 46669000 or visit [email protected]

First name: Father name: grandfather name: Family name:

Gender: ID Type: National ID resident Family Book

ID No. Nationality: DOB: Place of Birth:

Country: P.O. Box: City: Postal code:

Mobile No. Email:

Family members added to the application and included in the family book

1 Kinship Civil registration No.

2

3

4

For enterprises and investment Funds

Subscriber name: ………………………………………………………………………

Others: License CR type of ID

ID No. ………………… DOI: …………. Expiry date: ………………

P.O. Box: City: Postal code: Country:

Tel. No. ………… Mobile No. ………….. Email: ……………….

Bank account data:

Bank Name: ……………………………………………………………..

Bank Account No. (IBAN No.) …………………………………………

Name of account holder: ……………………………………………….

Deposit information in the Investor's Portfolio through SHUAA Investment

Name of licensed brokerage Co. ………………………………………

Number of investment portfolio: ……………………………………..

Note: the subscriber's investment portfolio should be active

Subscription data:

No. of Units in figures: ………………….

Subscription amount in figures: ……….

Subscription fees in figures: …………..

Total amount in figures: ……………….

Unit/ writing

SR/ writing

SR/ writing

SR/ writing

……………

……………

……………

…………….

Unit

SR

SR

SR

In case of a proxy

Agent Name: …………………………….. Civil registry No. …………………………

P.O. Box No. City: Postal code: City:

Approval& signature

I/we undertake that I, we received a copy of the Terms and Condition Note included in

SHUAA REIT SAUDI ARABIA Terms and Conditions and annexes attached thereto and I/we

read, understood and accepted what contained therein:

Name: ………………………… Date: ………………………. Signature: …………………….

Receiving Entities :


Page | 89

Annex (F) Letter of Acknowledgment

SHUAA REIT FUND

It's on this day___________ of _________in 2018, the undersigned acknowledges and agrees that he has

read, understood and accepted the Terms and Conditions of SHUAA REIT FUND. The undersigned

acknowledges and accepts the confidentiality obligations set out in these Terms and Conditions and will be

bound by the terms and conditions once he receives a signed copy of the Terms and Conditions from the

Fund Manager and acceptance by the Fund Manager of this Letter of Acknowledgment and Subscription

Form submitted by the undersigned.

Individual investors:

Name of the principal investor: ___________________________________

Signature: ____________________________________________________

Address: _____________________________________________________

Email Address: ___________________________ Tel. No. _____________

Legal Persons' investors:

Authorized signatory (ies): _______________________________________

Name: __________________________________

Position: _________________________________

Company Seal: ____________________________

Address: __________________________________

Email: __________________________ Tel. No. _______________________

In witness whereof, the Fund Manager accepted/approved this letter of acknowledgement on the date first

written above.

Name: ____________________ Signature: __________________

Position: __________________ Date: ______________________

Page | 90

Annex (G) Subscription Mechanism and Requirements

This table outlines the general requirements to subscribe in the Fund, in addition to the subscription requirements of

the receiving banks.

The investor wishing to subscribe in the units offered shall:

- Ba an agent of a receiving entity and have an active current account thereto;

- Have an active investment portfolio in the market (Tadawul) supervised by a licensed person;

- Complete and sign- or approve (as the case may be) – subscription application form available at e-websites

of the Fund Manager (www.shuaacapital.com.sa) and IPO agent (www.albilad-capital.com) and the receiving

entities, the National Commercial Bank (NCB) (www.alahli.com), Al Rajhi Bank (www.alrajhibank.com), Riyad

Bank (www.riadbank.com) , and signature or approval (as the case may be) on the Fund terms and condition

document and submitting thereof with any required documents to any of the receiving entities;

- Pay the subscription amount, subscription fees free of all deduction, costs, bank charges and currency

exchange fees, prior to the closing date.

Subscription can made in person at any of the receiving branches in the Kingdom, or through alternative channels

through:

E-websites of the receiving entities:

- National Commercial Bank (NCB) (www.alahli.com)

- Al Rajhi Bank (www.alrajhibank.com)

- Riyad Bank (www.riadbank.com)

- ATMs of any receiving entity

- Bank telephone of any receiving entity:

- NCB: (+966)920001000

- Al Rajhi Bank: (+966) 920003344

- Riyad Bank: (+966) 920002470

-

It should be noted that in the event that the investor has not previously participated in the IPO through the receiving

entity to which the application was submitted or if there has been a change in the investor's data since the last IPO

through the said entity or in the absence of an active current account in the name of its investor, this requires

personal attendance to complete the subscription transaction and submit any documents requested by the receiving

entity.

In case of subscription through the branches of the receiving entities, the subscription application form must be

completed and signed, and the Fund Terms and Conditions document shall be signed and sealed by the seal of the

company or corporate body submitting the application (if the applicant is a company or a corporate body) and

submitting thereof with signed copies of the following documents and signed by the seal of the company or the

corporate body (If the applicant is a company or corporate body), in addition to any other documents requested by

the receiving entity, provided that all documents issued outside the Kingdom of Saudi Arabia shall be certified by the


http://www.albilad-capital.com/


http://www.alrajhibank.com/

http://www.riadbank.com/


http://www.alrajhibank.com/

http://www.riadbank.com/

Page | 91

Embassy of the Kingdom of Saudi Arabia in the country of issue:

For individuals:

- ID card for Saudi or Gulf nationals or passport and residence permit for residents, for investors - Applicants;

In case of subscription on behalf of minors or dependents:

- ID card for Saudi or Gulf nationals or passport and residence permit for minor residents with age 15 years

Hijri to 18 years Hijri, or family book (or equivalent proof of identity to non-Saudis) for minors under 15 years

Hijri or dependents:

- ID card for Saudi or Gulf nationals or passport and residence permit for residents, for the legal guardian

applicant.

In case of subscription through investment portfolio owned by individual investor:

- A letter from the competent management of the portfolio manager indicating the intention to subscribe in

the Fund units and specify the identity of the person authorized to submit the application;

- ID card for Saudi or Gulf nationals or passport and residence permit for residents, for authorized signatories

at the portfolio manager;

For establishments:

In case of subscription for company or corporate body:

- A letter from the competent management of the invested establishment indicating the intention to subscribe

in the Fund units and specify the identity of the person authorized to submit the application;

- ID card for Saudi or Gulf nationals or passport and residence permit for residents, for authorized signatories;

In case of subscription for Investment Fund:

- A letter from the Fund Manager indicating the intention to subscribe in the Fund units and specify the identity

of the person authorized to submit the application;


at the Fund manager;

In case of subscription through investment portfolio owned by an establishment:

- A letter from the competent management of the portfolio manager indicating the intention to subscribe in

the Fund units and specify the identity of the person authorized to submit the application;


at the portfolio manager;

In case of subscription through alternative channels to the receiving parties, the investor shall:

- If wishes to subscribe through the website or ATMs of one of the receiving entities, shall complete and

approve the subscription application form in the Fund units and the Terms and Conditions in accordance

with the instructions set out on the Website or ATM;

Page | 92

- If wishes to subscribe through the bank telephone of one of the receiving entities, shall complete and

approve the subscription application form in the Fund units in accordance with the guidelines provided by

the bank telephone and accept the terms and condition by pressing the number requested by the bank

telephone.

Subscription amounts and subscription fees shall be paid by deducting from the investor's bank account at the

receiving party to which the application was submitted. In case of subscription on behalf of minors or dependents, the

deduction shall be made from the same bank account for the guardian of the minor or dependent in the absence of a

bank account for the minor or dependent.

The subscription application will be reviewed within three (3) working days from the date of submission. In the event

that the subscription application is not fulfilled or any observations are made, the investor will be notified via e-mail

or by text message to the registered mobile number or by any other electronic means to complete the requirements

within one (1) working day of the investor's notice.

In the event that the subscription application is completed, the authorized officer of the receiving entity will hand over

the applicant the "Confirmation of Subscription" document in the form included in the application form, in writing if

the subscription application is received in writing, electronically (via e-mail or by text message to registered mobile

number or by any other electronic means) in case of subscription electronically. Receiving the subscription application

and deliver the confirmation of the applicant's subscription do not mean acknowledgment of acceptance.

The signature and delivery of the subscription form and the Fund's terms and conditions document to the investor in

accordance with the foregoing provisions shall be deemed a confirmed commitment from him to subscribe in the Fund

units within the limits contained in the subscription application. This is subject only to the Fund Manager's approval

and units' allocation in accordance with such Terms and Conditions.

Page | 93

Annex (H) Example of calculating the recurrent fees

Invested amount (SR)* Total revenues (SR) Returns per unit (SR)

1000 79.5 0.795

Recurrent fees

Type of fees Fees amount Amount afforded by the unit holder

for a year (SR)

Custody fees 0.025% 0.2

External Audit Fees 35,000 0.0591

Registration, listing fees& regulatory

fees and publishing fees 800,000 1.352

Sub-administrator fees 140,000 0.236

Fees of other service providers

(valuation, sharia advisor and legal

advisor, etc)

157,500 0.266

Management fees 0.4% of the assets value,

5% of total leases 7.994

Total fees 10.1

Net yield on amount invested 69.4

% of yield on amount invested 6.94%

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