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Riyadh, Saudi Arabia
Al-Jada Al-Awwal Real Estate Development Company, listed on the Saudi market, announced the signing of an agreement with OJ Real Estate Development and Investment Company, which includes the sale of all its units in the La Pearl Real Estate Fund, which represents 38.6% of the total units of the Fund, in exchange for the acquisition of all OJ units in the “Acceleration” Fund, which represents 48.9% of its units, in addition to a cash settlement in favor of Aljada Al Awwal worth SAR 6.35 million.
The company confirmed that the value of the deal is 130.96 million riyals, pointing out that its ownership in the "Beach Fund" will increase under the agreement from 32.7% to about 81.6%, while it will exit completely from the "La Pearl Fund", explaining that the proceeds of the deal are additional investment units in the Beach Fund worth 124.62 million riyals, in addition to the cash amount of 6.35 million riyals, according to a statement of the company on "Tadawul".
The proceeds of the transaction are additional investment units in the “Beach Fund” of SAR 124.62 million in addition to the cash amount of SAR 6.35 million
It is noteworthy that the total value of the assets of the "Beach Fund" is about 255.1 million riyals, and consists of land in the beach district in Jeddah, with an area of 15.6 thousand square meters, and a construction factor of 6.25, in addition to cash liquidity of about 45 million riyals, with no funding based on the Fund.
Al-Jada Al-Awwal said that the deal comes within its strategy to redistribute its real estate investments and raise the efficiency of capital employment by exiting from an income-generating real estate asset that has reached an advanced stage of investment maturity and increased investment in an asset that has greater opportunities for development and growth.
She explained that she intends to study a number of options to benefit from the land of the "Beach Fund", including the development of a real estate project or the employment of the asset within other investment and financing solutions, according to feasibility studies and necessary credits.
The total value of the assets of the "Beach Fund" is 255.1 million riyals and consists of land in the beach district of Jeddah with an area of 15.6 thousand m2
The company had expected to achieve a profit of about 3.56 million riyals from the deal, provided that the final financial impact will be determined when the transfer of units and the settlement of investment in the fund, pointing out that the complete exit from the "La Pearl Fund" will result in the termination of the company's investment in the fund, and the end of its relationship related to the management and development of its assets, including the existing development agreement, in accordance with the contractual provisions and the relevant termination procedures.
It explained that the increase in its ownership in the Beach Fund to about 81.6% may result in a change in the accounting treatment of the investment, including the possibility of consolidating the financial statements of the Fund within the consolidated statements of the company if the requirements of standardization are met in accordance with the approved accounting standards, in which case the transactions and income exchanged between the company and the Fund, including the revenues resulting from the existing development agreement with the Beach Fund, may be excluded when preparing the consolidated financial statements to the extent that transactions within the Group are considered.
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