Top-of-the-line commercial services company Tobi announced a new strategic move: the acquisition of a property in Riyadh for a total value of SAR 83 million. This step comes as part of the company's efforts to strengthen its fixed assets and support its ambitious expansion plans in the technology and commercial services sector.
Deal details and financing
In an official statement published on the Saudi Stock Exchange (Tadawul) website today, Thursday, the company clarified that the acquired property covers an area of 3,005.14 square meters. The transaction with the seller, Faisal Al-Ammar, was signed on December 3rd. The company noted that the announced transaction value does not include real estate transaction tax or brokerage fees, meaning the total cost will be slightly higher when these charges are factored in.
Regarding the financing mechanism for this huge acquisition, Toby indicated that it relied on long-term bank facilities worth 83 million riyals, reflecting the company’s financial solvency and its ability to obtain financing that supports its future growth without depleting current operating cash flow.
The shift from renting to owning: an economic perspective
The company attributed this decision to extensive studies that included cost calculations and data on the current real estate market in Riyadh. The results showed that purchasing property is more sustainable and profitable in the long run compared to continuing to rent premises. This approach aims to more effectively meet the company's growing operational needs, especially given the increasing volume of existing contracts and anticipated projects in the coming period.
The context of the technology sector and growth in the Kingdom
This deal comes at a time when the telecommunications and information technology sector in Saudi Arabia is experiencing rapid growth, driven by the Kingdom's Vision 2030 and the comprehensive digital transformation across both the public and private sectors. Tubi is a key player in this field, offering integrated software solutions and business services. The company's acquisition of its own premises, rather than leasing, reflects a mature operational model and a desire to solidify its physical presence in line with its market position.
The impact of the deal on the real estate and investment market
This acquisition reflects the significant activity in Riyadh's commercial real estate market, where many major companies are looking to own their headquarters in anticipation of rising rental prices due to increased demand resulting from the program to attract regional headquarters for international companies. Financially, this asset will strengthen the company's balance sheet by increasing non-current assets and will also contribute to reducing operating expenses related to rent in the long term, which could positively impact profit margins in the coming years.
