In a strategic move aimed at improving the financial efficiency of Al-Khair REIT, its board of directors has announced its formal approval to use the proceeds from the sale of two real estate assets to repay a portion of its outstanding credit facilities. Under this decision, the fund will repay SAR 150 million to Al Rajhi Bank, representing a portion of its financial obligations.
This step follows the company's previous announcements on March 31, 2024, and August 4, 2025, which detailed the divestment and sale of the "B&Q" property (formerly known as Home Works Center) and the "Ahlan Court" property. The cash generated from these sales will be used to reduce the debt, specifically to repay SAR 150 million of the facilities drawn during the fund's initial public offering.
Details of credit facilities and financial impact
Regarding the fund's financing structure, the total value of the credit facility agreement signed between Al-Khair Capital (as the fund manager) and Al Rajhi Bank is approximately SAR 1.035 billion, and it is due to be fully repaid in September 2031. The financial data indicates that a total of SAR 737.5 million of this credit limit has been used, distributed as follows: SAR 340 million to finance IPO acquisitions, and SAR 397.5 million to finance the expansions of the first additional offering.
This measure is expected to have a direct and positive impact on the fund's financial statements in the coming periods. Reducing the principal debt by SAR 150 million will lower annual financing costs (debt servicing costs), thereby improving net distributable income for unit holders and strengthening the fund's profit margins amidst fluctuating interest rates in financial markets.
Context of the Real Estate Investment Trusts (REITs) sector in Saudi Arabia
This step is particularly important in the current economic landscape of the Real Estate Investment Trusts (REITs) sector in Saudi Arabia. With fluctuations in global and local interest rates (SAIBOR), professional REIT managers are restructuring their financial obligations to mitigate risk. Divestment of assets that may have peaked or are not achieving their target returns, and the use of the proceeds to repay loans, is a smart hedging strategy aimed at maintaining the sustainability of cash distributions to investors.
This action reflects Al-Khair Capital's commitment to the active management of its real estate investment trust (REIT) portfolio. The company not only holds assets but also actively circulates capital to maximize overall returns. REITs are a key investment vehicle in the Saudi market, allowing investors to participate in the income generated from developed properties that generate regular rental income. These REITs are subject to strict oversight by the Capital Market Authority to ensure transparency and good governance.
