Asas Makin Real Estate Development and Investment Company announced today a strategic financial step, which is the renewal of the Sharia-compliant credit facility agreement with Bank Al-Jazira, as part of the company’s efforts to enhance its financial solvency and support its expansion plans in the Saudi market.
Details of the agreement and guarantees provided
According to the official statement issued by the company and published on the Saudi Stock Exchange (Tadawul) website, the total value of this agreement is SAR 200 million. The financing term is set at one year, renewable, giving the company flexibility in managing its short- and medium-term financial obligations.
Regarding the guarantees provided by “Asas Makin” to obtain this financing, the company explained that they include a guarantee of payment and performance, in addition to providing a promissory note, and mortgaging a group of real estate instruments that include the properties to be financed or developed, which reflects the strength of the assets owned by the company and its ability to provide the necessary guarantees to financial institutions.
Funding objectives and expansion strategy
The company identified the primary purpose of obtaining these credit facilities as being central to its core operations. The cash flow will be used to purchase new land, acquire existing properties, and/or finance the development and construction costs of current and future projects, whether for sale or lease. This diversification in financing reflects the company's desire to diversify its investment portfolio between the rapid development of income-generating properties and long-term projects.
Economic context and the recovery of the real estate sector
This announcement comes at a time when the real estate sector in Saudi Arabia is experiencing unprecedented activity, driven by the goals of Vision 2030, which prioritizes increasing homeownership rates and developing infrastructure. Real estate development companies play a pivotal role in achieving these goals by injecting more residential and commercial units into the market.
Credit facilities are a vital tool for real estate developers to ensure the continuity of supply chains and accelerate construction, especially given the current high level of market competition. Furthermore, renewing the agreement with a long-established banking institution like Bank Al-Jazira reflects the mutual trust between the banking sector and real estate development companies, and underscores the creditworthiness of Asas Makin Company.
Financial and investment importance
From an economic perspective, this type of financing stimulates economic activity by injecting liquidity into the contracting and building materials sector, creating a positive multiplier effect on the local economy. For shareholders and investors, securing these facilities is a positive indicator of management's ability to provide the necessary resources to capitalize on available investment opportunities in the market, thus enhancing the company's future growth prospects and returns.
