Saudi Economic and Development Securities Company “SEDCO Capital”, in its capacity as manager of the “SEDCO Capital REIT” fund, announced a new strategic step aimed at growing the fund’s assets, as the Board of Directors approved signing an agreement to purchase 4 office complexes in the capital, Riyadh, in a deal that reflects the trend towards sustainable income-generating assets.
Deal details and strategic location
According to the official statement published on the Saudi Stock Exchange (Tadawul) website, the targeted office complexes are located in a prime location on Anas Ibn Malik Road in the Al Yasmin district, north of Riyadh. This location is considered one of the fastest-growing and most in-demand areas of the capital, due to its proximity to major thoroughfares and commercial centers. The net leasable area of the property is approximately 5,267 square meters.
The total acquisition value was estimated at SAR 125.77 million, while the lease term extends for a binding three-year period.
Financial returns and tenant quality
The company explained that the property is fully leased under a single-tenant contract with a government entity, which enhances the creditworthiness of its cash flow and reduces the risk of vacancy or default. The property's annual rental value is SAR 11.18 million, representing a gross annual return of 8.9%, a competitive and attractive rate given the current market conditions for the office sector in Riyadh.
Financing structure and recycling strategy
Regarding the financing of the transaction, SEDCO Capital noted that the deal will be financed through a combination of existing bank facilities granted to the fund, in addition to proceeds from the sale of one of the fund's previous properties. This move demonstrates the management's "capital recycling" strategy, whereby assets that have achieved their investment objectives are divested and replaced with new assets offering higher returns or better growth potential.
Economic context and impact of the deal
This acquisition comes at a time when Riyadh's real estate sector, particularly office space, is experiencing a significant boom driven by the goals of Vision 2030 and the program to attract regional headquarters for global companies. The concentration of real estate in northern Riyadh reflects an accurate assessment of the future of urban and commercial expansion in the capital.
The fund manager expected that this acquisition would have a tangible positive impact on the fund’s real estate portfolio, by improving asset quality and increasing potential cash distributions to investors, thus enhancing SEDCO Capital REIT’s position as one of the leading funds in the Saudi market.
