SHUAA Capital Saudi Arabia csjc
Hamad Tower, 27th Floor,
King Fahad Street, P.O. Box 8181
Riyadh 11582, Saudi Arabia
Tel: +966 (11) 466 6990
Fax: +966 (11) 466 6993
http://www.shuaacapital.com.sa
This document is produced for informational purposes only. The information contained herein must not
be reproduced in whole or in part without the prior consent of SHUAA Capital Saudi Arabia cjsc.
Copyright © 2018 All rights reserved
SHUAA Capital Saudi Arabia csjc
Hamad Tower, 27th Floor,
King Fahad Street, P.O. Box 8181
Riyadh 11482, Saudi Arabia
Tel: +966 (11) 466 6990
Fax: +966 (11) 466 6993
http://www.shuaacapital.com.sa This document is produced for informational purposes only. The information contained herein must not
be reproduced in whole or in part without the prior consent of SHUAA Capital Saudi Arabia cjsc.
Copyright © 2018 All rights reserved
Executive Summary
2
Disclaimers & Important Notices
Disclaimer & Important Notice
This presentation (the “Presentation”) has been prepared by SHUAA Capital Arabia cjsc (“SCSA”) exclusively for the benefit and internal use of the
recipient (the “Recipient”) to whom it is addressed. The Recipient is not permitted to reproduce in whole or in part the information provided in this
Presentation (the “Information”) or to communicate the Information to any third party without our prior written consent. No party may rely on this
Presentation without our prior written consent.
SCSA and its affiliates, officers, directors, employees and agents do not accept responsibility or liability for this Presentation or its contents (except to
the extent that such liability cannot be excluded by law).
This Presentation (i) is being furnished for discussion purposes only; and (ii) speaks only as of the date it is given, reflecting prevailing market
conditions and the views expressed are subject to change based upon a number of factors, including market conditions. The Information, whether taken
from public sources, received from the Recipient or elsewhere, has not been verified and SCSA has relied upon and assumed without independent
verification, the accuracy and completeness of all such information. No representation or warranty is made as to the Information’s accuracy or
completeness and SCSA assumes no obligation to update the Information. The Presentation is incomplete without reference to, and should be viewed
solely in conjunction with, the oral briefing provided by SCSA. The analyses contained in the Presentation are not, and do not purport to be, appraisals
of the assets, stock, or business of the Recipient, and to all documents provided by SCSA, including the SHUAA REIT terms and conditions.
The Presentation is not exhaustive and does not serve as legal, accounting or tax advice. Nothing herein shall be taken as constituting the giving of
investment advice and this Presentation is not intended to provide, and must not be taken as, the basis of any decision and should not be considered
as a recommendation by SCSA. Recipient must make its own independent assessment and such investigations as it deems necessary. In preparing this
presentation SCSA has acted as an independent contractor and nothing in this presentation is intended to create or shall be construed as creating a
fiduciary relationship between the Recipient and SCSA.
An investment in SHUAA REIT must be solely based on the information contained in the SHUAA REIT Terms and Conditions.
3
Table of Contents
IntroductionI 4
V 26KSA R.E. Market
8II SHUAA REIT Description
III 21REIT Strategy
IV 23REIT Financials
VI 33SHUAA Capital Saudi Arabia Credentials
This document is produced for informational purposes only. The information contained herein must
not be reproduced in whole or in part without the prior consent of SHUAA Capital Saudi Arabia cjsc.
Copyright © 2016 All rights reserved4
I. Introduction
5
Introduction
What is a REIT?
Unit Holders
REITREIT Manager
Properties
Dividends
(Yield)Investment
Rental Income Ownership
Management
Management
Fees
INTRODUCTION IIII IV VIII V
Equity REIT
Mortgage REIT
Hybrid REIT
Publicly Traded
REIT
Public Non-
Traded REIT
Private REIT
REIT Overview Typical Structure of a REIT
Types of REITs
Why Invest in a REIT?
High Yield
Mandatory Profit Distribution
Diversification
Access to High Yield Assets
Experienced Management
Visibility of Stream of Income
✓ Typically offer higher yields in comparison to other asset classes including equity and fixed income products
✓ Mandatory distribution of a set percentage to shareholders (minimum 90% of net profit imposed under CMA rules)
✓ Portfolio mix is typically diverse (sectors and assets types) which reduces concentration risk and ensures greater resilience to fluctuations
in market conditions
✓ Shareholders typically have access to high yield income generating assets that may not be easily accessible to average investors
✓ REIT Manager typically enhances portfolio value through professional management of properties
✓ REITs typically secure longer term leases, which provides the investors with visibility on expected streams of income enabling them to
effectively manage their cash flow and budgeting requirements
► A real estate investment trust (“REIT”) is a publically traded investment vehicle that
owns income-producing real estate assets. REITs own many types of properties,
ranging from office and apartment buildings to warehouses, hospitals, shopping
centers, and hotels.
► REITs allow for small and medium investors to own shares in portfolios of large-scale
properties, whereby shareholders earn a share of the income produced through
various and multiple income generating real estate assets.
► REITs are typically considered as a lower risk fixed income asset class instrument, that
generate a stable stream of income to unitholders. REITs are not considered a
speculative or growth instrument that anticipate huge capital gains.
6
Highly Experienced Management SHUAA REIT is spearheaded by a proficient
management team with solid track record in
real estate asset management
Potential Capital Appreciation – Appreciation in
Valuation of the Underlying Assets & Unit Price REIT shareholders typically benefit from share price
appreciation and enhanced valuation
Diversification and Access to
High Yield AssetsDiversified portfolio with high yielding
assets, ensures greater resilience to cyclical
market conditions
Converting Illiquid Real Estate (“R.E.”)
Investments to Liquid Tradable Units Shareholders will gain the same sector
exposure of directly owning illiquid real estate
assets, while eliminating the illiquidity risk
associate with the R.E. investments
Economies of ScaleBetter barging power with property
/ facility management companies
and other service providers
Low Leverage ExposureOptimal capital mix that enhances and
maximizes the returns to shareholders while
controlling the credit risks and liabilities
Introduction
The opportunity to investors and property owners
1
INTRODUCTION IIII IV VIII V
2
3 4
65
SHUAA
REIT
7
to manage the REIT in
accordance with Terms
and Conditions
Properties
Properties to be acquired
Roomz
Showroom
Almutlaq
Showroom
Provision of ongoing
and continuous
supervision to ensure
compliance with CMA
regulations / Sharia's
principles and overall
sustainabillity of the
REIT
BOD and Committees
Shareholders
Ownership of Shares Dividends
In-kind Investors New Investors
REIT Manager
SHUAA Capital Saudi Arabia cjsc
Strategic direction
and oversight
Property Manager(s)
SPV(s)
100%
Custody
Agreement
Regulated
Custodian
SHUAA Saudi REIT
(CMA Regulated)
Bank(s)
Bank financing
Introduction
SHUAA REIT - A unique investment opportunity
REIT StructureREIT Overview
(1) Including target assets
1. SHUAA Capital Saudi Arabia
(“SCSA”) has obtained CMA
approval on a REIT (The
“REIT “ or “SHUAA REIT”) in
KSA on 25/02/2019.
2. SHUAA REIT will be
established under the Saudi
Arabian Capital Market (the
“CMA”) Real Estate
Investment funds
Regulations and the Real
Estate Investment Traded
Fund Instructions (the
“Regulations”)
3. Subscription period will start
on March 25th , 2019 and
lasts for 10 business days
until April 7th, 2019.
Nada CenterEuro
Compound
Alkhorayef
WarehousesElite Mall
INTRODUCTION IIII IV VIII V
This document is produced for informational purposes only. The information contained herein must
not be reproduced in whole or in part without the prior consent of SHUAA Capital Saudi Arabia cjsc.
Copyright © 2016 All rights reserved8
II. SHUAA REIT Description
9 IIII IV VIII VSHUAA REIT DESCRIPTION
Fund Manager & Administrator
Technical consultant
Floatation Manager & Custodian
Feasibility Consultant
Sub-Administrator Sharia Advisor
Receiving Entities Valuators
Auditor Regulator
Legal Counsel Stock Exchange
SHUAA REIT Description
REIT Service Providers Directory
10
SHUAA REIT Description
Key Fund Terms (Subject to CMA Approval)
Fund Name SHUAA REIT, a closed ended Sharia compliant real estate investment traded fund established in accordance with CMA’s Regulations
REIT Size A targeted market capitalization of SAR 591.5 MM (inclusive of capitalized expenses)
Use of Proceeds Acquisition of income generating real estate properties.
REIT Manager SHUAA Capital Saudi Arabia Cjsc
Management Fee *▪ 0.4 % of Gross Asset Value
▪ 5 % of Gross Rental Revenue
Fund Term 99 years
Transaction Fees *▪ 1% of property acquisition value (applicable for acquisition of new properties post initial listing)
▪ 2 % of property disposition value
Subscription fees * 2% of capital raised from market subscription
Debt arrangement fee 1.5% of debt raised
Target net Yield 6.94%
Distribution Semi-Annually
Lock up Period One year for In-kind unitholders only (initial property owners)
IIII IV VIII VSHUAA REIT DESCRIPTION
* All fees are subject to VAT
11
SHUAA REIT Description
Key Offering Terms (Subject to CMA Approval)
Offering Period 25/03/2019 until 07/04/2019
Expected Tadawul Listing Q2, 2019
Publicly Offered Ownership 51.58%
Publicly Offered Units 30,515,000 Units
Offer Price SAR 10 / Unit
Public Offer Value SAR 305,150,000
Minimum Subscription 50 Units / SAR 500
Maximum Subscription 2,900,000 Units / SAR 29,000,000
Eligible Investors
▪ Saudi and GCC Citizens.
▪ Residents of Saudi Arabia.
▪ Companies, institutions, Investment Funds established in Saudi Arabia and GCC.
▪ Qualified Foreign Investors.
Receiving Banks
IIII IV VIII VSHUAA REIT DESCRIPTION
12
SHUAA REIT Description
Key Differentiation Factors
Management fees comprise two components:
1. Fixed percentage (0.4%) based on gross asset value
2. Variable percentage based* on (5%) of the gross rental poolAlignment of interests
Initial property owners will not be fully cashed-out in the IPO (with approximately 50% cash and 50% in-kind
contribution)
Co-investment in Initial property owners
The REIT manager’s objective is to actively manage the underlying pool of Real Estate assets to enhance and
optimize the returns to the unit holdersActive management
Diversification is applied on two main levels
1. Number of initial owners
2. Segmentation of the underlying property mix (i.e various sectors and types)
Diversification (Ownership and Properties)
The selection criteria of the current and future underlying properties is geared towards capturing investment
opportunities in prime areas Prime locations
Lease terms are structured externally by a leading legal counsel and further supported with personal order
notes for a period of no-less than three-and-half (3.5) years to guarantee the income-stream for the unit
holders during the respective years
Optimization of contractual agreements
The fund targets a net yield of 6.94% in the initial periods taking into consideration the following:
1. Net yields are projected to increase over the medium term
2. The targeted returns are considered to be on the higher-end relative to its peers
Maximization of net yield returns relative to comparable REITs
The units representing the in-kind contribution of the initial property owners will be locked-up for a period of
one-year
Lock-up period for existing Pre-IPO owners
* The variable component ensures the fund managers commitment to actively preserve and grow the rental
pool aligning interests with the unit holders
IIII IV VIII VSHUAA REIT DESCRIPTION
13 IIII IV VIII VSHUAA REIT DESCRIPTION
SHUAA REIT Description
Underlying Assets
Fund Asset Breakdown
34.1%
11.8%22.0%
3.2%
17.2%
8.5%
3.2%
Elite Mall
Nada Center
Wrehouses
Euro Compound
Roomz
Almutlaq
Capitalzed Soft Costs
12.25%
25.68%
34.64%
23.93%
3.51%
Office
Line Retail
F&B
Industrial
Residential
Ownership Structure Breakdown
Revenue Breakdown by Sector
51.60%
17%
5.90%
11.00%
1.60% 12.80%Offered to Public
In-kind Contribution 1
In-kind Contribution 2
In-kind Contribution 3
In-kind Contribution 4
In-kind Contribution 5
14
REIT Properties
Land Area (Sqm) 9,587
Built-up Area (Sqm) 21,929
Gross Leasable Area (Sqm) 12,343
Net Rent (SAR Million) 16 m
Price (SAR Million) 201.5 m
Cap Rate (%) 7.94%
Lease Term (years) 5 years
Elite Mall (Mixed Use) Nada Center (Mixed Use) Roomz Showroom (Retail)
Land Area (Sqm) 4,685
Built-up Area (Sqm) 9,742
Gross Leasable Area (Sqm) 7,664
Net Rent (SAR Million) 6 m
Price (SAR Million) 70 m
Cap Rate (%) 8.57%
Lease Term (years) 5 years
Land Area (Sqm) 8,079
Built-up Area (Sqm) 7,752
Gross Leasable Area (Sqm) 7,000
Net Rent (SAR Million) 8 m
Price (SAR Million) 102 m
Cap Rate (%) 7.84%
Lease Term (years) 15 years
IIII IV VIII VSHUAA REIT DESCRIPTION
SHUAA REIT Description
Underlying Assets
15
REIT Properties
Euro Compound (Residential) Alkhorayef Warehouses (Logistics) Almutlaq Showroom (Retail)
Land Area (Sqm) 900
Built-up Area (Sqm) 2,200
Gross Leasable Area (Sqm) 1,600
Net Rent (SAR Million) 1.65 m
Price (SAR Million) 19.2 m
Cap Rate (%) 8.6%
Lease Term (years) 5 years
Land Area (Sqm) 85,000
Built-up Area (Sqm) 64,400
Gross Leasable Area (Sqm) 62,400
Net Rent (SAR Million) 11.255 m
Price (SAR Million) 130 m
Cap Rate (%) 8.65%
Lease Term (years) 5 years
Land Area (Sqm) 4,401
Built-up Area (Sqm) 4,960
Gross Leasable Area (Sqm) 4,960
Net Rent (SAR Million) 4.075 m
Price (SAR Million) 50 m
Cap Rate (%) 8.15%
Lease Term (years) 15 years
IIII IV VIII VSHUAA REIT DESCRIPTION
SHUAA REIT Description
Underlying Assets
16
REIT Properties
Land Area (Sqm) 9,587
Built-up Area (Sqm) 21,929
Gross Leasable Area (Sqm) 12,343
Net Rent (SAR Million) 16 m
Price (SAR Million) 201.5 m
Cap Rate (%) 7.94%
Lease Term (years) 5 years
Elite Mall (Mixed Use) Overview
► The subject property is located in As Sulaimaniah district of Riyadh which is a key commercial area
of the city.
Property description
► A retail and office development with a land area of 9,587 sqm.
► A fully constructed strip mall composed of Basement, Ground floor and First floor.
► A freehold property.
IIII IV VIII VSHUAA REIT DESCRIPTION
SHUAA REIT Description
Underlying Assets
17
REIT Properties
Nada Center (Mixed Use)
Land Area (Sqm) 4,685
Built-up Area (Sqm) 9,742
Gross Leasable Area (Sqm) 7,664
Net Rent (SAR Million) 6 m
Price (SAR Million) 70 m
Cap Rate (%) 8.57%
Lease Term (years) 5 years
Overview
► Property is an office and retail development located in North of Riyadh in the An-Nada district with a
direct view on Al Thumamah Road.
Property description
► A gross leasable area of 7,664 sqm with a land area of 4,685 sqm .
► A fully constructed strip mall comprising of Basement, Mezzanine, Ground floor, First floor and Annex.
► A total no. of 33 units in the development.
IIII IV VIII VSHUAA REIT DESCRIPTION
SHUAA REIT Description
Underlying Assets
18
REIT Properties
Roomz Showroom (Retail)
Land Area (Sqm) 8,079
Built-up Area (Sqm) 7,752
Gross Leasable Area (Sqm) 7,000
Net Rent (SAR Million) 8 m
Price (SAR Million) 102 m
Cap Rate (%) 7.84%
Lease Term (years) 15 years
Overview
► Property is a retail development located at the south corner of Northern Ring Road and King Abdul Aziz
Road, within Al Muruj District, Riyadh
Property description
► The subject property is a single-storey with basement and mezzanine, retail/showroom building known as
“Roomz”. It was built mainly of reinforced concrete structure with glass and aluminum cladding exterior
wall finishes, painted interior wall, granite tiles flooring, painted ceiling and automatic glass main entrance
door. It is presently used as a furniture showroom.
► The property is in good condition and well maintained
IIII IV VIII VSHUAA REIT DESCRIPTION
SHUAA REIT Description
Underlying Assets
19
REIT Properties
Euro Compound (Residential)
Land Area (Sqm) 900
Built-up Area (Sqm) 2,200
Gross Leasable Area (Sqm) 1,600
Net Rent (SAR Million) 1.65 m
Price (SAR Million) 19.2 m
Cap Rate (%) 8.6%
Lease Term (years) 5 years
Overview
► Property is a residential building located about 70 meters southwest of King Abdul Aziz Road, within
As Sulaymaniyah District, Riyadh.
Property description
► The subject property is a 4-storey residential apartment building known as “Euro Building”. It was
built mainly of reinforced concrete structure with GRC panels cladding exterior wall, plastered and
painted interior wall, granite tiles flooring, painted ceiling, glass windows and wooden room doors.
► It is equipped with one elevator, centralized air-conditioning system and internet connection. Building
facilities includes a fitness gym and coffee area at roof floor and outside parking slots for its tenant.
IIII IV VIII VSHUAA REIT DESCRIPTION
SHUAA REIT Description
Underlying Assets
20
REIT Properties
Alkhorayef Warehouses (Logistics)
Land Area (Sqm) 85,000
Built-up Area (Sqm) 64,400
Gross Leasable Area (Sqm) 62,400
Net Rent (SAR Million) 11,255
Price (SAR Million) 130 m
Cap Rate (%) 8.65%
Lease Term (years) 5 years
Overview
► The subject property is an industrial compound known as “Alkhorayef Warehouses”, located along the
southwest side of Al Imam Street, within Ad Dar Al Baida District, Riyadh.
Property description
► The warehouses are equipped with firefighting system, fire extinguishers and fire hose cabinets. The
compound’s open area is asphalt-paved with steel pole street lightings. During inspection, the subject
warehouses were noticeably new and of good quality workmanship.
IIII IV VIII VSHUAA REIT DESCRIPTION
SHUAA REIT Description
Underlying Assets
21
REIT Properties
Almutlaq Showroom (Retail)
Land Area (Sqm) 4,401
Built-up Area (Sqm) 4,960
Gross Leasable Area (Sqm) 4,960
Net Rent (SAR Million) 4.075 m
Price (SAR Million) 50 m
Cap Rate (%) 8.15%
Lease Term (years) 15 years
Overview
► Property 5 is a retail building identified as “Almutlaq Co. Ltd.”, located at the southwest corner of Olaya
Street and That Alsawari Street, within Al Wurud District, Riyadh.
Property description
► The subject property is a two-storey retail/showroom building known as “Almutlaq Co. Ltd.”. It was built
mainly of reinforced concrete structure with glass and aluminum cladding façade and pebble washout
exterior wall finishes. The building is well maintained.
IIII IV VIII VSHUAA REIT DESCRIPTION
SHUAA REIT Description
Underlying Assets
22
Tenants and Brands Sample
IIII IV VIII VSHUAA REIT DESCRIPTION
SHUAA REIT Description
Underlying Assets
23
Lease Agreements
Lease terms ranges between 5 to 15 years
Leases are unbreakable for the first five
years
Mixed use properties have one main tenant
with a triple net lease secured with personal
order notes bearing all risk should any
subtenant defaults
All leases are renewable for an additional
period with escalations ranging from 3% to
15%.
No tenant concentration as non of the
leases represents more than 25% of the
total fund revenue
Credible tenants with established track
record
IIII IV VIII VSHUAA REIT DESCRIPTION
SHUAA REIT Description
Underlying Lease Agreements
Term Structure
Lock-in Periods
Order Notes
Tenant Mix
Lease Terms
Tenant Profiles
24
SHUAA REIT Description
SHUAA REIT Board of Directors
• CEO of The Factory
Furniture
• 20 years of Real Estate
and Manufacturing
Experience
• BA in Business
Administration,
Marketing from
American National
University
• Board Member
AlMutlaq Group
• COO of SHUAA Capital
Saudi Arabia (“SCSA”)
• 13 years of Private
Banking & Private
Equity & Real Estate
funds Experience
• BS in Finance from
University of Central
Florida, FL, USA
• CME-1 Registered
• CEO of SHUAA Capital
Saudi Arabia (“SCSA”)
• 34 years of Investment
Banking & Real Estate
Experience
• Masters in Economics
from Syracuse
University, NY, USA
• BA in Business
Administration form
the American
University of Beirut
• CME-1 Registered
• Board Member all
SCSA Funds
• Board Member Gulf
Finance House
• Board Member Al Bani
Real Estate
Development
• AGM of Salehiya
Medical
• 14 years of Professional
Business Experience,
Private Equity, Hedge
Funds & Real Estate
• BS in Finance &
Marketing (Dean’s List)
from Salve Regina
University, RI, USA
• VP of Yasser
AlMohaimeed Law Firm
& Legal Consultants
• 18 years of Professional
Business Experience,
Development & Real
Estate
• Diploma in Sales &
Marketing from
Administration
Institute, Riyadh, KSA
Omar Al JaroudiChairman
Faisal Bin SultanNon-Executive
Independent Member
Abdulla Al MutlaqNon-Executive
Dependent Member
Basel BarqawiExecutive Member
Yazeed AlMohaimeedNon-Executive
Independent Member
IIII IV VIII VSHUAA REIT DESCRIPTION
This document is produced for informational purposes only. The information contained herein must
not be reproduced in whole or in part without the prior consent of SHUAA Capital Saudi Arabia cjsc.
Copyright © 2016 All rights reserved25
III. REIT Strategy
26
REIT Strategy
Investment strategy & guidelines
IIII IV VIII V
The REIT Manager intends to acquire a diversified portfolio of commercial and residential real estate including hospitality, offices, retail, residential, and
warehouse properties located primarily in Saudi Arabia. The REIT Manager will focus on acquiring primarily income-producing properties. These
properties may be existing, income-producing properties, newly constructed properties or properties under development.
► Own high quality and strategically located properties;
► Maintain a geographically diversified portfolio throughout Saudi Arabia
with potential international acquisitions representing no more than 25% of
total assets value of the REIT’s portfolio;
► Target the acquisition of commercial assets with a remaining average
weighted lease term of between three to six years;
► Achieve, across the whole REIT portfolio, a diverse and broad spread of
tenants;
► Implement pro-active asset management through prudent control of
property operating expenses, active leasing and marketing of any
vacancies and expiring leases, programs for the regular maintenance of
building structures, asset refurbishment and enhancement programs to
increase the competitive positioning of the assets; and
► Increase net rental income from properties such that more cash is available
for distributions.
Investment Strategy Guidelines
Development Strategy
► Within the limits of the CMA regulations, the REIT Manager may prudently undertake development activity when appropriate opportunities arise while
mitigating any construction and leasing risk, as well as any short-term dilution on the REIT’s dividend yield and distribution capabilities.
► Development opportunities pursued will be for the intention of holding the properties for the long term in order to derive new and increased rental
income to the REIT unit holders.
► The value of a single property, on a stand alone basis at the time of
investment, will not represent more than 35% of the REIT’s gross asset
vale; and leases by one tenant should not represent more than 25% of
the fund revenue.
► The REIT may commit up to a maximum of 25% of its total asset value
to development activities;
► The REIT may commit up to a maximum of 25% of its total asset value
to acquisition outside Saudi Arabia;
► Maintain a target loan-to-value (“LTV”) for the portfolio between 30%
and 50%.
Long-term Target Portfolio Composition
REIT STRATEGY
This document is produced for informational purposes only. The information contained herein must
not be reproduced in whole or in part without the prior consent of SHUAA Capital Saudi Arabia cjsc.
Copyright © 2016 All rights reserved27
IV. REIT Financials
28
Total Value of Assets (Including Preparatory expenses and registration fees of Tadawul): SAR 591.5 Million
Capital Required (Mn)
Metrics Amount
Assets Value SAR Mn 572.70
Acquisition Fee 2.50% 14.32
Structuring fee paid for fund manager SAR Mn 3.74
Preparatory Expenses SAR Mn 0.39
Tadawul Registration Fees SAR Mn 0.35
Total Capital Required SAR Mn 591.50
Debt 0.00% -
Equity 100.00% 591.5
Equity in Kind 48.41% 286.35
Equity in Cash 51.59% 305.15
IIII VIVII IV REIT FINANCIALS
REIT Financials
REIT Capital Structure
29
Fund Yield (based on lease agreements and consultants forecast)
Source: ValuStrat
Note: All figures above have been rounded to the greatest hundredth decimal
* This represents the fixed component of the management fee based on Gross Asset Value of the REIT
** This represents the variable component of the management fee based on the Gross Rental Pool
REIT Financials
REIT Pro-forma Financials
Year Metric 2018 2023 2027 2028
Net cash inflows from rent SAR MM 47.03 50.54 51.74 54.24
Management Fee 0.40%* (2.36) (2.36) (2.36) (2.36)
Management Profit Share 5.00%** (2.37) (2.54) (2.60) (2.73)
Custody Fees SAR MM (0.14) (0.14) (0.14) (0.14)
Audit Fee SAR MM (0.04) (0.04) (0.04) (0.04)
Valuation SAR MM (0.09) (0.09) (0.09) (0.09)
Legal SAR MM (0.03) (0.03) (0.03) (0.03)
Sharia SAR MM (0.04) (0.04) (0.04) (0.04)
Tadawul Fees SAR MM (0.80) (0.80) (0.80) (0.80)
Administrator Fees SAR MM (0.10) (0.14) (0.14) (0.14)
Operating Cash Flows SAR MM 41.00 44.40 45.50 47.90
Net Cash Flows to the Fund SAR MM 41.02 44.40 45.50 47.90
Yield 6.94% 7.50% 7.69% 8.09%
The above yields are unleveraged and the fund manager intends to raise debt and acquire new
assets which will cause accretion to the earning per unit
IIII VIVII IV REIT FINANCIALS
This document is produced for informational purposes only. The information contained herein must
not be reproduced in whole or in part without the prior consent of SHUAA Capital Saudi Arabia cjsc.
Copyright © 2016 All rights reserved30
V. KSA Real Estate Market
31
Shortage of Affordable Housing
Source: NCB
KSA Real Estate Market
KSA Housing Market Overview
82.30%
82.51%
82.70%
82.90%
83.10%
83.30%
82%
82%
82%
82%
83%
83%
83%
83%
83%
2011 2012 2013 2014 2015 2016
Rate of Urbanization in KSA
80%75%
65%70%
55%
30%
70%
0%
20%
40%
60%
80%
100%
Greece Turkey UK USA Sweden Saudi
Arabia
Global
Average
Home Ownership Ratio
Government Initiatives and Market Activity
►In 2018, the Ministry of Housing has launched its initiative to increase
home ownership of Saudi Nationals to 52%.
Increase Home Ownership for Saudi Nationals
•Currently 46 projects providing 13,973 housing units are under
development in the Kingdom, nine of which have already been
delivered.
Ministry of Housing Projects
•The Ministry of Housing also intends to launch a high tech electronic
rental platform to ensure rights of rental parties i.e. landlords and
tenants.
Electronic Rental Platform
•There have been changes in the off-plan of residential units law which
are now in line with International standards.
Off plan sales law
•The launch of East gate project is the first public private partnership
by the Ministry of housing.
Launch of East Gate project (7,000 units) in East
Source: Statistica
IIII VIVII IV Saudi RE Market Overview
32
Office Sector – Market Commentary
► As 60% of the Saudi population of the Kingdom is under 30 years old, the demand for jobs in the private sector is high. This will have positive
impact of the office market as more office space will be required by local and multi-national companies.
► Riyadh continues to develop as the foremost commercial center of Saudi Arabia, being home to the majority of financial and banking institutions.
Historically, commercial developments have been concentrated on King Fahd Road and Olaya Street. Future supply is set to raise the standard of
commercial offerings as flexible floor plates, parking and ease of access become more important to occupiers.
► Like Riyadh and the Eastern Province, Jeddah does not benefit from a CBD. Instead, many companies have built owner-occupied premises on
land that they have owned for a number of years. Jeddah does not have any international Grade A space, with Jameel Square and Kings road
tower remaining the best quality building to date. Parking ratios and access here remain below par.
► Demand for commercial stock has primarily been driven by the oil sector, with ARAMCO the largest employer both directly and indirectly.
Tenants remain price sensitive and continue to place higher importance on parking and ease of access, with quality of premises coming second.
Population growth
Riyadh
Jeddah
Dammam/Al Khobar
IIII VIVII IV Saudi RE Market Overview
KSA Real Estate Market
KSA Office Sector Overview
33
Retail Sector in the Kingdom
Source: SAMA
► The demand drivers for
retail sector in Saudi
Arabia are presented
herein.
► Historically the rising
disposable incomes,
growing young
population are the key
demand drivers for retail
► The government recently
allowed 100% foreign
ownership in the retail
sector. This will boost the
demand in the retail
sector as well.
► As women start driving in
June 2018, it is expected
that this will lead to a rise
in demand for retail.
► Population
In any economy, population is the major driver
behind every sector especially for retail sector.
Saudi Nationals are spending heavily as they get
more employment opportunities and jobs in line
with Saudi Vision 2030.
► Growing younger population
Young people dominate the population of KSA
where approximately 39.2% of the population is
under the age of 24. The demand for retail is linked
with the younger generation.
► Rising disposable Incomes
The disposable incomes in Saudi Arabia have risen significantly during the past couple of years. According to Euromonitor the GDP per capita disposal income has grown at a CAGR of 6.4% between 2011 and 2015. The Citizen account program of 2018 will help low and middle income Saudi population by providing them income allowance every month.
► Rise in Point of Sale Transactions
Point of sale transactions in Kingdom rose 28% in December 2017 from November 2017 which is the highest since 22 years.
15.7514.16
16.31 16.4718.86 18.08
15.316.91
15.1216.45 16.84
20.22
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17
Point of Sale Transactions (SAR Billion)
IIII VIVII IV Saudi RE Market Overview
KSA Real Estate Market
KSA Retail Sector Overview
34
Retail GLA per Capita & Spending
Source: Economic Intelligence Unit
► The GCC retail sector has
remained attractive, owing to
an expansion of population
base, high income levels and
rising tourist arrivals.
► The Gross leasable area
(GLA) is the amount of floor
space available to be rented
in a commercial space.
► GLA per capita is commonly
used measure to asses the
supply of retail space in
different cities.
► Saudi Arabia has lower GLA
per capita as compared to
the neighboring GCC
countries which shows that
the retail sector has more
potential.
0.23 0.23
0.48
0.19
0.510.72
1.26
2.14
Jeddah Riyadh Dammam Kuwait Bahrain Doha Dubai US (All cities)
Retail GLA per Capita – Sqm
205219
233246
225240 235
270
2016 2017 2018e 2019e
KSA Retail Spending – SAR Billion
Food Sales Non-Food Sales
Source: Source: Alpen Capital
IIII VIVII IV Saudi RE Market Overview
KSA Real Estate Market
Overview of GLA per capita & spending
35
REITS (Real Estate Investment Trusts)
REIT
S
General characteristics
o REITS are funds that invest directly in
income generating properties either
through the underlying real estate or
mortgages.
o In a typical REIT structure investors
purchase shares or units in the REIT. In
return the REIT distributes income
periodically to investors in the form of
dividends. It is required by law for a
REIT to distribute majority of its
income.
REITS in the UAE
o While unlisted real estate vehicle funds
are not new to the GCC, but listed
REITS were only introduced to the
region in 2014 with the listing of
Emirates REIT on Nasdaq Dubai.
o In Abu Dhabi, a law enabling and
regulating the use of both public and
private REITs was enacted in June 2015.
REIT in Saudi Arabia
o In Saudi Arabia, non-listed real estate
vehicles are not new to the market,
with one of the most prominent being
the vehicle which was created in 2015
for the development of Jeddah
Economic City including Jeddah Tower.
o Since legislation was passed outlining
the rules governing the listing of REITs
in November 2016, the sector has seen
significant growth, with six REITs
already listed in the kingdom
Listed REITS in KSA
o Major REITS include Riyad REIT, Al
Jazira Mawten REIT, Jadwa REIT
AlHaramain, Taleem REIT, Al Maather
REIT, Musharaka REIT, Mulkia REIT and
Mashaer REIT.
o The number of successful listings and
the number of applications that are
currently in the pipeline clearly show
the pent up demand for REITs in Saudi
Arabia.
REITS in Bahrain
o In Bahrain, a new trust law which came
into force in November 2016 has
established REITs as a regulated
investment structure. The first REIT
listing of Eskan Bank Realty Income
Trust was formed and listed on the
Bahrain Bourse shortly after the
introduction of this regulation.
Benefits of REITS
o A minimum of 90% of the REIT profits
must be distributed to shareholders
with only 10% of profits allowed to be
reinvested.
o REITs can invest locally, regionally and
globally. A maximum of 25% of the
REIT’s total value is allowed to be
invested outside Saudi Arabia.
o REITs could present an attractive
opportunity for investors looking to
diversify their portfolios.
IIII VIVII IV Saudi RE Market Overview
KSA Real Estate Market
Overview of REITs across the GCC region
36
Listed REITs (Real Estate Investment Trusts)
• The REITS currently listed
in Saudi Arabia are
presented in this section.
• Most of the REITS are
mixed use which comprise
of different real estate
asset classes with the
exception of the Taleem
REIT which is an Education
REIT.
• The location in which the
Income generating REITS
are located is an important
consideration when it
comes to yields e.g. A four
star Holiday Inn located in
Riyadh will generate a
different Income than that
located in Jeddah.
Listed REIT Asset Class
Riyad REIT Office + Retail + Hospitality
Al Jazira Mawten REIT Warehouses
Jadwa REIT Al Harmain Hospitality + Retail
Taleem REIT Education
Al Mather REIT Residential + Office + Retail + Warehouses
Musharaka REIT Residential + Warehouses + Hospitality
Mulkia Gulf Real Estate REIT Residential + Industrial + Office + Retail
Al Mashaer REIT Hospitality + Retail
Al Ahli REIT 1 Retail + Hotel
Derayah REIT Residential + Retail
Al Rajhi REIT Retail + Office + Schools
SEDCO Capital REIT Residential + Retail + Commercial
Source: ValuStrat
IIII VIVII IV Saudi RE Market Overview
KSA Real Estate Market
Overview of KSA listed REITs
This document is produced for informational purposes only. The information contained herein must
not be reproduced in whole or in part without the prior consent of SHUAA Capital Saudi Arabia cjsc.
Copyright © 2016 All rights reserved37
VI. Fund Manager Credentials
33
38
Fund Manager Credentials
A full-fledged regional financial institution
▪ 39-year presence in the region
and publicly listed since 1984.
▪ Strong shareholder support with
Abu Dhabi Financial Group
(“ADFG”) owning 48.3% of total
share capital.
▪ Exceptionally well positioned
platform geared at capturing
inbound and outbound activity.
▪ Strong track record in leading
IPOs.
▪ Key player in institutional Sales
& Trading.
▪ Full-fledged investment banking
operations in Saudi Arabia since
2008.
▪ Established and proven track
record for establishing, placing,
and managing hospitality and
real estate development funds.
▪ Established connections in the
GCC; governments, corporates
and UHNW investors.
▪ SAR 2.9 bn of Real Estate AUMs
under management.
Primary Market
Secondary Market
Investment Banking & Advisory
Real Estate
Capital Markets
Brokerage Services
48.36% 51.64%Free
Float
Riyad
h
Dubai
Regulated by
Geographical Presence
Egypt*
(*) Full Brokerage License
Client Advice & Investment Solutions
Principal Investments
SME Lending (Gulf Finance Corporation)
VIV FUND MANAGER CREDENTIALSIIII II IV
39
SHUAA Capital Saudi Arabia is an entity licensed by the Capital Market Authority (“CMA”) (license #37-56070) to conduct financial investment business services
including underwriting of securities, other corporate finance activities, investment advisory services, asset and portfolio management services, and brokerage services.
Investment Banking & Advisory
Real Estate Asset Management
Real Estate Development
Custody Services
SHUAA Capital
Saudi Arabia
Mr. Mazen Al Saeed
Chairman
Dr. Mohamed Bin Daina
Director
Mr. Jassim Al Siddiqi
Director
Mr. Omar Al Jaroudi
Director
Mr. Fawad Tariq-Khan
Director
Board of Directors
SHUAA Saudi Arabia Key Milestones
2008
2009
2011
2013
▪ Closed the SR 535 million equity raising for its
SHUAA Saudi Hospitality Fund I.
▪ Closed the SR 80 million Jeddah Centro Fund I.
▪ Started the development of the Jeddah Centro
▪ Closed the SR 125 million Dammam Rayhan
Fund I.
▪ Licensed by the Capital Market Authority of
Saudi Arabia.2014
2015
2016
2017
▪ Established the GCC Real Estate Fund for an amount of SR 175
million.
▪ Started the development of its Dammam Rayhaan.
▪ Exited the GCC Real Estate Fund at an IRR 125 %.
▪ Placement Agent for $ 60 million in equity raising for Cayan Real
Estate Development Fund I.
▪ Closed the SR 580 million raising for the SHUAA Wadi Al Hada
Fund.
▪ Opening of Centro Shaheen Jeddah.
100%
2012
▪ Started the development of the Riyadh Centro
project.
▪ Secured debt financing of SAR 366 million for all
3 hospitality projects
▪ Commencement of mobilization works for SHUAA Wadi Al Hada
Project.
▪ Secured refinancing of Jeddah Centro Fund I of SAR 98.5 million,
and SAR 20 million working capital.
▪ Secured SAR 430 million for Cayan Real Estate Development Fund I.
2018
▪ Secured debt financing of SAR 731 million for SHUAA Wadi Al Hada
Fund I.
▪ Opening Of Centro Waha Riyadh.
Fund Manager Credentials
SHUAA Capital Saudi Arabia
VIV FUND MANAGER CREDENTIALSIIII II IV
Services
40
SHUAA’s team comprises 10 professionals with extensive real estate and operational experience, provide a leading platform for the execution of Real Estate projects.
Real Estate Team
Omar Al Jaroudi
Chief Executive Officer - SCSA
▪ Joined SHUAA in 2007
▪ 34 years of experience in commercial & Investment Banking
▪Oversees real estate division
Shahrazad A.K.
Head of Legal▪ Joined SHUAA in 2015
▪Overseas the legal function
Shafqat Yasin
Analyst - Finance
▪ Joined SHUAA in 2016
▪ Supports the accounting
function
Basel Barqawi
Chief Operating Officer
▪ Joined SHUAA in 2016
▪ 13 years of experience in Banking
and Private Equity Funds - Key
focus on real estate
Khalid Al Shadfan
Associate – Real Estate
▪ Joined SHUAA in 2016
▪ 5 years of experience in the
financial services industry
Faisal K. AlZaqdi
Associate – Real Estate
▪ Joined SHUAA in 2017
▪Hands-on experience in
real estate investment &
development
Mohammad Yaghi
Senior Associate –
Finance▪ Joined SHUAA in 2015
▪Acting Finance Manager
Lina Assaf
Compliance & AML
Manager▪ Joined SHUAA in 2018
▪Overseas the Compliance
function
GovernmentRelations
Administration
Board of Directors
Chief Executive Officer
Chief Operating Officer LegalAsset Management
Compliance
Specialized Funds
Real Estate
Development
Hospitality Operations
(KSA)
Real Estate Investment
Fund(“REIT”)
FundsOperations
HumanResource
IT
Abdullah Al-Shammasi
Analyst - Finance▪ Joined SHUAA in 2018
▪ Supports the accounting
function
Tarek Baadarani
VP Asset Management ▪ Joined SHUAA in 2018
▪ 9 years of experience with a
specialization in Alternative
Investments, including Real
Estate
Fund Manager Credentials
SHUAA Capital Saudi Arabia
Finance
VIV FUND MANAGER CREDENTIALSIIII II IV
41
SHUAA Wadi Al Hada
Fund
Fund Manager & Fund Administrator
Residential Real Estate Fund
Regulated by the CMA
SAR 579,870,000
SHUAA Saudi Hospitality
Fund I
Fund Manager, Developer,
& Fund Administrator
Hospitality Fund
Regulated by the CMA
SAR 535,000,000
GCC Property
Fund I
Investment Fund
Regulated by the CMA
SAR 175,000,000Fund Manager & Administrator
Cayan Real Estate
Development Fund I
An exempted limited partnership,
closed-ended and established
under the laws of the Cayman
Islands
USD 60,000,000Investment Manager
Jeddah Centro
Fund I
Hospitality Fund
Regulated by the CMA
SAR 80,000,000Fund Manager, Developer.
& Fund Administrator
Dammam Rayhaan
Fund I
Hospitality Fund
Regulated by the CMA
SAR 125,000,000Fund Manager, Developer,
& Fund Administrator
Managing 6 real estate funds regionally with total AUMs of more than SAR 2.9 billion
Debt Advisory & Arrangement
SHUAA Wadi Al Hada
FundMurabaha Financing Facility
for the construction of developing
a high-end residential compound.
SAR 731,000,000Lead Arranger
Islamic Facility Agent, Security Bank,
and Account Bank
Dammam Rayhaan
Fund IMurabaha Financing Facility
For the construction of
4-star hotel.
SAR 150,000,000Lead Arranger
Islamic Facility Agent, Security Bank,
and Account Bank
Jeddah Centro
Fund IMurabaha Financing Facility
For the construction of
4-star hotel.
SAR 98,050,000Lead Arranger
Islamic Facility Agent, Security Bank,
and Account Bank
Emirates REIT
(CEIC) Limited
Initial Public Offering of 128,676,471
shares at USD1.36 per share on
NASDAQ Dubai
Sponsor and Joint Bookrunner
USD 201,250,000Co-Manager
Initial Public Offering of
2,528,731,083 shares at AED 1.00
per share on the DFM
AED 2,528,731,083
Lead Manager, Bookrunner
Deyaar Development
Initial Public Offering of
3,178,000,000 shares at AED 1.0 per
share on Dubai Financial Market
AED 3,178,000,000
Rotana Hotel LLC
Capital Increase and Sale of Shares
Financial Advisor & Placement
Agent
AED 219,600,000
Emaar Properties PJSC
Private Placement
Arranger & Sole Underwriter
AED 360,000,000
Siyaha International Co
Advisory services & Capital Increase
for the redevelopment of King Fahd
Park
Financial Advisor
Dubai Parks & Resorts
PJSC
Jeddah Centro
Fund IRefinancing of Murabaha Financing
Facility for the construction of
4-star hotel.
SAR 120,000,000
Islamic Facility Agent, Security Bank,
and Account Bank
Lead Arranger
Cayan Real Estate
Development Fund I
Forward Ijarah Financing for the
construction of Cayan Cantara
Tower.
AED 300,000,000Lead Arranger
Islamic Facility Agent, Security Bank,
and Account Bank
Cayan Real Estate
Development Fund I
Murabaha Mezzanine Facility for
the construction of Cayan Cantara
Tower.
AED 130,000,000Lead Arranger
Islamic Facility Agent, Security Bank,
and Account Bank
Real Estate Funds Real Estate Advisory
SHUAA Saudi Hospitality
Fund I
Murabaha Financing Facility
For the construction of
4-star hotel
SAR 117,600,000Lead Arranger
Islamic Facility Agent, Security Bank,
and Account Bank
Fund Manager Credentials
Real Estate Track-record
VIV FUND MANAGER CREDENTIALSIIII II IV
42
Fund Manager & Developer
Auditor
Bank
Hotel Operator
Projects Summary Legal Advisor
Consultants
Project Manager
• SHUAA Capital Saudi Arabia cjsc is the investment manager to SHUAA Saudi Hospitality Fund I, a CMA regulated fund for the
purpose of developing 3 Rotana hotels in Saudi Arabia.
• Fund Purpose: To develop:
• 4-star (Rotana Centro) in Jeddah – operational in September 2016,
• 4-star (Rotana Centro) in Riyadh – operational in September 2017, and
• 5-star (Rotana Rayhaan) in Dammam – to become operational in Q1 2019.
• Fund Term: Five years from the final closing date (unless extended at discretion of Investment Manager for up to two consecutive
one-year periods).
Completion
Sep ‘16
Fund Manager Credentials
Case Study #1 - SHUAA Hospitality Fund
VIV FUND MANAGER CREDENTIALSIIII II IV
Completion
Sep ‘17
Exp. Completion
Q1 ‘19
43
Fund Overview
• SHUAA Capital Saudi Arabia cjsc is the investment
manager to SHUAA Wadi Al Hada Fund, a CMA
regulated fund for the purpose of developing a high-
end residential compound.
Fund Purpose
• To develop a high-end residential compound
comprising of 559 units in Riyadh, and is located in Al
Hada District on the south west side of Riyadh, which
is surrounded by four roads, on which the Al Hada 3
compound (the “Al Hada 3 Compound”) will be
developed.
• The Al Hada 3 Compound will be a sophisticated and
highly amenitized mid to mid-high end residential
compound with integrated lifestyle planning and
modern oriented architecture with flexible features
for a variety of households.
• The compound will be a city block surrounded by
streets on all sides and the general layout will
comprise of two major parts: the plateau, which is
reserved for dwellings and the wadi, which is reserved
for amenities.
Fund Term
• The Fund Term is seven years from November 30,
2015G, subject to one two-year extension at the
discretion of the Fund Board and the approval of the
Unitholders.
Fund Manager &
AdministratorProject Summary
Land Area 208,434 sqm
Built-up Area 156,935 sqm
Net Sellable Area 84,089 sqm
Villas & Townhouses 15,577 sqm
Apartments 64,860 sqm
VVIP Villas 2,600 sqm
Commercial 1,052 sqm
Net Sellable Area Efficiency 54%
Number of Units 549
Villas & Townhouses 61
Apartments 488
Developer
wadihanifa
Consultants
Bank
Auditor
Facility Management
Consultant
Contractor
Fund Manager Credentials
Case Study #2 - SHUAA Wadi Al Hada Fund
VIV FUND MANAGER CREDENTIALSIIII II IV
44
Fund Overview
• SHUAA Capital psc is the investment manager and
placement agent to Cayan Real Estate Development
Fund I, L.P. for the purpose of developing a mixed-
use real estate development.
Fund Purpose
• To develop two adjacent towers, including a high-rise
residential apartment tower and a high-rise serviced
apartment tower in Dubai Science Park in Dubai, UAE.
• The residential tower will include a total of 415 units
with a net sellable area of 440,447 square feet
including 115 studios, 195 one-bedroom apartments,
82 two-bedroom apartments, and 23 three-bedroom
apartments.
• The serviced apartments tower will include a total of
329 units with a net sellable area of 362,845 square
feet (inclusive of sellable balcony area) including 58
studios, 184 one-bedroom apartments, 70 two-
bedroom apartments, and 17 three-bedroom
apartments.
Fund Term
▪ Five years from the final closing date (unless extended
at discretion of Investment Manager for up to two
consecutive one-year periods).
Project Summary
Land Area 105,458 sqft
Built-up Area 1.55 mn sqft
Gross Floor Area 844,065 mn sqft
Residential Apartments 453,152 sqft
Units 440,447 sqft
Retail Area 12,705 sqft
Serviced Apartments 362,845 sqft
Number of Units74
4
Residential Apartments41
5
Serviced Apartments32
9
Fund Manager
Developer
Consultants
Auditor
Operator
Contractor
Administrator
Fund Manager Credentials
Case Study #3 – Cayan Cantara
VIV FUND MANAGER CREDENTIALSIIII II IV
SHUAA Capital Saudi Arabia csjc
Hamad Tower, 27th Floor,
King Fahad Street, P.O. Box 8181
Riyadh 11482, Saudi Arabia
Tel: +966 (11) 466 6990
Fax: +966 (11) 466 6993
http://www.shuaacapital.com.sa
For more information, kindly visit the following website:
www.shuaacapital.com.sa/en/what-we-do/real-estate-investment-trust-(reit)/