executive summary - shuaa capital · presentation scsa has acted as an independent contractor and...

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





Tel: +966 (11) 466 6990

Fax: +966 (11) 466 6993

[email protected]

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


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





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


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


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


12


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


13 IIII IV VIII VSHUAA 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





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)





Price (SAR Million) 70 m

Cap Rate (%) 8.57%







Cap Rate (%) 7.84%




Underlying Assets

15

REIT Properties

Euro Compound (Residential) Alkhorayef Warehouses (Logistics) Almutlaq Showroom (Retail)

Land Area (Sqm) 900



Net Rent (SAR Million) 1.65 m


Cap Rate (%) 8.6%







Cap Rate (%) 8.65%







Cap Rate (%) 8.15%




Underlying Assets

16

REIT Properties






Cap Rate (%) 7.94%


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.



Underlying Assets

17

REIT Properties

Nada Center (Mixed Use)






Cap Rate (%) 8.57%


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.


► 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.



Underlying Assets

18

REIT Properties

Roomz Showroom (Retail)






Cap Rate (%) 7.84%


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


► 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



Underlying Assets

19

REIT Properties

Euro Compound (Residential)

Land Area (Sqm) 900





Cap Rate (%) 8.6%


Overview

► Property is a residential building located about 70 meters southwest of King Abdul Aziz Road, within

As Sulaymaniyah District, Riyadh.


► 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.



Underlying Assets

20

REIT Properties

Alkhorayef Warehouses (Logistics)




Net Rent (SAR Million) 11,255


Cap Rate (%) 8.65%


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.


► 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.



Underlying Assets

21

REIT Properties

Almutlaq Showroom (Retail)






Cap Rate (%) 8.15%


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.


► 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.



Underlying Assets

22

Tenants and Brands Sample



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



Underlying Lease Agreements

Term Structure

Lock-in Periods

Order Notes

Tenant Mix

Lease Terms

Tenant Profiles

24


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





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




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




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



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)



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



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.



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



Overview of KSA listed REITs




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.


SHUAA Capital Saudi Arabia


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


▪ Supports the accounting

function

Basel Barqawi

Chief Operating Officer


▪ 13 years of experience in Banking

and Private Equity Funds - Key

focus on real estate

Khalid Al Shadfan

Associate – Real Estate


▪ 5 years of experience in the

financial services industry

Faisal K. AlZaqdi

Associate – Real Estate


▪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


SHUAA Capital Saudi Arabia

Finance


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


SAR 535,000,000

GCC Property

Fund I

Investment Fund


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


SAR 80,000,000Fund Manager, Developer.


Dammam Rayhaan

Fund I

Hospitality Fund


SAR 125,000,000Fund Manager, Developer,


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.



and Account Bank

Jeddah Centro

Fund IMurabaha Financing Facility


4-star hotel.



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


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


and Account Bank

Cayan Real Estate

Development Fund I

Murabaha Mezzanine Facility for

the construction of Cayan Cantara

Tower.

AED 130,000,000Lead Arranger


and Account Bank

Real Estate Funds Real Estate Advisory

SHUAA Saudi Hospitality

Fund I

Murabaha Financing Facility


4-star hotel



and Account Bank


Real Estate Track-record


http://www.google.com.sa/url?sa=i&source=imgres&cd=&cad=rja&uact=8&ved=0CAwQjRwwAA&url=http://www.dubaiparksandresorts.com/&ei=YyJbVcr5FqaeywPOo4CABw&psig=AFQjCNHGLYhwEhkYsVfJ4soABmCe15SO_w&ust=1432122339475241

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


Case Study #1 - SHUAA Hospitality Fund


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


Case Study #2 - SHUAA Wadi Al Hada Fund


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


Case Study #3 – Cayan Cantara






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)/

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