Emaar EC invests SAR 18 bln in KAEC since inception, reviews long-term strategy

Logo of Emaar The Economic City

Emaar The Economic City (Emaar EC) invested nearly 18 billion in the development of King Abdullah Economic City (KAEC) in equity and funding since its inception, the company said in a statement to Tadawul today, Aug. 23.

This created approximately 8x value to the investment properties as disclosed in the audited financial statements for the year ended Dec. 31, 2020.

Accordingly, the company is in the process of revising its long-term strategy to unlock such value by attracting additional investment on strategic projects both by the company and the third-party developers, to create jobs and footfall, up to a certain point beyond which KAEC will have organic growth and hence yield returns for its shareholders.

The company will take the following measures regarding the accumulated losses:

- Emaar EC has recently engaged with multiple mortgage and financing companies to enhance the affordability of housing units in KAEC and boost its profitability and cash flow generation.

- On Dec. 1, 2020, the company entered into a subscription agreement with the Public Investment Fund (PIF) - the completion of which is subject to several conditions, including the novation of part of the Ministry of Finance loan to the PIF. The agreement is still in progress, as referred to in Note 3 of the financial statements for the period ending on June 30, 2021.

Emaar EC narrowed net losses after Zakat and tax by 23.5% to SAR 372 million for the first half of 2021, from SAR 486 million in the year-earlier period. In Q2 2021, the company cut net losses by 13% to SAR 178 million, Argaam reported.

Accumulated losses reached SAR 3.03 billion by June 30, 2021, accounting for over 35% of the company’s capital of SAR 8.5 billion.