Mulkia-Gulf REIT buys 76% stake in Vivienda Hotel for SAR 95 mln

Mulkia Investment Company on Tuesday said its Mulkia-Gulf Real Estate REIT has acquired a 76 percent stake in Vivienda Hotel Villas Al Hada for SAR 95 million.

The project – which has a land area of about 10,000 square meters (sqm) and built-up area of 7,200 sqm – is located on Prince Faisal bin Fahad Road.

It will be partly financed by the SAR 18 million in surplus funds resulting from the REIT’s initial public offering (IPO). The remaining SAR 77 million will be financed through loans from local banks.

The acquisition will result in an expected 10 percent increase in operating profits for 2018 compared to the forecast before the stake purchase, which in turn will be reflected positively on cash dividends in the future.

Mulkia Investment Company indirectly holds a 24 percent stake in the project through its Mulkia Plaza Development Real Estate Fund.

The leasing contract for the Vivienda Hotel has been signed for a 20-year period, starting with an amount of SAR 10.94 million for the first five years.

The rent will increase by 7 percent every five years with the REIT's share in the rent being SAR 8.31 million per year.

The buyout will increase the fund size to SAR 677 million from SAR 600 million, the statement said.