Derayah Financial announces a material development relating to Derayah REIT: The impact of the precautionary measures taken to combat the novel epidemic coronavirus (COVID-19) on Derayah REIT
We would like to take this opportunity to express our sincere gratitude to the Saudi government for its efforts in mitigating the impact of the global pandemic (COVID-19). Moreover, we also thank healthcare workers all over the world and in our dear Kingdom for their tremendous efforts managing this health crisis.
Since listing Derayah REIT in Tadawul in March 2018, our investment philosophy has been based on acquiring and managing a portfolio of real estate assets diversified by geography and by sector while avoiding large concentrations in a specific asset or tenant. We believe in the benefits of diversification. As per the audited statements of Derayah REIT for the fiscal year ending in 2019, Derayah REIT’s total assets reached SAR1.61 billion. Derayah REIT has a total of 26 properties, located in 6 major cities in the Kingdom, composed of 9 different real estate sectors, and leased to a large number of tenants.
Derayah Financial, as the Fund Manager of Derayah REIT, has received a number of requests from some tenants to defer or temporarily reduce due rents as the result of the pandemic. To date, the total value of these requests is SAR4,500,000, or 3% of the total annual rents of Derayah REIT. The Fund Manager did not accept some of these requests while still evaluating the remaining requests. The evaluation of such requests takes into account regularity and contractual procedures in a manner that protects the interests of unitholders of Derayah REIT in a commercial basis.
As per the audited statements of Derayah REIT for the fiscal year ending in 2019, Derayah REIT, the amount of cash available is circa. SAR35 million. The loan-to-value does not exceed 36% and the outstanding financing facility is only due five years from now. Also, the current reduction in SAIBOR rates are expected to have a positive impact on the Fund. The Fund Manager has asked the financing banks to postpone debiting any due financing expense, as per the economic incentives announced by the Saudi Arabian Monetary Agency.
To preserve the liquidity of Derayah REIT, the Fund Manager has embarked on additional measures such as postponing maintenance work and entering into negotiations to reduce operating expenses for some of the properties. The Fund Manager has also delayed filing VAT returns, as permitted by GAZT’s new directions. Given the number of initiatives and discussions that we are working on, the Fund Manager aims to maintain the stable quarterly cash dividends. As the repercussions resulting from the precautionary measures to combat the pandemic is still continuing, the Fund Manager will review the financial position of Derayah REIT periodically and will announce any material developments in due course.