HALF YEAR REPORT JUNE 2018 1
His Majesty King Salman Bin Abdulaziz Al Saud Custodian Of The Two Holy Mosques His Royal Highness Prince Mohammed Bin Salman Bin Abdulaziz Al Saud Crown Prince, First Deputy Prime Minister
Index Section 1 REIT Timeline Section 2 Jadwa REIT Saudi Fund Performance Section 3 Portfolio Highlight Section 4 Fund Manager and Third Parties Section 5 Fund Governance
Abstract Jadwa REIT Saudi Fund is a closed-ended Shariahcompliant real estate investment-traded fund. The Fund operates in accordance with the Real Estate Investment Fund Regulations and the REIT Instructions issued by Saudi Arabia s Capital Market Authority (CMA). In February 2018, Jadwa REIT Saudi Fund has been successfully listed on Tadwaul (Saudi) Stock Exchange as a second REIT Fund managed by Jadwa Investment at an initial equity offering of SAR 1.58 billion that objectively invest in the Kingdom main cities (with the exception of investing in Makkah and Madinah) across a diversified asset classes. The initial asset portfolio is located across Central and Eastern Province of the Kingdom, offering exposure to four sectors: commercial, industrial, residential and educational. The Portifolio provides diversified exposure to Core and Core (+) strategies, under secured long term contracts (between 5-20 years). The Fund distributes dividends to investors on a quarterly basis with a dividend payout ratio of 100% of the Fund s FFO. During the first half of 2018, the Fund announced the distribution of two dividend payments totaling SAR 0.28 per unit starting from February 2018 the Fund operational date (Q1 Dividend: SAR 0.1 per unit, Q2 Dividend: SAR 0.18 per unit). As of June 30, 2018, the average fair value of the fund s portfolio, which was valued by two independent valuers, stood at SAR 1,693 million. The Fund Net Asset Value at the end of June 30, 2018 stood at SAR 11.03 per unit. Moving forward, Jadwa REIT Saudi plan on improving FFO through further acquisitions and maximize unit holders returns. Since listing till 30th June 2018, Jadwa REIT Saudi Fund generated rental income of SAR 52.1 million. 1
Section 1 REIT Timeline 2
REIT Timeline February 2018 Fund Listing April 2018 First Dividend Distribution July 2018 Second Dividend Distribution 3
Section 2 Jadwa REIT Saudi Fund Performance 4
Jadwa REIT Saudi Fund Performance Portfolio Statistics June 30, 2018 Number of Properties Use Total Land Area Total BUA 5 properties Retail, Office, Industrial, Residential and Educational 377,502 sqm 443,772.6 sqm Average portfolio Occupancy 100% Number of Tenants WAULT 3 Tenants 6.8 years Fair Market Value * SAR 1,692,800,000 Annual Contractual Rent SAR 129,958,200 Net Property Yield 8.40% Net Fund Yield ** 7.30% *Market Value as per two independent valuers ** the annualized Net Fund Yield at par value 5
Jadwa REIT Saudi Fund Performance Balance Sheet SAR Interim Ending June 30, 2018 Total Assets SAR 1,608,421,186 Total Liabilities SAR 16,300,366 Net Asset Value SAR 1,592,120,820 NAV per Unit SAR 10.08 NAV per unit fair value SAR 11.03 Income Statement SAR Interim Ending June 30, 2018 Rental Revenue SAR 52,128,577 Fund Expenses SAR 6,555,386 Depreciation Expense SAR 17,652,371 Net Income SAR 27,920,820 Funds From Operations (FFO) SAR 45,573,191 FFO per Unit SAR 0.288 Expense Ratio 0.38% DPU SAR 0.28 6
Jadwa REIT Saudi Fund Performance Dividend Distributed in 2018 Q1 2018 Q2 2018 Announcement Date 16/4/2018 23/07/2018 Distribution Date 24/4/2018 within 20 business days Distribution Way Cash Cash Amount/ Unit SAR 0.1 SAR 0.18 7
Section 3 Portfolio Highlight 8
REIT At Glance Portfolio Allocation by Sector Eastern Provenance Al Yaum Tower Al Fanar Complex Riyadh Marvella Complex Al Maarefa College Al Sulay Industrial Facility 14.3% Industrial 9.9% Retail 45.1% Residential 12.9% Educational 17.8% Offices Portfolio Allocation by Geography 66.4% Riyadh 33.8% Eastern Provenance Assets Value Allocation Marvela Compound Al Yaum Tower Sulay Industrial Al Marefah College Al Fanar Complex 39% 18% 14% 13% 16% 9
Al KHALIDIYAH الخالدية King Abdulaziz Road طريق الامير سعود بن محمد بن مقرن الجامعة العربية المفتوحة Arab Open University كلية المعرفة طريق الملك عبدالعزيز Al Maarefa College Al Thaghr Plaza الثغر بلازا Prince Saud Bin Mohammed Bin Muqrin Road Al Maarefa College Core Asset: Defensive Nature AT TARIF AL JADID AL FAISALIYAH الفيصلية الطريف الجديد Educational Facility Asset Use King Khalid Road, Riyadh Location SAR 224,600,000 Average Market Value Tenant SAR 200,000,000 Acquisition Price SAR 16,000,000 Annual Rental Income 8.0% Net Rental Yield 19.5 years WAULT 4 years Al Maarefh College, including assignment of dividend and pledge of units in the REIT Guarantees 10
AL HAMRA الحمراء AL KHALEEJ الخليج طريق الشيخ حسن بن حسين بن علي Marvella Complex Core(+) Asset: A Value Position King Abdullah Road طريق سعود بن عبدالعزيز آل سعود الكبير طريق الملك عبدا KING FAISAL الملك فيصل مجمع مارفيلا Marvella Complex Prince Saud Ibn Abdul Aziz Al Saud Al Kabir Road Shaikh Hasan Ibn Hussain Ibn Ali Road Residential compound and showrooms Asset Use King Abdullah Road, King Faisal District, Riyadh Location SAR 645,100,000 Average Market Value Property Manger SAR 606,000,000 Acquisition Price SAR 50,000,000 Annual Rental Income 8.25% Net Rental Yield 4.5 years WAULT 5 years - Al Muhaidib Group (AMG), including promissory note or bank guarantee and corporate guarantee Guarantees Asset Update Occupancy rates have increased over the last period in both the residential and retail accompanied by an increase in rental in the retail shops 11
Al Safa Street شارع الصفا Al Mishal المشاعل Al Sulay Industrial Facility Core(+) Asset: Strong Sub-Tenants Al Sulay Industrial Facility شارع اسطنبول مستودعات السلي Haroon Al Rashid Road Istanbul Street طريق هارون الرشيد Industrial Facility (Warehouses, Showrooms, Offices) Asset Use Sulay Industrial District, Riyadh Location SAR 255,650,000 Average Market Value Property Manger SAR 221,680,000 Acquisition Price SAR 20,000,000 Annual Rental Income 9.02% Net Rental Yield 4.5 years WAULT 5 years - Al Muhaidib Group (AMG), including promissory note or bank guarantee and corporate guarantee Guarantees 12
King Saud Road Al Hussam الحسام As Safa الصفا Al Yaum Tower Core(+) Asset: Growth Potential King Fahd Road برج اليوم Al Yaum Tower طريق الملك سعود Al Qashlah شارع عبدالرزاق بن همام طريق الملك فهد القشلة Abdulrazaq Bin Hammam Street Office Tower (Grade A according to Collier Intl.) Asset Use King Fahad Road, Dammam, Eastern Province Location SAR 303,450,000 Average Market Value Tenant SAR 275,000,000 Acquisition Price SAR 23,833,200 Annual Rental Income 8.67% Net Rental Yield 5.3 Years Guaranteed WAULT 5 years Al Yaum, including pledge of units in the REIT Guarantees 13
King Fahd Road الروابي Ar Rawabi King Faisal Road طريق الملك فيصل Al Fanar Complex Core(+) Asset: Self Diversifying طريق الملك فهد مجمع الفنار Al Fanar Complex Salaheddin Al Ayoubi Street الكورنيش شارع صلاح الدين الايوبي Corniche Mixed use complex offering retail, residential and office components Asset Use King Faisal Road, Al Khobar, Eastern Province Location SAR 264,000,000 Average Market Value Property Manger SAR 243,940,000 Acquisition Price SAR 20,125,000 Annual Rental Income 8.25% Net Rental Yield 7.5 Years Residential Component 4.5 Years Commercial Component WAULT 5 years for commercial and 8 years for residential - Al Muhaidib Group (AMG), including promissory notes or bank guarantee and corporate guarantee Guarantees 14
Section 4 Fund Manager and Service Providers 15
Fund Manager and Third Parties Fund Manager Custodian Fund Sub Administrator Auditor Legal Advisor Third-Party Valuers VAT Consultant 16
Section 5 Fund Governance 17
Fund Governance Conflict of Interest As of June 30, 2018, there are no transactions involving material conflicts of interest between Jadwa REIT Saudi Fund, Jadwa Investment Company, its board or any third parties. To clarify, the appointed custodian Al Bilad Capital is wholly owned by Al Bilad Bank. A member of Jadwa Investment Company s board of directors is a shareholder in a founding company of Al Bilad Bank (at a percentage not representing control) Conflicts of interest may exist or arise from time to time between the REIT, and Jadwa Investment Company or its affiliates, subsidiaries, directors, officers, employees and agents thereof, and other funds sponsored or managed by them. Where Jadwa Investment Company has a material conflict of interest with the fund, Jadwa Investment Company will make full disclosure to the Fund Board as soon as practicable. Jadwa Investment Company will attempt to resolve any conflicts of interest by exercising its good faith judgment considering the interests of all affected investors and parties taken as a whole.. Fund Material Changes The fund during the last period announced the following material changes: 1. Financial results for the periods ending 30 June; 2. Distributing cash dividends amounting to SAR 0.28. 18
Disclaimer Disclaimer: Jadwa Investment or its directors, staff, or affiliates makes no warranty, representation or undertaking whether expressed or implied, nor does it assume any legal liability, whether direct or indirect, or responsibility for the accuracy, completeness, or usefulness of any information that is contained in this material. It is not the intention of this material to be used or deemed as an advice, option or for any action that may take place in future. Unless otherwise stated, all information contained in this material shall not be reproduced, in whole or in part, without the specific written permission of Jadwa Investment. The content of this document is for information purposes only. Jadwa Investment does not hold itself out as providing legal, financial or other advice via this document. To ensure proper understanding of the Fund and its suitability for you according to your risk appetite, we recommend that you seek specialist investment advice.investments in Jadwa s products are governed by their Terms and Conditions. While reading the product s Terms and Conditions, please refer to the principal risks of investing in the product. Some products are exposed to foreign currencies and changes in currency exchange rates and other risks that may have an adverse effect on the value and price. The product s value is subject to fluctuations and the investor may not receive the full amount that is originally invested. The information provided in this document can be changed at any time without prior notice. Past performance is not indicative of future returns. Jadwa Investment is authorized and regulated by the Capital Market Authority of Saudi Arabia. 19
Jadwa Investment s Headquarters: Sky Towers, King Fahad Road P.O. Box 60677, Riyadh 11555, Kingdom of Saudi Arabia Tel +966 011 279 1111 Fax +966 011 293 7992 jadwa.com 20