Alistithmar Capital secures SAR 17.5m guarantee for asset

Riyadh – Mubasher: Alistithmar for Financial Securities and Brokerage Company, known as Alistithmar Capital, has announced the signing of a significant commercial guarantee agreement aimed at stabilizing the financial performance of the Alistithmar AREIC Diversified REIT Fund.

The agreement, entered into with AREIC REED, establishes a minimum annual net operating income floor of SAR 17.50 million for the Somerset Downtown Khobar property, according to a bourse filing.

This move is designed to provide a high degree of fiscal predictability for the fund over a four-year period, effectively mitigating risks associated with market fluctuations and operational performance.

The disclosure, issued by Alistithmar Capital in its capacity as the fund manager, outlines the specific terms of the commercial guarantee agreement signed on 18 June 2026.

Under the provisions of the contract, the guarantor, AREIC REED, has provided an unconditional and irrevocable commitment to ensure the Somerset Downtown Khobar asset maintains a baseline net operating income.

This asset is a primary real estate holding within the Alistithmar AREIC Diversified REIT Fund’s portfolio.

This guarantee is scheduled to take effect on 1 October 2025 and will remain in force for a duration of four consecutive calendar years from that date.

Meanwhile, the structure of the agreement provides a protective mechanism for the fund’s revenue streams; in the event that the actual net operating income generated by the Somerset Downtown Khobar property falls below the SAR 17.5 million threshold in any given year during the term, AREIC REED is contractually obligated to pay the difference to the fund.

This arrangement follows a previous strategic appointment, as AREIC REED was designated as the property manager for the fund’s real estate assets on 11 July 2024. By linking the property management role with a formal income guarantee, the fund manager aims to align the interests of the property manager with the financial objectives of the REIT and its investors.

The irrevocable nature of the guarantee ensures that the fund has a legal recourse to maintain its projected income levels regardless of the broader economic environment or specific hospitality sector challenges in the Khobar region.

The fund manager emphasized that the execution of this agreement is expected to yield a positive impact on the fund’s overall financial health. By securing a guaranteed income floor, the fund enhances the stability of its cash flows, which is a critical metric for Real Estate Investment Trusts that rely on consistent income to facilitate distributions to unit holders.

Source: Mubasher Source: {{details.article.source}}