MEFIC REIT’s board opts not to renew Plaza 1 usufruct contract

MEFIC REIT
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Riyadh – Mubasher: Middle East Financial Investment Company (MEFIC Capital), acting in its capacity as the fund manager for the MEFIC REIT Fund, has announced a significant board decision regarding the future of the Plaza 1 property.

Following a formal review of the asset's performance and contractual terms, the fund’s board of directors has resolved not to extend the current usufruct agreement beyond its original expiration date in July 2026.

The decision marks a strategic shift for the fund as it evaluates the economic viability of its existing real estate holdings.

In a regulatory disclosure submitted to the Saudi Exchange, MEFIC Capital informed unitholders and the wider investment community that the board of directors convened on 25 June 2026. During this session, the board specifically addressed the status of the Plaza 1 property, which is currently held under a usufruct arrangement.

The primary focus of the deliberation was the upcoming conclusion of the original contract term and the potential activation of an extension clause.

The existing usufruct contract for Plaza 1 is slated to reach its natural conclusion in July 2026. Under the terms of the agreement, the fund had the option to extend the association for an additional two-year period.

However, after conducting a thorough assessment of the property’s contribution to the fund’s objectives, the board of directors issued its formal approval to terminate the relationship at the end of the initial term.

This move effectively cancels any plans for the two-year extension that was previously available as an option.

The rationale provided for this decision centers on the lack of economic feasibility. The fund manager noted that after reviewing the projected returns and the costs associated with maintaining the usufruct for the additional two years, the board concluded that proceeding with an extension would not align with the fund's financial performance standards.

By allowing the contract to expire as originally scheduled, the fund avoids committing capital to an arrangement that no longer meets its strategic requirements for growth and yield.

Regarding the financial and operational impact of this development, MEFIC Capital emphasized that the decision was made with the long-term health of the fund in mind. The disclosure states that the non-renewal of the contract after the original term is expected to serve the best interests of the fund and its unitholders.

This proactive management of the real estate portfolio ensures that the REIT can reallocate its focus and resources toward assets that offer higher feasibility and better alignment with its investment mandate.

The fund manager remains responsible for overseeing the transition as the July 2026 deadline approaches. This includes managing the legal and operational wind-down of the usufruct interest in Plaza 1.

The board of MEFIC REIT Fund recently approved a significant increase in the fund’s total asset valued at SAR 834.80 million, involving the acquisition of a commercial complex in Jeddah and a development site in Makkah.

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