Jabal Omar Development Co. is likely to close its merger with Umm Al Qura Development and Construction in 2018, Reuters reported, citing a senior company executive.
The Saudi Arabia-listed property developer is working with adviser Goldman Sachs on a valuation for the deal, Jabal Omar Chief Investment and Development Officer Faisal Shaker said in an interview with Reuters.
When the merger was announced in November 2017, local media estimated the transaction would form a real estate business with 50 billion Saudi Arabian riyals of investments. Shaker told Reuters that Jabal Omar is aiming to add value to the real estate market in Mecca through the transaction, noting that Umm Al Qura is developing more than 6 million square meters of built-up area on King Abdul Aziz Rd.
Shaker also confirmed that Jabal Omar is looking to issue Islamic bonds, or sukuk, in the first half of 2018 to fund its working capital, with Gulf International Bank and HSBC as advisers. The executive did not disclose the terms of the issuance, but an earlier report by Reuters pegged the proposed sukuk sale at more than 4 billion riyals.
Jabal Omar also plans to set up a real estate fund to support new phases of its 1.66 million-square-meter mega-project, which includes hotels, commercial malls and residential buildings.
Shaker further told Reuters that the company is working on real estate investment trusts, funds with various structures and other investment products, and is considering injecting certain assets into income-producing funds.
The company is likely to launch off-plan sales of residential properties upon obtaining license from the Ministry of Housing in 2018. It expects its 2019 inventory to include roughly 5,000 new hotel rooms, the executive told Reuters.
As of Feb. 28, US$1 was equivalent to 3.75 Saudi riyals.
