Islamic financing for Mecca development
- Saudi Arabian Jabal Omar Development signs SR2bn ($533m) loan
- It will finance the completion of construction for phase two of the Jabal Omar development in Mecca
- The lenders are local Sabb and Samba
Saudi Arabias Jabal Omar Development Company has signed a SR2bn ($533m) Islamic loan.
The loan will finance the completion of sections 3 and 4 of the second phase of the $3.5bn Jabal Omar development in Mecca.
The medium term bridge loan has a three-year term. Jabal Omar plans to repay it through a loan on the second housing complex, which is expected to be arranged by the end of 2015, or by refinancing.
It is secured on land bonds and commercial rents from the second phase and agreements with contractors.
The second phase of the development involves the construction of four hotel towers to be operated by the Starwood Hotels and Resorts group. Two of the towers will be built under The Westin hotel brand, while the remaining towers will be run by Sheraton.
The development covers 57 acres in total. It includes 37 towers with a total built-up area of 2 million square metres, including hospitality, residential, retail, commercial and religious facilities.
US-based Hill International has been the project manager on the development since 2010.
In March 2012, a joint venture of the local Saudi Arabian Baytur Construction Company and the local Azmeel Contracting & Construction Corporation was awarded an estimated $405m contract to build the second phase.
In January 2014, Jabal Omar signed a SR4bn loan facility to refinance the construction costs of the first phase of the development.
The first phase, which is due to be completed in early 2016, involves hotels, shops and housing units. Local Nesma & Partners Construction are the main contractors.
National Commercial Bank (NCB) provided the funding, which refinanced a previous facility signed with six Saudi Arabian banks in September 2012. The new facility provided better financing terms with an extended repayment period of 15 years rather than 8 years.
In December 2012, the joint venture of Lebanons Arabian Construction Company (ACC) and the UAEs Drake & Scull International was awarded the estimated $720m contract to build phase three of the development.
UAE-based Ruwad Construction Company were awarded the estimated $800m contract to build the fourth phase in early 2014.
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