Funding for Mecca real estate project expected before end of 2010
Saudi Arabia’s Jabal Omar Development Company is working on a SR1.35bn ($360m) bridge loan to cover the early stage development of its real estate project at Mecca, as plans to put in place larger funding sources have fallen behind schedule.
Mecca’s largest projects | ||
---|---|---|
Client | Project | Value ($) |
Finance Ministry | Mecca Administration Compound | 1bn |
King Abdul Aziz Endowment | Abraj Al-Bait Complex: Mecca Clock Royal Tower | 180m |
Higher Education Ministry | Umm al-Qura University | 131m |
Sources: MEED; MEED Projects |
The bridge loan is expected to be in place by the end of September, with two larger fundraisings due to be concluded before the end of the year. Jabal Omar had hoped to complete around SR3bn of bank financing in the first half of the year, followed by a SR2bn rights issue in the third quarter.
In order to get funding in place quickly the bridge loan will now be done first and replaced by a SR5bn syndicated loan before the end of the year. The rights issue could now take place in November.
Jabal Omar had hoped to be able to raise the majority of its funding requirements at around the same time, but is understood to now be looking at approaching the financing markets in several phases. The syndication and rights issue could be followed by a sukuk (Islamic bond) issue and a further syndication in 2011.
Sources close to the project say the total cost could be around SR19bn. The bridge loan will be provided by a group of Saudi banks including Al-Rajhi, which is also acting as financial adviser to Jabal Omar, National Commercial Bank, Bank Al-Jazira, Saudi Hollandi Bank and Sabb. When this loan is replaced by the larger facility the banking group will be expanded to include several more Saudi banks and the tenor of the deal could be around seven years.
The bridge loan is already an extension and increase in size of an existing SR350m provided by Al-Rajhi.
Al-Rajhi replaced the local Jadwa Investments in May 2009, after Jabal Omar removed them from the project because of failure to secure financing within agreed deadlines. Jadwa managed to raise just $400m for the project (MEED 25:5:10).
Construction work, which involves the development of 15 residential towers and 40 hotels, began in September 2008.
You might also like...
McDermott completes financial restructuring exercise
28 March 2024
Region heads for hotel boom
28 March 2024
Lowest bidders emerge for Kuwait housing project
28 March 2024
Redcon wins Red Sea Triple Bay infrastructure deal
28 March 2024
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.