Logo ofKnowledge Economic City (KEC)
Knowledge Economic City (KEC), together with its subsidiary Algharraa International Real Estate Development Co. Ltd., signed a letter of intent (LOI) with BSF Capital. 
The move aims to establish the general framework for launching and managing a closed-end private real estate investment fund, regulated by the Capital Market Authority (CMA), to develop the Knowledge Gardens project within Knowledge Economic City in Madinah.
The project will be undertaken in partnership with Fourmen Investment Co., with the possibility of additional investors joining the fund, KEC said in a statement to Tadawul.
The parties to the LOI include KEC and Algharraa International as co-sponsors and co-developers, Fourmen as the lead sponsor and developer and BSF Capital as the proposed fund manager.
The proposed fund structure is based on an in-kind land contribution valued at approximately SAR 1.66 billion, in addition to direct cash contributions, bank financing, and investments from other investors.
KEC said that establishing the fund and implementing the project remain subject to fulfilling all regulatory and contractual requirements, including obtaining the necessary approvals, signing the final agreements, and completing financing arrangements.
The company also expects the fund to secure a five-year bank financing facility, comprising three years for project development and two years for repayment from sales proceeds. The final financing terms will be determined upon signing the definitive agreements and obtaining all required regulatory approvals.
Key LOI Terms
Item
Details
Transaction
Signing an LOI to establish a closed-end private real estate investment fund to develop the Knowledge Gardens project in Knowledge Economic City, Madinah.
Proposed Fund Manager
BSF Capital
Preliminary Fund Ownership Structure
Fourmen Investment: 46.2%; KEC Algharraa: 39.9%; other investors: 13.9%
Land Contribution
SAR 1.66 bln contributed to the fund
Estimated Total Fund Uses
Approximately SAR 7.5 bln, including land value, construction costs, indirect costs, contingencies, fit-out, and development fees
Expected Revenue
Approximately SAR 10.2 bln, based on preliminary studies
Funding Sources
Land contribution, cash contributions, bank financing, and investments from other investors
Expected Return to KEC
Around SAR 800 mln in cash from the land value, while retaining a 39.9% stake in the fund through an in-kind contribution, in addition to development management fees
Bank Financing
Expected five-year financing (three years for development and two years for repayment from sales proceeds)
LoI Term
120 days to complete negotiations and execute definitive agreements
Fund Term
Four years (three years for development and one year for marketing and exit), extendable by up to two additional one-year periods
Financial Impact
To be recognized upon fulfillment of all regulatory and contractual conditions in accordance with IFRS
Related Parties
None
Strategic Objective
To support regional and international marketing of the project, while leveraging Fourmen and Tatweer Holding’s network and strategic partnerships in international markets.
Logo ofKnowledge Economic City (KEC)
Knowledge Economic City (KEC), together with its subsidiary Algharraa International Real Estate Development Co. Ltd., signed a letter of intent (LOI) with BSF Capital.
The move aims to establish the general framework for launching and managing a closed-end private real estate investment fund, regulated by the Capital Market Authority (CMA), to develop the Knowledge Gardens project within Knowledge Economic City in Madinah.
The project will be undertaken in partnership with Fourmen Investment Co., with the possibility of additional investors joining the fund, KEC said in a statement to Tadawul.
The parties to the LOI include KEC and Algharraa International as co-sponsors and co-developers, Fourmen as the lead sponsor and developer and BSF Capital as the proposed fund manager.
The proposed fund structure is based on an in-kind land contribution valued at approximately SAR 1.66 billion, in addition to direct cash contributions, bank financing, and investments from other investors.
KEC said that establishing the fund and implementing the project remain subject to fulfilling all regulatory and contractual requirements, including obtaining the necessary approvals, signing the final agreements, and completing financing arrangements.
The company also expects the fund to secure a five-year bank financing facility, comprising three years for project development and two years for repayment from sales proceeds. The final financing terms will be determined upon signing the definitive agreements and obtaining all required regulatory approvals.
Key LOI Terms
Item
Details
Transaction
Signing an LOI to establish a closed-end private real estate investment fund to develop the Knowledge Gardens project in Knowledge Economic City, Madinah.
Proposed Fund Manager
BSF Capital
Preliminary Fund Ownership Structure
Fourmen Investment: 46.2%; KEC Algharraa: 39.9%; other investors: 13.9%
Land Contribution
SAR 1.66 bln contributed to the fund
Estimated Total Fund Uses
Approximately SAR 7.5 bln, including land value, construction costs, indirect costs, contingencies, fit-out, and development fees
Expected Revenue
Approximately SAR 10.2 bln, based on preliminary studies
Funding Sources
Land contribution, cash contributions, bank financing, and investments from other investors
Expected Return to KEC
Around SAR 800 mln in cash from the land value, while retaining a 39.9% stake in the fund through an in-kind contribution, in addition to development management fees
Bank Financing
Expected five-year financing (three years for development and two years for repayment from sales proceeds)
LoI Term
120 days to complete negotiations and execute definitive agreements
Fund Term
Four years (three years for development and one year for marketing and exit), extendable by up to two additional one-year periods
Financial Impact
To be recognized upon fulfillment of all regulatory and contractual conditions in accordance with IFRS
Related Parties
None
Strategic Objective
To support regional and international marketing of the project, while leveraging Fourmen and Tatweer Holding’s network and strategic partnerships in international markets.
