Arabian Centres amends “ U-Walk Jeddah” land lease contract

Saudi Arabia U-Walk

Arabian Centers Company has concluded negotiations with the heirs of Princess Munira bint Abdulaziz Al Jiluwi Al Saud to amend some of the terms of the company’s lease contract signed on 16 July 2015 for U-Walk Jeddah Centre ( Zahra Mall previously).

The company clarified in a statement that the total value of the land lease during the contract period has been reduced by 620 million Saudi riyals from 1.785 billion Saudi riyals to 1.075 billion Saudi riyals. Moreover, the start date of the lease period was amended to start from 1 August 2022 and end on 31 July 2052. These amendments also included that the rental period be divided into two periods, the first is binding on the two parties and the second is optional for the Arabian Centers Company, according to what is explained below (previously the total period was binding on both parties).

It included that the annual rent for the first ten years is 30 million riyals, then 35 million riyals for the ten years that follow, and then 42.5 million riyals for the last ten years (previously the annual rent was 47 million riyals for the first five years, then it increased by 5 million riyals every 5 years. Years until it reaches 72 million riyals annually during the last five years).

The company indicated that these amendments will reduce the right to use assets and lease contract obligations within the balance sheet. In the income statement, reductions in depreciation expense will be made on right-of-use assets and interest expense on lease liabilities. This financial impact will begin to appear on the company’s financial statements during the third quarter of the fiscal year 2021 AD and ending on December 31, 2020.

The Centers stated that it intends to implement and deliver the project according to the model of the outdoor shopping center under the name “U-Walk Jeddah”, similar to the U-Walk Center in Riyadh that was inaugurated in September 2019.