Knowledge Economic City has announced the signing of a memorandum of understanding with Kaden Investment Company to develop the «City Hub 2» mixed-use project in Medina, with an estimated investment of 2.5 billion riyals. The project is located adjacent to the northern side of the first phase of «Al-Madinah Hub,» overlooking King Abdulaziz Road and adjacent to the Boulevard in the Knowledge Economic City. It aims to develop an integrated destination featuring residential, commercial, and office components, along with supporting facilities and services.
The project’s land area is approximately 92,040 square meters, while the estimated gross floor area is approximately 229,120 square meters.
1,527 residential units
According to the initial concept, the project includes approximately 1,527 residential units distributed across three areas, in addition to a commercial and office component with a net leasable area of approximately 31,100 square meters, as well as parking lots, clubs, recreational and service facilities, and landscaping and tree planting for the adjacent central park.
The plan is to develop and sell the residential units, including off-plan sales during the construction phase, while the commercial and office components will be developed, leased, and operated until stable occupancy and operational levels are achieved, and then retained until the investment is exited through sale.
«City of Knowledge» Contributes Land
Under the initial structure, the two parties intend to establish a closed-end real estate investment fund to own, finance, and develop the project, with «Knowledge City» will contribute the land as an in-kind contribution, in exchange for a cash contribution from «Kaden.»
«Knowledge City’s» share amounts to 75% of the fund’s units, compared to 25% for «Kaden,» which will also serve as the development manager, including overseeing development, leasing, property management, and sales of residential units.
The initial value of the project land provided by «City of Knowledge» is approximately 692.3 million riyals, while the total equity required for the project is estimated at approximately 832.7 million riyals.
67.7 million riyals in cash
Following the conclusion of the final agreements, «Knowledge City» is expected to receive approximately 67.7 million riyals in cash, in addition to units in the target fund with an estimated value of 624.6 million riyals.
The approximate cost of the land is 64.2 million riyals, with the financial impact to be reflected in the company’s financial statements in accordance with International Financial Reporting Standards after the accounting recognition requirements are met and the procedures for transferring ownership are completed of the land.
The project is expected to be financed through a combination of equity, bank financing, and proceeds from off-plan sales, in accordance with the final financing structure and relevant approvals.
The memorandum of understanding provides for a 90-day exclusivity period to conduct negotiations, studies, due diligence, and finalize the agreements related to the project.
The two parties also agreed to appoint Capital Hill Financial as the proposed manager of the closed-end real estate investment fund to be established for the project’s development.
The project is part of the «Knowledge Economic City» strategy to develop its land portfolio and maximize its value through partnerships with specialized investors and developers, as well as to diversify sources of financing, land uses, and real estate products within the city.
