Saudi Arabia's Knowledge Economic City has announced the sale of 17,624.85 sq m plots of land within its premises in Madinah to two key entities - Al Bawaba International Investment and Olu Real Estate Company - for SAR229 million ($60 million). 

The duo will be using these plots (C06-6 and C06-3) located within the Knowledge Economic City masterplan in Madinah for the development of a mixed-use project, said KEC in its filing to Saudi bourse Tadawul.

As per the deal, it will be set up through a private real estate investment fund to be jointly owned by Al Bawaba and Olu Real Estate. 

This transaction is part of Knowledge Economic City's strategy to maximise the value of its 6.8 million sq m land portfolio through direct development, partnerships with specialised investors and developers, or investment fund structures, thereby accelerating project development and enhancing capital efficiency.

The transaction represents one of the development models adopted by the company to unlock the value of its assets through collaboration with specialized investment firms and financial institutions, supporting the attraction of high-quality investments and promoting urban development within Knowledge Economic City, said the statement.

The book value of the land plots in the company's records is SAR22 million, it stated.

According to KEC, the deal is aimed at enhancing its liquidity, boosting its financial position, enabling the reinvestment of capital into its current and future strategic projects, and accelerating the development of one of the strategic land plots within Knowledge Economic City.

The transaction is expected to generate a gross profit of SAR153.3 million before deducting any transaction-related expenses, fees, or obligations. 

On the financial impact, KEC said it will be recognised in the company's financial statements in accordance with the International Financial Reporting Standards (IFRS) upon satisfaction of the applicable accounting recognition criteria and completion of the title transfer procedures.

The proceeds of the asset sale will be used to enhance the company's liquidity and strengthen its financial position as well as for redeployment of capital into its current strategic projects to support sustainable growth and maximise shareholder value.-TradeArabia News Service