“Fakeeh Medical” rents land to establish a health facility for 217.9 million riyals
Dr. Soliman Abdul Qader Fakeeh Hospital Company concluded a contract "Fakih Medical"Yesterday, an agreement was signed with Alof Development Company, a company 100% owned by the Jazan Municipality.
The company said in a statement on its website "Saudi Arabia trading"The agreement is to lease a plot of land in a strategic location in the city of Jizan with a total area of 34,581 square meters, in order to establish an integrated health care facility for a period of 50 years, renewable for a period of 25 years at the market price, with the possibility of an additional extension for a period of 25 years if the status of the lessor to Alof Development Company is still ongoing.
It noted that the tenant will build and operate a health care facility throughout the term of the lease and its extensions, if any, according to the build-operate-transfer structure. (BOT).
She explained that the rental payments include:
• One payment upon signing: 1,729,771 riyals.
• Years 2 and 3: Grace period (without fees).
• Years 4–10: 13,924,659 riyals.
• Years 11–50: 202,342,755 riyals.
The value of the deal amounts to 217.9 million riyals, representing the total lease payments for a period of 50 years.
It stated that the land may only be used for the purpose of establishing, operating and maintaining a health care facility and support services. Any other use requires prior approval from the lessor.
The contract provides the option of adding the provision of health education services/programmes, after obtaining the necessary approvals from the relevant authorities.
The lessee is committed to obtaining all necessary licenses and approvals from the relevant authorities to begin implementing the project by the end of the grace period (end of the third year).
The deal will be financed from the self-resources of Fakeeh Healthcare Group, while this deal will contribute, through a long-term lease for 50 years, to securing a site for a hospital on a distinctive coastal land in Al-Shati neighborhood is within a rapidly developing area in the city of Jizan and its surrounding areas, where the demand for high-quality health care supports the growth of the population and the expansion of the insured base associated with workforce flows driven by industrial and infrastructure projects.
The lease structure enables the project to be developed without owning the land, which supports the disciplined channeling of capital towards construction, equipment and gradual operation phase.
The contract provides flexibility to add a health education facility on the same plot of land, and is in line with Fakeeh Healthcare Group’s plans for geographical expansion. And enhancing services in areas where the Fakeeh Healthcare brand has a strong presence.
The company will pay the first annual installment of the rental rent upon receipt of the land, and will also record the lease in its financial statements in accordance with the International Financial Reporting Standards
(IFRS) approved in the Kingdom of Saudi Arabia by the Saudi Authority for Auditors and Accountants (SOCPA).
It expected that the financial impact of this agreement will begin when the construction of the medical facility is completed and its operation begins. The company will announce any relevant material developments and the expected financial impact in a timely manner in accordance with regulatory requirements.
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