Jeddah Economic Company & Alinma Investment in SR8.4bn real estate fund deal

Updated 01 December 2015

Jeddah Economic Company & Alinma Investment in SR8.4bn real estate fund deal

RIYADH: Jeddah Economic Company and Saudi Arabia’s Alinma Investment have signed a deal to initiate an SR8.4 billion fund.
Jeddah Economic Company is the owner and developer of the Jeddah Economic City project and Jeddah Tower in Obhur, just north of Jeddah on the Red Sea coast.
Alinma Investment is an SR1 billion Saudi limited liability company established by the namesake bank to pioneer a comprehensive system of investment products and services.
The fund, to be named the Alinma Jeddah Economic City Fund, is a Shariah-compliant fund that will operate under the Saudi Arabian Capital Market Authority (CMA) and current laws in Saudi Arabia.
Initially, its purpose will be to develop the first phase of the Jeddah Economic City project and finish construction work on Jeddah Tower, currently at its 26th floor, as well as a number of major real estate projects within the project.
Alinma Bank will finance the fund, to be managed by Alinma Investment, while Jeddah Economic Company will be the master developer of projects that will draw on the fund’s credit lines.
Prince Alwaleed bin Talal, chairman of Kingdom Holding Company, will chair the fund’s board, with AbdulMohsen Alfaris, CEO of Alinma Bank, as deputy chairman.
Abdulrahman Sharbatly, Saleh Binladen, Talal Al-Maiman, Hassan Sharbatly, Samawal Bakhsh, Abdulrahman Jawah, Fouad Al-Rashid, Mohammed Al-Shuhaibany and Bandar Alturki will be members of the board.
Jeddah Economic Company bought out the entirety of the fund’s units.
The agreement was signed in the presence of Prince Alwaleed, Jeddah Economic Company’s board members, and Alinma Bank and Alinma Investment representatives.
The ceremony took place at Prince Alwaleed’s office at the Kingdom Holding Company in Riyadh.
“This agreement with Alinma is part of Jeddah Economic Company’s drive to diversify its sources of funding for Jeddah Tower and Jeddah Economic City,” said Prince Alwaleed.
“Our cooperation with the banking sector is a manifestation of just how strongly we believe in this ambitious project, which is set to become the pride and joy of every Saudi, especially those who reside in Jeddah, and will become an iconic urban center that will take the city to the next level, both regionally and globally.”
Prince Alwaleed said that the primary purpose of developing Jeddah Economic City is to provide a state-of-the-art living, working and entertainment environment for its community to enjoy a unique way of life, with the best possible levels of services that up-and-coming Saudis aspire to.
“Jeddah Economic City will be a must-go destination for those who visit Jeddah for business, trade, entertainment, culture, medical treatment and education, and will be a trendsetter in future real estate and urban development, all while securing the future of young Saudis with job opportunities and meeting the ever-growing demand for housing.”
Abdulmohsen Al-Fares, Alinma Bank’s CEO, said: “We at Alinma Investment seek to create fruitful strategic partnerships with various sectors in the real estate industry that enjoy a wealth of management expertise and are capable of managing successful investment projects, thus supporting investment plans and removing hurdles in the way of bringing these projects to fruition.”
The CEO said: “Jeddah Tower and Jeddah Economic City are pioneering projects that will transform their namesake city, and we are happy to be cooperating with Jeddah Economic Company and contributing to the building of this great project.”
Talal Al-Maiman, executive director of the Kingdom Holding Company, said that financial planning for the project took over two years.
“When we formulated and prepared the financial model, which included all aspects of cost and revenue, we made sure that we studied every single one of the project’s needs,” he said.
“Alinma Investment has been an active partner in the process of devising a detailed, sophisticated financial model that complies with Sharia and law so we can build the world’s highest skyscraper on our homeland. Such a financial model will set the trend for future real estate projects.”
Mounib Hammoud, CEO of Jeddah Economic Company, said that 26 floors of Jeddah Tower built over an area of 85,000 square meters, have already been completed.
Now that the agreement has been signed and required funds secured, Hammoud expects the project to be finished on schedule.
“With this deal, we will reach new, as yet unheard of highs in real estate development, and will fulfill the company’s objective of creating a world-class urban center that offers an advanced lifestyle, so that Jeddah may have a new iconic landmark that attracts people from all walks of society with comprehensive services and a multitude of uses,” said Hammoud.
“The overall layout of Jeddah Economic City is designed to accommodate a comprehensive, multipurpose environment, replete with aspects of a modern lifestyle over its 5.3 square kilometers, supported by world-class, state-of-the-art infrastructures.
“The first phase, to be constructed over 1.5 sq km, will accommodate more than 3.3 million square meters of modern, multipurpose structures, which will form the nucleus of northern Jeddah’s downtown, bolstering the city’s standing in the world.”


Powell: No clear hint on rates but says Fed will aid economy

Updated 23 August 2019

Powell: No clear hint on rates but says Fed will aid economy

  • The outlook for the US economy, Powell said, remains favorable but continues to face risks
  • Trump, who has relentlessly attacked Powell and the Fed over its rate policies, kept up his verbal assaults on Twitter

WASHINGTON: Federal Reserve Chairman Jerome Powell sent no clear signal Friday that the Fed will further cut interest rates this year but said it would “act as appropriate” to sustain the expansion — phrasing that analysts see as suggesting rate cuts.
Powell said President Donald Trump’s trade wars have complicated the Fed’s ability to set interest rates and have contributed to a global economic slowdown.
Speaking to a gathering of central bankers in Jackson Hole, Wyoming, Powell didn’t give financial markets explicit guidance on whether or how many rate cuts might be coming the rest of the year. The Fed cut rates last month for the first time in a decade, and financial markets have baked in the likelihood of more rate cuts this year.
The outlook for the US economy, Powell said, remains favorable but continues to face risks. He pointed to increasing evidence of a global economic slowdown and suggested that uncertainty from Trump’s trade wars has contributed to it.
Reacting to the speech Friday, Trump, who has relentlessly attacked Powell and the Fed over its rate policies, kept up his verbal assaults on Twitter:
“As usual, the Fed did NOTHING!” Trump tweeted. “It is incredible that they can ‘speak’without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work “brilliantly” with both, and the US will do great.”
Trump added:
“My only question is, who is our bigger enemy, Jay Powel (sic) or Chairman Xi?“
Powell’s speech comes against the backdrop of a vulnerable economy, with the financial world seeking clarity on whether last month’s rate decision likely marked the start of a period of easier credit.
The confusion only heightened in the days leading to the Jackson Hole conference, at which Powell gave the keynote address. Minutes of the Fed’s July meeting released Wednesday showed that although officials voted 8-2 to cut their benchmark rate by a quarter-point, there was a wider divergence of opinion on the committee than the two dissenting votes against the rate cut had indicated.
The minutes showed that two Fed officials favored a more aggressive half-point rate cut, while some others adopted the polar opposite view: They felt the Fed shouldn’t cut rates at all.
The minutes depicted the rate cut as a “mid-cycle adjustment,” the phrase Powell had used at his news conference after the rate cut. That wording upset traders who interpreted the remark as suggesting that the Fed might not be preparing for a series of rate cuts to support an economy that’s struggling with a global slowdown and escalating uncertainty from President Donald Trump’s trade war with China.
There was even a difference of opinion among the Fed members who favored a rate cut, the minutes showed, with some concerned most about subpar inflation and others worried more about the threats to economic growth.
Comments Thursday from Fed officials gathering in Jackson Hole reflected the committee’s sharp divisions, including some reluctance to cut rates at least until the economic picture changes.
“I think we should stay here for a while and see how things play out,” said Patrick Harker, the president of the Fed’s Philadelphia regional bank.
Esther George, president of the Fed’s Kansas City regional bank and one of the dissenting votes in July, said, “While I see downside risk, I wasn’t ready to act on that relative to the performance of the economy.”
George said she saw some areas of strength, including very low unemployment and inflation now closer to the Fed’s target level. She said her decision on a possible future rate cut would depend on forthcoming data releases.
Robert Kaplan, president of the Fed’s Dallas branch indicated that he might be prepared to support further rate cuts.
If “we are seeing some weakness in manufacturing and global growth, then it may be good to take some action,” Kaplan said.
George was interviewed on Fox Business Network; Harker and Kaplan spoke on CNBC.
The CME Group, which tracks investor bets on central bank policy, is projecting the likelihood that the Fed will cut rates at least twice more before year’s end.
Adding to the pressures on the Fed, Trump has kept up his attacks on the central bank and on Powell personally, arguing that Fed officials have kept rates too high and should be cutting them aggressively.
Trump has argued that a full percentage-point rate reduction in coming months would be appropriate — a suggestion that most economists consider extravagantly excessive as well as an improper intrusion on the Fed’s political independence.
The president contends that lower rates in other countries have caused the dollar to rise in value and thereby hurt US export sales.
“Our Federal Reserve does not allow us to do what we must do,” Trump tweeted Thursday. “They put us at a disadvantage against our competition.”
Earlier in the week, he had told reporters, “If the Fed would do its job, you would see a burst of growth like you have never seen before.”
Powell has insisted that the White House criticism has had no effect on the Fed’s deliberations over interest rate policy.