Performance Review

Real Estate Sector

SEDCO Holding is powering the development of Saudi Arabia’s real estate sector through operating companies that create the infrastructure, residential and commercial properties essential to long-term economic growth. Regional and international assets span Asia, Africa, the USA and Europe.

SEDCO
Development

SEDCO Development is a wholly owned subsidiary of SEDCO Holding, offering real estate development management services.

Zuhair Hamzah
Chief Executive Officer

In the past, the company offered integrated services enabling real estate projects. It identified market opportunities and then supported clients and partners with planning, design, approvals and execution of development projects.

During 2019, as part of SEDCO Holding’s overall reorganization of real estate activities, the company was downsized and restructured. The Board of Directors was dissolved and replaced by an Executive Committee to oversee the restructuring and reorientation process.

The outcome of this process is likely to result in changing the company’s operational model to focus exclusively on the development of SEDCO Holding projects. It is expected to be completed during 2020, and over the next year the company will target the study of three leading projects for the Group.

Al Mahmal
Development

Al Mahmal Development is a real estate developer and manager established in 2004 to manage Al Mahmal Shopping Center in Jeddah. The center is 80% owned by SEDCO Holding and opened in 1987.

Imad Yassin Kaki
Chief Executive Officer

With lettable area of 13,000 m² over seven floors, the center has more than 70 shops, 11 kiosks and booths, 13 stands and platforms, four cafes, and a food court. Al Mahmal Development is responsible for rental and management, as well as operating the adjoining 550-bay Al Mahmal Parking building.

The company achieved a 4.4% increase in revenues during 2019, while Al Mahmal Shopping Center recorded 89% occupancy, boosted by the implementation of a tenantmix plan. A new contract to redevelop the parking entry and exit system will improve efficiency of vehicle movement and reduce operating costs.

In 2020, Al Mahmal Development will focus on raising the center’s occupancy to 95% while seeking to reduce costs. Higher revenue will be achieved by rental adjustments and the optimal use of vacant space.

Red Sea Markets

Red Sea Markets Company is the owner and asset manager of Red Sea Mall. Established in 2004, the company is 49.5% owned by SEDCO Holding.

Geji Masilela
Chief Executive Officer

"JEDDAH SEASON SAW RED SEA MALL HOSTING INTERNATIONALLY ACCLAIMED EVENTS AS THE CITY’S LEADING SHOPPING DESTINATION IN THE CELEBRATIONS HELD OVER THE SUMMER VACATION."

During 2019, the company considered its next phase of growth through increasing the volume of assets under management. This resulted in the adoption of a new strategic framework by the Board of Directors.

Red Sea Mall is the Western Region’s pioneering mall that has a connected five-star hotel and a premium office tower. SEDCO Tower has gross lettable area of 10,549 m², while the hotel — leased to Elaf — comprises 156 rooms, banqueting and wedding hall facilities, and a spa.

Occupancy at Red Sea Mall remained strong throughout 2019, peaking at 98% in the fourth quarter.

In 2019 a deal was concluded to bring the first virtual reality (VR) park to Saudi Arabia under the TEKZONE brand. The tenant is at an advanced stage of shop-fitting. Footfall has consolidated on gains made since VOX Cinemas opened, resulting in improved retail sales throughout the mall.

Red Sea Mall is now officially Jeddah’s second-top attraction, as confirmed through Trip Advisor by visitors to the city. In recognition, an award was conferred by Trip Advisor.

Jeddah Season saw Red Sea Mall hosting internationally acclaimed events as the city’s leading shopping destination in the celebrations held over the summer vacation. Other successful marketing events won several awards and recognition: two Golden Tiger Awards for Excellence in HR Leadership; the Saudi Commission of Tourism and Heritage; Retail ME; and Jeddah Creative Awards.

Al Mahmal Facilities
Management

Al Mahmal Facilities Services was established in 1988 and takes responsibility for client properties such as shopping malls, banks, hospitals, office towers and residential buildings. Services include operation and maintenance, janitorial and housekeeping, security and safety, and project engineering and support.

Imad Yassin Kaki
Chief Executive Officer

"INVESTMENT IN EMPLOYEES REMAINS A PRIORITY FOR THE COMPANY. IN 2019, MANPOWER INCREASED BY 344 AND PLATINUM STATUS WAS ACHIEVED FOR SAUDIZATION."

During a year of sustained growth, the company expanded into areas such as government projects, commercial centers, industry, and residential towers. Services were also expanded across the Kingdom, achieving 93% of target revenue.

Among new Jeddah clients were National Guard Khatiba, Serafi Mega Mall, Savola and ALJ Finance. New clients in Riyadh included DAMAC Exclusiva Tower, Philips Lighting, and Al Baik branches. At the same time, the company renewed 23 existing clients.

Other significant initiatives and projects in 2019 included a successful cost reduction program, completing construction and renovation of NCB branches, and updating the company’s policies and procedures manual. Enhancing and upgrading IT resources included implementation of Office 365 Cloud, cloud-based time and attendance management, enterprise data backup, and a disaster recovery site,

Investment in employees remains a priority for the company. In 2019, manpower increased by 344 and Platinum status was achieved for Saudization. In 2020, more than 20 Saudi employees will graduate from the Higher Institute of Paper and Industrial Technologies as electrical and mechanical technicians.

Intimaa

Intimaa is one of Saudi Arabia’s leading real estate services providers, with several billion riyals of property under management.

Maher F. Luqman
Chief Executive Officer

"THE COMPANY HAS INITIATED A FULL-SCALE STRATEGIC PLAN TO BUILD ON ITS PROPERTY MANAGEMENT EXPERTISE AND RESOURCES, POSITIONING IT AS AN INTEGRATED PROPERTY MANAGEMENT COMPANY."

The company’s net income improved by more than 80% in 2019. Key strategic objectives were achieved, including improvements to financial processes and control measures.

Recent changes in global and local economic conditions have created challenges for many businesses. Intimaa is addressing these by refocusing attention on core activities.

The company has initiated a full-scale strategic plan to build on its property management expertise and resources, positioning it as an integrated property management company. This strategic project is designed to create a sustainable longterm direction for the company.

Intimaa Mall Management Services has now been operational for a full year and has made significant efforts to develop new business opportunities. Leasing activities for Mujan Park, a large community-oriented mall located in Khamis Mushayt, passed key milestones.

Mall Management Services continues to attract client and partnership interests. Several malls have been assessed for management potential and further studies are under way.

Upgrading the company’s human resources talent is ongoing, helping drive operational improvements and succession planning initiatives. Training programs attended by employees in 2019 range from accounting to marketing to language-training, among others.

Within the next two years, Intimaa will bring a more refined and focused product to the marketplace, with optimized operations relying on an extensive new IT infrastructure.

Saudi Arabia
Portfolio

In Saudi Arabia, SEDCO’s portfolio is well diversified and includes shopping malls, hotels, apartment blocks, office buildings, industrial units, and a prime land bank. SEDCO’s geographic exposure covers the main cities such as Jeddah, Makkah, Madinah, Riyadh, Al Khobar, Taif and Jazan. These assets are grouped into:

"SEDCO HAS A SIGNIFICANT BANK OF PRIME LANDS ACROSS SAUDI ARABIA, WITH SITES IN RIYADH, TAIF, MADINAH, ABHA, YANBU, MAKKAH, JAZAN AND JEDDAH."

These assets are grouped into:

Retail and Hospitality

Hotel Galleria — combines a five-star hotel and upscale retail mall.

Red Sea Mall — one of the largest mixed-use retail developments in Saudi Arabia.

Al Mahmal Center — one of Jeddah’s landmarks.

Apart from these major assets, the portfolio contains many more properties assets located across the Kingdom’s major cities, including strip retail developments in Jeddah, Riyadh and Al Khobar.

Residential

Our assets cover major cities and include fully-owned by multi-use compounds in Jeddah, Khobar and Riyadh that are. We also offer serviced apartments as well as strip retail areas.

Industrial

SEDCO owns warehouses in Jeddah and Jizan.

Investment

In 2012, SEDCO acquired a strategic stake in SEDCO Capital Real Estate Income Fund I, the Saudi income-generating fund. The fund has secured properties in the Kingdom’s residential, retail and office sectors.

Land bank

SEDCO has a significant bank of prime lands across Saudi Arabia, with sites in Riyadh, Taif, Madinah, Abha, Yanbu, Makkah, Jazan and Jeddah.

Regional and
International Portfolios

Regionally, SEDCO owns and manages portfolios ranging from highyield developments in global cities to capital-gain investments and land. SEDCO has always focused on quality investments and assets that generate sustainable long-term net revenues, while also contributing to societal good. SEDCO’s portfolio follows a balanced strategy and is diversified geographically and by operating sector.

"INTERNATIONALLY, SEDCO OVERSEES A PORTFOLIO RANGING FROM HIGH-YIELD DEVELOPMENTS IN GLOBAL CITIES TO CAPITAL-GAIN INVESTMENTS AND LAND."

SEDCO’s portfolio follows a balanced strategy and is diversified geographically and by operating sector.

Asia and Africa

SEDCO’s Middle East portfolio includes investments, land in the UAE, Egypt, Lebanon, and Bahrain, and investments in funds and assets in Vietnam, Indonesia, and Australia.

The regional portfolio is well diversified in sectors that include retail and hospitality, as well as residential and industrial complexes.

USA and Europe

Internationally, SEDCO oversees a portfolio ranging from high-yield developments in global cities to capital-gain investments and land. SEDCO’s international assets are located in America and Europe.

We have optimized our international portfolio, with well-timed divestments and new deployments gathering pace. Income-generating properties recorded strong occupancy and have delivered stable returns.

SEDCO is focusing internationally on Grade A assets that generate sustainable longterm net revenues. The international real estate portfolio follows a balanced strategy and is diversified geographically and by sector.

It currently includes a diverse range of real estate spanning retail, office, logistics and healthcare, mainly across America and Europe.