Valuation report

Al Andalus Mall and Staybridge Suites

Hotel Apartments, Jeddah, Kingdom of
Saudi Arabia

Prepared for NCB Capital / NCB

Date of issue: 28 July 2020

Contact details

Danial Mahfooz, CFA, NCB Capital, Jeddah, KSA

Knight Frank Spain Saudi Arabia Real Estate Valuations Company, 1st Floor, WH14, Raidah Digital City,
Riyadh, Kingdom of Saudi Arabia, Stephen Flanagan, +971 4 4512 000,
stephen.flanagan@me.knightfrank.com
KF ref: KF/V/198-2020

Knight Frank Spain Saudi Arabia Real Estate Valuations Company is a company registered in KSA with commercial registration number 1010564516.
Executive summary

The executive summary below is to be used in conjunction with the valuation report to which it forms part and is
subject to the assumptions, caveats and bases of valuation stated herein and should not be read in isolation.

Address Al Andalus Mall and Staybridge Hotel Suites, Old Airport, Al Fayhaa District, Jeddah,
Kingdom of Saudi Arabia.

Location The property is located in the Al Fayhaa district of Jeddah in the Western Province of the
Kingdom of Saudi Arabia (KSA). The property is located at the junction of Prince Majid Road
(Highway #70) and King Abdullah Road (Highway #45), just south of a large roundabout /
interchange. The site is bounded by the districts of Al Worood and Al Naseem to the north
of the subject and Jeddah Gate to the west. Prince Majid Road is one of the major north –
south arterial highways linking the north of Jeddah and the international airport with the south
of Jeddah.
The King Abdulaziz International Airport is located some 18 km to the north west, with a
driving time of 30-40 minutes depending on traffic conditions. Jeddah Islamic Port is located
some 6 km to the west of the subject.

Description The property comprises a large retail shopping mall known as Al Andalus Mall, together with
Staybridge Suites, a certified 5-Star, deluxe serviced apartment. Staybridge Suites is
operated by Intercontinental Hotel Group (IHG) and was opened to the public on the 23rd
May 2017.
The mall is a well-established super-regional mall which has over 3,000 car parking spaces
and is anchored by Hyper Panda. Its current occupancy at the date of the report is 95%, with
very few vacant shops. Built over two principal shopping floors, the main anchor tenant is
located on the First Floor level, underneath which is substantial covered parking below at
ground level. The mall has a number of entrances from both sides of the mall allowing
effective pedestrian circulation.
The serviced apartment building consists of B+G+16 floors and extends to 164 guest rooms,
also accommodating extensive parking at podium level. The unit inventory comprises
studios, 1 bed and 2 bed suites, with the majority (90 keys) being 1 bed suites. The subject
asset’s source markets focus on long stay guests which will include corporate and
government business.

Tenure Freehold

Tenancies and As at the valuation date Al Andalus Mall is 95% occupied based on its GLA. The lease terms
Occupancy generally range in length from 1 year to 12 years, with the majority of leases being 1-3 years
in length. The exceptions to the above include the lease for the Hyper Panda supermarket
which has a 20 year lease term and the cinema lease which is for 15 years.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 2
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
Executive summary cont.

Valuation Key Item Unit Assumption

Assumptions -
Passing Rent SAR per annum 131,836,150
Al Andalus Mall
Market Rent at 100%
SAR per annum 137,000,000
occupancy

SAR per sq m per

Operating Costs 25,887,240
annum

Stabilised Occupancy % 95%

Exit Yield % 8.75%

Growth % 2%

Discount Rate % 10.75%

Valuation Key Our projections are prepared in accordance with the Uniform System of Accounts for the
Assumptions - Lodging Industry (USALI) as used by the hotel and leisure industry worldwide.
Hotel
We have made a number of assumptions within our valuation which we have listed below:
● The valuation is based on the EBITDA of the serviced apartment, with an allowance for
the terms and fees included in the hotel management agreement.
● The valuation given includes furniture, fittings, equipment and operational supplies that
are necessary for the hotel as a going concern.
● We were not provided with the classification certificate for the operating hotel and
therefore we have assumed the previous certificate which expired on 31/12/2019 was
renewed.
● Unless otherwise stated, ADR (Average Daily Rate) in our calculations is inclusive of
service charges, but exclusive of tax and municipality fees.
● Our cash flow is prepared on the basis of a fiscal year, not calendar year. Year 1 of the
cash flow starts from the date of valuation.
● The client is currently in the process of terminating the hotel management agreement
with Holiday Inns Middle East under the Staybridge Suites brand and is in advanced
discussions with another reputable international operator. Therefore, we have assumed
that the operator / brand appointed would be similar to that of Staybridge Suites. We have
assumed that this new operator would continue to manage the subject property effectively
and efficiently under a 5-Star deluxe serviced apartment positioning.
● We were not provided with the revised commercial terms under the new management
agreement and therefore have had to rely on industry standard fee structures that are

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
Executive summary cont.

typically offered by hotel operators for the Jeddah market. These terms are assumed to
prevail over a 15-year term and come into effect before the end of 2020.
● During the transition of operators, we have assumed that the property will continue to
remain open for business and be owner operated. Furthermore, our projections take into
account that the new operator would be appointed and running the operations of the hotel
before the end of 2020. A delay in appointing the new operator would impact the
projections.
● Typically, when a new hotel operator takes over an existing branded operational hotel,
there are costs associated with re-branding, FF&E upgrades, etc. Typically, these costs
are borne by the owner; however, we have been informed that the costs related to re-
branding will be borne by the new operator and that costs related to any FF&E upgrades
will be minor and be covered by the accrued FF&E reserve from the previous years.
● The subject hotel has all relevant documentation and permissions required from the
relevant planning and trading authorities in Jeddah, KSA.
● We have assumed the rate of inflation to be 2 percent per annum.
● We have adopted a discount rate of 11.25 percent and a terminal capitalisation rate of
9.25 percent for the hotel cash flow.
● We have adopted the 9.25 percent capitalisation rate to show the subject property as a
deluxe, internationally branded asset, located in the area of Al Fayha District, an
emerging international leisure and corporate destination in the city of Jeddah.

Valuation Retailers across the board are generally finding the current trading conditions difficult as
considerations most non-essential retailers ceased operations during the majority of Q2 2020. The retail
sector is beginning to regain traction as stores resume trading under restrictions set out by
the government. Implications are expected to impact the retail market further due to the
increase in VAT from 5% to 15%, which will impact tenants overall costs of occupation.
The mall is 95% let and well positioned in the market, with a popular mid-market anchor in
Hyper Panda. It has excellent parking facilities, a good tenant mix and the offering was
enhanced with the opening of the hotel suites in 2017.
With poor economic cues from Europe and the current volatility in the global oil prices, the
regional real estate investment market has shifted focus to high quality best-in-class assets,
mostly, if not only, income producing. In summary, appetite for best-in-class products in the
region is still strong for specific property types and locations. However, investors are being
careful and very selective in choosing such assets and given the geopolitical and economic
uncertainties, purchase of bare undeveloped land currently does not seem to be their
preferred investment strategy, unless finance on good terms has been secured.
Few malls of this size openly transact and we feel this offers a good option, being well let,
firmly anchored and with a diverse offering of F&B and leisure to attract families. Ongoing
works are to enhance the food court and entertainment offering further.

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
Executive summary cont.

Due to the large lot size of the asset, the able pool of buyers for an asset of this type and
size is limited, typically to sovereigns, large funds or big development companies. The large
lot size limits the buyer pool, when considered against smaller assets that have a wider
potential buyer base.

Valuation date 30 June 2020

Market Rent Our opinion of Market Rent for Al Andalus Mall, subject to the caveats and assumptions
detailed herein as at the valuation date is: SAR 137,000,000 per annum.

Market Value We are of the opinion that the (aggregate) Market Value of the property subject to the caveats
(aggregate) and assumptions detailed herein as at the valuation date is:
SAR 1,304,600,000
(One Billion, Three Hundred and Four Million, Six Hundred Thousand Saudi Arabian
Riyals)

Market Value Split on values between the two component parts is as follows:
Analysis
 Al Andalus Mall - SAR 1,150,000,000 - (One Billion, One Hundred and Fifty Million Saudi
Arabian Riyals)

 Staybridge Suites (subject hotel) - SAR 154,600,000 (One Hundred and Fifty Four Million
and Six Hundred Thousand Saudi Arabian Riyals)

Material The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health
Uncertainty Organisation as a “Global Pandemic” on the 11th March 2020, has impacted global
financial markets. Travel restrictions have been implemented by many countries. In the
Kingdom of Saudi Arabia (KSA), market activity is being impacted in all sectors. As at the
valuation date, we consider that we can attach less weight to previous market evidence for
comparison purposes, to inform opinions of value. Indeed, the current response to COVID-
19 means that we are faced with an unprecedented set of circumstances on which to base
a judgement. Our valuations is are therefore reported on the basis of ‘material valuation
uncertainty’ per VPGA 10 of the RICS Valuation – Global Standards (Appendix 7).
Consequently, less certainty – and a higher degree of caution – should be attached to our
valuation than would normally be the case. Given the unknown future impact that COVID-
19 might have on the real estate market, we recommend that you keep the valuation of the
subject property under frequent review.
For the avoidance of doubt, the inclusion of the ‘material valuation uncertainty’ declaration
above does not mean that the valuation cannot be relied upon. Rather, the phrase is used
in order to be clear and transparent with all parties, in a professional manner that – in the

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
Executive summary cont.

current extraordinary circumstances – less certainty can be attached to the valuation than
would otherwise be the case. The material uncertainty clause is to serve as a precaution
and does not invalidate the valuation.

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
Contents

Executive summary 2

1 Instructions 10
Engagement of Knight Frank Spain Saudi Arabia Real Estate Valuation Company 10
Scope of enquiries & investigations 11
Valuation bases 11

2 The property 13
Location 13
Site 14
Description 15
Mall 20
Hotel 20
Services 20
Tenure - Hotel 21
Hotel Management Agreement 21
Condition 23
Hotel Competition 23
Business Commentary 24
Services 28
Legal title deed – Overall Property 29
Tenancies 29
Tenancy Schedules 30
Condition 30
Environmental considerations 30
Planning 31
Highways and access 31

3 KSA Economic analysis 32

Jeddah Retail Market 44
Comparables / Benchmarking 48
Jeddah Hospitality Overview 50
Jeddah Future Outlook 54
Jeddah – Existing Demand Generators 56
Jeddah– Upcoming Major Developments 58
Investment Overview 59
SWOT Analysis - Mall 61
GCC Investment Market 62
SWOT Analysis - Hotel 64

4 Valuation 65
Methodology 65
Valuation assumptions – Retail Mall 65
Valuation assumptions – Hotel 67

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Valuation bases 69
Valuation date 69
Market Value 69

5 Signature 71

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 8
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
Appendices

Appendix 1 - Instruction documentation

Appendix 2 - Title Deed
Appendix 3 - Photographs
Appendix 4 - Floor plans
Appendix 5 - Building Permit
Appendix 6 - Profit & Loss – Hotel
Appendix 7 - Extract from Red Book – VGPA 10
Appendix 8 - Taqeem Certificates

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
1 Instructions

Engagement of Knight Frank Spain Saudi Arabia Real Estate Valuation Company
Instructions 1.1 We refer to your instructions and to our subsequent Terms of Engagement and
General Terms of Business dated 05 December 2019, which was returned to us on
the 30th December 2019, and email confirmation of 17 June 2020 to provide a valuation
report on Al Andalus Mall and Staybridge Suites, (“the property”). Copies of these
documents are attached at Appendix 1.
1.2 This valuation has been carried out in accordance with our General Terms of Business
for Valuations (“General Terms of Business”).
Client 1.3 Our client for this instruction is NCB Capital, acting as manager on behalf of Al-Ahli
REIT Fund, a real estate investment traded fund on the Saudi Stock Exchange
(Tadawul). We are also valuing Salama Tower, Jeddah, KSA, subject to the same
instruction.
Valuation 1.4 This valuation has been undertaken in accordance with RICS Valuation – Global
standards Standards 2020, incorporating the International Valuations Standards (IVS). The
valuation also undertaken in accordance with the Saudi Authority for Accredited
Valuers (Taqeem).
Purpose of 1.5 You have confirmed that this valuation report is required for REIT reporting to the Saudi
valuation Capital Market Authority (CMA) for the semi-annual reporting of the market value (MV)
in accordance with Taqeem regulations.
Conflict of 1.6 We have valued the property for the same client in 2017 for IPO purposes and in
interest December 2019 for REIT reporting purposes. We confirm that we do not have any
material connection or involvement giving rise to a conflict of interest and are providing
an objective and unbiased valuation.
1.7 We are acting as External Valuers, as defined in the Red Book.
Responsibility 1.8 Our valuation report is only for the use of our Client and no liability is accepted to any
to third parties third party for the whole or any part of its contents unless expressly agreed in writing.
Disclosure & 1.9 Neither the whole nor any part of this valuation nor any reference thereto may be
publication included in any published document, circular or statement nor published in any way
without our prior written approval of the form or context in which it may appear.
Limitations on 1.10 No claim arising out of or in connection with this valuation report may be brought
liability against any member, employee, partner or consultant of Knight Frank Spain Saudi
Arabia Real Estate Valuation Company (“Knight Frank”). Those individuals will not
have a personal duty of care to any party and any claim for losses must be brought
against Engagement of Knight Frank.
1.11 Knight Frank’s total liability for any direct loss or damage caused by negligence or
breach of contract in relation to this instruction and valuation report is limited to the

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 amount specified in the Terms of Engagement letter, a copy of which is attached. We
do not accept liability for any indirect or consequential loss (such as loss of profits).
1.12 The above provisions shall not exclude or limit our liability in respect of fraud or for
death or personal injury caused by our negligence or for any other liability to the extent
that such liability may not be excluded or limited as a matter of law.
Expertise 1.13 The valuer, on behalf of Knight Frank, with the responsibility for this report is Alex
Arvalis, MRICS, Taqeem Certified Valuer. We confirm that the valuer meets the
requirements of the Red Book, having sufficient current knowledge of the particular
market and the skills and understanding to undertake the valuation competently.
Vetting 1.14 This report has been vetted as part of Knight Frank’s quality assurance procedures.

Scope of enquiries & investigations

Inspection 1.15 We were instructed to carry out an inspection of the property. Our inspection of the
property was undertaken on 08 June 2020 by Talal Raqaban.
Investigations 1.16 The extent of enquiries/investigations made is set out in our General Terms of
Business. In carrying out this instruction we have undertaken verbal / web based
enquiries referred to in the relevant sections of this report. We have relied upon this
information as being accurate and complete.
Information 1.17 In this report we have been provided with information by NCB Capital (the Client), its
provided advisors and other third parties. We have relied upon this information as being
materially correct in all aspects.
1.18 In particular, we detail the following:

 Information relating to the extent of the property, produced by the client

 Information relating to the tenancy schedules, produced by the client

 Information relating to the operating costs / service management agreement

costs as produced by the client.

 Copy of the title deed

1.19 In the absence of any documents or information provided, we have had to rely solely
upon our own enquiries as outlined in this report. Any assumptions resulting from the
lack of information are also set out in the relevant section of this report.

Valuation bases
1.20 In accordance with your instructions, we have provided our opinions of value on the
following bases:-
Market Value 1.21 The Market Value of the freehold interest in the property, in its current physical
(MV) condition, subject to the existing leases and hotel management agreements.
Market Rent 1.22 The Market Rent of the property. Our letting assumptions are set out in the Valuation
(MR) Section of this report.

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
Valuation date 1.23 The valuation date is 30 June 2020.

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2 The property

Location
2.1 The property is located in the Al Fayhaa district of Jeddah in the Western Province of
the Kingdom of Saudi Arabia (KSA). The property is located at the junction of Prince
Majid Road (Highway #70) and King Abdullah Road (Highway #45), just south of a
large roundabout / interchange. The site is bounded by the districts of Al Worood and
Al Naseem to the north of the subject and Jeddah New City / Jeddah Gate to the west.
Prince Majid Road is one of the major north – south arterial highways linking the north
of Jeddah and the international airport with the south of Jeddah.
The King Abdulaziz International Airport is located some 18 km to the northwest, with
a driving time of 30-40 minutes depending on traffic conditions. Jeddah Islamic Port is
located some 6 km to the west of the property.

Subject Property

Source: Google Earth maps modified by Knight Frank

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 13
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 2.2 The plan below shows the micro location of the property.

Subject Property

Source: Google Earth maps modified by Knight Frank

Site
Site area 2.3 We have been provided with a copy of the title deed, from which we understand that
the mall and hotel have been developed over 159,133.96 sq m of land.
Site plan 2.4 The property is identified on the Google Earth image below, showing our
understanding of the boundary outlined in red:

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 2.5

Source: Google Earth maps modified by Knight Frank

Description
Al Andalus Mall 2.6 The property comprises a super regional retail shopping mall known as Al Andalus
Mall, together with an attached serviced apartment tower which opened on 23rd May
2017 and is branded and operated by Staybridge Suites (part of the Intercontinental
Hotels Group) and is physically connected into the north west corner of the mall. The
mall opened in July 2007 and is therefore over 13 years old at the date of this report.
A small extension was added to the mall and completed in 2016.
The mall is a well-established super-regional mall which has over 3,000 car parking
spaces and is anchored by Hyper Panda supermarket. Its current occupancy at the
date of the report is 97%, with very few vacant shops. Built over two principal shopping
floors, the main anchor tenant is located on the First Floor level, underneath which is
substantial covered parking below at ground level. The mall has a number of entrances
from both sides of the mall allowing effective pedestrian circulation.
2.7 The mall is built of traditional reinforced concrete construction, with the roof structure
being of a series of steel framed sections with waterproof membrane over parts, with
other parts (especially the roof of the Hyper Panda) being a flat concrete structure.
2.8 The mall is served by formal entrances to the front, rear and ends of the mall for
pedestrians, with one gate being the focal point for entry of vehicles for display and
larger attractions etc. Parking is provided to the rear, partly under the Hyper Panda
and thus covered / shaded and to the front at grade.
2.9 A selection of photographs taken during our inspection are below:

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
Staybridge 2.10 Staybridge Suites is positioned as a 5-Star, deluxe serviced apartment adjacent to Al
Suites Andalus Mall in Jeddah, KSA. The subject property is operated by Intercontinental
Hotel Group (IHG) and was opened to the public on the 23rd May 2017.
The total built up area for the subject property is 18,820 square metres, this is made
up over B+G+16 floors, providing 164 guest rooms, 236 parking spaces, 7 meeting
rooms, 2 F&B outlets, 2 male massage rooms, swimming pool, tennis court and
gymnasium.
2.11 Guest Rooms
There are 164 guest rooms split into 3 room types; Studio, one bedroom and two
bedroom.
Given the current situation surrounding COVID-19, we have had to rely on photos from
our previous property inspection on 25th June 2019 and assumed that no material
changes have been made to the internal or external areas of the property. During our
survey, we undertook an inspection of:
● a studio room (Room 0709)
● a one bedroom unit (Room 0706)

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 ● and a two bedroom unit (Room 0708)
The units are fitted to a 5-Star, deluxe serviced apartment specification, in line with
brand standards. All guest rooms comprise a fitted kitchen with working white units,
bedroom, living room and bathroom fixtures and fittings.
Exhibit 1: Room Breakdown

Unit Gross Internal Gross Internal Area

Unit
Breakdown Area (sq m) (sq ft)
Two Bedroom Type 1 15 110 1,650

Two Bedroom Type 2 15 100 1,500

Studio Type 1 14 55 825

Studio Type 2 15 50 750

Studio Type 3 15 60-69 894

One Bedroom Type 1 75 65-85 5,369

One Bedroom Type 2 15 65-85 1,155

Total Keys 164 12,143

2.12 Food
z and Beverage Outlets
There are 2 food and beverage outlets in the subject property. These are highlighted
below;
The all-day dining option (The Hub) accommodating 75 covers and offering breakfast,
lunch and dinner.
The Deli is a healthy option located on the ground floor, offering no covers, with a
stronger focus on a ‘grab and go’ concept for passing trade from guests entering and
exiting the building.
It should be noted there are many F&B options provided in Al Andalus Mall and as the
brand is positioned as a serviced apartment, which typically limit their F&B outlets, as
the concept of the accommodation offers kitchens and kitchenettes for their guests as
standard.
Exhibit 2: F&B Breakdown by type and location

F&B Outlets Type Level

Deli Grab and go Ground Floor

The Hub All Day Dining 1st Floor

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 2.13 Leisure Facilities:
The leisure facilities comprise:-
● An outdoor swimming pool
● Gymnasium
● 2 male massage rooms
● Male sauna and steam room
● 1 Tennis court
2.14 Meeting and Conference Facilities
The meeting and business facilities are extensive, and are located on the first and
second floors. There are 2 meeting rooms on the ground floor ranging in size from 62
sq m to 72 sq m Meeting room 3 measuring 785 sq m in total and is situated on the
2nd floor which can be used as a ballroom or split into 5 separate meeting rooms,
catering to the MICE segmentation in Jeddah.
Exhibit 3: Meeting Room breakdown

Meeting Room Area Level

Meeting Room 1 62 Sq m 1st Floor

Meeting Room 2 72 Sq m 1st Floor

Meeting Room 3 785 Sq m 2nd Floor

2.15 A selection of photographs taken during our previous inspection are below:

One Bedroom Suite Front elevation of the building

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Common corridor – 2nd floor All Day Dining Restaurant – The Hub

Children’s pool Swimming pool

Gymnasium Reception & Lobby Area

View from the hotel Rear Elevation

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
Mall
Retail Mall 2.16 As agreed with the client, we have relied upon floor areas provided to us by the client.
No further verification has been undertaken.
2.17 As at the valuation date Al Andalus Mall is 95% occupied, we note that this includes
GLA only.
2.18 An extension was added to the mall in 2016, this is now fully let and income producing.
Ground Floor 2.19 The ground floor is accessed via 7 different “Gates” on each sides of the mall,
strategically placed to access the mall from the car parks. There are numerous large
kiosks arranged around the ground floor in the two main corridors running east / west
along the length of the mall and also around the central atrium area as well as around
the main gates to the mall. Gates 2 and 5 are the most centrally located gates to the
mall, being located in the centre, from the front and rear respectively. We understand
the mall management are trying to obtain consent to create two more entrances to the
mall from the rear side.
2.20 The ground floor is effectively anchored with Centre Point at one end of the floor and
other mini anchors including Riva, Kiabi, H&M, Mango and Paris Gallery arranged
throughout the ground level.
First Floor 2.21 The first floor is anchored by Hyper Panda who take up a large proportion of the first
floor GLA. The other major uses on the first floor include the Fun Zone and the Food
Court.
2.22 Aside from Hyper Panda, the other anchors on the first floor level include Red Tag,
Home Box and H&M. The Hyper Panda space extends out over the ground floor parking
area, so the GLA of the first floor is much larger than that of the ground floor level.
Other 2.23 Other accommodation includes store rooms which are located to the rear perimeter of
the car park and comprise a series of concrete storage rooms which are let to tenants
for storage purposes.

Hotel
Measurement 2.24 The building has been purpose built as a serviced apartment by the master developer;
it has been fitted and furnished to a 5-Star Staybridge Suites (IHG) brand specification.
2.25 As agreed with the client, we have relied upon the room facilities and details provided to
us by NCB Capital. No further verification has been undertaken.

Services
2.26 In accordance with the General Terms of Business, no tests have been undertaken on
any of the services.
2.27 We have assumed for the purposes of this valuation that mains gas, water, electricity,
drainage and telecommunications are all available to the subject property.

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Tenure - Hotel
Commercial 2.28 We have been provided with a copy of the proof of Ownership Licence for the site.
Register Further details are as follows:

 Type: Limited Liability Company

 Main HQ: Riyadh, Kingdom of Saudi Arabia

 Date Established: 14 December 2017

 Trade Name: Alandalus Mall Staybridge Jeddah Hotel

 Address: Prince Majid Street, Al Fayha District, Jeddah

 Activity: 24th February 2016 gaining the tourist accommodation licence

Classification 2.29 We were not provided with the updated classification certificate; however, we have
assumed that the previous certificate shown with the details below, has been renewed.

 Trade Name: Staybridge Suites Jeddah Alandalus Mall (may ultimately be

revised taking into consideration the re-branding discussed in the Hotel
Management Section of this report)

 Operators Name: Alandalus Co.

 Building Number: 8829

 Attestation: the above mentioned entity shall be granted a licence to operate

and classify the activities of tourist accommodation facilities.

 Granted: 5-Star Operating Licence

 Date of Issue: 5th February 2017

 Date of Expiry: 31st December 2019

Covenant 2.30 We have assumed that the property is not subject to any unusual or onerous covenants,
restrictions, encumbrances or outgoings.
2.31 We reserve the right to amend our valuation accordingly in the event the above
assumption is proven to be incorrect.

Hotel Management Agreement

2.32 The hotel started operating approximately three years ago under a 15 year
management agreement by Staybridge Suites. The agreement is dated 17th June 2013
and made between Alandalus Property Company (owner) and Holiday Inns Middle East
Limited (Operator). However, the client has informed us that they are currently in the
process of terminating the agreement with Holiday Inns Middle East Limited (Operator)
and are in advanced discussions with another reputable international hotel operator,
which will take over the subject property with the same positioning as a deluxe 5-Star
serviced apartment. During this transition, the client has notified us that the property

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 21
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 would remain open and be owner operated until the new international operator is
appointed.
The client has not provided us with the commercial terms of the potential new
international operator, and therefore we have assumed that the fees would not be
inferior to the ones provided by Holiday Inns Middle East.
As a result, we have assumed the following key heads of terms for the new hotel
management agreement for the subject property. These commercial terms broadly
reflect the current terms that are currently being offered in the market by hotel operators.
2.33 We summarise our assumptions under the new hotel management agreement below
as follows:
Exhibit 4: Key heads of terms

164 key 5 star deluxe serviced apartments located adjacent

Property: to Al-Andalus Mall in Jeddah

To be determined; however, it is assumed to be an

Name: international operator and brand that is equivalent or more
superior to that of Staybridge Suites.

Term: 15 years from HMA signature

 1.5% of Adjusted Gross Revenues in financial reporting

years 1-2.
License Fee:
 1.75% of Adjusted Gross Revenues in financial reporting
year 3 and thereafter.

7.0% of Adjusted Gross Operating Profit (AGOP)

Incentive
AGOP is defined as Gross Operating Profit minus License
Management Fee:
Fee.

Marketing 2.0% of Gross Rooms Revenue

Contribution:
Reservation 1.0% of Gross Rooms Revenue
Contribution:
 2% of Gross Revenues – first year of operations under
new management
FF&E Reserve:
 3% of Gross Revenues – second year of operations and
thereafter

When a new hotel operator takes over an existing branded operational hotel, there are
costs associated with re-branding, FF&E upgrades, etc. Typically, these costs are
borne by the owner; however, we have been informed that the costs related to re-
branding will be borne by the new operator and that costs related to any FF&E upgrades

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 22
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 will be minor and will be covered by the accrued FF&E reserve from the previous years.
Because of the appointment of a new operator and anticipated new furnishings that will
be included in the hotel, we have included an FF&E Reserve for the first year of our
projections at 2 percent, and 3 percent from the second year and thereafter.

Condition
Scope of 2.34 As stated in the General Terms of Business attached, we have inspected the property.
inspection However, we have not undertaken a building or site survey of the property.
Comments 2.35 At the date of inspection, the building appeared to be in a generally reasonable state of
repair, commensurate with its age and use. No urgent or significant defects or items of
disrepair were noted, which would be likely to give rise to substantial expenditure in the
foreseeable future or which fall outside the scope of the normal annual maintenance
programme.
Ground 2.36 We have not been provided with a copy of a ground condition report for the site. We
Conditions have assumed that there are no adverse ground or soil conditions and that the load
bearing qualities of the site are sufficient to support the building constructed thereon.

Hotel Competition
Hotels of 2.37 Competition
Competitive
We have been provided with an analysis of the competitiveness of the subject property
Relevance
against a selection of similar properties that the operator and owner feel deemed most
relevant to the subject property in Jeddah, in terms of location, facilities & rooms offered,
guest profile etc. The chosen properties, which have been included in the competitive
set have been provided below:
Competitive set - Staybridge Suites Jeddah Alandalus Mall
● Amjad Hotel Royal Suite Jeddah (formerly known as Radisson Blue Royal Suite
Hotel)
● Ascott Tahlia Jeddah
● Citadines Al Salamah Jeddah
● Radisson Blu Plaza Hotel Jeddah
● Novotel Jeddah Tahlia Street
2.38 The performance of the subject property versus the competitive set breakdown is
showcased in the next exhibit.
Exhibit 5: Subject Property Vs. Competitive Set

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 23
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 700 66% 70%
62% 62% 61%
600 60%
52%
500 43% 50%

Occupancy (%)
400 40%
SAR

300 30%

200 20%

100 10%
599

371

575

378

560

239

393

242

583

301

385

234
0 0%
Subject Competitive Subject Competitive Subject Competitive
property set property set property set
2018 2019 May TYD 2020
ADR RevPAR Occupancy (%)

Source: STR; Subject property’s P&L 2018, 2019 and May YTD 2020
2.39 Over the periods observed (full year 2018 and 2019, and May YTD 2020), the subject
property recorded much lower occupancy rates compared to the competitive set;
however, the Staybridge Suites Jeddah Al Andalus Mall pursued a rate driven strategy
which exceeded the rates achieved across the competitive set. As a result, RevPAR
rates were relatively in line for the full year in 2018 and 2019; however, as of May YTD
2020, the subject property recorded a RevPAR of SAR 301 compared to the
competitive set, which achieved a RevPAR of SAR 234. This represented a 28 percent
increase over the competitive set. Nevertheless, given the market situation and
uncertainty surrounding the impact of COVID-19, both the subject property and
competitive set are expected to close the year (2020) with lower key performance
indicators.

Business Commentary
Projections 2.40 We have projected the subject property’s trading performance for the forthcoming years
as follows:
Exhibit 6: Subject Property Forecast Performance Measurements

Performance measure 2020/2021 2021/2022 2022/2023

No. of rooms 164 164 164
Occupancy 45.0% 66.0% 72.0%
Av. Room Rate (SAR) 575 656 708
Rev PAR (SAR) 259 433 510
Total Revenue (SAR thousands) 17,871 30,036 35,531
EBITDA (SAR thousands) 4,531 11,824 15,622
EBITDA as a % of Total Revenue 25.4% 39.4% 44.0%

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 24
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 We have made our own judgements and used our own professional opinion when
providing projections of hotel performance in our 10-year cash flow.
The duration and recovery period of the COVID-19 outbreak remains uncertain;
however, we have taken the opinion that COVID-19 is likely to impact trading
performance over the short term, rather than the long-term of trading performance of
the asset.
In addition, the client has informed us that the property would remain open during the
transition of operators and that the property would be owner operated until the new
international hotel operator is appointed. Furthermore, our assumption take into
account that the new operator would be appointed and running the hotel operations
before the end of 2020.
Average room 2.41 Projections of occupancy are dependent on trading performance to date in 2020, the
occupancy current and future supply of new hotels of similar category and location, forecast room
(ARO) demand and the existing situation surrounding the impacts of COVID-19.
As of May YTD 2020 the subject property achieved an occupancy of 33 percent, which
is 19 percentage points lower compared to the same period in 2019. This is primarily
attributable to the impact of COVID-19, which is anticipated to soften demand over the
short term. However, we have estimated occupancy to ramp up to 45 percent by the
end of the first fiscal year. This reflects the hotel returning back to an occupancy of
approximately 50 percent by the end of the year, while recording occupancy peaks in
the second quarter of 2021, which typically tends to be the start of the high season in
Jeddah.
Furthermore, we have estimated the subject property to recover and re-stabilise at an
occupancy of 72 percent in year 3 of our projections.
Average daily 2.42 Forecasting the average daily room rate for the subject property, we would expect there
room rate to be an impact in the 1st year of projections given the impact of COVID-19. We have
(ADR) assumed that the property would achieve an ADR of SAR 575, which sits between a
historical range recorded in 2018 (SAR 599) and 2019 (SAR 560).
In year 3 of our projections, we have estimated the property to recover and achieve a
rate of SAR 708. After this, we expect ADR to be in line with inflation at 2.0 percent,

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 25
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 2.43 Our forecast of room performance in our cash flows are provided in the next exhibit:
Exhibit 7: Hotel Forecast Room Performance

800 80%
72% 72% 72%

700 66%

600 60%

Occupancy (%)
500 45%
SAR

400 40%

300

200 20%

100
575

259

656

433

708

510

722

520

737

530
0 0%
2020/2021 2021/2022 2022/2023 2023/2024 2024/2025
Av. Room Rate (SAR) RevPAR Av. Room Occupancy

Total Revenue 2.44 Subsequent to the recovery period of 2020/2021 and the period of 2022/2023, we
would expect total revenue to be in line with inflation over the 10-year period.
Please note that we have not seen a business plan from the owner or operator and
have relied upon our current market knowledge of the area to arrive at our market
forecasts.
Exhibit 8: Hotel Forecast Split of Revenue

40,000 36,967
35,531 36,242
607 619
35,000 595
4,513 4,603
30,036 4,424
30,000 449
3,690
25,000
(SAR) '000

20,000 17,871
214
2,168 31,744
15,000 30,512 31,122
25,897
10,000
15,489
5,000

-
2020/2021 2021/2022 2022/2023 2023/2024 2024/2025
Rooms Department Food & Beverage Department OOD & Miscellaneous Income Total

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 26
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
Gross Operating 2.45 Gross Operating Profit (GOP) relates to the properties’ profits after subtracting the
Income respective departmental operating expenses and undistributed operating costs. It
defines the level of operational profitability of the subject property.
Undistributed 2.46 Administration and General (referred to as Admin & General): This comprises
Expenses both operational and managerial expenses that does not fall under a specific
operating department. Most of these expenses are moderately fixed, with
exceptions such as cash overages and shortages or credit card commissions. It is
usually compared on a per available room basis, supported by the percentage of
total revenue.
IT Systems: This comprises of costs related to any information technology,
telecommunication and software systems required to operate the property.
Sales & Marketing: It covers all the expenses related to the advertising, sales and
promotion of a property to obtain new customers or retain existing ones. Unlike most
expense categories, marketing is controlled almost completely by management.
This expense is forecasted in the budget and target can be met if a detailed, tailored
and specific marketing plan is followed. New hotels need to start marketing before
the hotel even opens, while an existing hotel may wish to increase its marketing
expenses to stabilize or increase revenue. It is commonly expressed as a
percentage of total revenue.
Property Operation & Maintenance: This is an expense related to the
maintenance or the property. They are controlled by management but some
necessary maintenance issues cannot be postponed. The expenses are highly
correlated with the hotel’s age, quality of facilities and the approach followed in
scheduling maintenance. Repairs can be pushed to subsequent years but will still
accumulate if not tackled promptly.
Utilities: Covers expenses related to the running of utilities (electric, heating,
water, etc.) to operate the hotel.
A summary of our projected Undistributed Expenses is set out in the following
table:
Exhibit 9: Undistributed expenses for the subject hotel (SAR Thousands)
Year 1 Year 2 Year 3
(SAR) '000
2020/2021 2021/2022 2022/2023
Administration &
2,949 16.5% 3,529 11.8% 3,731 10.5%
General
IT Systems 760 4.3% 826 2.8% 888 2.5%

Sales and Marketing 894 5.0% 1,277 4.3% 1,332 3.8%

Property Operation and
938 5.3% 1,126 3.8% 1,155 3.3%
Maintenance
Utilities 1,876 10.5% 2,328 7.8% 2,487 7.0%
Total Undistributed
7,417 41.5% 9,086 30.3% 9,593 27.0%
Operating Expenses

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 27
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Given the current situation surrounding COVID-19, hotels across the market
including the subject property have implemented risk-mitigating strategies to reduce
the financial burden of COVID-19.
In our 1st year Undistributed Operating Expenses projections, we have assumed
that the property will continue to implement a number of critical measures to reduce
costs (e.g. employees taking unpaid leave, limited task force team on property,
closing down room floors to reduce utility expenses, etc.). As a result, we have
estimated Property Operation & Maintenance and Utilities expenses to be reduced
by approximately 10-15 percent, while Admin & General to be reduced by
approximately 30 percent compared to 2019 figures. In addition, we have estimated
IT System and Sales & Marketing costs to be reduced by approximately 15 percent
and by 35 percent respectively compared to full year 2019. Subsequently, we expect
these costs to ramp-up to year 3 of projections and subsequently grow in line with
inflation.
EBITDA 2.47 We have run our projections based on a competent international operator assuming
(Earnings that the hotel is effectively managed, positioned and operated as well as strategies
Before Interest, are being put in place to reduce costs given the impact on room night demand from
Tax,
Depreciation COVID-19. The following exhibit highlights Knight Frank’s projected total turnover
and and EBITDA.
Amortisation)
Exhibit 10: Hotel Forecast Revenue and EBITDA

40,000 50.0%
44.0% 44.0% 44.0%
45.0%
35,000 39.4%
40.0%
30,000
35.0%
25,000
30.0%
(SAR) '000

EBITDA %
25.4%
20,000 25.0%

20.0%
15,000
15.0%
10,000
10.0%
17,871

30,036

11,824

35,531

15,622

36,242

15,934

36,967

16,253
4,531

5,000
5.0%

- 0.0%
2020/2021 2021/2022 2022/2023 2023/2024 2024/2025
Total Turnover ('000) EBITDA ('000) EBITDA %

Services
2.48 In accordance with the General Terms of Business, no tests have been undertaken
on any of the services.
2.49 We have assumed for the purposes of this valuation that mains water, electricity,
drainage and telecommunications are all available to the subject property. In addition
there are septic tanks for the property.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 28
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 2.50 Main electricity is available via the national grid (SCICO), in addition there are
emergency diesel generators should mains power be interrupted.

Legal title deed – Overall Property

Land ownership 2.51 We have been provided with copy of the property’s (land) title deed, the details of
which is presented in the following table:

Item Description
Title Deed Number 320211029670
Date 23/10/1440 – 27/06/2019
Size 159,133.96 sq m
Owner Al Akaria Development Company for Ownership and
Source: Client Management

A copy of the Title Deed can be found in Appendix 2.

2.52 These assumptions should be verified by your legal advisors. If they prove incorrect,
any variation may have a material impact on value and should be referred back to us
for further comment.
2.53 For the purposes of this valuation report we have assumed that the Property is held
on a freehold basis and is free from any encumbrances and third party interests.
Covenants 2.54 We have assumed that the property is not subject to any unusual or onerous
covenants, restrictions, encumbrances or outgoings.
2.55 We reserve the right to amend our valuation accordingly in the event the above
assumption is proven to be incorrect.

Tenancies
Tenancy 2.56 We have not been provided with a sample of occupational leases. However, in 2017
information valuation, we were provided with a sample of occupational lease documentation in
Arabic, which we translated to identify the key points but have not verified them
further.
2.57 The leases are in Arabic but include institutional terms with provision for the following:

 Landlord and Tenant are stated

 Lease fully dated and operating as per the Gregorian calendar

 Units / Demise is identified

 User clause is incorporated

 Term is stated

 Rents and payment terms for the rents are stated (2 payment per year)

 Provision are made for vacation of the store

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
  Tenants and obligations are set out

 Approvals to be made by the owner are set out

 Provisions are set out for contract termination

 First and second party rights are provided for

 Provision is made for store design and approvals required

 Provisions are made for subletting / assignment

 Provision are made for payment of repairs / maintenance charges

Covenant 2.58 Although we reflect our general understanding of the status of the tenants, we are
information not qualified to advise you on their financial standing.

Tenancy Schedules
2.59 The client has provided us with the tenancy schedule for the property, which shows
the unit breakdown of Al Andalus Mall, along with lease start and end dates, rent
amount and scheduled rent uplifts.
Summary 2.60 The current rent passing as at the date of valuation is SAR 131,836,150 per annum
and the property is currently 95% occupied.
The lease terms generally range in length from 1 year to 12 years, with the majority
of leases being 1-3 years in length. The exceptions to the above include the lease
for the Hyper Panda supermarket which has a 20 year lease term and the cinema
lease which is for 15 years.

Condition
Scope of 2.61 As stated in the General Terms of Business attached, we have not undertaken a
inspection building or site survey of the property.
2.62 During our inspection we did not inspect any inaccessible areas. We are unable to
confirm whether the property is free from urgent or significant defects or items of
disrepair. Apart from any matters specifically referred to below, we have assumed
that it is in sound order and free from structural faults, rot, infestation or other defects,
and that the services are in a satisfactory condition.
Ground 2.63 We have not been provided with a copy of a ground condition report for the site. We
conditions have assumed that there are no adverse ground or soil conditions and that the load
bearing qualities of the site are sufficient to support the buildings constructed
thereon.

Environmental considerations
Contamination 2.64 As stated in the General Terms of Business, investigations into environmental
matters would usually be commissioned from suitably qualified environmental
specialists. Knight Frank is not qualified to undertake scientific investigations of sites

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 30
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 or buildings to establish the existence or otherwise of any environmental
contamination, nor do we undertake searches of public archives to seek evidence
of past activities which might identify potential for contamination.

Planning
2.65 We have been provided with a one page document that sets out the permission to
build on the site, which is dated 26/2/04 and provides for a commercial centre
licensed to build 2 floors, including parking, commercial content, ground and first
floors and 220 commercial units. This is in Arabic and has been translated to provide
details. (This is included in the Appendix 4).
2.66 We are not qualified to advise you if this fully covers the actual property which stands
today – i.e. mall and hotel, and therefore your legal advisors need to verify that this
is the case. For the purposes of our valuation, we have assumed that all necessary
consents and licences are in place for the property as built.

Highways and access

Highways 2.67 We have assumed that there are no current highway proposals in the immediate
vicinity likely to have a detrimental effect upon the property within the foreseeable
future.
Access 2.68 In reporting our opinion of value, we have assumed that there are no third party
interests between the boundary of the subject property and the adopted highways
and that accordingly the property has unfettered vehicular and pedestrian access.
2.69 We have assumed that there are no issues relating to visibility splays which may
impact upon the use or proposed use of the property.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 31
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
3 KSA Economic analysis

KSA 3.1 Saudi Arabia GDP Growth, 2011 - 2023

 According to provisional full year data published by General Authority for
Statistics (GaStat), the Saudi Arabia’s GDP grew by 0.3 percent in 2019
compared to growth of 2.4 percent year-on-year in 2018.
 As expected, GDP growth was lifted by non-oil sector. However, Saudi Arabia’s
lower yearly oil output as a result of the OPEC agreement, meant oil sector
GDP declined in 2019, resulting in an overall contraction of GDP growth.
 According to the IMF estimates, Saudi Arabia’s GDP growth is expected to
remain on a positive trajectory, averaging 2.3 percent over the five years
forecast period.
 With this rate of economic growth, Saudi Arabia will remain below the average
growth rate of c. 5 percent which was recorded between 2011 and 2015. The
most challenging aspect of the long term economic growth will be in bolstering
the non-oil private sector as any significant decline in oil prices and oil
production from current levels can be a drag on headline GDP growth.
Forecast

Source: Knight Frank Research, Macrobond

Saudi Arabia Oil & Non-Oil GDP and GDP Growth
 Non-oil GDP growth has been gradually accelerating since 2016, reaching 3.3
percent in 2019, the highest level of growth since 2015. The non-oil economy
is benefiting from the spillovers of oil price recovery and the ongoing reforms
plan aimed at restructuring the economy and decreasing its reliance on the
hydrocarbon sector.
 Both the Vision 2030 and the National Transformation Plan (NTP) are set to
remain a central element of economic policy over the coming years and provide
further support to the expansion of the non-oil sector.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 32
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Source: Knight Frank Research, Macrobond
3.2 Saudi Arabia, Purchasing Manager Index (PMI)
 The Purchasing Manager Index (PMI) – a non-oil tracker - The Saudi Arabia
PMI plunged to a record low of 42.4 in March 2020 from 52.5 in February, since
the survey began in August 2009 as travel and social restrictions aimed at
stopping the spread of the virus affected business.
 Al fall in business activity, new orders and stocks of purchases were listed as
the main factors weighing on the Saudi PMI. However, employment numbers
dropped only slightly in March, which contrasted with the steep falls in output,
new work and business confidence.

Source: Knight Frank Research, Macrobond

3.3 Saudi Arabia, Central Government Budget
 In December 2016, Saudi Arabia has launched the Fiscal Balance Program
2017-2020, which represents a medium-term fiscal planning mechanism to
sustain the status of public finances and achieve a balanced budget by
maximising non-oil government revenues and improving government spending
efficiency. This has helped the fiscal deficit to gradually narrow from a record

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 33
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 level of 17.2 percent of GDP in 2016 to an estimated 1.9 percent of GDP
according to the IMF. A fiscal balance is targeted to be achieved by 2023.
 Fiscal consolidation measures in view of strengthening non-oil revenues have
so far included the introduction of VAT starting January 2018, the
implementation of an expatriate levy in the form of a fee on dependents starting
from July 2017, and the introduction of an excise tax on certain commodities
such as soft drinks, energy drinks and tobacco products. In early 2019, Saudi
Arabia has extended the scope of the excise tax to include additional types of
beverages and smoking products.

Source: Knight Frank Research, Macrobond

3.4 Saudi Arabia Crude Oil Production and Price
 The Kingdom’s total oil production has increased to 10.31 mb/day in 2018
versus 9.96 mb/day in 2017. The OPEC’s yearly basket price rebounded to an
average of USD 69.5 in 2018 from its lowest point in a decade of USD 40.76 in
2016. In 2017 and 2018, there was a significant riecovery in oil prices partly
explained by the agreements on production cuts in an attempt to steady the
market.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 34
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Source: Knight Frank Research, Macrobond
Saudi Arabia Consumer Confidence Index by Thomson Reuters / IPSOS
 The Thomson Reuters / IPSOS Consumer Confidence Index for Saudi Arabia
significantly improved in 2019 and heading into 2020, hitting a level of 65.1 in
March 2020, reaching its highest level ever. The index is driven by the
aggregation of four weighted sub-indices namely: current conditions, perceived
economic expectations, perceived investment climate and current job security.
 In parallel with the improvement in consumer confidence, we have seen private
sector loan growth regaining momentum. The recovery in banks’ lending to the
private sector in 2018 and heading into 2020 is seen as crucial in driving
consumer spending and demand for real estate in the short to medium term.

Source: Knight Frank Research, Macrobond

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 35
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Saudi Arabia Consumer Price Index, YoY Change %
 Following a rise in inflation in 2018 as a result of the introduction of VAT,
inflation rates have fallen into negative territory in 2019. The latest CPI reading
was measured at -0.18 percent YoY in December 2019, compared to a rate of
-0.58 percent in the previous month. The most important categories in the
consumer price index for Saudi Arabia are food and beverage (22 percent of
total weight); Housing, water, electricity, gas and other fuels (21 percent);
Transport (10 percent); Furnishings, household equipment and routine
household (9 percent); and Clothing and footwear, and Communication (8
percent each).
 Following the introduction of VAT and the revision of subsidies in 2018,
inflationary pressures and weak consumer sentiment have impacted consumer
spending. We see a change in the situation with the recent improvement in
consumer confidence and the price deflation which will likely translate into
higher consumer spending and a regain of appetite for real estate purchases.

Source: Knight Frank Research, Macrobond

3.5 Saudi Arabia Population Segmentation by Province - 2017
 Saudi Arabia accounts for over 50 percent of the total population of the GCC
and is largely more populous than any other GCC country. According to official
statistics, the population count was registered at 32.6 million in 2017.
 The population segmentation by regions for 2017 shows that nearly 65 percent
of the population of the Kingdom is concentrated in three provinces namely
Makkah Al Mokarramah, Riyadh, and the Eastern Province which account for
26 percent, 25 percent and 15 percent of the country’s population respectively.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 36
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Beyond the year 2017, the breakdown of the KSA population by region is not
available.

12%%
5%2% Al-Riyadh
1%
2%
3% 25%
Makkah Al-
7% Mokarramah
Al-Madinah Al-
Monawarah
15% Al-Qaseem

4% 26% Eastern Region

7%
Aseer

Source: Knight Frank Research, GASTAT

Saudi Arabia Population Forecasts
 According to official statistics, the population of Saudi Arabia is estimated to
have reached 33.4 million in the first half of 2018 and 34.2 million in the first
half of 2019. The Saudi/Non-Saudi breakdown of the population for 2018
stands at 20.8 million/12.6 million according to the same source.
 Based on the IMF forecasts, the population of Saudi Arabia is expected to grow
at a constant 2 percent annual growth rate from 2019 onwards, reaching 36.7
million in 2023. A large and growing population, albeit at a slower pace than
previous years, will continue to drive demand for goods and services in the
short to medium term.
 Saudi Arabia’s population is dominated by Saudi nationals, accounting for 63
percent of the population. This implies that aggregate demand for products and
services does not primarily stem from the expatriate workforce.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 37
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Source: Knight Frank Research, IMF
3.6 Total Number of Households
 Total number of households in Saudi Arabia is estimated at roughly 6.2 million
in 2019 according to Oxford Economics. The yearly average growth in number
of household is set to slow to 1.5 percent per annum between 2019 and 2028
according to Oxford Economics down from 2.7 percent between 2008 and
2019.
 The average household size in Saudi Arabia stood at 5.48 individuals in 2019
according to Oxford Economics. While the average household size for Saudi
households stands just over 6.0, the average household size for non-Saudis is
closer to 4 individuals. The overall average household size is set to slightly
decrease over the next years reaching 5.45 in 2028.
 Regarding the local population, it was not unusual historically for generations
of the same family to be living in a sizeable family home. The younger
generation now exhibits a desire to move away from multi-generational
household structure. Over the next decades, falling household sizes will
underpin demand for higher density development which provides smaller and
more efficient units.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 38
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Source: Knight Frank Research/ Macrobond, Oxford Economics

Population by Age, Nationality, and Gender - 2018

 The population pyramid of Saudi Arabia that depicts the age structure of the
Saudi and Non-Saudi population based on the preliminary 2018 data, highlights
the fact that approximately 39.2 percent of the population were aged between
0 and 25 years, about 57.5 percent were aged between 25 and 64 years and
3.2 percent were aged above 65 years.
 When looking at the age structure of the Saudi population, the share of the
population aged between 0 and 25 years rises to 49 percent, highlighting the
young demographic profile of the Saudi population, a key driver to consumer
market growth.
 It is expected that population dynamics are expected to shift in Saudi Arabia
over the next decades, which will entail a significant increase in the population
over 40. The over 60s age cohorts are expected to increase by 3 times between
2018 and 2035. Despite these changing demographic profile, Saudi Arabia will
remain amongst the youngest countries in the GCC in 2030.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 39
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Source: Knight Frank Research, Macrobond

Labour Force and Unemployment Rate, Non Saudis

 The employment market has been at the forefront of the economic agenda
particularly as Saudi Arabia rolls out the Saudization plan aimed at boosting
national employment in the private sector, placing a special focus on youth and
women participation in the workforce.
 So far, this has entailed the introduction of levies on expats in the form of fees
on dependants and the implementation of a plan restricting employment in
certain sectors to Saudi nationals.
 According to the latest Q3 2019 Labour Survey, total employed persons
(excluding employees in the security and military sectors and non-registered in
the records of GOSI and MCS) reached 12.9 million in Q3 19 as compared to
13.8 million in Q1 2017. This decline in total employment figures can be
explained by the expat outflows from the workforce resulting from Saudization
policies.

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 11,000 1.20%

10,500 1.00%

0.80%

Thousands Persons
10,000
0.60%
9,500
0.40%
9,000 0.20%

8,500 0.00%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018 2019

Labour Force and Unemployment Rate, Saudis

 Recent official statistics reveal that the unemployment rate among Saudis has
slightly edged down. According to the Q3 2019 Labor Market Survey, the official
rate of unemployment among Saudis fell to 12.03 percent. This was down from
12.3 percent in Q2 2019 and represents the lowest rate of unemployment since
Q4 2016.

3,200 13.20%
13.00%
3,150 12.80%
12.60%
Thousand Persons

3,100 12.40%
3,050 12.20%
12.00%
3,000 11.80%
11.60%
2,950 11.40%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018 2019

Source: Knight Frank Research, Macrobond

KSA Employment by Economic Activity (Saudis, 2018)

In 2018, the trade sector accounted for the largest share (23 percent) of
employment among Saudis in Saudi Arabia. This is followed by collective and social
services (22 percent) and by the construction sector (21 percent).
In 2018, a large share of the non-Saudi workforce was employed within the
construction sector (41 percent). This is followed by the trade sector which employs
25 percent of the non-Saudi workforce.
Given Saudi Arabia’s decision to gradually restrict certain retail jobs to nationals,
we should expect to see an increase in the share of Saudis employed within the

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 wholesale and retail trade sectors over the coming years. A total of 43 professions
in the retail sector will be restricted to nationals.
In the shorter term, Saudization policies are resulting in higher costs for most
businesses as the average wage for Saudis is significantly higher than the average
wage for non-Saudis. Saudi wages have increased by c. 4 percent since the
beginning of 2017, outpacing inflation, a reflection of how Saudization is affecting
local economic conditions.
On the upside we have seen a very encouraging rise in the Saudi female labour
force participation rate to 24.3 in the second quarter of 2019 compared to 22.4
percent a year earlier. The inclusion of women in the workforce, is incentivising
employment, increasing household income and pushing toward greater productivity
in the workforce.

6% 3% 4%
10%
11%

21%

22%

23%

Post and telecommunications Manufacturing

Construction Trade
Collective and social services Finance, insurance and real estate
Mining and quarrying Other sectors

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 KSA Employment by Economic Activity (Non-Saudis, 2018)

2%4%
1%
10% 10%

7%

25%
41%

Post and telecommunications Manufacturing

Construction Trade
Collective and social services Finance, insurance and real estate
Mining and quarrying Other sectors

Source: Knight Frank Research, Labour survey Q4 18

Employment YoY Change%
 Employment growth in Saudi Arabia is set to decelerate to 1.3 percent per
annum between 2020 and 2023 down from 4.6 percent between 2008 and 2019
according to Oxford Economics estimates.
 Total employment declined by -6.34 percent in 2018 due to outflows of
expatriates from the workforce. However, this trend has reversed in 2019 where
total employment increased marginally by 1.31 percent.
 Employment growth is expected to remain supported by the various initiatives
aimed at boosting youth, women and Saudi nationals’ participation in the
workforce, in the short to medium term this will be balanced by rising pressures
on the expat labour market resulting from the impact of government fees and
Saudization plans on non-Saudi employment figure.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 43
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Source: Oxford Economics, Macrobond

Jeddah Retail Market

3.7 JEDDAH RETAIL RENTS, SAR/SQ M/PA

Regional/Super- Community
Composite
Regional Malls

Q2 2019 2,945 1,844 2,395

As at Q2 2019 average rental rates in super regional and regional malls were
recorded at SAR 2,945/sq m/pa, whilst community malls rentals stood at SAR
1,844/sq m/pa.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 44
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 3.8 JEDDAH RETAIL RENTS, YEAR-ON-YEAR % CHANGE

Regional/Super Community
Composite
-Regional Malls

Y-o-Y % Change 0% -4% -2%

Super regional and regional malls rents across Jeddah remained unchanged in the
year to Q2 2019. Whilst average lease rates for community centres fell by 4% over
the same period.

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 3.9 JEDDAH RETAIL FUTURE SUPPLY MAP – STUDY, DESIGN AND EXECUTION

There are approximately 16 active projects within Jeddah, with delivery dates up to
2021, which are either being executed or in the study or design phase. The total
value of these projects is estimated at USD 1.3 billion.

3.10 JEDDAH, RETAIL SUPPLY, TOTAL, SQUARE METRES

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 2018 2019f 2020f 2021f

Total stock (Million

1.87 2.14 2.48 2.70
square metres)

Jeddah’s current office stock stands at around 1.87 million square metres of mall-
based retail space. By 2021, the total supply of structured retail space is expected
to be around 2.7 million square metres.
3.11 JEDDAH, MARKET WIDE INDICATIVE VACANCY

Vacant
13%

Occupied
87%

Occupied Vacant

The market wide vacancy rate in Jeddah remained unchanged at 13% as at Q2

2019. Given the soft economic conditions and the growth of e-commerce, landlords
continued to offer flexible leasing options to retain tenants.

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 3.12 JEDDAH RETAIL MARKET OUTLOOK, 12 MONTHS

We expect market conditions in Jeddah to remain challenging with rental rates of

community malls continuing to fall and vacancy rates expected to increase.
However it is expected that Jeddah regional and super regional malls lease rates
will remain stable during the next 12 months due to a limited supply of retail space
in this segment.

Comparables / Benchmarking
Mall 3.13 The key competition / comparables in relation to the subject mall we consider to be
the following large / super regional malls:

 Al Salaam Mall

 Aziz Mall

 Haifa Mall

 Mall of Arabia
3.14 We have reviewed key performance metrics to understand how these malls perform
in relation to the subject, and what they offer as competition.

Item Haifaa Mall of

Aziz Mall Salaam Mall
Mall Arabia
GLA sq m 72,153 32,946 109,185 121,113

Non GLA units 71 44 60 72

Parking spaces 1,422 914 2,053 1,825

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 Parking ratio 1 space per
51 36 53 66
X sq m

Vacancy % 5.0% 16.4% 3.5% 7.1%

Occupancy (approx.) 95.0% 83.6% 96.5% 92.9%

Footfall 2019 6,797,062 4,580,595 7,916,204 10,972,869

Opex SAR psm average 250 250 350 251

Additional income as %
8.1% 8.1% 8.1% 8.0%
of total income

S/C recovery per sq m 224 260 294 177

Rents 0-50 sq m 4,000 3,200 6,100 3,400

Rents 51-200 sq m 3,500 2,700 4,000 2,600

Rents 201 - 500 sq m 2,600 1,800 3,100 1,900

Rents 500 - 1,500 sq m 1,800 1,200 2,400 1,400

Over 1,500 sq m 700 1,000 1,100 500

Year built 2005 2011 2008 2012

Source: Arabian Centres IPO prospectus

3.15 The competitive set of shopping malls all show occupancy above 85% which is
positive. In our visits to the competing malls, it was apparent there were generally
very few vacant units, typically less than 20 in all, which translates to occupancy
rates of 85 – 95% typically. The subject benefits from having a very popular anchor
store in Hyper Panda, which is popular with the income bracket in this part of
Jeddah, being positioned differently from Danube which is in Salaam Mall just
across Prince Majid Road.
Occupancy 3.16 Considering the competitive set of malls above, we note that Mall of Arabia has
the highest occupancy, although 5 of the comparable set have occupancy rates
above 90%.

Rank Occupancy Mall

1 97% Al Andalus

2 96.5% Mall of Arabia

3 95% Red Sea Mall

4 92.9% Al Salaam Mall

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 5 83.6% Haifaa Mall

6 95% Aziz Mall

7 85% Stars Avenue

Source: Knight Frank

Parking 3.17 The subject property provides a best in class parking ratio, with over 3,000 parking
bays, much more than its competitors.

Rank Parking Ratio Mall

1 1:26 Al Andalus

2 1:36 Haifaa Mall

3 1:51 Aziz Mall

4 1:53 Mall of Arabia

5 1:66 Al Salaam Mall

6 TBC Red Sea Mall

7 TBC Stars Avenue

Source: Knight Frank

Gross Leasable 3.18 We provide a summary of the GLA for each mall in our comparable set below.
Area (GLA)
Rank GLA sq m Mall
1 140,000 Red Sea Mall

2 105,994 Mall of Arabia

3 101,560 Al Salaam Mall

4 89,697 Al Andalus Mall

5 71,944 Aziz Mall

6 35,150 Stars Avenue

7 32,594 Haifaa Mall

Source: Knight Frank

Jeddah Hospitality Overview

Jeddah Hotel 3.19 ● The following exhibit below depicts the hotel market performance of major
Performance cities in the Middle East, in relation to Jeddah as per STR Global data 2019.

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● ● Over the last year (2018-2019), the hotel sector across the majority of key cities
in the GCC witnessed declining RevPAR performance.
Exhibit 11: Regional Performance of the GCC Hotel Market 2019
300

250 Jeddah
ADR (USD)

200
Kuwait City
Riyadh
Makkah Ras Al Khaimah
150 Manama
Medina Dubai
Muscat
Al Khobar/Dammam
100 Abu Dhabi
Fujairah
Doha
Sharjah
50
45% 50% 55% 60% 65% 70% 75% 80%
Occupancy (%)

Source: STR KSA GCC Jeddah

● Despite the fact that occupancy in Jeddah increased by 1 percentage point to
58 percent, ADRs declined by 11 percent from USD 282 (SAR 1,056) to USD
251 (SAR 940) resulting in a RevPAR decline of 9.3 percent from USD 160
(SAR 600) to USD 145 (SAR 544).
● Nevertheless, Jeddah remains the best performing market in terms of RevPAR
compared to other key cities observed across the GCC.
Historic Market 3.20 Exhibit 12: Historical Performance of Jeddah’s Hotel Market (2012 – 2019)
Performance
1,200 100%
78.8%

74.2%
74.2%
73.6%
72.4%
71.1%

71.1%

90%
65.5%

1,000
80%
58.9%

57.9%
56.8%

70%
Percentage (%)

800
60%
SAR

600 50%
40%
400
30%
20%
1,056

200
969
675
480

716
509

753
546

805
635

889
655

719

946
703

971
636

972
572

600

940
544

10%
0 0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
ADR RevPAR Occupancy (%)

Source: STR

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 51
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 ● Between 2009 and 2019, occupancy declined 13 percentage points, while ADR
grew by a compounded annual growth rate of 3.4 percent from SAR 675 to
SAR 940. As a result, RevPAR increased by a compounded annual growth
rate of 1.3 percent from SAR 480 to SAR 544.

● Subsequent to the financial crisis (2008/2009), the hospitality market in Jeddah

showed signs of recovery until 2014. However, post 2014, the market softened
as a result of a rise in regional conflicts and a decline in oil prices, which led
governments to cut back on spending. This was further exacerbated from the
supply that was introduced to the market in 2016 (in particular occupancy).

● Looking forward, we anticipate the market to decline in the short term due to
the recent global uncertainties surrounding the outbreak of Covid-19. As global
governments impose restriction on travel and major events are being
cancelled, we expect RevPAR to decline. This trend is expected to reverse in
the medium term as governments will ease travel restrictions.

Seasonality 3.21 ● The following exhibit depicts the monthly deviation from the annual average
RevPAR in Jeddah for the full year 2019. The seasonality of Jeddah is very
pronounced, with average RevPAR levels increasing by up to 74 percent in the
month of June and decreasing to a low of 55.5 percent in the month of
November.
● The comparatively low occupancy levels combined with high average rate are
symptoms of a heavily seasonal market in Jeddah with demand peaks during
Ramadan and Hajj season and troughs during winter and spring months.
Exhibit 13: RevPAR Variation from the Mean Jeddah 2018

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
100.0%
74.0% 71.9%
80.0% 59.6% 57.4% 59.2%
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
-36.8% -31.6%
-60.0% -41.7%
-49.8% -52.1% -55.5%-54.7%
-80.0%
-100.0%

Source: STR

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 Supply 3.22 ● The following exhibit depicts the evolution of supply between 2009 and 2024.
evolution
Exhibit 14: Jeddah evolution of room supply (2009-2024)

22.00 21.1

20.00
18.4 2.8
18.00
2.4 1.7
15.3
Number of rooms ('000s)

16.00 14.8
1.7
14.00 2.2
12.7 1.9
12.00 11.0 1.6 1.3 1.5 8.6
10.5
9.5 1.2 1.1 7.6
10.00 9.0 1.1
1.0 0.6 0.8
7.1 7.1 7.1 7.2 7.2 7.7 0.8 5.9 5.9
8.00 6.9 0.6 0.6 0.6
0.5 0.5 0.5 0.5 0.5 0.5 5.2
6.00 0.6 0.6 0.6 0.6 0.6 0.6 0.6 4.5 4.5
3.9 4.1
4.00 3.1 3.2 3.2 3.2 3.4 3.4 3.6 8.0
6.7
5.7 5.7
2.00 3.8 4.3 4.5 4.7
2.8 2.8 2.8 2.8 2.8 2.8 2.9 3.6
0.00

5-Star 4-Star 3-Star & Below SA Total

Source: STR
● At the end of 2019, the total quality room supply in Jeddah stood at 10,997
keys, of which 59 percent (6,540 keys) of the total quality key count comprised
internationally branded rooms.
● The quality hotel market in Jeddah recorded an annual growth rate of 4.7
percent over the last 10 years (2009 to 2019) and 8.7 percent over the last 5
years (2014-2019) indicating continued growth despite an economic
slowdown. Between 2009 and 2019, the serviced apartment segment recorded
the highest annual growth rate of 10.4 percent; however, it is important to note
that the segment started with a small base of 458 rooms in 2009. The 5-Star
segment recorded the second highest annual growth rate of 4.9 percent, while
the 4-Star and 3-Star & below segments recorded annual growth rates of 3.9
percent and 2.5 percent respectively.
● Given the supply pipeline until the end of 2024, the market is expected to
expand at a faster pace compared to historical figures with a compounded
annual growth rate of 13.9 percent (2019-2024). The quality room supply is
estimated to increase by nearly double (10,102 quality rooms); however, it
should be noted that the annual historical materialisation rate stood between
40 and 60 percent and therefore a number of these projects would likely be
delayed resulting in growth rates contracting.
● All segments are estimated to record a faster growth rate between 2019 and
2024 compared to growth rates noted between 2009 and 2019. The serviced

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 apartment and 3-Star & below segments are anticipated to grow at an annual
compound rate of 17.5 percent and 16.4 percent respectively. As mentioned,
this is mainly attributed to the fact that these segments currently feature a low
supply base.
● The 5-Star and 4-Star segments are expected to note annual growth rates of
12.5 percent and 13.8 percent respectively.
Demand & 3.23 ● The following exhibit showcases the evolution of supply and demand dynamics
Supply between 2009 and 201 9 in Jeddah.
Exhibit 15: Jeddah quality hotel market supply Vs. demand dynamics

4,500 18.0%
16.4%

4,000 16.0%

14.0%
3,500
Room nights (thousands)

10.6% 12.0%
3,000
10.0%
2,500
8.0%
6.5%
2,000 5.7%
4.9% 6.0%
1,500
4.0%
2.4% 2.1%
1,000 0.0%
0.0% 0.0% 2.0%
2,524
1,796

2,585
1,838

2,585
1,872

2,585
2,037

2,639
1,942

2,639
1,958

2,810
2,086

3,271
2,143

3,458
2,037

3,825
2,174

4,014
2,323
500 0.0%

0 -2.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Rooms nights available Rooms nights demanded Supply (y-o-y change)

Source: STR
● In the first half of the 10 year period – there was a limited supply of rooms
introduced to the market, with 2010 and 2013 noting an increase in supply.
However in the second half of the period observed, every year noted an
increase in supply, with 2016 noting the highest supply increase.
● Supply and demand dynamics remained challenged between 2009 and 2019
given that supply outpaced demand, representing a compounded annual
growth rate of 4.7 percent and 2.6 percent respectively.

Jeddah Future Outlook

3.24 ● There are several key tourism related projects that have recently been completed,
these include:
● Jeddah Season

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 ● King Abdullah Sports City
● Prince Sultan Cultural Centre
● King Abdul-Aziz University
● Al Balad Historical District
● Jeddah Waterfront
● Jeddah International Exhibition & Conference Centre (JIECC)
● King Abdulaziz International Airport (new terminal)
3.25 ● In addition, there are number of projects under construction, these include:
● Haramain Railway
● Jeddah Economic City
● Heart of Jeddah
● King Abdullah Economic City

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Jeddah – Existing Demand Generators
Red Sea Mall

● It covers approximately 242,200 square meters of built area

with the "Elaf Jeddah" hotel attached to the mall.
● The mall has the "biggest indoor water fountain" and the
largest glass covered area in Saudi Arabia.

King Abdullah Sports City

● The stadium lies approximately 15 kilometres inland from the
Corniche, 20 kilometres from the Red Sea Mall, 35 kilometres
from the King Fahd Fountain, and 40 kilometres from Al-Balad
old town.
● In addition to the main 60,000-seat soccer stadium, the
complex includes a 10,000-seat multi-sports hall, an outdoor
1,000-seat athletic stadium, additional indoor training fields,
and parking for 45,000 vehicles

King Abdul-Aziz University

● King AbdulAziz University includes two separate campuses

(one for females and one for males) as per the requirements
of the Islamic Shar’ia Law.
● Each of the campuses is equipped with academic, cultural,
sports and recreational facilities, as well as a large library,
which is supplied with the most advanced technologies to
serve students and the teaching staff.

Al Balad Historical District

● Al Balad was founded in the 7th century and historically

served as the center of Jeddah.
● Al Balad was nominated by Saudi Commission for Toursim
and Antiquites to be listed in UNESCO's World Heritage site,
which was accepted on 2014.

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 Jeddah Corniche
● The corniche features a coastal road, recreation area,
pavilions and large-scale civic sculptures - as well as King
Fahd's Fountain, the highest fountain in the world.
● The established area is well equipped, with many facilities
including restaurants, retail outlets, hotels, aquarium, cultural
center, water dancing fountain, blossoming gardens and
fountains.

Jeddah International Exhibition & Conference Centre (JIECC)

● Jeddah International Exhibition and Convention Center (also
known as Jeddah Center for Forums & Events) is a multi-
purpose venue, located in one of the leading commercial hubs
of Saudi Arabia.
● The venue covers 40,000 square metres and provides 10,000
square metres of indoor event area, a large exhibition hall, a
business centre and dining options.

Haya Jeddah Festival

● Haya Jeddah, considered the largest shopping festival in

Saudi Arabia, promotes the city’s position as a welcoming and
accessible family destination.

Fakieh Aquarium
● The only aquarium for the public in Saudi Arabia and offers
education and entertainment by presenting the wonders of the
underwater environment of the Red Sea and marvels brought
from other seas and oceans around the world.
● With more than 200 species including Sharks, Groupas, Sting-
Rays, Napoleon Wrasse, Sea Horses and Moray Eels
amongst others, the Fakieh Aquarium aims to continue
expanding the aquarium, offering a unique dolphin swimming
experience, which was started in 2019.

Haramain High Speed Railway

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 ● The 450km high speed rail link connects the cities of Makkah,
Jeddah and Madinah.
● The project has been running tests since Q3 2016 and
opened to the public officially in October 2018.
● The line is projected to carry around 165,000 passengers per
day at full operational capacity.

Jeddah– Upcoming Major Developments

Prince Sultan Cultural Centre

● The Cultural Centre will be the focal point of the Cultural City,
providing a range of cultural and artistic activities and
programmes.
● The Centre will be designed to include a 2,000 seat Auditorium
for performing arts, conventions, exhibitions, interactive
experiences and gallery space.

Jeddah Economic City

● Jeddah Economic City, previously known as Kingdom City, is a
5,202,570 square metre (56,000,000 square feet) (2 square
mile) project approved for construction in Jeddah, Saudi Arabia.
● The centerpiece of the development will be Jeddah Tower,
planned to be the tallest building in the world upon its
completion. Jeddah Economic City is a three-phase project. We
understand that Jeddah Tower is included in phase 1 of
construction, earmarked for completion by 2021.

Heart of Jeddah
● Heart of Jeddah is a new community in central Jeddah, Saudi
Arabia. The site is a redevelopment of an abandoned air field
and is surrounded by newly developed residential communities
and retail establishments. Immediately adjacent to the site is
King Abdelaziz University.
● Derived from the historical development patterns of Jeddah, the
Souk features a number of small, low-rise mixed-use buildings.

King Abdullah Economic City

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 ● King Abdullah Economic City (KAEC) has defined its
credentials in the past few years as a major social and
economic growth driver in the Kingdom.
● The Economic City, the 168 million square metres development
on the Red Sea coast, energises the economy through diverse
components including a port, industrial zone, and residential
projects.
● KAEC will have a station on the Haramain high-speed railway
connecting Makkah and Medina.

Investment Overview
3.26 Below we document some of the transactions that have taken place in the retail sector
in recent times. The REITS have been the most active acquirers of retail real estate
in the Kingdom in terms of retail malls. In addition, Arabian Centres listed their malls
business on the Tadawul in early 2019, which was over subscribed at the time,
showing the appetite for investors exposure to this asset class..

Asset Acquisition Cap

Location NOI Notes
Price SAR rate

Acquired by Wabel REIT in 2018. 3

Al Makan Mall, yrs old mall, 75 tenants, 97%
219,417,197 17,820,000 8.12%
Tabuk occupancy, freehold title. Anchored
by HyperPanda and H&M.

Acquired by Wabel REIT in 2018. 4

Al Makan Mall, yrs old mall. 114 tenants, 97%
166,820,000 21,390,000 12.82%
Dawadmi occupancy, leasehold title. Anchored
by HyperPanda and Centrepoint.

Acquired by Wabel REIT in 2018. 3

yr old mall, 171 tenants, 97.5%
Al Makan
470,206,000 42,800,000 9.10% occupancy, freehold title. Anchored
Mall,Hafr Al Batin
by Hyper Panda, Asateer, Home
Centre.

Acquired by Wabel REIT in 2018. 3

yr old mall, 63 tenants, 93%
Al Makan Mall,
232,560,000 19,920,000 8.57% occupancy, freehold title. Anchored
Riyadh
by Centrepoint, Panda, H&M, City
Max.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 59
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Acquired by AlKhabeer REIT in
2019. Head lease in place for the
Ahlan Court
70,000,000 7,000,000 10% entire asset at an annual rent of SAR
Centre
7m, which appears over rented. 9
showrooms and an office.

Al Rashid Mall,
206,000,000 15,646,293 7.60% Built in 2010, 3 storeys,
Jizan

Acquired by Bonyan REIT, initial

SAR 233 m plus SAR 148 m payable
Al Rashid Mall,
372,000,000 34,583,966 15.49% upon 90% occupancy, total SAR
Abha
372m. 20 year leasehold title, newly
built in 2017/2018.

Al Rashid Mega Acquired by Bonyan REIT, built in

505,500,000 32,824,933 6.49%
Mall, Madinah 2009, freehold title, 4 storeys.

Acquired by Al Ahli REIT in 2017, 10

year old+ mall, central location,
Al Andalus Mall,
1,147,279,000 92,396,115 8.05% occupancy 95%, anchored by
Jeddah
HyperPanda, freehold title.
Connected to Staybridge Suites.

Acquired by Sedco REIT in 2018,

newly constructed retail development
on Khobar corniche, occupancy,
Ajdan Walk,
345,000,000 25,000,000 7.25% anchored by Cheesecake Factory
Khobar
and other Al Shaya brands. Freehold
title, headlease to Al Fozan / Al Oula
for 5 years.

Yield 3.27 The subject asset(s) i.e. mall and hotel in our opinion attract different risk profiles,
conclusions with the hotel having no contracted income and being subject to performance of the
operator. The mall itself has certain long term incomes and many various different
shorter term incomes.
3.28 We consider that for the mall, the asset is a large lot size, with a relatively limited
number of potential purchasers. The key positive factors associated with the asset
include 95% occupancy, well established mall with excellent parking, a tenant mix
that is very in line with the surrounding catchment income profile and a strong anchor

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 supermarket in the form of Hyper Panda. It has a good mix of mini anchors and
smaller line shops and some franchisees that underwrite large portions of the income.
3.29 We conclude that a terminal cap rate of 8.50 to 9.0% would be reasonable for the
subject mall given its size, age and income profile.
3.30 We conclude that the hotel, being newly developed will take time to stabilise, but with
an international brand in this location should perform well and derive synergies from
the connectivity to the mall.

SWOT Analysis - Mall

Strengths Weaknesses
 Well established mall with a very high  Lot size is large – relatively small
occupancy (95%) market of purchasers able to afford
this price point
 Good long income in the form of the
anchor Hyper Panda and cinema  Salaam Mall opposite, within 500m –
so competition
 Some other good long term anchors
such as CityMax, Home Box,  Older property, will start to require
CentrePoint increasing OpEx and cap ex going
forward in order to maintain market
 Excellent parking facilities sets it
share and rental levels
apart from other malls

 Food Court has recently been

overhauled and renovated to improve
performance

 The tone of the mall, being mid

income brands suits the tone of the
catchment

 Kids Fun Zone acts as demand driver

to bring families in

Opportunities Threats
 New gates in the rear elevation of  New supply of malls generally across
mall to increase foot fall to certain Jeddah
areas
 Market sentiment falling further
 Development of hospital adjacent
should help footfall to the mall and
visitation to the hotel apartments

 Cinema going into mall to drive

footfall

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 61
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 3.31 Investors would typically formulate their bids for this type of asset on an initial yield
approach from our experience of advising on the buy side of and also taking to
market a number of commercial investments across the Kingdom of Saudi Arabia
in the last 18-24 months.
3.32 In formulating our capitalisation rate / yield we have had regard to the points in the
SWOT analysis above but also to the following:

 The mall is 95% let.

 There is an upcoming cinema which is a footfall generator.

 The amenities provided are good, with a nice mix of leisure, F&B and
entertainment.

 The parking facilities are market leading.

 The major anchor is strong and well suited to the catchment in terms of spend
levels.
The medium term outlook is positive, and although short term retailers are under
pressure and there is a lot of supply in the form of super-regional malls coming to
the market in Jeddah, most of these are located to the north, around or north of,
the airport.

GCC Investment Market

GCC Hospitality 3.33 In benchmarking our hotel yield / terminal yield, we have had regard to the following
Investment anecdotal sales transactions in the MENA region, which have occurred over
Market previous years, providing good indicators of where the market lies.
Overview
Exhibit 16: list of transactions that have been carried out in MENA

Sales Price Value per

Country Transaction Star
Location (USD) Keys Key
of Origin Date Rating
(Rounded) (USD)

Ritz Carlton
UAE 2011 5 Star 300,000,000 300 600,000
DIFC

Ocean View
UAE 2011 4 Star 98,000,000 342 354,223
Residence

Marina View
UAE 2013 4 Star 60,000,000 224 272,480
Hotel

Business Bay
UAE 2014 5 Star 79,000,000 296 266,892
Hotel

Moevenpick
UAE 2014 5 Star 95,000,000 312 299,728
Bur Dubai

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 62
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 4 Star –
Yasat Gloria UAE 2014 Serviced 259,000,000 1,019 245,232
Apartment

Moevenpick
UAE 2014 5 Star 130,000,000 294 435,967
JBR

Business Bay
UAE 2015 4 Star 140,000,000 367 381,471
Hotel

Kenzi Hotel KSA 2015 5 Star 400,000,000 759 527,009

Bahrain
Bahrain 2015 - 92,000,000 246 373,984
Tourism Co.

Bakkah ARAC
KSA - 4 Star 88,000,000 426 206,573
Hotel

Moevenpick
City Star KSA 2016 4 Star 69,000,000 228 302,632
Jeddah Hotel

Al Falaj Hotel Oman 2016 4 Star 36,000,000 150 240,000

Warwick Hotel UAE 2017 4 Star 136,000,000 357 381,624

5/4 Star
Emaar Portfolio UAE 2018 600,000,000 993 604,230.
portfolio

Source: Knight Frank

Hotel Discount 3.40 The fact that there is typically no confirmed / contracted income to the owner, as
Rate / Exit Yield the majority of hotels are run under management agreements rather than leases
in KSA suggests that the yield sought by investors should be slightly higher than
other real estate asset classes, with long term contracted income. Market
sentiment in the area over recent years, coupled with the upcycle of tourism
growth, particularly in the leisure sector, which is a key focus of Vision 2030
diversifying the economy away from oil revenue, has led to proactive discussions
with potential investors, however, this is yet to come to fruition with an open market
transaction.
We are not aware of any direct comparable sales transactions, however, we are
aware of the Movenpick Jeddah Star transaction, positioned at an upscale 5-Star
level, comprising 228 keys. We are unaware as to what level the transaction
achieved as an initial yield against 1st year NOI, due to opaque data. However, we
are aware the transaction achieved a value per key of circa USD 302,600.
Although the transaction is not directly comparable, as the sale was carried out in
2016 and competes in a different category to the subject property. This allows us
to understand buyer sentiment, in the current market. When taking this into
consideration, we have assumed a higher capitalisation rate and a lower cost per
key for the subject property, due to the location, quantum of keys offered and
positioning.

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Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 3.41 Based on the above information and taking into consideration the outlook for the
specific hospitality sector in Jeddah as well as the current impact of the recent
outbreak of Covid-19, we would expect an internationally branded serviced
apartment, operating in its ramp up phase, at the date of valuation, to reflect an
exit yield of circa 9.25 percent for an investor, looking to purchase on the open
market, equating to approximately USD 235,000 per key.

SWOT Analysis - Hotel

Strengths Weaknesses
● Located within the Al Woroud district ● Traffic congestion area
– prime location on the cross roads of
● Poor vehicular accessibility
Prince Majid Road and King Abdullah
Road. ● Limited F&B facilities

● Immediately adjacent to Al Andalus ● Trajectory of growth in the city of

Mall, a prestigious mall in Jeddah. Jeddah is shifting north, with
developments such as Jeddah
● Large room sizes, which are well
Economic City (JEC) and the
maintained to a high specification;
development surrounding the
● Diversity of room inventory providing Jeddah Creek.
guests with more choice.
● Variety of meeting space capitalising
on exposure towards MICE
segmentation
● Internationally branded serviced
apartments, where there is a lack of
supply in the current market.

Opportunities Threats
● Large masterplan development in ● Future supply pipeline will heavily
place where Al Andalus Mall and influence the market share of the
Staybridge Suites are one of the first serviced apartments.
phases of development to be
● Several vacant land plots which
constructed – potential to leverage on
may be developed into competing
corporate guest and VFR market
properties.
share from proposed hospital
currently under construction.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 64
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
4 Valuation

Methodology
4.1 Our valuation has been undertaken using appropriate valuation methodology and our
professional judgement.
Investment 4.2 Our valuation has been carried out using the comparative and investment methods.
method – Al In undertaking our valuation of the mall property, we have made our assessment on
Andalus Mall the basis of a collation and analysis of appropriate comparable investment and rental
transactions, together with evidence of demand within the vicinity of the subject
property. With the benefit of such transactions we have then applied these to the
property, taking into account size, location, terms, covenant and other material
factors.
4.3 We have undertaken the valuation of the mall via a discounted cash flow approach,
whereby we can reflect current and potential future revenues and costs explicitly. We
have applied rental growth, occupancy percentages, and operating expenses in our
cash flow based on our discussions with the client. Cap Ex items have also been
reflected based on their probably timing as we deem reasonable.
Profits Method 4.4 We
4 value operational property assets by reference to the earnings potential, as this
(DCF) – is the basis on which such properties are commonly bought or sold.
Staybridge
The income capitalisation approach is based on the principle that the value is
Suites
indicated by its net return, or present worth of future benefits, i.e. the future forecast
income and expenditure along with the proceeds from a future sale. These benefits
are converted into an indication of market value through capitalisation and DCF
process.
Of the three valuation approaches available to a valuer, the income capitalisation
approach provides the most persuasive and supportable conclusions when valuing
a hotel facility. Using a 10 year forecast and an exit yield most accurately reflects the
real actions of hotel buyers, who buy based on their leveraged discounted cash flow.

Valuation assumptions – Retail Mall

4.5 We have valued the shopping mall having regard to current and potential future
income, on a 10 year DCF basis. Given that the leases are for very different terms,
there is some income that is contracted well into the future and secure, and there are
also a number of leases which are short and therefore less secure (terms of 1 year
being common for certain units). Where income is contracted for the next few years,
we have reflected that contracted income in our cash flow along with fixed rental
increases. Upon lease expiry we have assumed they revert to Market Rent.
Inflation 4.6 We have adopted a rental growth and expense inflation rate of 2% in our cash flow,
in line with the long term standing average for the Kingdom.

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Occupancy 4.7 The current mall occupancy is 95%, with only 12 vacant shops throughout the
property. This is superior to the other malls in the competitive set as detailed in the
report. Having regard to future supply and the age of the mall, we have assumed a
structural occupancy level of 95% (stabilised).
4.8 Based on recent lettings and our analysis from benchmarking other malls as per the
report, we have derived the following gross Estimated Rental Value for Al Andalus
Mall components as follows:

Ground Floor First Floor

Item (ERV SAR psm) (ERV SAR psm / unit)
0 to 49 3,125 2,875

50 to 100 2,525 2,375

101 to 150 2,350 2,050

151 to 250 2,125 1,900

251 to 500 2,000 1,450

501+ 1,000 550

GF Kiosk - 171,100

FF Kiosk - 111,600

Cinema - 1,100

ATM - 99,100

Other - 575

Supermarket - 550

Warehouse - 650

4.9 The above are adopted market rents having regard to the recent deals achieved in
the mall and having regard to the current market sentiment.
Operating 4.10 We have been provided with the breakdown of the operating costs for the property by
Expenses the Client which amounts to SAR 25,887,240 per annum. This have been adopted in
our valuation.

Item Unit Assumption

Total Area sq m 90,485

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 Passing Rent SAR per annum 131,836,150

Market Rent at 100%

SAR per annum 137,000,000
occupancy

Operating Costs SAR per sq m per annum 25,887,240

Sinking Fund % of Total Revenue 1%

Bad Debts SAR year 1 33,000,000

Bad Debts % of Total Revenue from year 2 1.25%

Rent free Months in year 1 2

Stabilised Occupancy % 95.00%

Exit Yield % 8.75%

Growth % 2.00%

Discount Rate % 10.75%

Valuation assumptions – Hotel

Assumptions 4.11 Our valuation is necessarily based on a number of assumptions which have been
drawn to your attention in our General Terms of Business, Terms of Engagement
Letter and within this report.
Key 4.12 Our projections are prepared in accordance with the Uniform System of Accounts for
Assumptions the Lodging Industry (USALI) as used by the hotel and leisure industry worldwide.
We have made a number of assumptions within our valuation which we have listed
below:
● The valuation is based on the EBITDA of the serviced apartment, with an
allowance for the terms and fees included in the hotel management agreement.
● The valuation given includes furniture, fittings, equipment and operational
supplies that are necessary for the hotel as a going concern.
● We were not provided with the classification certificate for the operating hotel and
therefore we have assumed the previous certificate which expired on 31/12/2019
was renewed.
● Unless otherwise stated, ADR (Average Daily Rate) in our calculations is inclusive
of service charges, but exclusive of tax and municipality fees.
● Our cash flow is prepared on the basis of a fiscal year, not calendar year. Year 1
of the cash flow starts from the date of valuation.
● The client is currently in the process of terminating the hotel management
agreement with Holiday Inns Middle East under the Staybridge Suites brand and
is in advanced discussions with another reputable international operator.

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 Therefore, we have assumed that the operator / brand appointed would be similar
to that of Staybridge Suites. We have assumed that this new operator would
continue to manage the subject property effectively and efficiently under a 5-Star
deluxe serviced apartment positioning.
● We were not provided with the revised commercial terms under the new
management agreement and therefore have had to rely on industry standard fee
structures that are typically offered by hotel operators for the Jeddah market.
These terms are assumed to prevail over a 15-year term and come into effect
before the end of 2020.
● During the transition of operators, we have assumed that the property will
continue to remain open for business and be owner operated. Furthermore, our
projections take into account that the new operator would be appointed and
running the operations of the hotel before the end of 2020. A delay in appointing
the new operator would impact the projections.
● Typically, when a new hotel operator takes over an existing branded operational
hotel, there are costs associated with re-branding, FF&E upgrades, etc. Typically,
these costs are borne by the owner; however, we have been informed that the
costs related to re-branding will be borne by the new operator and that costs
related to any FF&E upgrades will be minor and be covered by the accrued FF&E
reserve from the previous years.
● The subject hotel has all relevant documentation and permissions required from
the relevant planning and trading authorities in Jeddah, KSA.
● We have assumed the rate of inflation to be 2 percent per annum.
● We have adopted a discount rate of 11.25 percent and a terminal capitalisation
rate of 9.25 percent for the hotel cash flow.
● We have adopted the 9.25 percent capitalisation rate to show the subject property
as a deluxe, internationally branded asset, located in the area of Al Fayha District,
an emerging international leisure and corporate destination in the city of Jeddah.
Property Risks 4.13 The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health
Organisation as a “Global Pandemic” on the 11th March 2020, has impacted global
financial markets. Travel restrictions have been implemented by many countries. In
the Kingdom of Saudi Arabia, market activity is being impacted in all sectors. As at
the valuation date, we consider that we can attach less weight to previous market
evidence for comparison purposes, to inform opinions of value. Indeed, the current
response to COVID-19 means that we are faced with an unprecedented set of
circumstances on which to base a judgement.
Our valuation is therefore reported on the basis of ‘material valuation uncertainty’ per
VPGA 10 of the RICS Valuation – Global Standards. Consequently, less certainty –
and a higher degree of caution – should be attached to our valuation than would
normally be the case. Given the unknown future impact that COVID-19 might have
on the real estate market, we recommend that you keep the valuation of this property
under frequent review.

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 For the avoidance of doubt, the inclusion of the ‘material valuation uncertainty’
declaration above does not mean that the valuation cannot be relied upon. Rather,
the phrase is used in order to be clear and transparent with all parties, in a
professional manner that – in the current extraordinary circumstances – less certainty
can be attached to the valuation than would otherwise be the case. The material
uncertainty clause is to serve as a precaution and does not invalidate the valuation.

Valuation bases
Market Value 4.14 Market Value is defined within RICS Valuation – Professional Standards as:
“The estimated amount for which an asset or liability should exchange on the
valuation date between a willing buyer and a willing seller in an arm’s length
transaction after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion.”
Market Rent 4.15 The basis of valuation for our opinion of rental value is Market Rent. This is defined
in RICS Valuation – Professional Standards as:
“The estimated amount for which a property would be leased on the valuation date
between a willing lessor and a willing lessee on appropriate lease terms in an arm’s
length transaction, after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion.”

Valuation date
Valuation date 4.16 The valuation date is 30 June 2020.

Market Value
Assumptions 4.17 Our valuation is necessarily based on a number of assumptions which have been
drawn to your attention in our General Terms of Business, Terms of Engagement
Letter and within this report.
Key assumptions 4.18 Whilst we have not provided a summary of all these assumptions here, we would in
particular draw your attention to the following assumptions which are particularly
important / relevant :

 Knight Frank have not measured the property and have relied upon the client
provided areas for all elements
Market Value 4.19 We are of the opinion that the Market Value of the freehold interest in the entire
(Aggregate) property, subject to the existing leases, and hotel management agreement at the
valuation date is:
SAR 1,304,600,000
(One Billion, Three Hundred and Four Million, Six Hundred Thousand Saudi
Arabian Riyals)
4.20 The split between the two main components is as follows:

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Market Value (Al 4.21 We are of the opinion that the Market Value of the freehold interest in the mall, subject
Andalus Mall) to the existing leases, at the valuation date is:
SAR 1,150,000,000
(One Billion, One Hundred and Fifty Million Saudi Arabian Riyals)
Market Value 4.22 We are of the opinion that the Market Value of the freehold interest in the subject
(Staybridge hotel, subject to the existing management agreement and assumptions within this
Hotel) report, as at the valuation date is:
SAR 154,600,000
(One Hundred and Fifty Four Million and Six Hundred Thousand Saudi
Arabian Riyals)
4.23 Our opinion of Market Value (Subject hotel) above equates to a capital value of
approximately USD 257,000 per key.

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 70
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
5 Signature
Reviewed (but not undertaken by):

Alex Arvalis, MRICS Stephen Flanagan, MRICS

RICS Registered Valuer RICS Registered Valuer
Taqeem No. 1220000885 Taqeem No. 1220001318
Associate Partner – Valuation & Advisory Partner
For and on behalf of Knight Frank Head of Valuation & Advisory MENA
Spain Saudi Arabia Real Estate For and on behalf of
Valuations Company Knight Frank Spain Saudi Arabia Real
Estate Valuations Company

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 Appendix 1 - Instruction documentation

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 Appendix 2 - Title Deed

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 Appendix 3 - Photographs

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 Appendix 4 - Floor plans

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 Appendix 5 - Building Permit

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 Staybridge Suites Display in (SAR) 1,000
Valuation Date 30 Jun 2020
P&L - Uniformed Account System

Currency (SAR) '000 Forecast

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2020/2021 2021/2022 2022/2023 2023/2024 2024/2025 2025/2026 2026/2027 2027/2028 2028/2029 2029/2030

Av. Room Occupancy 45% 66% 72% 72% 72% 72% 72% 72% 72% 72%
Av. Room Rate (SAR) 575 656 708 722 737 751 766 782 797 813
RevPAR 259 433 510 520 530 541 552 563 574 586

Operations Revenue
Rooms Department 15,489 86.7% 25,897 86.2% 30,512 85.9% 31,122 85.9% 31,744 85.9% 32,379 85.9% 33,027 85.9% 33,687 85.9% 34,361 85.9% 35,048 85.9%
Food & Beverage Department 2,168 12.1% 3,690 12.3% 4,424 12.5% 4,513 12.5% 4,603 12.5% 4,695 12.5% 4,789 12.5% 4,885 12.5% 4,982 12.5% 5,082 12.5%
Other Operating Department 155 0.9% 388 1.3% 534 1.5% 545 1.5% 556 1.5% 567 1.5% 578 1.5% 590 1.5% 601 1.5% 613 1.5%
Miscellaneous Income 59 0.3% 60 0.2% 61 0.2% 63 0.2% 64 0.2% 65 0.2% 66 0.2% 68 0.2% 69 0.2% 71 0.2%

Total Sales / Operation Revenue ('000) 17,871 100% 30,036 100% 35,531 100% 36,242 100% 36,967 100% 37,706 100% 38,460 100% 39,229 100% 40,014 100% 40,814 100%

Departmental Expenses ('000)

Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020

Rooms Department 3,098 20.0% 4,144 16.0% 4,424 14.5% 4,513 14.5% 4,603 14.5% 4,695 14.5% 4,789 14.5% 4,885 14.5% 4,982 14.5% 5,082 14.5%
Food & Beverage Department 1,648 76.0% 2,399 65.0% 2,610 59.0% 2,662 59.0% 2,716 59.0% 2,770 59.0% 2,825 59.0% 2,882 59.0% 2,940 59.0% 2,998 59.0%
Other Operating Department 31 20.0% 97 25.0% 147 27.5% 150 27.5% 153 27.5% 156 27.5% 159 27.5% 162 27.5% 165 27.5% 169 27.5%
Miscellaneous Income 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0%

Total Departmental Expenses 4,777 26.7% 6,639 22.1% 7,181 20.2% 7,325 20.2% 7,471 20.2% 7,621 20.2% 7,773 20.2% 7,929 20.2% 8,087 20.2% 8,249 20.2%

Gross Operating Income ('000) 13,094 73% 23,397 78% 28,350 80% 28,917 80% 29,495 80% 30,085 80% 30,687 80% 31,301 80% 31,927 80% 32,565 80%

Undistributed Operating Expenses

Administration & General 2,949 16.5% 3,529 11.8% 3,731 10.5% 3,805 10.5% 3,881 10.5% 3,959 10.5% 4,038 10.5% 4,119 10.5% 4,201 10.5% 4,285 10.5%
IT Systems 760 4.3% 826 2.8% 888 2.5% 906 2.5% 924 2.5% 943 2.5% 962 2.5% 981 2.5% 1,000 2.5% 1,020 2.5%
Sales and Marketing 894 5.0% 1,277 4.3% 1,332 3.8% 1,359 3.8% 1,386 3.8% 1,414 3.8% 1,442 3.8% 1,471 3.8% 1,501 3.8% 1,531 3.8%
Property Operation and Maintenance 938 5.3% 1,126 3.8% 1,155 3.3% 1,178 3.3% 1,201 3.3% 1,225 3.3% 1,250 3.3% 1,275 3.3% 1,300 3.3% 1,326 3.3%
Utilities 1,876 10.5% 2,328 7.8% 2,487 7.0% 2,537 7.0% 2,588 7.0% 2,639 7.0% 2,692 7.0% 2,746 7.0% 2,801 7.0% 2,857 7.0%

Total Undistributed Expenses ('000) 7,417 41.5% 9,086 30.3% 9,593 27.0% 9,785 27.0% 9,981 27.0% 10,181 27.0% 10,384 27.0% 10,592 27.0% 10,804 27.0% 11,020 27.0%

Gross Operating Profit ('000) 5,678 32% 14,311 48% 18,756 53% 19,132 53% 19,514 53% 19,905 53% 20,303 53% 20,709 53% 21,123 53% 21,545 53%

Management Fee 268 1.5% 451 1.5% 622 1.8% 634 1.8% 647 1.8% 660 1.8% 673 1.8% 687 1.8% 700 1.8% 714 1.8%

Adjusted Gross Operating Profit ('000) 5,410 30% 13,860 46% 18,135 51% 18,497 51% 18,867 51% 19,245 51% 19,630 51% 20,022 51% 20,423 51% 20,831 51%

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019
Incentive Fee 379 2.1% 970 3.2% 1,269 3.6% 1,295 3.6% 1,321 3.6% 1,347 3.6% 1,374 3.6% 1,402 3.6% 1,430 3.6% 1,458 3.6%

Non-Operating Income and Expenses 143 0.8% 165 0.6% 178 0.5% 181 0.5% 185 0.5% 189 0.5% 192 0.5% 196 0.5% 200 0.5% 204 0.5%

Replacement Reserve 357 2.0% 901 3.0% 1,066 3.0% 1,087 3.0% 1,109 3.0% 1,131 3.0% 1,154 3.0% 1,177 3.0% 1,200 3.0% 1,224 3.0%
Appendix 6 - Profit & Loss – Hotel

EBITDA - Net Cash Flow ('000) 4,531 25.4% 11,824 39.4% 15,622 44.0% 15,934 44.0% 16,253 44.0% 16,578 44.0% 16,909 44.0% 17,248 44.0% 17,593 44.0% 17,944 44.0%

Page 80
 Appendix 7 - Extract from Red Book – VGPA 10

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 81
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020
 Appendix 8 - Taqeem Certificates

Valuation report │ Al Andalus Mall and Staybridge Suites, Jeddah, KSA │KF Ref: KFV548-2019 Page 82
Prepared on behalf of NCB Capital │ Date of issue: 28 July 2020