Jabal Omar Development Company, one of Saudi Arabia’s largest-listed property developers, has secured 1.6 billion riyals ($427 million) in loans from Banque Saudi Fransi backed by a Finance Ministry guarantee, it said in a bourse filing.
The company, which posted five consecutive quarterly losses to the end of September 2020, operates the Jabal Omar complex of hotels and residential and commercial property within walking distance of the Grand Mosque in the Muslim holy city of Mecca.
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The 15-year credit facilities, signed on March 8, will be used to complete work on the third phase of the Jabal Omar project, which includes four towers with 2,160 rooms and a total commercial area of 26,435 square meters.
It said the guarantee was issued “after agreeing on a number of representations and warranties” with the ministry.
Developing the Haj and Umrah religious pilgrimages, which before the pandemic drew millions of worshippers from around the world each year, are part of the government’s Vision 2030, a program that aims to wean the economy off reliance on oil.
The pilgrimages generated billions of dollars before the haj was dramatically scaled back last year due to the pandemic.
“Jabal Omar has been hit hard by Mecca lockdown following COVID-19,” a source familiar with the matter said, saying the guarantee would support the main developer of the Mecca complex.
The ministry and government media office did not immediately respond to requests for comment.
King Salman this week approved initiatives to mitigate the pandemic’s financial impact on the sector that supports the pilgrimages.
Jabal Omar said in May it would halt 270 million riyals in rent payments on three hotels and a commercial center bought by Alinma Makkah Real Estate Fund in 2017 and which Jabal Omar then leased back and operated, after revenues tumbled.
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