Riyad REIT, owner of the 70-storey Burj Rafal skyscraper close to the King Abdullah Financial District, has removed German hotel operator Kempinski as the operator of the tower's 349-room hotel.
In a filing posted on the Saudi stock exchange on Monday, the real estate fund, which is managed by Riyad Capital, said that it had decided “to discontinue Kempinski’s management of the Burj Rafal Hotel”. It said the move was taken "to protect the interests of unitholders of the fund”.
It said that the hotel would continue to temporarily operate as the Burj Rafal Hotel and that this was not expected to have any impact on the hotel's income, but that the hotel was being positioned “to capture the increase in business activities expected to emerge from Vision 2030 initiatives, the opening of King Abdullah Financial District, and the G20 Summit being held in Riyadh”. The G20 summit is due to be held in Riyadh in November next year.
Riyad REIT is also planning to make investments in the hotel's food and beverage offering, it said, targeting “reputable and specialised brands”, as well as utilising around 3,000 square metres of commercial space within the hotel. It did not respond to a request from Zawya as to whether a new operator will be brought in to manage the hotel.
The Burj Rafal Kempinski hotel opened in 2015 on completion of the tower, which was developed by Riyadh-based Rafal Real Estate and built by Dubai Contracting Company.
A spokesman for Kempinski Hotels confirmed in an emailed comment to Zawya that it no longer managed the property.
“We regret that this is the result of a dispute between Kempinski Hotels and the owner of the hotel, which is now subject to confidential dispute resolution proceedings, initiated by Kempinski,” the spokesman added.
He said that apart from the hotel's general manager, all staff at the hotel were employed directly by the hotel owner, not by Kempinski.
At the end of March, Riyad REIT announced results for 2018 which showed the company earned net income of almost 64.2 million Saudi riyals on total income of 149.1 million riyals. However, like many other REITs in the region, its share price trades at a discount to its net asset value. A factsheet on the REIT's performance published in April showed that the REIT had a net asset value per share of 9.94 riyals at the end of March, when its share price traded at 7.67 riyals. On Wednesday, Riyad REIT’s share price closed at 7.50 riyals.
(Reporting by Michael Fahy; Editing by Mily Chakrabarty)
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