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MEFIC REIT Fund has announced its decision not to renew the usufruct contract for Plaza 1 property beyond its expiration in July 2026. The board of directors approved this decision on June 25, citing that extending the contract is not commercially viable. The usufruct agreement, which allows temporary use of the property, will now remain in effect until its original term concludes. MEFIC Capital, the fund manager, stated this decision was communicated to Tadawul, emphasizing the lack of financial justification for renewal.
This development could impact investor perceptions of MEFIC REIT's asset management strategy. The decision reflects a strategic shift to prioritize commercial viability over long-term commitments, which may influence the fund's valuation and liquidity. Traders should monitor how this affects investor sentiment, particularly in the Saudi real estate sector, where usufruct agreements are common for large properties.
For the Saudi market, the outcome highlights the importance of evaluating asset utilization efficiency. Investors should watch for updates on the property's future use post-2026 and potential repositioning strategies. Additionally, the decision may set a precedent for other REITs managing similar assets, prompting a broader reassessment of usufruct contracts in the region.
