Jadwa REIT Al Haramain (4332.SR) Q4 2023 Earnings Report

Overview: Jadwa REIT Al Haramain Fund (4332.SR) reported QQ4 2023 results with Revenue of SAR 12.50 million and Gross Profit of SAR 4.55 million, yielding a Gross Margin of 36.4%. EBITDA stood at SAR 18.89 million and Operating Income at SAR 13.24 million, contributing to a Net Income of SAR 16.27 million for the quarter. The result suggests a robust pre-tax profitability profile, though the quarterly net income margin figures appear elevated relative to revenue, signaling potential one-off items or other income contributions within the period. Management commentary accompanying the earnings data (where available) would be instrumental to decompose the drivers behind the payout of net income versus operating cash flow.

Cash flow and liquidity reflect a mixed picture. Net cash provided by operating activities was negative SAR 20.24 million, driven by working capital movements (change in working capital and payables/receivables dynamics) and items such as other working capital effects. Net cash used in financing activities was SAR 37.03 million, while investing activities generated a cash inflow of SAR 45.71 million, primarily from purchases and sales of investments, contributing to a net decrease in cash of SAR 11.55 million for the period. Ending cash balance stood at SAR 4.50 million. This cash flow pattern underscores ongoing asset management activity and potential financing needs to support portfolio activities.

Balance sheet and leverage remain sound, with total assets of SAR 724.75 million and total equity of SAR 504.51 million. Total debt stood at SAR 214.10 million, leaving net debt of SAR 209.60 million and a debt-to-equity ratio of approximately 0.424. The fund’s equity-centric balance sheet supports a conservative risk posture, though the cash flow dynamics warrant monitoring of liquidity, distribution capacity, and refinancing risk in a cyclical real estate market. The fund’s stated objective to distribute at least 90% of net profit (excluding capital gains) aligns with a high-yield REIT philosophy, implying a potential focal point for income-focused investors.

Strategic implications: The QQ4 2023 results indicate a financially stable but cash-flow-sensitive profile. Given the portfolio focus on prime religious tourism assets in Makkah and Madinah, the evolution of tourism flows, occupancy trends, and regulatory/market conditions in Saudi Arabia will be key determinants of future cash generation and dividend sustainability. A prudent investor stance would emphasize tracking management commentary on occupancy recoveries, asset acquisitions/dispositions, and any changes to the dividend policy or capital allocation strategy.