Palm Hills Developments announced, on Sunday, that that its subsidiary, Arkan Palm for Real Estate Investment Company, of which Palm Hills owns 40% stake, signed a mixed-use co-development agreement with the New Urban Communities Authority (NUCA) on a revenue sharing basis.
The project will be built over 205 feddan in Sheikh Zayed City. It will include residential, commercial, and administrative units as well as recreational areas.
According to this co-development agreement, Badr Al Din Real Estate Development Company, the majority shareholder of Arkan, will be responsible for all operating and financing activities, construction, development, and marketing of commercial units.
On the other hand, Palm Hills will oversee all sales and marketing activities of residential units. The NUCA will contribute with the land plot alongside all external project infrastructure.
According to the agreement, the NUCA will be entitled to fixed annual cash revenues up to EGP 10bn, payable over 12 years, excluding an advance payment of EGP 100m upon signing the agreement, implying a net present value of EGP 2.5bn after applying a discount of 16%.
In addition, the NUCA will receive an annual revenue share of 12.5% from the project’s annual revenues with an aggregate payment of EGP 13bn, equivalent to a net present value of EGP 3.5bn-at a 16% discount rate-payable over 10.5 years, starting after 1.5 years from signing the agreement.