First Avenue Swaps La Perle Units for Al Shati Stake

Jeddah, Saudi Arabia — First Avenue for Real Estate Development Company has agreed to sell its entire 38.6% stake in La Perle Real Estate Fund to Awj Real Estate Development and Investment Company. In return, First Avenue receives Awj’s full 48.9% holding in Al Shati Real Estate Fund, plus a 6.35 million SAR cash payment. The total transaction value stands at 130.96 million SAR, signed on October 14, 2026.

The deal reshapes First Avenue’s portfolio. The company exits a mature, income-generating fund and doubles down on a development-stage asset with higher growth potential. After the swap, First Avenue’s ownership in Al Shati Real Estate Fund rises from 32.7% to approximately 81.6%.

Deal Structure and Asset Details

The core exchange works like this: First Avenue hands over its La Perle units, booked at 127.40 million SAR, and receives Al Shati units valued at 124.62 million SAR plus 6.35 million SAR in cash. The company expects to book a gain of 3.56 million SAR on the transaction, though the final figure depends on completing the unit transfer and settlement.

Al Shati Real Estate Fund holds a 15,600-square-meter land plot in Jeddah’s Al Shati District, with a Floor Area Ratio of 6.25. That ratio allows for significant vertical development. The fund also holds 45 million SAR in cash and carries zero financing obligations. Total fund assets are valued at approximately 255.1 million SAR.

La Perle Real Estate Fund, by contrast, owns income-generating properties that have reached operational maturity — exactly the type of asset First Avenue is now rotating out of.

Why First Avenue Made This Move

• La Perle assets are mature and stabilized — limited upside remains for First Avenue as a minority holder.
• Al Shati offers a blank-canvas land plot in a prime Jeddah location, with room to develop or monetize through financing structures.
• The 45 million SAR cash inside Al Shati fund gives First Avenue immediate financial flexibility without requiring new capital.
• Raising its Al Shati stake to 81.6% may trigger IFRS consolidation, pulling Al Shati’s 255.1 million SAR balance sheet into First Avenue’s consolidated accounts.

Accounting Implications to Watch

The consolidation angle is material. If First Avenue meets the IFRS control criteria, it will consolidate Al Shati’s financials. That means intragroup revenues — including any fees from First Avenue’s existing development agreement with Al Shati — will be eliminated on consolidation. First Avenue is still assessing the full accounting impact and will disclose any material effects separately.

Separately, First Avenue will terminate its development agreement with La Perle Real Estate Fund as part of the divestment. That ends its involvement in La Perle’s asset management entirely.

What This Means for Investors

• The expected 3.56 million SAR gain is modest relative to the 130.96 million SAR transaction size — this is a portfolio rebalancing move, not a profit event.
• Investors should watch for a consolidation announcement: if Al Shati is consolidated, First Avenue’s reported assets and revenues could change significantly.
• The Al Shati land’s value depends on what gets built — development outcomes are uncertain and subject to market conditions and regulatory approvals.
• No related parties are involved, and the deal carries no conditions, reducing execution risk for shareholders.

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THE SAUDI STANDARD’S VIEW: FIRST AVENUE’S AL SHATI PIVOT IS A CALCULATED DEVELOPMENT BET

First Avenue’s asset swap is a disciplined portfolio rotation, not a reactive trade. By exchanging a stabilized minority position for near-majority control of a development-stage land fund in one of Jeddah’s most sought-after coastal districts, the company is making a deliberate shift from yield preservation toward capital appreciation. Investors should read this transaction as a strategic statement about where First Avenue believes value creation now lies in Saudi real estate.

• CONTROL IS THE CORE PRIZE

Moving from 32.7% to 81.6% ownership in Al Shati Real Estate Fund is the defining outcome of this transaction. At that threshold, First Avenue transitions from a passive co-investor to an entity with operational authority over how the 15,600-square-meter Al Shati plot is developed, financed, and ultimately monetized. Control in a high-FAR urban land asset is structurally more valuable than income participation in a matured fund.

• THE BALANCE SHEET IMPACT COULD DWARF THE HEADLINE NUMBERS

A potential IFRS consolidation of Al Shati’s 255.1 million SAR balance sheet would represent a far more consequential financial shift than the 3.56 million SAR transaction gain. Investors tracking First Avenue’s reported asset base and leverage ratios should prepare for material changes to consolidated financials once the accounting assessment concludes. The elimination of intragroup revenues under consolidation also warrants close attention from analysts modeling the company’s top line.

• EMBEDDED CASH PROVIDES DEVELOPMENT RUNWAY

The 45 million SAR in cash held within Al Shati fund, combined with zero financing obligations on the asset, gives First Avenue a meaningful buffer to advance development planning without immediately tapping external credit markets. In an environment where financing costs remain a key variable in real estate project economics, inheriting an unencumbered asset with liquid reserves is a structurally sound starting position. This embedded liquidity reduces near-term capital call risk for First Avenue’s shareholders.

• EXECUTION RISK SHIFTS FROM THE DEAL TO THE DEVELOPMENT

The transaction itself carries minimal completion risk — no conditions attach and no related parties are involved. However, the risk profile does not disappear; it migrates forward into development execution. The Al Shati plot’s ultimate value is contingent on securing regulatory approvals, selecting the right development structure, and timing delivery against Jeddah’s cyclical demand dynamics. Investors should begin evaluating First Avenue on its development execution track record, not merely its deal-making capability.

This transaction reflects a broader pattern emerging across Saudi Arabia’s listed real estate sector: companies with Vision 2030 tailwinds are actively repositioning away from mature, low-upside assets toward development-stage landholdings in urban growth corridors. Jeddah’s Al Shati District sits squarely within the kingdom’s push to expand premium hospitality, mixed-use, and residential supply along its coastline. First Avenue’s move to consolidate control over a high-density-eligible plot in that corridor positions it to participate directly in the infrastructure of Saudi Arabia’s urban economic transformation — provided it executes with discipline on what comes next.