Jabal Omar Development signs SAR 2B Murabaha facility with SNB

Jabal Omar Development Co. signed a SAR 2 billion Murabaha financing agreement with Saudi National Bank to refinance existing debt. The company said the facility improves its repayment schedule and frees up cash flow.

The deal replaces shorter-term borrowings with a single Islamic credit line. That reduces the number of maturities the developer needs to manage each quarter. Jabal Omar has carried a heavy debt load tied to hotel and commercial real estate projects near the Grand Mosque in Mecca. Occupancy rates there depend on Umrah and Hajj seasons.

The refinancing does not change the underlying revenue challenge. The company still needs to fill rooms and retail space. The new terms buy time. Pushing maturities further out reduces the risk of a covenant breach or a forced asset sale if a season underperforms.

For Saudi banks, the deal shows continued willingness to take large real estate exposures tied to the holy cities. SNB is the kingdom's largest lender by assets and has been the go-to bank for Mecca-focused developers. The structure is a Murabaha, a cost-plus-profit sale that complies with Sharia law. It is standard for Saudi corporate loans.

Other developers with Mecca exposure carry similar debt loads. Makkah Construction and Al Madinah for Development both have large hotel projects in the holy cities. The SNB agreement is the largest single debt renegotiation for a Mecca developer in recent quarters.

Jabal Omar shares traded flat on the news. The stock is down roughly 15% over the past 12 months, reflecting persistent concern about occupancy rates and new supply in Mecca's hotel district.