KEC extends partnership funding model to its SAR 7.5 bn Knowledge Gardens project

Knowledge Economic City (KEC) is turning another chunk of its Madinah land bank into a revenue-generating project without fronting the capital. KEC signed a letter of intent with BSF Capital to establish a closed-ended private real estate investment fund for the development of the Knowledge Gardens, a 332k-sqm mixed-use project in Madinah with an estimated development cost of SAR 7.5 bn and projected revenue of SAR 10.2 bn, according to a Tadawul disclosure.

The structure: BSF Capital will manage the fund, and Fourmen Investment will serve as lead developer and investor. Meanwhile, KEC and its subsidiary Algharraa International Real Estate Development will contribute the land, valued at approximately SAR 1.66 bn, of which they expect to receive around SAR 800 mn incash, with the remainder taken as equity plus development management fees.

The ownership split: Fourmen will hold 46.2% of the fund, KEC and Algharraa combined at 39.9%, other investors at 13.9%. The fund has a four-year life — three years for development, one for marketing and exit — with two optional one-year extensions.

What gets built: The master plan includes around 4.1k residential units, 183 apartments, a 450-key hotel, roughly 80k sqm of commercial and office space, a community center, a mosque, a kindergarten, and more than 52k sqm of parks and open spaces across four mixed-use zones.

The financing: The fund will draw on the land contribution, direct equity, bank financing with a five-year tenor, and additional investors. Bank debt covers three years of development and two years of repayment through project sales.

Why it matters: This is the second time in weeks that KEC has monetized its Madinah land bank through a partnership model. The Multaqa Residences agreement with Alrashid Properties followed the same logic, with KEC keeping the land, a specialist developer carrying the capital and construction risk, and both sides sharing the upside. If the model keeps repeating, KEC is effectively converting an underperforming land portfolio into a series of revenue-generating vehicles, each funded by someone else.

What’s next: The LOI is valid for 120 days, during which the parties will finalize agreements and complete regulatory requirements.