Dar Al Arkan can pay $2.1b debt without tapping bond market
RIYADH: Dar Al Arkan Real Estate Development Co., Saudi Arabia's biggest property company by market value, can repay 7.8 billion riyals ($2.1 billion) of debt maturing within five years without tapping the bond market again, according to its general manager.
"We are on sound footing to manage all of our debts," Saud Al Gusaiyer said in an interview in Riyadh Dec. 1. The loans are "nothing compared with our assets." Rental income from properties in Mecca, Medina and Riyadh will generate 300 million riyals a year and the company plans to raise money by selling residential properties and land in its portfolio, though not fixed assets, Al Gusaiyer said. Dar Al Arkan has total assets worth 23 billion riyals, according to its thirdquarter balance sheet. Debts include a 3.75 billion riyal Islamic bond, or Sukuk, due in July 2012, one for 750 million riyals maturing in 2014 and another totaling 1.7 billion riyals due in 2015. Moody's Investors Service cut its credit rating on Dar Al Arkan on Nov. 11 to Ba3, the third-highest non-investment grade, citing the maturing debt and a decline in land sales that hurt earnings. "Concerns about the company's liquidity position are overstated," Majed Azzam, a real estate analyst at AlembicHC, said in an e-mail. "The company's total assets are held at cost, with plot sales margins averaging 45 percent, thus the market value of these assets could be as high as double." -Bloomberg