Dar Al Arkan can pay $2.1b debt with­out tap­ping bond mar­ket

The Pak Banker - - International3 -

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

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