JEDDAH: Dar Al Arkan Real Estate Development Co., Saudi Arabia's biggest property company by market value, can repay SR7.8 billion ($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. The loans are "nothing compared with our assets." Rental income from properties in Makkah, Madina and Riyadh will generate SR300 million 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 SR23 billion, according to its third-quarter balance sheet. Debts include a SR3.75 billion Islamic bond (Sukuk) due in July 2012, one for SR750 million maturing in 2014 and another totaling SR1.7 billion 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. Third-quarter profit fell 53 percent to SR289.6 million, the company said Oct. 20. Revenue declined 40 percent to SR910 million. Dar Al Arkan has declined 36 percent in Riyadh trading this year, compared with a 3.6 percent gain for Saudi Arabia's benchmark stock index. Al Gusaiyer said he expects revenue to increase next year as demand for housing exceeds supply by about 40 percent. He also said he's confident that Saudi authorities will approve a new mortgage law in the first quarter aimed at increasing lending in the Kingdom. "The real estate market is good," in Saudi Arabia, Al Gusaiyer said. "Since the beginning of the 1970s, real estate has always been on the increase or on hold, but never in decline."
