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21 April 2024

Dar Al Arkan real estate to spend $720m in 2010

By Agencies

Saudi Arabia's Dar Al Arkan real estate will use the proceeds of an Islamic bond issue to help finance SAR2.7 billion (Dh2.64bn, $720m) capital expenditure during 2010, a prospectus for investors showed yesterday.

"Management expects Dar to make a total of SAR2.7bn of capital expenditures during 2010 principally related to development of the Al Qasr and Shams Ar Riyadh masterplanned communities," the prospectus said.

Dar moved its international roadshow to the UAE yesterday as it looks to drum up investor interest across the Middle East, Europe, Asia and the US.

"Dar Al Arkan intends to fund its capital expenditures with a combination of cash from operations, current debt facilities and the proceeds from the offering of the certificates pursuant to this offering memorandum," the document obtained by Reuters said.

Deutsche Bank, Goldman Sachs and Unicorn Investment Bank are arranging the sale.

Dar operates in speculative, cyclical, and capital-intensive land development and homebuilding activities, and in the still-opaque and immature Saudi housing market, ratings agency Moody's Investors Service said on January 20. It assigned a BB-long-term rating to Dar Al Arkan and for the benchmark sukuk.

"I think [it will be between] half a billion and a billion [dollars]," Alain Marckus, head of sukuk and credit trading treasury at Noor Islamic Bank, said on the sidelines of the roadshow in Dubai. "The appetite is there and people will be interested in Saudi paper… the market is losing its appetite for sukuk generally in Dubai so that might help them a little," Marckus added.

A second banker attending the meeting in Dubai also said the issue could be worth about $1bn.

As of December 2009, Dar Al Arkan's land bank consisted of SAR8.9bn of undeveloped land and SAR4.5bn of developed land, the prospectus said.

The roadshow will now move on to Asia and the US and is due to be completed in two weeks.

Dar's Managing Director Abdullatif bin Abdullah Al Shelash declined to comment on the matter.

Moody's Investors Service said the planned bond will set a pricing benchmark for the Gulf's non-investment grade issuers.

"It's a landmark issuance," Jehad El Nakla, a Dubai-based analyst at Moody's, told reporters at a conference in Dubai yesterday.

It is the first non-investment grade issue from the region, El Nakla said at the formation of the Gulf Bond and Sukuk Association.


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