Dar Al Arkan said that he could pay $ 2.1 billion debt without touching Bond Market

Dar Al Arkan Real Estate Development Co., Saudi Arabia's largest property company by market value, you pay 7.8 billion riyals (2.1 billion) of debt maturing in five years without touching the bond market Again, according to general manager.

"We are at the foot of sound to manage all our debts," said Saud Al Gusaiyer in an interview in Riyadh on December 1. The loans are "nothing compared to our assets."

Rental income from properties in Mecca, Medina and Riyadh will generate 300 million rials a year and the company plans to raise money through the sale of residential properties and land in its portfolio assets, although not fixed, Al Gusaiyer said. Dar Al Arkan has total assets worth 23 billion riyals, according to the balance of the third quarter.

The debts included 3.75 billion Islamic bond Rial, or sukuk, scheduled for July 2012 at 750 million rials due in 2014 and another for a total of 1.7 billion riyals due 2015. Moody's Investors Service cut its rating on Dar Al Arkan on 11 November at Ba3, the third highest degree of non-investment, citing the debt maturity and a decrease in land sales that hurt profits.

"Concerns about the liquidity position of the company are overblown," said Majed Azzam, a real estate analyst AlembicHC in an e-mail. "The company's total assets are stated at cost, with the sale of plots average margins of 45 percent, therefore the market value of these assets may be as high as double." Dar Al Arkan AlembicHC upgraded to "overweight" from "buy" last month.

"The continued weakness"

"Dar Al Arkan will have to balance their available cash from debt service and reinvestment," said Asim Bukhtiar, an equity analyst at capital Riyadh. "The continued weakness in sales of land is expected until 2011, which could mean cash conservation at the expense of project delays." Gradient Dar Al Arkan capital Riyadh to "hold" from "buy" in October.

third-quarter profit fell 53 percent to 289.6 million riyals, the company said Oct. 20. Revenue fell 40 percent to 910 million riyals.

Al Gusaiyer says it expects revenue to increase next year housing demand exceeds supply by 40 percent. He said he was confident the Saudi authorities to adopt a new mortgage law in the first quarter to increase lending in the kingdom.

"The housing market is good" in Saudi Arabia, Al Gusaiyer he said. "Since the beginning of the decade of 1970, real estate has always been on the rise or on hold, but never in decline."

Dar Al Arkan shares fell 0.6 percent to 8.90 riyals at the close today at 3:30 pm in Riyadh. The stock has lost 37 percent this year compared with a gain of 4.9 percent for the benchmark stock index in Saudi Arabia.