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Dar al-Arkan repays $1bn Islamic bond to Deutsche

Cash and proceeds from land sales used to repay debt after Q2 profits

Dar Al-Arkan is Saudi Arabia's biggest developer, responsible for such projects as Qasr Khozam
Dar Al-Arkan is Saudi Arabia's biggest developer, responsible for such projects as Qasr Khozam

Dar al-Arkan Real Estate, the Saudi construction giant, has transferred $1bn (SAR 3.7bn) to Deutsche Bank to repay its Islamic bond, or sukuk, the firm said in a bourse statement on Saturday.

“Dar al-Arkan transferred the total principal sum to Deutsche Bank, the principal paying agents, on Thursday and the sukuk account holders will receive the funds on Monday,” the firm said in the statement.

The kingdom’s largest property developer has issued three international sukuks and one domestic in the past five years, raising a total of $2.2bn (SAR 8.4bn), the statement said.

Dar al-Arkan had earlier said that it would use cash and proceeds from land sales to repay the bond.

Last week the company announced its second-quarter net profit rose 11%.

Although this was lower than analysts’ expectations, the firm made a net profit of $88.3m (SAR 331m) in the three months ending June 30, compared with $79.5m (SAR 298m) in the same period a year earlier.

Analysts had forecast that Dar would achieve a net profit averaging $113.1m (SAR 424m).

“The increase in net income for the six month period and the second quarter this year compared... is primarily due to the increase in real estate sales, which is attributable to the demand increase on the company's products,” the developer said.

Operational profit increased 11.8% in the second-quarter to $91.1m (SAR 341.7m), compared with $81.3m (SAR 305m) in the same period a year earlier.

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Construction Week - Issue 753
Nov 09, 2019