Al Akaria’s investments reached SAR 1 bln in H1 2018

Saudi Real Estate Co.’s (Al Akaria) investments in Saudi firms stood at SAR 1.03 billion by the end of H1 2018, chief executive officer, Mamdouh Al Sharhan, told Argaam in an exclusive on Tuesday.

The real estate developer will immediately disclose new investments to Tadawul and the Capital Market Authority, after completing the required evaluation of target companies.

Meanwhile, profit from Al Akaria’s affiliates, Saudi Real Estate Infrastructure Co. (BINYAH), Al Akaria Hanmi for Project Management (AHPM) and Saudi Korean for Maintenance and Property Management (SAKOM) is likely to boost the developer’s consolidated financial statements going forward.

Al Akaria’s portfolio comprises 1,586 residential units, a commercial space of 249,711 square meters and 21 million sqm land plots, Al Sharhan said.

The company is currently developing its land bank to offer various projects in Riyadh, he added, noting that Al Akaria has not recently purchased any new assets or land plots. 

Al Sharhan also underlined an increase in the value of Al Akaria’s land portfolio on continuous development despite a drop in the value of Saudi land plots.

Below is the full interview with Al Sharhan:

Q: Can you give us details about Al Akaria’s investment portfolio as of H1 2018? Any plans for boosting or cutting these investments?

A: The market value of Al Akaria’s investments in Saudi firms stood at SAR 1.03 billion by the end of H1 2018. The real estate developer will immediately disclose new investments to Tadawul and the Capital Market Authority, after completing the required evaluation of target companies.

Q: When will Al Akaria’s affiliates, BINYAH, AHPM and SAKOM begin commercial operations? And what about the expected profit?

A: The three affiliates reported strong profit after commencing operations in fiscal years 2016 and 2017, as planned. Due to application of IFRS in fiscal year 2017, this profit did not reflect on Al Akaria’s consolidated financial statements. However, the developer expects the related financial impact from these firms to appear going forward.

Q: What about the company’s asset portfolio as of H1 2018?

A: Al Akaria’s portfolio comprises 1,586 residential units, a commercial space of 249,711 square meters and 21 million sqm land plots.

Q: Has the company acquired any new assets or land plots?

A: Al Akaria has not recently purchased any new assets or land plots. The company is currently developing its land bank to offer projects in Riyadh, in line with the Kingdom’s policy that aims to fast track land development processes.

Q: What was the occupancy rate of Al Akaria’s residential and commercial units as of H1 2018?

A: The occupancy rate of commercial spaces as well as residential units stood at 91 percent each, compared to 95 percent for offices. Al Akaria had reported high occupancy rates, thanks to its strategically-located assets as well as the high quality of its buildings and services.

Q: Have the company’s rentals been impacted in the first half of the year? Also, did the value of its land bank see declines?

A: Actually, Al Akaria’s rentals were slightly impacted, being offset by high occupancy rates year to date. Meanwhile, the value of Al Akaria’s land portfolio increased, thanks to continuous development despite a drop in the value of Saudi land plots.

Q: Any updates about Al-Rimal, Al-Nargis projects and the second phase of Al Akaria’s housing project? When do you expect to make returns from these developments?

A: Construction of Al-Nargis and Al-Rimal is likely to be finalized in Q1 2019.

Q: Does Al Akaria own stakes in Qiddiya or Neom project?

A: The company does not own any stake in either project, taking into account that the developer is 65 percent owned by the Public Investment Fund. In addition, strategic decisions in the sector are only taken by the government.

Q: What is your plan to repay short and long-term loans which are valued at SAR 208 million and SAR 2.9 billion, respectively?

A: The company will easily pay back short-term loans through its existing internal funds. It is studying solutions to repay other long-term debt. All updates will be duly disclosed through Tadawul and the Capital Market Authority.

Q: Why did the company object to the white land taxes imposed by the Ministry of Housing?

A: The company has never objected to the levy imposed by the housing ministry. It rather deems these taxes essential for encouraging owners to develop land plots across the Kingdom and help rentals become more sustainable.

Al Akaria is implementing mega projects, therefore the development process usually takes more time. We believe that land fees do not apply to Al Akaria’s land bank, as the company is well committed to implementing the ministry’s land development program.