Alandalus has no new divestiture plans, retail division accounts for 84% of revenue: CEO

“The company’s strategy mainly focuses on income-generating assets, including mixed-use and commercial properties. All properties included in the company’s business portfolio are of mixed-use,” stated Al-Otaibi.

“We may expand our operations in the residential segment, if its projects are developed as quickly as in the commercial sector,” Al-Otaibi said, adding that the Saudi firm primarily targets revenue-generating projects, while the residential sector in the Kingdom depends in the first place on selling rather than leasing and income-generating properties.

On a separate note, Al-Otaibi said that the relevant financial impact of Dr. Sulaiman Al-Habib Medical Group's hospital in Jeddah will reflect on Alandalus three years after launching operations.

The hospital project is 2.5% complete; it is expected to be finalized in Q2 2023, and will likely launch operations by Q3 of the same year, Argaam previously reported.

Alandalus has only one project in the hospitality segment, which is not a key business division for the company, said Al-Otaibi while speaking of the impact of Saudi Arabia’s precautionary measures against the coronavirus disease (COVID-19) on the company’s hospitality investments.

Al-Otaibi also indicated that Alandalus has no new divestiture plans, following offloading shares in Hamat Property Co., adding that its expansionary projects will be financed through internal resources or loans but under preferential terms for the company, thanks to its robust financial position and low interest rates.

The implementation of the IFRS 16 had a negative financial impact of SAR 11 million on the company’s lease contracts and of around SAR 25 million on shareholders’ equity. However, Alandalus managed to report earnings, as the IFRS 16’s negative impact only appears in the early phase of the property lease contract.

The company owns only 4 projects on leased land plots, representing 5% of its business portfolio, and they are all in the early phase of the lease term.

On the impact of e-commerce, Al-Otaibi said the key challenge in the retail segment is offering products that do not meet the demand of the new generation of customers.