Dar Al-Arkan to use sukuk proceeds in new projects, says Al-Shelash

Proceeds from Dar Al-Arkan Real Estate Development Co.’s sukuk issue will not be used to pay off debts as none is due in 2017, the company’s chairman Yousef Al-Shelash told CNBC Arabia on Sunday.

He said media reports that said the sukuk would be used to repay existing debt was incorrect.

The developer would rather avail the issue proceeds to embark on several projects in Riyadh, Jeddah and Dammam, taking advantage of the steep decline in construction cost and the cost of building materials.

“Despite the stagnation in the real estate market over the past two years, Dar Al-Arkan sees a great opportunity to launch new housing projects,” Al-Shelash added.

The kingdom is still in need of mega projects to address housing shortage.

Meanwhile, Al-Shelash expected moderate profit growth in 2017, compared to the last two years, adding that, “we hope 2017 ends up being better than 2016.”

The developer had earlier repaid $950 million worth of Islamic bonds, he added.

Dar Al-Arkan recently closed the fourth tranche of its benchmark sukuk program worth $500 million (SAR 1.875 billion), Argaam earlier reported.