Dar Al-Arkan Properties targets annual dividend; IPO underway

Dar Al-Arkan Properties is planning to distribute dividends on an annual basis following its listing on the Saudi Stock Exchange (Tadawul) this year, the chief executive of its parent company told Argaam in an exclusive interview. 

In December last year, Riyadh-based Dar Al-Arkan Real Estate Development Company announced plan to float a 30 percent stake in Dar Al-Arkan Properties, its wholly-owned subsidiary, through an initial public offering (IPO).

“Since investors are investing in a company with the majority of its assets being income-producing, we will definitely be targeting to distribute dividends in the new company on an annual basis,” Ziad El Chaar said in a telephone interview on Monday.

He added the company is moving as quickly as possible to complete the listing process, but declined to give a timeframe. 

“We are now in the early stages of the IPO. We are appointing officers, lawyers, and technical auditors so that the work can start. It’s happening, and we are trying to move as quickly as possible.”

Samba Capital has been appointed as the financial adviser for the planned offering.

While the initial plan was to raise 30 percent of the new company's income-generating assets, valued at SAR 2.7 billion, El Chaar said the final amount to be raised from the market would be determined following the completion of due diligence and valuation of the assets.

“All the assets and projects will now go for valuation, due diligence, and technical due diligence, and only then we can determine whether we are still with the same projects, or we want to change some of the projects, or if the value has gone up or has come down, as the SAR 2.70 billion is our internal estimate for some of the income-producing assets and two development projects [in Riyadh and Jeddah] that we would like to include in this new company.”

Despite more than seven Real Estate Investment Trusts (REITs) listed in 2017 and several launched earlier this year, the CEO believed his company product was “better” than a REIT.

“We are creating a market on our own. Just like what we have been doing for 25 years. We have decided to get out of the congested market of REITs, and a create a product that we believe is better than a REIT,” El Chaar said.

He further ruled out any competition with REITs on the acquisition of income-generating assets in Saudi Arabia, adding that Dar Al-Arkan will develop income-producing assets on its own.

“We are floating the new company to be mainly of income-producing assets. But at the same time, it will benefit from the large development skills and large development assets of Dar Al-Arkan.

“So, this is a REIT that can grow with time because we can continuously add income-generating assets to this company that will always be producing a higher return for the shareholders,” he said.

Asked if the company is in talks with the government to build any project in the $500-billion NEOM, or the Entertainment City, El Chaar said developers from the world are keen to be part of these projects.

"I think when the door becomes open for developers all of us will contribute," he added.

At present, Dar Al-Arkan's SAR 25-billion property development portfolio includes two master communities in Saudi Arabia – Shams ArRiyadh in Riyadh and Shams Al Arous in Jeddah – and a SAR 816.9 million "I Love Florence Tower" in Business Bay, Dubai.