KUWAIT: Capital Intelligence (CI), the international credit rating agency, announced Monday that it has affirmed the 'BBB-' Rating of ALARGAN International Real Estate Company's (ARE) KWD 26.5 million five-year bond issued in April 2012, and has raised the Outlook for the Rating to 'Positive'. The upgraded Outlook for the Rating reflects the increase in equity and the fall in debt that has resulted from the successful exit from its investment in KSA.
The agency stated that ALARGAN continues to enjoy a sound financial profile, a geographically diversified business model, and a good funding structure, with little reliance on short-term borrowing. CI also noted that while profitability in the past has been neither a supporting nor constraining factor, it has been "consistently sound" and that ALARGAN "has a good earnings track record" and that the plans to build up a larger base of recurring rental income "are welcome".
However, CI did highlight that the main constraints on the bond rating remains the size of the company in balance sheet terms, and the risk profile of the sector in which it operates, although ongoing changes to the business model should lower the overall risk profile over time.
The international credit rating agency added: "The fact that secured borrowings still remained after the issue of the bond contributes to an element of structural subordination - although this has been steadily reducing. The amount of such borrowing is not considered large enough to impact the rating, while its maturity structure (more than three-quarters is repayable after the maturity date of the bond) is also a significant positive. In addition, ALARGAN has a solid balance sheet with improved financial ratios, which are forecast to remain strong throughout the remaining life span of the bond."
Commenting on the Company's noticeable achievement, Eng. Khaled Al-Meshaan, CEO and Vice Chairman of the Board of Directors, said: "ALARGAN International aspires to be the leading regional real estate developer and to deliver superior value to our stakeholders. The affirmation of our bond's Rating and the upgrade in our Outlook confirm that we have a sound business model with revenue streams expected to grow steadily."
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ALARGAN International Real Estate Company is a leading real estate company based in Kuwait and focused on the development of affordable and middle income housing in the GCC. The company strives to integrate its motto, 'Life... As You Love It', across its projects by creating "live, work, play and savor" environments that present a unique lifestyle experience. The company also endeavors to pass on its sustainability values to the community by including green and energy efficient initiatives in its projects. The only company in Kuwait to obtain Platinum ranking for the Leadership in Energy & Environmental Design (LEED) program, which is awarded by the U.S. Green Building Council (USGBC). ALARGAN follows a balanced investment strategy, and tries to seize opportunities with stable and superior returns based on the market's investment cycle. Its projects are diverse and located across the Gulf region, including the State of Kuwait, the Kingdom of Saudi Arabia, the Kingdom of Bahrain and the Sultanate of Oman, delivering popular hotels resorts, widely visited shopping and food destinations, large development communities, and middle income level residential housing.
© Press Release 2015
