Kuwait, September 19, 2010: Capital Standards Rating Co. (CSR) has assigned a 'BBB-' issuer rating and a National rating of 'A-kw' to Salhia Real Estate Company K.S.C. (closed). The outlook is stable. This is the first time that CSR rates Salhia. The rating is based on the consolidated financial statements until March 2010.

Salhia's credit rating is reflective of the high-end portfolio quality, sectoral and geographical diversification, stable operating cash flows, and an experienced management team. The company benefits from a well diversified revenue stream encompassing commercial, home care and hotel operations. The rating is also supported by Salhia's position as one of the top 10 real estate companies in Kuwait. The rating is however constrained by the potential pressure on earnings from the oversupply in the commercial real estate market in Kuwait and a low level of liquidity. Financial flexibility is further constrained by the high level of short-term debt.

The financial crisis affected Salhia to some extent however the majority of these effects were impairment of properties and unrealized losses on the investment portfolio. Salhia is expected to benefit from real estate development in countries like Oman, Bahrain, Saudi Arabia, and the government of Kuwait's expansion plans. Salhia also benefits from its partnership in 'Key Property Investment', a leading UK real estate company.

The outlook for Salhia is stable, supported by its market position as a provider of high-end properties and a stable operating cash flow. Salhia has a high quality asset base and it enjoys diversified revenue stream from its operations. The management plans to deleverage the company to gain more financial flexibility, and is targeting a debt-to-equity ratio of less than 1 by the end of FY 2010.

The principal methodology used in rating Salhia is "Real Estate Methodology", and it can be found at www.capstandards.com in the 'methodologies brief' sub-directory under the Rating tab.

Salhia is a leading Kuwaiti real estate company with a unique position in the high-end commercial and hospitality sector in the GCC, UK and Germany. The company was established in 1974, giving it a strong track record of operations in real estate, hotels, and care home operations. Salhia is a KSE listed company, with the largest shareholders being Mr. Ghazi Fahad Al-Nafisi (16.49%), Al-Zaben Global General Trading Company (6.24%) and Mr. Issa Abdulla Al-Othman (5.05%). The rest of the shares are widely held by the public.

In a continuous effort to benefit both local and regional issuers, CSR developed rating scales that reflect issuers' scale and focus, whether global or regional. CSR developed a National Rating Scale along with its International Rating Scale to give maximum benefit for issuers when dealing with stakeholders (banks, investors, regulatory bodies, etc.). Small and regional issuers with only local and regional operations might be interested in knowing their creditworthiness when compared to their local peers only. While larger, internationally focused issuers would be more interested in knowing their position compared to global players. In all CSR's Ratings, an International Rating is assigned along with an equivalent National Rating.

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Reference CSR Real Estate Rating Methodology (http://capstandards.com/meth-realestate.php)

Contacts:
Abdulaziz Bohadida,
Tel: +965 22258822, ext.516,
email- a.bohadida@capstandards.com;

Jyoti Singh,
Tel: +965 22258822, ext.511,
email- j.singh@capstandards.com

Additional information is available at www.capstandards.com

Press Release 2010