Khaled Al-Meshaan, ALARGAN
International Real Estate

KUWAIT:  Capital Intelligence (CI), the international credit rating agency, yesterday announced that it has raised its rating on the KD26.5 million bond issued by ALARGAN International Real Estate Company in April 2012 to "BBB" and revised the outlook to "stable" from a previous "BBB-" rating and "positive" outlook issued in December last year. The raise was supported by identified resources (cash plus unutilized committed funding lines) in place to repay the obligation. The rating upgrade also reflects the increase in equity and the fall in debt (and therefore leverage).

The rating agency also said in its report that ALARGAN enjoys a sound financial profile, a geographically diversified business model, and a good funding structure with close to no reliance on short-term bank borrowing (though the bond has now become a current liability as it matures in April 2017). CI also highlighted that the company's ongoing changes to the business model have already begun to lower the overall risk generated from the sector in which it operates through the proportion of revenues coming from recurring rental income steadily increasing over time.

CI said that the remaining borrowing amount of the company is not considered large enough to impact the rating, while more than three quarters is repayable after the maturity date of the bond. In addition, ALARGAN has a solid balance sheet with improved financial ratios, which are forecast to remain strong throughout the short remaining life span of the bond.

Commenting on the rating, Khaled Al-Meshaan, CEO and Vice Chairman of the Board of Directors of ALARGAN International Real Estate Company, said: "The Capital Intelligence rating confirms once again the company's stable position. ALARGAN is committed to delivering sustainability in every aspect of its business, including ensuring the business model is sustainable financially and operationally for the benefit of shareholders and stakeholders. As we move forward, ALARGAN will continue to focus on generating steady revenue through developments that add value to their surrounding communities."