The CEO of the Saudi Real Estate Company, Ibrahim Alwan, said that repaying the loan that the company obtained from Riyad Bank is part of the company’s strategic plan aimed at restructuring its capital and loans.
Al-Alwan added in an interview with Al-Arabiya that the company’s loans amounted to 4.5 billion riyals to a number of agencies and banks, so the board of directors saw a restructuring of capital and loans to help the company achieve its strategic plan for the next five years.
He explained, “In order for the level of loans to capital to be appropriate for launching future projects, we planned in advance to repay part of the loan used today, and part of the capital uses during the last period, especially since today we are witnessing high interest rates,” noting that all the company’s loans are linked With SIBOR with a profit margin for banks.
Al-Alwan stated that the last period witnessed a clear rise in SIBOR prices, and therefore the company began 3 months ago to study the impact of the current and future interest rate hike, which is expected to reach 125 basis points.
And he indicated that “with the increase in the company’s loans, there was a goal to reduce the loans to match the capital, which does not mean not borrowing in the future, but it will be a targeted borrowing for projects according to the company’s needs.”
He pointed out that at the beginning of the year, the company’s loans were 4.5 billion riyals, explaining that 170 million riyals were paid for the loan of the Ministry of Finance, while the payment was made to Riyad Bank today in the amount of 535 million riyals, while next month a bridge loan will be paid to Bank Al-Jazira with a value of 380 million riyals.
Alwan said, “At the end of next July, we will repay a total of 1.1 billion riyals, so the loans will drop to about 3.2 billion riyals, which is a good size compared to the target at the beginning.”
He pointed out that the company signed an agreement with “Loshan Real Estate” as part of the strategic plan to invest in the residential sector, indicating that the company has two orientations, namely projects on lands owned by the company or major housing projects.
Al-Alwan added that the Lotus project was targeted for its specialization in housing, as the company has distinctive locations.