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Eng. Ibrahim Al Saqabi: “Al Mazaya Holding” never ceased projects during and after crisis, with income-generating assets yielding more than KD4m annually
Al Saqabi: Al Mazaya succeeded in applying new work plan under motto” Focus & Excellence”
• The volume of Al Mazaya assets up to KD228m at present, including KD175m as real estate assets and KD17.5m as cash.
• Al Mazaya continued the implementation of its projects in spite of the inconsistent political and economic circumstances.
• Al Mazaya’s relation with banks has never ceased and it has been committed to pay the installments without delay.
• The real estate is a fixed asset in Kuwait which sees a considerable demand for investment and residential real estates in spite of their higher prices.
• Al Mazaya completed restructuring its loans with banks and converting them from short to medium and long termed loans.
• The recommendation to distribute the share remuneration is to reinforce the company’s next step in the utilization of the current cash in new investments.
Engineer Ibrahim Saq’abi, CEO of Al Mazaya Holding Company, stressed that by virtue of the wise policy of the Board of Directors and Executive Management, the Global Financial Crisis had not hindered the continuation, growth and development of the company, although a considerable proportion of its works were concentrated at the heart of the Emirate of Dubai, one of the Gulf markets remarkably affected by the latest changes.
In an exclusive interview with “Al Watan”, Al Saq’abi pointed out that “Al Mazaya Holding” successfully implemented its alternative strategy launched under the motto “Focus and Excellence”. The strategy was grounded on four main themes: developing and operating the new projects currently underway; restructuring all financial obligations with all relevant parties including banks; supporting and delivering the actual projects of the company on time; and internal ordering of the company, including the restructuring of the organizational structure, in addition to promoting the company’s executive staff with expertise and taking advantage of actual potential within the company.
He stressed that “Al Mazaya Holding” continued the implementation of the projects initiated earlier, in spite of the changing economic and political conditions in the region, and adhered to its obligations with banks and various financial institutions, despite not owning income-generating assets at that time. It later succeeded in turning its assets under development to income-generating assets. Thus the total current income amounted to KD4m, with the volume of the company’s assets up to KD 228m, and the total shareholders’ equity to KD91m. The following is the text of the interview.
*Above all, tell us about your new experience with Al Mazaya Holding Company!
I am honored, after having become a member of the Al Mazaya Holding Company family, to stress the notable position the company has achieved throughout its journey in the real estate world. Such a position could not have been accomplished without the strategic planning, confidence, determination, sincerity, and all other elements and factors that contribute to success after success that are evident in Al Mazaya’s journey and milestones. I also confirm that the company continuously seeks to develop and promote its successes, not simply settling upon previous successes and excellence.
I can also assure you that Al Mazaya Holding Company has been able to maintain its firm financial position, strong operational performance and prestigious status in the real estate market, through the application of its ambitious plan and carefully designed smart objectives, as well as the vital policy that the company has always maintained since its inception.
In fact, my key goal has been to work in a great real estate company, due to my previous membership in several real estate companies. However, my transfer to Al Mazaya Company came by accident. I decided to join Al Mazaya Holding Company for two reasons: the first is the congruence with the chairman of the Board, which has been reflected by the company’s success; and the second is the growth of the company, which enabled it to survive during the Global Financial Crisis, in addition to its success in maintaining its name and status in the region in spite of all the global and regional challenges it faced.
*A considerable proportion of Al Mazaya’s investments were concentrated in Dubai. Did this have an impact on the company in light of the decline which the market saw there?
Honestly speaking, the company’s investments in Dubai have been affected in the same way as the rest of the real estate companies operating there. Al Mazaya went through a decline in the value of assets exceeding KD135m during the past five years, and therefore it was compelled to take provisions and pump much liquidity into the implementation of its projects in Dubai. Since investors and customers have been delayed in repaying the due financial installments, the company preferred to focus on the implementation of current projects and all its financial obligations, a matter which was reflected in the company’s ability to engage in new investments.
Perhaps the most substantial motivation that helped the company overcome this phase is the sincere intent of the Board and owners, who are keen to maintain and support the company in all respects. This being the case, they prepared a crystal-clear work plan that included clearing the company’s financial budget and moving forward towards the implementation and delivery of its projects on time, in addition to not delaying its financial obligations towards banks and investors.
It can be said that the former relations of the company in days of prosperity have fruited since the beginning of the crisis, in terms of its relationship with contractors and the relevant parties. This helped continue the implementation of projects without interruption. The company’s relations with banks have never been broken, as it committed to paying the due installments without delay, in spite of not having income-generating assets during 2008 and 2009. Yet it was able to develop its strategy which included income-generating assets.
Al Mazaya Holding has prepared an alternative plan since the beginning and end of the market changes and global crisis. The Board of Directors and Executive Management were able to determine the most substantial future directions of the company through the alternative plan that involved four major criteria which helped the company focus and excel.
The plan was centered around operating and developing the current projects, entering into new and distinct ones, and restructuring all the financial obligations with all relevant parties including banks, which provided the necessary liquidity for the operational projects. In addition, the plan focused on supporting and delivering the company’s actual projects on time. This included Al Mazaya Towers, at the heart of the Kuwaiti Capital, in which the operation rate amounted to 100% in two towers; the company intends to launch the third tower in the coming stage. In Dubai, Al Mazaya succeeded in the delivery of The Villa Residential Project, the first stage of the “Q-point” Project in Liwan, and Business Avenue as projects for sale. The occupancy rate in Sky Gardens Project amounted to 95%, while adding up to 100% for the company’s projects in a number of countries and cities in the region like the Kingdom of Saudi Arabia and Dubai.
The fourth criterion, the in-house reordering, included the restructuring of the company’s organizational structure, supporting the executive staff of the company with actual expertise and taking actual advantage of potential within the company.
*Would you tell us about the company’s financial results in 2013?
The company has recently announced its 2013 profits amounting to KD 6m, with a 2000-% jump compared to the year 2012. It was able to accomplish a quantum leap in its operational processes by achieving high sales and increasing the occupancy rate in its income-generating projects, the matter which led to the increase of the company’s rental revenues by 39%, with a value of KD4m in 2013.
To spell out clearly the strong position of the Al Mazaya Company at present, shareholders are invited to look at the 2013 financial statements, according to which the total assets of the company amounted to KD228m in 2013, compared to KD221m in 2012, while the total shareholders’ equity added up to KD91m in 2013, compared to KD83.3 in 2012 – a 9.2-% increase.
*The Board of Directors recommended the distribution of 6 % of shares, not cash dividends, as remuneration for shareholders. What is the reason behind that?
The recommendation of distributing the share remuneration, rather than cash, aimed to reinforce the company’s next step, represented by the utilization of the current cash in new investments which will benefit the company and shareholders alike. It can be said that the recommendation mirrors the Board’s keenness on shareholders’ participation in its results this year, especially since the company and shareholders overcame several hardships and crises during the past four years, culminating in the transition from loss to profitability and profit growth.
* How would you describe the state of the Real Estate Market in Kuwait and the region in general?
The real estate market is generally considered the safest haven for investors, because it is linked with current political matters. Real estate is deemed a fixed asset, especially in Kuwait where there is a great demand for investment and residential real estate in spite of their high prices.
Due to the high demand for residential real estate, and high numbers of housing applications at the General Organization for Housing Welfare, amounting to more than 106,000, we hope that the private sector would play a substantial role in the next phase in the provision of residential care at a national level in Kuwait.
At a regional level, we closely observe the high rates of government spending on infrastructural projects in the Kingdom of Saudi Arabia, the United Arab Emirates – specifically in Dubai, especially after winning Expo 2020 – and the State of Qatar.
In general, it could be said that a lot of real estate companies have benefited from the recent global financial crisis. These companies are noted to have become cautious in their prices and launch of projects. Banks and financial institutions have also become more cautious than before in dealing with the various companies, so we are becoming optimistic about the current situation and market.
*Al Mazaya has a strong presence in all the Gulf markets and some Arab ones. What is Al Mazaya’s next destination?
Al Mazaya is present in local and foreign markets. As is well known, the company’s expansion policy varies from the internal expansion through the current projects, to external expansion in the surrounding and external region.
The company is currently studying the possibility of expanding in more than a foreign country, but still ascertains those markets should represent an alternative to the current markets.
In general, we follow a secretive policy, with adherence to an optimistic approach and focus on real estate in the next phase, both in current and new markets that we are studying, which will be announced once fully completed.
*Al Mazaya has succeeded recently in diversifying its real estate products and engaging in real estate sectors. Would you elaborate on this?
Al Mazaya features new products with an added value. These products are offered not only to the office sector and the commercial and residential sectors, but also to the Logistics sector, in which Al Mazaya aims to engage in the Warehouse Industrial Unit System Project in Bahrain Investment Port in the Kingdom of Bahrain, one of the outstanding projects in terms of services and facilities and location compared to similar initiatives.
It is well known that Al Mazaya has been a pioneer in establishing unique projects in other sectors, including “Clover Clinic” and “Seven Zones”. The company is knowledgeable in this kind of project by which it aspires to expand at the local or foreign level.
Al Mazaya Holding has been following a distinct style and approach in the selection of its real estate products and the creation of an identity and brand that qualifies it to expand to other areas, as well as reinforces its strength and ability in providing a unique product and a solid brand in all markets.
*Kindly tell us about the current projects of Al Mazaya Holding Company!
It can be said that all the company’s current projects run according to a strict financial timetable. A considerable proportion of the current projects are expected to be delivered during the years 2014 and 2015.
In general, we can sum up the projects movement as follows: the completion rate in the first stage of the “Q-Point” Project in Liwan reached 75%, and the company had earlier sold a considerable proportion of the project. The company has also recently commenced the delivery of apartments sold to the final consumer, as it believes that this project represents an added value because it serves a considerable segment of consumers in Dubai who belong to the middle class.
As for the Warehouse Logistics Project in Bahrain, the company has completed the preparation of preliminary designs and licenses. The project is currently being tendered for contractors. The implementation of the project is expected to last for seven months, to be delivered in early 2015, noting that there are serious discussions by tenants who wish to fully rent these warehouses.
*You have stated the company’s intention to engage into real estate products other than the real estate development. What does this mean?
Above all, I would like to point out that Al Mazaya Holding Company has been able to present itself as an integrated station for all the real estate products and services which include, but are not confined to, real estate development, project management, marketing and sales management, search management, real estate portfolios and funds, and real estate evaluation and brokerage.
The most recent services offered by the company include the property management service, through which the company has been able to gain high experience by managing its own real estate properties inside and outside Kuwait. Thus Al Mazaya has won the confidence of other companies and clients who have been looking for these services and ultimately come to us.
*Do you have the sufficient liquidity to engage in new projects?
Praise be to Allah! We have sufficient liquidity by virtue of our income assets which generate up to KD4m due to the annexation of the new tower to our asset portfolio. Al Mazaya also completed the restructuring of a considerable proportion of its loans with banks and converted them from short to medium-and long-termed loans, which resulted in additional liquidity for the company, as well as the income-generating sales after we recently commenced delivering a large number of completely implemented projects.
Moreover, the company will gain large amounts as a result of exiting from a number of real estate assets, either by completing and delivering projects or selling new ones. Additionally, we will leave investments which no longer run within our operational track.
*You have strong presence in the Qatari Market as a shareholder in “Mazaya Qatar”. What are your future plans for this investment?
I assure you that our presence in the Qatari market is a strategic presence. Qatar is considered a highly promising market, and Mazaya Qatar is an associate company in which Al Mazaya Holding possesses a certain share and proportion, while Qatar Foundation, the best supporter of Mazaya Qatar, also owns a considerable share.
The essential role of Al Mazaya Holding Company in Qatar is to conclude management contracts with Mazaya Qatar Company to manage the company, its strategic plans and projects. This strengthened Al Mazaya’s experience in the Qatari Market. Thus we are managing more than one project in Qatar, including “Marina” Project which is a commercial complex in “Lusail”, and the “Sidra” Project, that consists of 1000 villas and is expected to be delivered during 2014, in addition to a number of assets owned by “Mazaya Qatar”.
*What about Dubai Market and the impact of Expo 2020 on the company’s businesses there?
In fact, we have seen a considerable increase in purchase applications there, either through our project or through real estate prices in general. Expo 2020 is an opportunity to enhance the actual revenues of the state in general and real estate in particular, as it will provide 300,000 new jobs. These jobs undoubtedly will result in considerable demand for housing, services and so on.
As it is known, the greater the demand, the greater the opportunity of real estate companies to develop and grow. By the Grace of Allah, Al Mazaya enjoys a great track record and expertise that helps it grow and take advantage of the promising development which Dubai will see during the next phase.
*We have noticed a good movement on Al Mazaya’s share in the official market where the share price has doubled during the past year. What is the reason behind this?
We have nothing to do with Al Mazaya’s share movement which seems to have moved on the basis of the shareholders’ impression about the company in the local market. The company’s actual profits which were declared during the last period were mostly operational profits, and the current Board of Directors focused on the operational side – the matter which enhanced shareholders’ confidence in the company.
It could be argued that the company’s share price was tempting to purchase after its value had considerably fallen earlier, making it a suitable opportunity for some investors. We stress that there was not any kind of direct or indirect support for the share, either through the purchase of treasury shares or through any kind of other support.
On the other hand, it can be said that the implementation and delivery of projects and other steps taken by the company, including the restructuring plan with banks, were encouraging factors that strengthened the position of Al Mazaya among shareholders.
*Do you view that the share’s current price is the fair price or not?
I cannot answer this question. However, the book value of shares is still greater than the market value, and this is clear. So the executive management of the company will be keen to focus on operational plans that will have a positive impact in the next phase, which may enhance the confidence of the shareholders by increasing the demand for Al Mazaya’s shares.
Academic Qualifications:
Engineer Ibrahim Al Saqabi holds an MA degree in Business Administration from Kuwait Maastricht Business College, and a BA degree in Civil Engineering from George Washington University in the United States of America.
Professional Experiences:
His career journey involves 15-year experience culminated with achievements in which he highlighted his practical and academic skills, reflecting a remarkable performance through assuming various positions during the past years, including the chairmanship of the Board of Directors of Kuwaiti Manager Company in which he had also assumed earlier the General Director of Kuwaiti Manager Group owned by Kuwait Finance House, one of the major companies compliant with the Islamic Law in the Middle East. Al Saqabi also held the position of Holding Company Management consisting of seven branches offering specialized services in real estate development, including the projects implementation of management. He has a long experience in the field of corporate restructuring and the implementation of governance systems that include operational systems for companies, as well as developing plans and strategies to enhance their shares in the labor market . As for his membership in the real estate companies, he has served as a member of the Board of Directors of Your House Real Estate Company, Commercial Real Estate Company, Real Estate Development Company and Housing Company. Eng. Ibrahim Saq’abi currently serves as the Chief Executive Officer of Al Mazaya Holding Company Group and its subsidiaries.
