RAM Ratings reaffirms ratings of Sukuk Ijarah backed by Ampang Point Shopping Centre

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1. IM Press Release Service Published on :​ ​IslamicMarkets.com Publications: ​https://islamicmarkets.com/publications RAM Ratings reaffirms ratings of Sukuk Ijarah backed by Ampang Point Shopping Centre 14 December 2018 RAM Ratings has reaffirmed the ratings of Purple Boulevard Berhad’s (the Issuer) RM250 million of Sukuk Ijarah under its RM450 million asset-backed Sukuk Ijarah Programme (the Programme). The Issuer is a special-purpose vehicle (SPV) sponsored by Nadin Holdings Sdn Bhd and Nadin Management Sdn Bhd (also the Servicer) (collectively, the Originators). The SPV was incorporated for the securitisation of Ampang Point Shopping Centre (Ampang Point or the Property), a suburban neighbourhood mall surrounded by well-established residential communities and commercial shop offices. Sukuk Ijarah Rating/Outlook Amount of up to (RM million) Expected Maturity Date Legal Maturity Date Senior Class A AAA/Stable 95 11 November 2022 10 May 2024 Senior Class B AA3/Stable 15 13 November 2020 13 May 2022 Senior Class C A3/Stable 15 13 November 2020 13 May 2022
2. IM Press Release Service Published on :​ ​IslamicMarkets.com Publications: ​https://islamicmarkets.com/publications Guaranteed Class D AAA(fg)/Stable 125 11 November 2022* 10 May 2024 Subordinated Class E Not Rated 200 11 November 2022 10 May 2024 * Known as the Class D Mandatory Prepayment Date under the Class D Sukuk Ijarah. The reaffirmation of the ratings of the Class A, Class B and Class C (Senior Class) Sukuk Ijarah is premised on our expectation that Ampang Point’s sustainable net property income (NPI) and adjusted valuation will stay intact, although its near-term cashflow performance will be affected during the transition period of the Property’s asset enhancement initiatives (AEI). While the Property’s performance had exceeded RAM’s sustainable cashflow expectation, we have maintained this assumption for now in view of an asset reconfiguration exercise planned for the next one to two years. As such, collateral support offered by the Property remains unchanged and commensurate with the assigned ratings, as reflected in the loan-to-value and stressed debt service coverage ratios of the respective Senior Class Sukuk Ijarah. The reaffirmation of the guaranteed Class D Sukuk Ijarah’s rating is based on the credit standing of its guarantor, Danajamin Nasional Berhad, whose rating was reaffirmed at AAA/Stable on 6 August 2018. The Property’s NPI for FY 2017 and 8M FY 2018 stayed broadly above our sustainable cashflow assumption of RM21.00 million per annum. Over the review period, the generally weaker retail sector caused Ampang Point’s average rental rate to decline from RM7.36 psf to RM7.08 psf in FY 2017 and 8M FY 2018, owing to the management’s tenant retention strategy to stay competitive given the incoming supply of retail malls in the market. However, this was compensated by a better average occupancy rate in both periods, attributed to the management’s proactive efforts to retain and secure tenants as well as create new lettable area. The Issuer’s finance service coverage ratio of 1.76 times as at end-June 2018 stayed above the covenanted level of 1.50 times. Single-asset concentration risk remains a key moderating factor of the ratings, as does tenant concentration risk given that the Property’s top five tenants made up 43.8% of its total net lettable area (NLA) and 19.1% of monthly gross rental income as at end-August 2018. The management is currently in negotiation with a prospective tenant to replace a key tenant (accounting for 2.2% of monthly gross rental income and 8% of NLA) which has reached a mutual agreement with the management to terminate its lease in September ahead of expiry. The area previously occupied by the said tenant will be reconfigured into multiple lots, which would help reduce concentration risk. Ampang Point’s lease maturity profile is well spread, with leases for a respective 23.4%, 26.4% and 25.1% of NLA due to expire in 2018, 2019 and 2020.
3. IM Press Release Service Published on :​ I​ slamicMarkets.com Publications: ​https://islamicmarkets.com/publications The management has indicated its plan to proceed with the renovation of the third floor, to accommodate the prospective anchor tenant. The budget for this purpose is estimated at approximately RM18 million, to be partially funded via monies in the transaction’s Mall Refurbishment Account (MRA) and further advances from the Originators. The said renovations will necessitate some tenant relocation. All said, it remains to be seen whether the AEI can be carried out within the estimated time and cost. We will continue to monitor the progress of the exercise and make necessary adjustments to our assumptions once the Property’s performance normalises. Organisation Name: RAM Rating Services Berhad News Type: RATING ANNOUNCEMENT Source: https://www.ram.com.my/pressrelease/?prviewid=4798 Media Contact Padthma Subbiah (603) 7628 1162 padthma@ram.com.my Disclaimer: The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security's market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations. RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings' credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications. Similarly, the disclaimers above also apply to RAM Ratings' credit-related analysis and commentaries, where relevant.