MARC Ratings has affirmed its AAIS rating on Fortune Premiere Sdn Bhd’s RM3.0 billion Multi-Currency Islamic Medium-Term Notes (Sukuk Murabahah) Programme. The rating outlook is stable. Fortune Premiere is a wholly-owned funding vehicle of IOI Properties Group Berhad (IOI Properties). The rating reflects the credit strength of IOI Properties which has provided an unconditional and irrevocable guarantee on the Sukuk Murabahah programme.
IOI Properties’ well established market position and longstanding track record in domestic property development, underpinned by low landholding cost that has sustained healthy margins, remain key rating drivers. Key moderating factors are the increase in leverage to fund asset acquisitions domestically and overseas, and the fairly high inventory level that has continued to weigh on profitability.
The acquisition of the remaining 50.1% stake in South Beach, Singapore, for RM2.75 billion will further stengthen IOI Properties’ investment property portfolio. In addition to a series of recent acquisitions, the group now owns shopping malls, office buildings and hotels across Malaysia and Singapore as well as in Xiamen, China. MARC Ratings’ concerns over the group’s largely debt-funded acquisitions are partly mitigated by the steady growth in recurring income from its investment properties, supported by the generally healthy occupancy levels. The property investment segment accounted for 30.9% of revenue in the financial year ended 30 June 2025 (FY2025) (FY2024: 22.0%). The group’s IOI Central Boulevard Towers alone, with a net lettable area of 1.26 million sq ft, is projected to generate approximately SGD135 million in annual rental income based on a targeted 80% occupancy by FY2026.
Ongoing domestic projects, largely within the group’s established townships, had a combined GDV of RM3.3 billion as at end-June 2025, of which 54% comprised landed residential developments while the remaining were high-rise units launched in FY2024. The average take-up rate of about 66% for Bandar Putra Kulai (including newly completed phases) underscores sustained demand for landed products in Johor. Completed inventories have continued to decline over the past two years, supported by targeted sales and marketing campaigns. Standing at RM1.3 billion as at end-June 2025 (end-June 2024: RM1.9 billion), 65% of the completed inventories was accounted for by domestic units, with the balance comprising residential units in Xiamen. The group expects improved sales traction in Xiamen following price adjustments in response to weaker market conditions. Holding cost risks are mitigated by the low breakeven levels of its domestic projects due to low land costs.
The group’s exposure to the challenging residential property market in China continues to affect sales at its IOI Palm International Parkhouse residential development in Xiamen, with unsold units valued at RM338.3 million as at end-FY2025 after a write-down of RM158.0 million. Conversely, its investment property assets in Xiamen have performed better: IOI Mall Xiamen registered an 86% occupancy rate, while the 370,504 sq ft IOI Business Park office tower — completed in July 2024 — recorded 57% occupancy and this is projected to reach around 70% by FY2026. The group’s 370-room Sheraton Grand Xiamen Jimei hotel commenced operations in 3QFY2025. Over the medium term, IOI Properties remains focused on clearing existing inventories.
For FY2025, revenue grew marginally to RM3.1 billion, supported mainly by higher contributions from the property investment and hospitality segments which offset the slower performance of the property development segment. OPBITDA rose by 29.4% y-o-y to RM1.1 billion. Earnings are expected to strengthen further in FY2026 as newly completed and acquired assets begin contributing more substantially to recurring income.
Group borrowings increased to RM19.6 billion as at end-FY2025 (end-FY2024: RM19.2 billion), with around 79% comprising foreign-currency borrowings mainly to fund its Singapore projects — Marina View and IOI Central Boulevard Towers. The Marina View development, located near IOI Central Boulevard Towers, is scheduled for completion in 2028. The project’s first residential phase of 100 units was launched in October 2025, with subsequent launches to be planned in tandem with market conditions. Construction of the 360-room W Singapore Marina View hotel is progressing and its opening is expected in 2029. Proceeds from the residential sales are expected to support repayment of the project’s associated borrowings upon full completion.
Over the near term, borrowings are expected to rise further, primarily to fund the ongoing construction of the Marina View development. The pro forma debt-to-equity (DE) ratio is projected to increase to around 0.95x (FY2024: 0.80x). Post-acquisition, further debt escalation is expected to be limited; MARC Ratings notes that recent borrowings have largely funded the development and acquisition of investment properties with strong income-generating potential. The group is currently exploring potential asset monetisation initiatives involving its investment properties in Malaysia and Singapore over the near term, following which, borrowings and leverage are expected to reduce substantially. The outstanding amount as of end-June 2025 under the rated sukuk programme stands at RM1.2 billion.