MARC Ratings has affirmed its rating on Sime Darby Property Berhad’s (SD Property) RM4.5 billion Islamic Medium-Term Notes (IMTN) Programme (Sukuk Musharakah) at AA+_IS with a stable outlook. The outstanding under the rated programme stood at RM2.2 billion as at 2 December 2025.

The rating continues to reflect SD Property’s strong sales track record from its established townships and its strong balance sheet characterised by low leverage. The rating benefits from a one-notch uplift to reflect implicit support from the group’s largest shareholder, Permodalan Nasional Berhad (PNB), which together with funds under its management held a combined 47.5% stake in SD Property as at end-November 2025.

In 9M2025, SD Property’s launched projects with a combined gross development value (GDV) of about RM2.5 billion achieved a healthy average take-up rate of 60%, supported by strong demand for the group’s mid- to upper-range residential products within its established townships and integrated developments. Residential projects accounted for around 64% of total GDV launched during the period, while industrial and commercial projects made up the remainder. Considerable landbank of about 11,100 acres, largely within the group’s existing townships, would continue to provide opportunities for developmental expansion of mixed products that are aligned with market demand. Unbilled sales of RM4.1 billion are expected to provide strong earnings and cash flow visibility over the next three years and beyond. Completed inventories, at carrying value, remained modest at RM154.3 million as at end-September 2025.

SD Property continues to undertake initiatives to broaden its presence in the real estate business encompassing the property development segment as well as the investment and asset management segment. This includes an expansion of its built-to-lease offerings — notably industrial and logistics assets as well as two hyperscale data centres — which provide long-tenure, recurring income. The group’s growing investment properties portfolio comprising commercial buildings, as well as industrial and logistics buildings in its various industrial parks, together with its growing retail segments including KL East Mall, Elmina Lakeside Mall and KLGCC Mall, will also enhance earnings stability and mitigate margin volatility from the property development segment.

Overseas, the Battersea Power Station development in London, United Kingdom, in which the group holds a 40% joint-venture stake, continued to register a mixed response from the market. The residential components of the development have received a strong response overall. The latest completion of Phase 3B of the project has registered a take-up rate of 85% as at end-September 2025. Meanwhile, the 200,000 sq ft office tower, 50 Electric Boulevard, recorded an occupancy rate of approximately 45% amid a soft office market in the UK. Leasing efforts are focused on securing long-term tenancies with high-quality tenant profiles; this is expected to support sustainable rental income and enhance the asset’s long-term value. Phase 3C is currently in the tender stage with construction targeted to commence by 2026, while the Phase 4 master plan is expected to be finalised in the near term.

For 9M2025, despite a slight moderation in revenue to RM3.1 billion (9M2024: RM3.3 billion), SD Property recorded pre-tax profit of RM659.1 million (9M2024: RM636.8 million), reflecting sustained earnings performance amid sound operating margins. Operating profit margin remained healthy at 23.0%, supported by prudent cost management and a diversified product mix. Cash flow from operations stood at RM135.2 million, notwithstanding land acquisitions made during the period. The group recorded negative free cash flow of RM724.8 million, largely due to development expenditure of its hyperscale data centre projects, which will generate sizeable and long-term recurring income upon completion. As at end-9M2025, total borrowings increased to RM4.4 billion (FY2024: RM3.1 billion) to fund the data centre development, investment property acquisitions and the growth of assets under management. Debt-to-equity (DE) ratio stood at 0.41x, with a net DE ratio of 0.34x as at end-9M2025, supported by a healthy cash balance of RM755.6 million.