MARC Ratings has affirmed its long-term ratings of AAA, AA and A on Kinabalu Capital Sdn Bhd’s Issue 3 of RM113 million Class A, RM21 million Class B and RM11 million Class C Medium-Term Notes (MTN). The ratings outlook is stable.
The affirmed ratings reflect the loan-to-value (LTV) ratios of the classes under the issuances that are within the LTV benchmarks MARC Ratings applies for the rating bands. The LTV ratios of Class A MTN, Class B MTN and Class C MTN are 42.6%, 50.5% and 54.7%. The programme is collateralised by four properties: Sentral Building 1, 2 and 3 in Cyberjaya, Selangor, and Lotus’s Hypermarket in Penang.
MARC Ratings derived the LTV ratios of the various classes by applying a stabilised net operating income (NOI) of RM23.6 million to arrive at an aggregate value of RM265.1 million for the collateral properties. This represents a 24.5% discount from the independent valuation of RM351.0 million of the collateral properties collectively as at December 31, 2024. The properties have a combined total net lettable area (NLA) of 583,685 sq ft. The occupancy and customer profile of the collateral buildings have remained unchanged since the previous rating review.
Sentral Building 1 and 2 are fully occupied by DHL Asia Pacific Information Services Sdn Bhd (32.8% of total NLA) whereas Sentral Building 3 is largely occupied by BMW Group (9.1% of total NLA). With regard to Lotus’s Hypermarket, it is 100% occupied by Lotus’s Stores (Malaysia) Sdn Bhd (47.1% of total NLA). The rating agency notes that DHL’s tenancies in Sentral Building 1 and 2 will expire on December 31, 2025, while the BMW Group’s tenancy in Sentral Building 3 will expire on July 31, 2025. Renewal and concentration risks are substantially mitigated by the purpose-built nature of the buildings that caters to the tenants’ requirements and the longstanding tenancy relationships of more than 12 years each with Sentral REIT Management.
Total revenue was stable at RM29.3 million y-o-y in 2024, recording NOI of RM24.3 million. Debt service coverage ratio (DSCR) and security cover ratio (SCR) of 5.16x and 2.70x remain well within the DSCR and SCR covenants of 1.50x and 1.90x under the programme for Class A and B issuances.