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 loan-to-value (LTV) ratios for the MTN classes that are within MARC Ratings’ benchmarks, incorporating the RM13.7 million cash buffer to be injected by the REIT manager, Sentral REIT Management (SRM), as additional credit support.

Sentral Building 2 (SB2) has been vacant since 1 January 2026 after the sole tenant did not renew its lease, lowering the stabilised net operating income (NOI) to RM20.7 million from RM23.6 million. To mitigate the impact on the MTN programme, SRM has committed to a RM13.7 million cash injection, subject to bondholders’ approval expected by end-April 2026, to prevent LTVs for Class A and Class B from rising to 48.9% and 56.3%, respectively, which would breach rating thresholds.

The programme is backed by four collateral properties comprising SB1, SB2 and SB3 — four-storey purpose-built offices in Cyberjaya — as well as a three-storey purpose-built Lotus’s hypermarket in Penang. Based on the stabilised NOI using a five-year average (2024–2028), the properties are valued at RM231.0 million in aggregate, a 33.6% discount to the market value of RM348.0 million as of 31 December 2025. The portfolio consists of 583,685 sq ft of net lettable area and, with only four tenants, is exposed to high tenant concentration. Near-term risk is partly mitigated by long-dated lease expiries (61% stretching beyond 2028), early termination penalties covering unexpired lease periods, and recent lease renewals.

Revenue remained stable at RM29.2 million in 2025, generating NOI of RM24.3 million. NOI is projected to moderate to about RM18.5 million in 2026–2028 following the SB2 vacancy, while debt service coverage ratio and security cover ratio of 5.13x and 2.68x remain well above the covenants of 1.50x and 1.90x for Class A and Class B.