Sunday 08, January 2017 by Jessica Combes

RAM Ratings reaffirms AAA(fg) rating of Great Realty's debt issue

RAM Ratings has reaffirmed the AAA(fg)/stable rating of Great Realty Sdn Bhd’s (Great Realty or the Company) RM170 million MTN programme.

The enhanced rating reflects an irrevocable and unconditional financial guarantee from Danajamin Nasional Berhad, rated AAA/Stable/P1 by RAM.

Excluding the guarantee, the Company’s ability to service the MTN Programme will depend heavily on the success of Aman Central (the Mall), which the Company developed and now manages. Located within the Central Business District of Alor Setar, Malaysia, the Mall’s fairly diverse tenant mix offers a holistic shopping and entertainment experience not found in any other mall in Kedah. Since its opening in October 2015, the Mall has seen around one million visitors a month, which is commendable given Alor Setar’s small population and relatively low average household income. At end-November 2016, Aman Central’s average occupancy rate (AOR) stood at a strong 88 per cent.

Great Realty recorded a strong operating profit before depreciation, interest and tax margin of 58 per cent in 1H 2016, in line with the typical 60 to 70 per cent margin seen for other retail mall owners. Aman Central’s high AOR and commendable average rental rate had also enabled the Company to record its maiden profit in 1H 2016.

Great Realty’s gearing ratio is expected to remain high at 1.8 times before progressively tapering off as the Company repays its borrowings and accumulates profits. Great Realty’s funds from operations debt coverage has been in the positive region since the Mall’s opening, coming in at 0.13 times for 1H FY Dec 2016, and is expected to inch up to 0.14 times for the next 2 years.

A 100 per cent subsidiary of Belleview Sdn Bhd (Belleview), Great Realty was set up to develop and operate Aman Central, an eight-storey mid-range shopping mall in Alor Setar. Privately owned by businessman, Dato’ Ho Kiong Chan, Belleview has almost 30 years of experience in property development, property management and property investment.

  

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