RAM Ratings has assigned a preliminary rating of AAA(fg)/Stable to the proposed up to RM230 million Medium Term Notes (Guaranteed Tranche(s)) to be issued under Hektar MTN Satu Sdn Bhd’s proposed RM500 million MTN programme.
The preliminary enhanced rating for the proposed Guaranteed Tranche(s) reflects the irrevocable and unconditional guarantee provided by Credit Guarantee and Investment Facility (rated AAA/Stable/P1 by RAM Ratings).
Hektar Satu is a wholly owned subsidiary of Hektar REIT (the REIT), set up solely as a funding conduit for the MTN Programme. the group was the first retail-focused real estate investment trust to be publicly listed in 2006. The REIT currently owns and manages six neighbourhood retail assets across peninsular Malaysia, namely Subang Parade, Mahkota Parade, Wetex Parade, Central Square, Kulim Central and Segamat Sentral, as well as a 156-room hotel annexed to Wetex Parade. Valued at RM1.21 bil as at end-December 2022, the asset portfolio is set to increase to RM1.36 bil after the completion of the acquisition of education asset Kolej Yayasan Saad (residential private school) in Melaka by 1H 2024, in line with the REIT’s strategy to diversify amid the competitive retail industry.
The group said the proceeds from the proposed Guaranteed Tranche(s) will be utilised to refinance some of the REIT’s existing borrowings and fund capital expenditure and asset enhancement initiatives for existing assets. This issuance would help diversify Hektar REIT’s funding profile beyond floating rate loans, providing some hedge against increases in interest rates.
RAM expects to assign the final rating and publish the rating rationale within the next month. This will be subject to its satisfactory review of relevant transaction documentation, including the approval and terms of the financial guarantee
