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RAM Ratings assigns final rating to 2019-Issue 1 MTNs issued by KIP REIT-sponsored vehicle

Published on 25 Jul 2019.

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RAM Ratings has assigned a long-term final rating of AAA/Stable to the first issuance (2019-Issue 1 MTN) of KIP REIT Capital Sdn Bhd’s (the Issuer) RM210 million Class A Medium Term Notes under its proposed RM2.0 billion perpetual MTN Programme (the Programme). The Issuer – a wholly owned special purpose vehice of KIP Real Estate Investment Trust (KIP REIT or the REIT) – was set up as a funding conduit for the sole purpose of facilitating the fundraising exercise via the proposed Programme, to be secured against properties owned by the REIT. KIP REIT, which was listed in February 2017, was initiated as a trust that focuses on an investment portfolio of community-centric retail centres. The underlying collateral for 2019-Issue 1 MTN will comprise KIP Mall Tampoi, KIP Mall Masai, KIP Mall Bangi (KMB) and AEON Mall Kinta City (AMKC) (collectively, the Secured Properties or the Properties). The Properties’ combined market value stood at RM678.9 mil as of their latest appraisal dates.  

Since the preliminary rating was published on 1 July 2019, there have been no major changes to the transaction terms, except for additional disclosures made on the final rating rationale. These include: (1) any future issuance of unrated tranches backed by same set of properties is subject to no negative rating impact to the existing rated MTN; and (2) Issuer may redeem MTN ahead of expected maturity if there is a sale of the Secured Properties (other than pursuant to a TE or an EOD) provided that the net proceeds of the sale are sufficient to redeem the outstanding MTN in full.

In assigning final rating to the 2019-Issue 1 MTN, we have reviewed all relevant transaction documents and are satisfied that they reflect the intended transaction structure represented during the preliminary rating exercise. Please refer to our final rating rationale for further details on the assigned rating. Upon closing, RAM will monitor the transaction’s performance on a regular basis via periodic performance reports prepared by the REIT Manager and/or REIT Trustee. We will keep the rating under surveillance as long as there are outstanding rated MTN in the Programme.

 

Analytical contact
Tan Han Nee
(603) 33852529
hannee@ram.com.my

Media contact
Padthma Subbiah
(603) 3385 2577
padthma@ram.com.my

 

The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2019 by RAM Rating Services Berhad



Rating Rationale

Ratings on KIP REIT Capital Sdn Bhd (Issue 1)

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