RAM Ratings assigns preliminary ratings to Belleview Group-sponsored MTNs supported by Aman Central Mall

Published on 31 Jul 2019.

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RAM Ratings has assigned respective preliminary AAA and AA2 ratings to the proposed RM175 mil Senior Class A and RM50 mil Senior Class B MTNs (collectively, the Senior Class MTNs) under AC Millennium Berhad’s (Issuer) up to RM400 mil Nominal Value MTN Programme (the Programme). Both the long-term ratings carry a stable outlook. The Issuer is a wholly owned subsidiary of Great Realty Sdn Bhd, specifically incorporated to facilitate the latter’s fundraising exercise under the Programme, which is backed by Aman Central Mall, an eight-storey retail mall in Alor Setar, Kedah (Aman Central or the Mall). The Senior Class MTNs will be secured by a third-party first legal charge to be provided by Great Realty – the underlying Obligor of the transaction as well as the developer and manager of Aman Central. The Subordinated MTNs of up to RM175 mil, if issued, may or may not be guaranteed. The guarantor or the Subordinated MTN holders (if not guaranteed) will have a second-ranking charge over the Mall.

Funds raised by the Issuer will, among other things, be used to refinance Great Realty’s borrowings, defray all relevant expenses in relation to the Programme, prefund debt service reserve requirements, and advance to the Obligor and/or the Obligor’s shareholders. Belleview Sdn Bhd (the Group), the Obligor’s ultimate holding company, is a niche property developer in the northern region (with more than 35 years of experience) and is fully controlled by Dato’ Ho Kiong Chan. RAM presently rates Great Realty’s RM170 mil Guaranteed MTN Programme (2014/2023), which will be refinanced via MTNs issued under the RM400 mil Programme. We expect to withdraw the rating of the former upon its full redemption via the proposed issuance.

Opened in October 2015, Aman Central is the newest and largest mall in Kedah. It is strategically located in the central business district of Alor Setar, enjoying good accessibility from main arteries that cut across the city. Additionally, Aman Central’s location along the main route between Thailand and Malaysia, and the North-South Expressway provides it with a larger catchment of shoppers, which has contributed to the Mall’s steady footfall of 1 million per month since its opening. The Mall was developed on the site of a previously abandoned commercial project which was subsequently resuscitated by the Group. Competition is limited as Aman Central is one of a few freehold commercial properties of its size and the only owner-managed retail asset in the market. Since inception, the Mall’s performance has been healthy with an average occupancy rate (AOR) of above 85%. It had also managed to achieve decent annual rental rate reversions – higher than that of neighbouring retail complexes. In 2018, Aman Central’s occupancy dipped to 86% before rebounded to 91% upon the conclusion of lease negotiations with some new tenants by 1Q 2019, as the Mall’s lease agreement entered its second renewal cycle. That said, the Mall is relatively unseasoned and has a lumpy lease maturity profile, although its tenant mix is diversified. Overall, however, the quality of the Property is deemed above average, as reflected by our RAM Property Score of R-4.00 out of R-5.00.

Going forward, management expects the Mall’s performance to improve further, eventually achieving a revenue and net property income of RM70 mil and RM44 mil, respectively, in FY Dec 2020 compared to an estimated RM60 mil and RM35 mil in FY Dec 2019. This is premised on committed tenancies to commence by the end of 3Q 2019, asset enhancement initiatives, net lettable area expansion and a planned increase in car parking rates. RAM’s sustainable cashflow assumption of RM40.2 mil per annum reflects this upside potential, although we have adopted more moderate annual rental reversions and tapered occupancies in view of the Mall’s short operating history. While the Mall registered a NPI of about RM34 mil in FY Dec 2018, we expect its performance to gradually improve closer to our expectations over the next two to three years. The resultant adjusted valuation of the Property of RM459.4 mil by RAM provides adequate credit enhancement for the respective preliminary ratings assigned to the Senior Class MTNs. 

In assigning the ratings, we have also considered the transaction’s various performance triggers to initiate early disposal of the Mall if breached. The transaction’s covenants will also impose limitations on the Obligor, including restricting its activities solely to the management of the Mall and capping additional indebtedness at RM3 million, to be utilised only for working capital purposes. Cashflow leakage from the transaction is also minimised as dividends will be subject to a minimum debt service coverage ratio of 1.75 times at the obligor level and the absence of a trigger event, among other prerequisites. Given the Property’s cashflow generating ability, the pre-funded six-month coupon reserve for the MTNs will, in our view, provide adequate liquidity to ensure continued servicing of coupon obligations under the MTNs during the transaction’s two-year tail period to ensure timely redemption of the notes by the legal maturity date. 


Analytical contact
Lim Chern Yit
(603) 3385 2528

Media contact
Padthma Subbiah
(603) 3385 2577


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.

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