RAM Ratings reaffirms AAA rating of Suria KLCC’s MTN Programme

Published on 25 Nov 2022.

Share Tweet Email

RAM Ratings has reaffirmed the AAA/Stable rating of Suria KLCC Sdn Bhd’s (Suria KLCC or the Company) RM600 mil Islamic Medium-term Notes (MTN) Programme (2014/2044). Suria KLCC is the owner and property manager of the iconic Suria KLCC Mall (the Mall), located within the prime Kuala Lumpur City Centre (KLCC) development.

The rating action reflects the Company’s conservative financial profile and Suria KLCC Mall’s recovering performance. For 8M FY Dec 2022, the Mall’s average rental rate improved slightly to RM36 psf (FY Dec 2021: RM35 psf) while its occupancy rate continued to average 92%. This coupled with much lower rental assistance caused the Company’s operating profit before depreciation, interest and tax margin to rebound to 83.8% (FY Dec 2021: 77.1%), remaining superior to peers’. Notably, the Mall’s tenant sales for 9M 2022 surpassed the pre-pandemic level by 106%. 

Rental collection improved significantly, with rentals overdue for more than one month falling to RM4.9 mil (FY Dec 2021: RM16.2 mil), about 2% of base rental for 8M FY Dec 2022. As at end-August 2022, the Mall’s lease renewal rate was decent at 74% of matured leases while the rest are under negotiation. Leases maturing in 2023 constitute 32.6% of net lettable area (NLA), one third of which is occupied by three major tenants that have been at the Mall since its inception and have not indicated any intention to vacate. 

The Mall’s occupancy rate and earnings are expected to recover further after the reconfiguration of space previously occupied by Rasa Foodcourt is completed in the first quarter of 2023 and the space becomes substantially occupied. The rental reversion rate for the coming year should turn positive, given that the majority of more recent new leases or lease renewals were locked in at broadly the same or higher rates. To compensate for those renewed at lower rates, the contracts incorporated an annual step-up rental rate. That said, full recovery of earnings to pre-pandemic levels will likely be seen only in 2024 in view of political and economic uncertainty, increasing interest rates and inflationary pressure.

The rating also factors in a high likelihood of parental support from the Company’s shareholder, KLCC (Holdings) Sdn Bhd (KLCCH), and Petroliam Nasional Berhad (PETRONAS), if required. PETRONAS has a direct 2.3% interest in KLCC Property Holdings Berhad (KLCCP), and another 64.7% indirectly held through wholly owned KLCCH. 

Suria KLCC is 60%-owned by KLCCP while the remaining 40% were beneficially owned by CBRE Investment Management. The relationship between Suria KLCC and its indirect shareholders (as defined in RAM’s Criteria on Parent-Subsidiary Rating Links) is deemed close as the Mall is a core component of the KLCC development, a prime real estate investment of KLCCH. The development is closely associated with PETRONAS – the major lessee of the prominent PETRONAS Twin Towers – which exercised its option in 2020 to extend the lease term for a further 15 years, well ahead of expiry in 2027. In addition, the Company accounts for about a third of the revenue and assets of its immediate major shareholder, KLCCP.


Analytical contacts
Joel Thum
(603) 3385 2517

Tan Han Nee
(603) 3385 2529


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 2022 by RAM Rating Services Berhad

Rating Rationale

Ratings on Suria KLCC Sdn Bhd