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RAM Ratings affirms AAA/Stable rating of IGB REIT Capital’s RM1.20 bil Second Tranche MTN
Published on 03 Jul 2025.
RAM Ratings has affirmed the AAA/Stable rating of IGB REIT Capital Sdn Bhd’s RM1.2 bil Second Tranche Medium-Term Notes (MTN), the second issuance under the RM5.0 bil MTN Programme secured against Mid Valley Megamall (the Mall or the Property).
IGB REIT Capital is a special-purpose vehicle created by IGB Real Estate Investment Trust (the REIT) for fundraising purposes. The rating affirmation reflects our view that the Mall will sustain its strong performance despite challenges stemming from inflationary pressures caused by upcoming fuel subsidy rationalisation, wider coverage of the sales and service tax, higher energy tariff rates and uncertainties posed by US tariff hikes.
Given Mid Valley Megamall’s sustained strong overperformance in the past three years, we have revised our annual sustainable cashflow (SCF) assumption for the Property to RM350 mil from RM290 mil previously. With an applied capitalisation rate of 8.0%, RAM’s adjusted market valuation of RM4.0 bil for the Mall (capped at appraised market value) provides superior credit support for the Second Tranche MTN, as seen in the loan-to-value ratio of 30.0% and stressed debt service coverage ratio of 3.43 times. The available credit support affords a healthy buffer against any prolonged SCF deterioration.
In FY Dec 2024, the Mall’s net property income (NPI) grew 3.7% y-o-y to RM333.5 mil, largely on the back of higher base rent from new tenancies post-reconfiguration of the Mall’s South Court, alongside positive rental reversions. Going forward, higher base rents from renewed tenancies as well as higher-yielding tenancies from a de-anchoring exercise are expected to support NPI growth further, although potentially moderated by increases in operating costs and capital expenditure. For 1Q FY Dec 2025, the Mall charted a healthy NPI of RM96.1 mil (+6.8 y-o-y). While a material portion is derived from variable income, introducing some volatility owing to lower consumer spending, the management’s strategy of raising base rent and the Mall’s strong mass-market positioning help provide some stability, as demonstrated over the years.
Analytical contacts
Hani Hamizah Nor Hashim
(603) 2708 8240
hani@ram.com.my
Lim Chern Yit
(603) 2708 8302
chernyit@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@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
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