Find A Rating 
PRESS RELEASES
RAM Ratings affirms Pavilion REIT Capital’s MTN and CP ratings; outlook stable
Published on 22 Jun 2026.
RAM Ratings has affirmed Pavilion REIT Capital Berhad’s (the Issuer) unsecured RM8.0 bil MTN Programme and unsecured RM200.0 mil CP Programme at AA3(s)/Stable and P1(s), respectively. The secured MTNs remain rated one notch higher at AA2(s)/Stable, reflecting the benefit of a strong 1.67 times minimum collateral coverage ratio.
The issue ratings reflect the credit strength of Pavilion REIT (PavREIT), for which the Issuer acts as funding conduit and ultimate obligor. The affirmation is underpinned by the REIT's resilient retail-focused portfolio, comprising prime mall assets with strong market positions, improved income visibility from master-leased properties, and a broader earnings mix following its diversification into hospitality assets. These strengths are balanced against its exposure to interest rate volatility given the still high proportion of floating-rate debt. As at FY Dec 2025, PavREIT’s eight assets were valued at RM9.1 bil. Master leases for its hotels and Da Men Mall support income stability, while providing upside through profit-sharing arrangements. Da Men Mall’s ongoing repositioning and improving tenant profile should add support to its operating performance over time, although execution risks remain relevant until stabilisation is fully demonstrated.
In fiscal 2025, PavREIT’s revenue grew 6.6% y-o-y to RM901.5 mil, alongside portfolio occupancy improvement to 94.5% from 90.4% a year earlier. The stronger performance was driven by a lease renewal rate of over 90% and mid-single-digit positive rental reversions, indicating sustained tenant demand across its key assets. Tenant concentration risk remains low, with the top 10 tenants accounting only 17.2% of gross rental income, supporting earnings resilience. The reconfiguration of Level 3 at Pavilion Kuala Lumpur following Parkson's exit is expected to support further rental growth once completed by December 2026. However, the benefits of the asset enhancement initiative, will depend on timely execution and the REIT’s ability to secure replacement tenants at targeted rates.
The REIT’s financial profile strengthened in FY Dec 2025, with fixed charge coverage improving to 2.99 times from 2.62 times in FY Dec 2024, and further to 3.36 times in 1Q FY Dec 2026, aided mainly by lower borrowing costs. While leverage increased following the RM500 mil MTN drawdown to fund hotel acquisitions and deferred payment for Pavilion Bukit Jalil, we expect its debt metrics to remain commensurate with the current rating, underpinned by moderate earnings growth and limited near-term funding needs. That said, financial flexibility remains constrained by the high share of floating-rate debt, which stood at 77% as of end-March 2026, although the current interest rate environment should keep its funding costs manageable . Debt maturities are well-spread, with no more than one-third maturing annually, reducing refinancing pressure.
Analytical contacts
Darrel Tiang
(603) 2708 8219
darrel@ram.com.my
Tan Han Nee
(603) 2708 8322
hannee@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
© Copyright 2026 by RAM Rating Services Berhad
