[RAM] RAM Ratings affirms ratings of AC First Genesis' Sukuk Ijarah backed by Aman Central Mall

RAM Ratings has affirmed the ratings of the Class A and Class B First Tranche Sukuk Ijarah (collectively, the Senior Sukuk) issued under AC First Genesis Berhad’s (the Issuer) RM3 bil Sukuk Ijarah Programme (see table). The Senior Sukuk is backed by Aman Central Mall (the Mall), an eight-storey retail mall in Alor Setar, Kedah. The Issuer is a trust-owned special-purpose vehicle incorporated to facilitate the securitisation exercise under the sukuk programme.




The rating action reflects the improved performance of Aman Central Mall, which is on track to achieving our annual sustainable cashflow assumption of RM41.0 mil by next year. With the Mall’s adjusted valuation of RM468.57 mil and the amortisation of Series 1 under the Class A and Class B Sukuk Ijarah, the LTV ratios and stressed FSCRs remain supportive of the respective ratings. The Issuer redeemed RM20 mil of Series 1 under the Class A and Class B Senior Sukuk on the expected maturity date of 27 May 2024 with cash balance in the Principal Reserve Account.

In FY Dec 2023, the Mall’s revenue and net property income (NPI, excluding one-off capital expenditure) rose by a respective 15% and 14% y-o-y to RM66.01 mil and RM37.76 mil. This resulted from stronger occupancy, base rent and promotion income which moderated increased operating expenses, keeping the NPI margin largely steady at 57% (FY Dec 2022: 58%). Average occupancy and rental rates were higher at 87% and RM6.49 psf, respectively (FY Dec 2022: 80% and RM6.21 psf).

Aman Central Mall faces a concentration of expiring leases this year given its third renewal cycle, although moderated somewhat by its above-average asset quality. With negotiations ongoing for tenancies expiring this year (majority due in 2H 2024), the management does not envisage any major tenant movement. We anticipate the Mall’s performance to benefit from potential income upside stemming from completed asset enhancement initiatives and the management’s proactive involvement in marketing and promotional campaigns.

The Issuer fully complied with remaining conditions subsequent to the First Tranche Sukuk Ijarah on 18 January 2024 (click here for latest updates). The transaction’s ultimate sponsor is Belleview Group, a niche property developer in the northern region, with a track record dating back to 1984. Its core business encompasses the development of residential properties, townships, offices and shopping malls as well as asset management for sale and investment. Aman Central Mall was previously held via the Group’s wholly owned subsidiary, Great Realty, before being securitised under the sukuk programme in May 2021.


Analytical contacts
Liew Kar Ling
(603) 3385 2586
karling@ram.com.my

Lim Chern Yit
(603) 3385 2528
chernyit@ram.com.my