Ratings of Axis REIT Sukuk’s RM110 million first sukuk reaffirmed
KUCHING: RAM Ratings has reaffirmed the respective AAA, AA1, AA2 and AA3 ratings of Axis REIT Sukuk Bhd’s (Axis REIT Sukuk) RM110 million of Class A, Class B, Class C and Class D sukuk (collectively, the First Sukuk) under its First Sukuk Issue; all the ratings have a stable outlook.
The first sukuk is backed by a portfolio of three industrial and industrial-office mixed properties and one retail property, namely Axis Steel Centre, Axis Vista, Bukit Raja Distribution Centre and Tesco Bukit Indah.
“The reaffirmation of the ratings is premised on our expectation that the portfolio’s adjusted capital value will stay intact, backed by a stable and predictable cashflow stream from the underlying portfolio’s longer than average weighted lease maturities and fixed longterm leases,” it said in a statement yesterday.
“Moreover, the strategic location of the properties and a healthy demand for industrial properties given the shortage of prime locations for new developments in Klang Valley, underscore our view that the portfolio’s performance will remain in line with our assumptions.”
In 2017, RAM saw that the portfolio achieved a net property income (NPI) of RM21.7 million, up from RM20.4 million a year earlier, due to higher portfolio occupancy and a one-off net gain from reinstatement works at ASC following the departure of its tenant during the year.
Excluding this non-recurring gain, NPI would have amounted to RM21 million.
RAM’s adjusted portfolio value remains at RM217.3 million – the resultant cumulative loan-to-value ratios of 43.7 per cent, 46.0 per cent, 48.3 per cent and 50.6 per cent and debt-service coverage ratios of 2.5, 2.4, 2.2 and 2.1 times are still commensurate with the respective ratings of the Class A to Class D sukuk.
“The ratings are, however, moderated by significant sector and tenant concentration risks, as three of the four properties are industrial properties and/or single-tenanted,” it said.
“Notably, the portfolio’s high exposure to the logistics sector (56.7 per cent of portfolio’s monthly rental income) renders the transaction susceptible to the cyclicality of the sector and changes in related business policies.