RAM Ratings affirms KIP REIT Capital's 2024-Issue 4 MTN rating

RAM Ratings has affirmed the AAA/Stable rating of the RM240 mil 2024-Issue 4 Class A Medium-Term Notes (MTN) under KIP REIT Capital Sdn Bhd's RM2.0 bil Perpetual MTN Programme. The MTNs are backed by four properties ? KIPMall Tampoi (KMT), KIPMall Masai (KMM) and KIPMall Bangi (KMB) (collectively, KIPMalls) and AEON Mall Kinta City (AMKC). KIP REIT Capital is KIP Real Estate Investment Trust's (KIP REIT or the REIT) funding conduit.

The affirmation reflects strong collateral and cashflow coverage from the securitised properties. The stable outlook reflects RAM's expectation that the properties will perform in line with the revised SCF assumption. Their mature catchments, high occupancy, positive rental reversions as well as active asset and tenant-mix management support the rating. The portfolio's revised RM57.0 mil sustainable cashflow assumption, raised from RM53.5 mil, captures sustained earnings outperformance, stronger occupancy and rental rates, car-park and turnover-based income, and higher rental under AMKC's extended master lease.

The revised SCF supports an adjusted valuation of RM650.0 mil, equivalent to 83.3% of the latest RM780.0 mil market valuation. The Class A MTN's loan-to-value ratio and stressed debt service coverage ratio improve to 36.9% and 2.79 times, respectively, from 39.3% and 2.62 times, providing ample headroom for the AAA rating, against weaker NPI or asset values.

Portfolio quality remains above average, and is diversified by geography, asset value, revenue and tenant mix, with each property contributing 18%-34% of portfolio NPI and ten largest tenant exposure still manageable in FY Jun 2026. Essential-services and fresh-market trades continue to anchor solid KIPMalls occupancy of 96.7% and 1%-8% rental reversions. Together with the REIT Manager's cost-containment initiatives, this supported portfolio NPI margin that held firm at 79.0% in FY Jun 2026. Ongoing ass