Tuesday, Sep 21, 2021
MARC has affirmed its ratings on Putrajaya Holdings Sdn Bhd’s (PJH) outstanding issuances at AAAIS with a stable outlook.
PJH’s timely receipt of sizeable rental income from the Malaysian government under long-term lease-and-sublease agreements and the strength of its government-linked shareholding structure remain key rating drivers. PJH is the master developer of the federal administrative centre in Putrajaya in which the Malaysian government is the principal lessee of government buildings.
As of date, PJH had delivered 41 government building projects with a total gross built-up area of 42.3 million sq ft, reflecting the group’s strong development track record. With the end of construction of the government buildings, PJH has increased commercial and residential development activities, mainly in Putrajaya. Among the projects is the affordable housing project for civil servants through the Perumahan Penjawat Awam Malaysia (PPAM) scheme in Precinct 17, and a mixed development project each in Precinct 7 and Precinct 8. Its combined gross development cost for ongoing projects stood at RM775.8 million as at end-2020. The average take-up rate for PJH’s ongoing residential projects stood at a moderate 58%. While this exposes the group to market risk, the rating agency draws comfort from the fact that the risk is substantially mitigated by its sizeable rental earnings.
PJH’s annual sublease rental income of about RM1.6 billion from the government is sufficient to meet the financial obligations under the rated programmes. Cash flow from operations stood at RM1.6 billion in 2020, increasing from RM1.3 billion in the previous year, with the increase coming mainly from the clearance of property inventories. The group’s recent RM1.0 billion Sukuk Wakalah Programme is to fund its developments in Precinct 7 and Precinct 8. Its rated programme are as follow:
PJH’s timely receipt of sizeable rental income from the Malaysian government under long-term lease-and-sublease agreements and the strength of its government-linked shareholding structure remain key rating drivers. PJH is the master developer of the federal administrative centre in Putrajaya in which the Malaysian government is the principal lessee of government buildings.
As of date, PJH had delivered 41 government building projects with a total gross built-up area of 42.3 million sq ft, reflecting the group’s strong development track record. With the end of construction of the government buildings, PJH has increased commercial and residential development activities, mainly in Putrajaya. Among the projects is the affordable housing project for civil servants through the Perumahan Penjawat Awam Malaysia (PPAM) scheme in Precinct 17, and a mixed development project each in Precinct 7 and Precinct 8. Its combined gross development cost for ongoing projects stood at RM775.8 million as at end-2020. The average take-up rate for PJH’s ongoing residential projects stood at a moderate 58%. While this exposes the group to market risk, the rating agency draws comfort from the fact that the risk is substantially mitigated by its sizeable rental earnings.
PJH’s annual sublease rental income of about RM1.6 billion from the government is sufficient to meet the financial obligations under the rated programmes. Cash flow from operations stood at RM1.6 billion in 2020, increasing from RM1.3 billion in the previous year, with the increase coming mainly from the clearance of property inventories. The group’s recent RM1.0 billion Sukuk Wakalah Programme is to fund its developments in Precinct 7 and Precinct 8. Its rated programme are as follow:
- RM370.0 million Sukuk Musharakah Programme (due 2030)
- RM3.0 billion Sukuk Musharakah Programme (due 2032)
- RM1.5 billion Sukuk Musharakah Medium-Term Notes (MTN) Programme (due 2033)
- RM1.0 billion 20-year Sukuk Wakalah Programme (due 2041)
Contacts:
Glenn Wong Liu Yu, +603-2717 2961/ liuyu@marc.com.my;
Taufiq Kamal, +603-2717 2951 / taufiq@marc.com.my.