AMANAHRAYA real estate investment trust (AR-REIT) has been reaffirmed with a corporate credit rating of BBB-/Stable- by Standard & Poor's (S&P) following the authorities' approval of the second injection of five properties.
AR-REIT, which has an initial asset size of RM336 million, will become the country's second largest REIT with an asset size of RM641 million, upon the completion of the second injection.
According to S&P, the stable outlook on AR-REIT is attributable to among others, the robust rental income, its long lease maturity profile, high level of tenant security deposits, and above-average asset quality with minimal capital expenditure requirements.
"S&P factors in the Malaysian government's support and equity stake in AR-REIT, and the REIT's close links with Kumpulan Wang Bersama (KWB) - a RM6.6 billion common fund guaranteed by the Malaysian government.
"KWB has a stringent selection criteria for its property investments and currently owns 13 properties, of which seven are qualified to be injected into AR-REIT. KWB will continue to have 20 per cent of its total fund in property assets as this is one of its guidelines.
"This means that AR-REIT will have a ready pool of properties to acquire from KWB to ensure that its portfolio consists of above-average quality real estate with a sustainable income stream," S&P said in its report.
Upon completion of its second injection, AR-REIT will be made up of 13 properties from diversified sectors.
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