28 December 2012
The RM530.3mil integrated complex, being built next to the Kuala Lumpur International Airport 2 (klia2) by Segi Astana Sdn Bhd, has secured commitments for 53.5% of the retail space as at Nov 30.
Malaysian Rating Corporation Bhd (MARC) said on Friday it expected the complex to secure more tenants as the project neared completion and operational by May 2013.
The rating agency had affirmed its rating of AAA(fg) on Segi Astana’s RM470mil medium term notes (MTN) programme with a stable outlook.
"The rating reflects the unconditional and irrevocable financial insurer guarantee provided by Danajamin Nasional Bhd. Danajamin is rated by MARC at AAA/Stable based on the financial insurer’s strong capital position and claims-paying resources relative to its risk exposure, and its status as a government-sponsored entity," it said.
To recap, Segi Astana, a joint venture between WCT Land Sdn Bhd (WCTL) (70%) and Malaysian Airports Holdings Bhd (MAHB) (30%), is building the complex under a 25-year build-operate-transfer concession.
The complex which adjoins the new klia2, is largely funded by the proceeds from the MTN programme.
Comprising of a landside mall with net lettable area of about 350,000 sq ft and a transportation hub, the complex was 78.3% completed as at end-November 2012 and was expected to be operational by May 2013 in line with the scheduled opening of klia2.
"Nonetheless, MARC opines that the primary challenge for Segi Astana will be to secure a strong occupancy level for the retail mall. As at Nov 30, 2012, 53.5% of retail space has secured commitment for tenancy, and this is expected to increase as the project nears completion," the rating agency said.
The rating agency expected the project to continue to benefit from the credit strength of its two sponsors, namely WCTL and MAHB. WCTL is a unit of WCT Bhd (WCT), one of the largest domestic construction players, while MAHB is a government-linked corporation, which owns and operates most of the country’s airports.
WCT’s unit, WCT Construction Sdn Bhd, is undertaking the construction on a fixed-price contract basis.
"MARC views the construction and non-completion risk during the project’s construction phase to be mitigated by the WCT group’s strong construction track record and a RM17.5 million completion guarantee provided by WCT as well as an undertaking to fund any construction cost overruns.
"MARC also notes that Segi Astana would be able to leverage on the expertise in property management within the WCT group during the operational phase of the project," said the rating agency.