KUALA LUMPUR (Dec 13): RAM Rating Sdn Bhd (RAM Ratings) has reaffirmed the enhanced ratings of Impian Ekspresi Sdn Bhd's RM450 million guaranteed Medium-Term Notes (MTN) Programme with a AAA(fg)/Stable rating for the Danajamin-guaranteed RM300 million and a AAA(bg)/Stable rating for the balance Maybank-guaranteed RM150 million.

The MTN programme has an 11-year tenure. Impian Ekspresi, the private vehicle of Tan Sri Desmond Lim, is owner and developer of the 9.58 acres Pavilion Damansara Heights project that is crafted by Lim's Pavilion Group.

In a statement Friday (Dec 10), RAM Ratings said the enhanced ratings reflect irrevocable and unconditional guarantees from AAA-rated Danajamin and Maybank, which enhance the credit standing of the debt issues beyond Impian Ekspresi's standalone credit strength.

"Excluding the guarantees, Impian Ekspresi’s ability to service its debt obligations depends on the timely completion and take-up of Pavilion Damansara Heights, which the company is developing. Construction progress has been hindered by changes in development plans, a delay in the approval of the development order, the complexity of demolition work and more recently, disruptions from Covid-19 infections and lockdowns. Construction and execution risks are expected to be kept manageable, in view of the track record of the reputable contractor for the project, WCT Holdings Bhd," the rating agency said.

RAM Ratings also noted that Impian Ekspresi’s majority shareholder, Tan Sri Desmond Lim Siew Choon — who is also WCT's executive chairman and Malton Bhd's non-executive chairman, as well as being the chairman and executive director of Pavilion Real Estate Investment Trust — has extended an irrevocable and unconditional undertaking to the guarantors of both series of the MTN, to ensure the availability of sufficient funds for the project’s completion and any cost overruns.

"As Pavilion Damansara Heights is Impian Ekspresi’s sole project, prompt completion and sale of the project are imperative to the company’s ability to service its debt obligations. Despite the challenging property market, Pavilion Damansara Heights has received encouraging response. As at end-September 2021, 97% of space in its nine office towers had been sold, with bookings received for the remaining 1.8%. Of the 1,314 units available in the three residential towers, 57.5% have been sold, while 11.9% have been booked. Ahead of the mall’s planned opening in 4Q 2022, tenants have either leased or committed to lease 52.2% of its net lettable area," RAM Ratings noted.

It also noted that as at end-June 2021, Impian Ekspresi’s balance sheet remained highly leveraged with a net gearing ratio of 1.26 times.

"We expect the company’s balance sheet to improve moving forward, in line with the gradual receipt of sale proceeds from the office towers and residential units, which will be used to pare down debts.

"We expect Pavilion Damansara Heights to continue to benefit from its prestigious address that boasts excellent visibility and accessibility. The project is also envisaged to gain from its experienced project team, mainly comprising personnel from Malton Group and Pavilion REIT Management Sdn Bhd," it added.

Edited by Tan Choe Choe. 

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