PT Mulialand awarded BBB-minus rating
PT Mulialand awarded BBB-minus rating
JAKARTA (JP): Standard and Poor has given a BBB-minus
corporate credit rating to publicly listed PT Mulialand, a
property arm of the Mulia Group.
The international rating agency announced Saturday the rating
outlook was stable.
The agency said the rating reflected Mulialand's strong market
position and prime asset quality.
However, the agency said the company's "single exposure to the
Jakarta market, short-lease maturity profile, and lumpy cash
flows as a result of Mulialand's property trading activities"
counters the strengths.
According to the agency, the company markets first-rate office
buildings and recently has diversified into the retail market to
participate the growth of retail sales.
"Mulialand's quality assets, including offices and the
recently completed Taman Anggrek Mall, are of prime quality," it
said.
It said the company's short lease maturity profile indicated
the rapidly growing and volatile economy.
The company seeks to maintain high occupancy levels through a
combination of quality in-house leasing services and a
competitive rental structure, it said.
The agency said it expected the company's retail assets would
perform adequately, and retail developments would be completed
within the articulated prudential framework
The company, however, would face tight competition in Jakarta
due to the growth in office supply and retail spaces development
in the city, it said.
"Mulialand lacks geographical diversification given its single
exposure to the Jakarta market," it said, adding that the
proposed expansion of its retail assets would represent
significant asset concentration.
However, the company's sales of office spaces in the city's
prestigious commercial district, the Golden Triangle, would make
up for the shortcoming, the agency said.
The agency expects Mulialand's net debt to capital would
fluctuate, but would not exceed 45 percent, with a forecasted
increase in property trading activity.
Mulialand would be able to pay its debt with the proceeds from
property sales, and it would receive about two-thirds of its
earnings from recurrent rental income, and the rest from one-off
trading opportunities, the agency said.
The agency said Mulialand's future property acquisitions were
intertwined with the development activities of its majority
shareholder, the Tjandra family.
It said the company's business profile would not be impaired
by the growth ambitions of the Tjandra family, if strict
financial parameters were imposed when purchasing assets. (das)