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)