[RAM] RAM Ratings affirms AAA(fg)/Stable rating of Hektar REIT's RM230 mil Guaranteed Tranche(s)

RAM Ratings has affirmed the AAA(fg)/Stable rating of the RM230 mil Medium-Term Notes (MTN) (Guaranteed Tranche(s)) issued under Hektar MTN Satu Sdn Bhd’s (Hektar Satu) RM500 mil MTN Programme. Hektar Satu is a wholly owned subsidiary of Hektar Real Estate Investment Trust (Hektar REIT or the REIT), set up solely as a funding conduit for the MTN Programme.

Backed by an irrevocable and unconditional guarantee on the MTN from Credit Guarantee and Investment Facility (rated AAA/Stable/P1 by RAM), the enhanced rating reflects Hektar REIT’s portfolio of neighbourhood malls spanning several Malaysian states and the addition of Kolej Yayasan Saad (KYS) in 2024. The REIT’s malls in Selangor, Melaka, Johor, and Kedah are generally dominant in their localities, with little direct competition. Its diversification into the education sector with a 30-year quadruple-net lease for KYS extends the portfolio weighted average lease expiry to 3.47 years, introducing stable long-term income. As of 9M FY Dec 2025, the top three assets constituted 71% of total revenue and 67% of asset value, with further sectoral diversification and capital growth anticipated from recent acquisitions with development potential.

Portfolio revenue for the same period stayed steady at RM94.0 mil, occupancy rising to 86.9% (end-2024: 84%) and the average rental rate up 2.1% y-o-y at RM3.83 psf. Occupancy should improve further by 2027 following ongoing asset and tenant enhancements. Rising staff and utility costs and a one-off revenue adjustment led to a thinner net property income margin of 48.72% in 9M fiscal 2025, which although lower than retail-focused peers’, is expected to increase to 58%-61% over the next three years, driven by cost containment and full-year earnings from new triple-net leases. Portfolio rental reversion was subdued at +1% as a result of tenant reconfiguration, but new tenants are expected to boost rental performance with better retail sales prospects.

The REIT’s leverage remains moderate at 41.60% as at end-September 2025. Its debt-to-operating profit before depreciation, interest and tax ratio and fixed charge cover weakened slightly to 12.81 times and 1.57 times, respectively, (end-2024: 12.39 times and 1.61 times) due to delayed cash flow recovery from asset and tenant reconfiguration. We anticipate these indicators to improve following 2026 asset acquisitions and investments.


Analytical contacts
Joel Thum
(603) 2708 8232
joel@ram.com.my

Tan Han Nee
(603) 2708 8322
hannee@ram.com.my

Media contact 
Sakinah Arifin 
(603) 2708 8212
sakinah@ram.com.my