(The following was released by the rating agency)
BANGKOK/SINGAPORE/SYDNEY, February 15 (Fitch) Fitch Ratings
(Thailand) Limited has affirmed Siam Future Development Public
Company Limited's (SF) National Long-Term Rating at 'BBB(tha)'
with Stable Outlook, its National Short-Term rating at 'F3(tha)'
and its outstanding senior unsecured debentures at 'BBB(tha)'.
Simultaneously, Fitch has assigned SF's new issue of up to
THB750m senior unsecured debentures due in 2016 a National
Long-Term Rating of 'BBB(tha)'. The proceeds will be used to
refinance the maturing debentures and a loan from bank.
The ratings reflect SF's strong market position as a leading
developer of Thai medium-sized open-air shopping centres. SF's
larger portfolio, longer experience and stronger expertise in
its niche provide it with a competitive advantage over its
peers. SF has a quality shopping mall portfolio with a high
average occupancy rate of more than 90% since the opening of its
first centre in 1995.
The ratings also reflect SF's secured cash flow from
long-term leases. Long-term leases account for about 65% of its
total gross leasable area (GLA) and contribute about 35% of
total recurring income. Anchor tenants are high-profile and
well-diversified companies. The top five largest tenants account
for 40% of total GLA while the largest tenant, occupying 17% of
total GLA, is a SF-related company. Its new anchor, IKEA store,
which is a new franchise in Thailand with a differentiated store
concept, also helps enhance SF's tenant profile.
SF faces a limit on rental increase and declining occupancy
in some major centres due to a decrease in visitor traffic,
following the closure of an anchor tenant at these centres, and
keen competition in the neighbourhood. The company is likely to
sign up new anchor tenants in late 2013 or early 2014. Growing
the recurring income of its existing portfolio will, therefore,
be challenging over the next two years while contributions from
the new centres should help if they open on schedule.
Nevertheless, the average occupancy rate of SF's shopping
centres should remain strong at above 90% in 2012-2015.
Fitch expects SF's net adjusted debt/EBITDAR to remain high
at about 5.6x-6.1x during 2013-2014 but its FFO fixed charge
coverage to improve to 2.3x-2.6x in 2013-2014 from about
2.0x-2.1x in 2012. Given the completion of Mega Bangna, SF will
focus on the expansion of its new centres with planned capex of
THB850m-THB1bn a year in 2013-2014 and additional GLA of
10,000-20,000 square metres a year.
SF's THB1.4bn debt, including THB1.2bn debentures, will
mature within one year from end-September 2012. The company
plans to refinance the maturing debt with new debentures,
including the aforementioned new debentures. SF's liquidity is
also supported by a cash balance and current investments of
THB50.7m and undrawn committed bank facilities of THB767m. SF
also has the alternative to sell its existing projects to
property funds or other operators, if needed.
Positive: Future developments that may, individually or
collectively, lead to positive rating action include:
-Substantial improvement in recurring income
-Funds from operations (FFO) fixed charge coverage above
3.0x on a sustained basis
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
- Deteriorating recurring income
- FFO fixed charge coverage below 2.5x on a sustained basis