MARC Ratings has reaffirmed its AAAlS rating with a stable outlook on the Merdeka Sukuk Wakalah Programme, valued at up to RM6 billion, issued by PNB Merdeka Ventures Sdn Bhd (PNBMV). The rating agency highlighted that this rating aligns with the AAA/Stable corporate credit rating of Permodalan Nasional Bhd (PNB), reflecting PNB’s unconditional and irrevocable rolling guarantee to cover any principal and profit shortfalls under the sukuk programme.

PNBMV, a wholly owned subsidiary of PNB, is spearheading the Merdeka 118 development, a 40-acre site in Kuala Lumpur featuring the 118-storey Menara Merdeka Maybank office tower, a retail mall, and designated areas for two residential towers and a serviced apartment building. The project also encompasses ownership and stewardship of the National Heritage-listed Stadium Merdeka and Stadium Negara.

The rating agency noted that PNBMV has leased all 84 floors of office space within the Menara Merdeka Maybank tower to PNB under a triple net master lease agreement. This arrangement places responsibility for property-related expenses, rental, and service charges on PNB. Approximately 70% of the office tower’s net lettable area, totaling 1.6 million square feet, has been subleased to various tenants, including Maybank, which occupies 40% or 33 floors, PNB with 20%, and other tenants accounting for about 10%. MARC Ratings projects overall occupancy to increase to around 90% in the next five years, with the office tower expected to generate annual net property income of approximately RM137 million.

Regarding the retail component, lease agreements covering 81% of the 750,324 square feet net lettable area have either been finalized or are in negotiation, with an indicative average rental rate of RM11.92 per square foot. The mall is slated for opening in November.

In addition to the commercial elements, two residential apartment towers, with a combined gross development value (GDV) of RM2 billion, are planned for launch in the first half of 2027. A serviced apartment project, featuring an estimated GDV of RM745 million, is scheduled for a later launch. MARC Ratings cautioned that these residential and serviced apartment segments face demand risks due to competition from other developments in Kuala Lumpur.

To date, the Merdeka 118 project has incurred development costs amounting to RM10.6 billion. The forthcoming residential phases are expected to require an additional RM1.4 billion, to be financed through a mix of borrowings and equity contributions.