The credit rating of Planetamoll-Ufa LLC (hereinafter, the Company, Planetamoll-Ufa) reflects the Company's low leverage, very high coverage, high profitability, very high cash flow, and medium operating risk profile and liquidity assessments. The credit rating is constrained by the high industry risk and the small business size. The Company is part of Malltech Holding Limited (hereinafter, the Holding). To determine the credit rating of the Company, ACRA took into account the credit rating of the Holding, which acts as a supporting entity for the Company. Since the standalone creditworthiness assessment (SCA) of the Company is on par with the Holding's credit rating, no adjustments were applied to the SCA.
Planetamoll-Ufa is the owner and operator of the Planet mall in Ufa. The gross building area (GBA) of the mall is 131,400 m2 and the gross leasable area (GLA) is 75,900 m2.
KEY ASSESSMENT FACTORS
Medium assessment of the operational risk profile. The Company owns and operates a single building with a diversified pool of tenants. The occupancy rate was about 97% at the end of 2021; less than a half of the lease contracts are long-term (for a period of more than three years). Most of the management functions are concentrated at the level of the Holding, and the corporate governance factor is assessed as adequate. The Company published is RAS financial statements, and its financial transparency is assessed as low.
Low leverage and very high coverage. The average weighted ratio of total debt to net operating income (NOI) for the period from 2019 to 2024 is estimated by the Agency at 2.9x; the weighted average ratio of total debt to LTV is 0.3x. The weighted average ratio of NOI to debt service (interest plus depreciation) is estimated at 3.2x for the period of 2022–2024.
Small size and high profitability of the business. The Company’s weighted average NOI for the period from 2019 to 2024 is estimated by ACRA at RUB 1.3 bln. The weighted average capitalization rate is estimated at 9.9% and the weighted average NOI per square meter of leasable area is RUB 17,400.
Very high cash flow assessment. The Company has no plans to make major investments or pay dividends, which results the very high assessment estimate of cash flow. The Company's free cash flow expected by the Agency in 2022–2024 will significantly exceed the amount of debt repayments.
key assumptions
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No strict quarantine restrictions to be introduced in 2022;
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The average annual growth rate of rental income at 8% in 2022–2024;
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The average annual key rate of the Bank of Russia at 7.5–8.5% in 2022 and its subsequent reduction to 5.25–6% in 2024;
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Maintaining a very high space utilization rate in the period from 2022 to 2024;
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No significant dividend payments in 2022–2024.
potential outlook or rating change factors
The Stable outlook assumes that the rating will most likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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The share of long-term lease contracts exceeding 90% and a concurrent increase in the financial transparency of the Company;
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Upgrade of the Holding's credit rating.
A negative rating action may be prompted by:
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The weighted average ratio of NOI to debt service declining below 2.2x, and the weighted average ratio of total debt to NOI exceeding 4x;
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Downgrade of the Holding's credit rating;
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New strict quarantine restrictions;
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Regulatory changes that may have a significant negative impact on the Company's performance.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): a-.
Adjustments: none.
issue ratings
There are no outstanding issues.
REGULATORY DISCLOSURE
The credit rating has been assigned under the national scale for the Russian Federation based on the Methodology for Credit Ratings Assignment to Non-Financial Corporations under the National Scale for the Russian Federation, Methodology for Analyzing Rated Entities Associated with a State or a Group, and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
A credit rating has been assigned to Planetamoll-Ufa LLC for the first time. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.
The credit rating was assigned based on data provided by Planetamoll-Ufa LLC, information from publicly available sources, and ACRA’s own databases. The credit rating is solicited, and Planetamoll-Ufa LLC participated in its assignment.
In assigning the credit rating, ACRA used only information, the quality and reliability of which was, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no ancillary services to Planetamoll-Ufa LLC. No conflicts of interest were identified in the course of credit rating assignment.
