Bulletin: Pakuwon's Growing Rental Income Supports Credit Quality

This report does not constitute a rating action. SINGAPORE (S&P Global Ratings) March 28, 2023--An ongoing recovery in PT Pakuwon Jati Tbk .'s rental income from its investment portfolio will offset weaker development revenue. While the net effect on revenue and EBITDA will be largely flat in 2023, we expect Pakuwon's sizable rental income will continue to underpin its credit quality. The Indonesian developer's ratio of recurring EBITDA to interest expense should improve slightly to 6.5x-7.0x in 2023 and 2024, from about 6.2x in 2022. Indonesia's lifting of all remaining COVID restrictions in December 2022 will bolster Pakuwon's retail mall portfolio in 2023. Improving shopper traffic and tenant sales will support rental growth. The average shopper traffic improved to 90%-95%

...SINGAPORE (S&P Global Ratings) March 28, 2023--An ongoing recovery in PT Pakuwon Jati Tbk.'s rental income from its investment portfolio will offset weaker development revenue. While the net effect on revenue and EBITDA will be largely flat in 2023, we expect Pakuwon's sizable rental income will continue to underpin its credit quality. The Indonesian developer's ratio of recurring EBITDA to interest expense should improve slightly to 6.5x-7.0x in 2023 and 2024, from about 6.2x in 2022. Indonesia's lifting of all remaining COVID restrictions in December 2022 will bolster Pakuwon's retail mall portfolio in 2023. Improving shopper traffic and tenant sales will support rental growth. The average shopper traffic improved to 90%-95% of the pre-COVID level by the end of 2022, from about 75% in early 2022. We also anticipate Pakuwon will not offer or only need to offer minor tenant discounts in 2023, improving on the 10%-20% tenant discounts it offered in the first quarter of 2022. Pakuwon's (...

Bulletin