Fitch Ratings has assigned
The Recovery Rating is 'RR4'.
ACSL3, also the trustee, is an exempted company with limited liability incorporated in the
ACC is using proceeds from the issue primarily to refinance its
Key Rating Drivers
The sukuk's rating is derived from ACC's Long-Term IDR (for ACC's Key Ratings Drivers see 'Fitch Affirms Arabian Centres at 'BB+'/'A-(sau)' dated
Fitch has given no consideration to any underlying assets or collateral provided, as the agency believes that the trustee's ability to satisfy payments due on the trust certificates will ultimately depend on ACC satisfying its unsecured payment obligations to the trustee under the transaction documents.
In addition to ACC's propensity to ensure repayment of the sukuk, in Fitch's view, ACC is required to ensure full and timely repayment of repayment of ACSL3's obligations due to its role and obligations under the sukuk structure and documentation, especially, but not limited to the features below:
ACC, as a servicing agent, will ensure the timely receipt and recording of all revenues of the wakala portfolio and murabaha profit instalment payments and also paying these amounts into the transaction account, which is intended to be sufficient to fund the periodic distribution amount payable under the certificates.
On the business day prior to the relevant scheduled dissolution date, the trustee will have the right to require the obligor (ACC) to purchase all of the trustee's interests, rights, title, benefits and entitlements in, to and under the wakala assets; and the aggregate amounts of the deferred sale price then outstanding, if any, will become immediately due and payable.
The exercise price payable by ACC to the trustee and the aggregate amounts of the deferred sale price then outstanding, are intended to fund the dissolution distribution amount payable by the trustee under the certificates, which should equal the sum of (a) the outstanding face amount of the certificate; and (b) any accrued, but unpaid, periodic distribution amounts; and (c) any other amounts payable following a total loss event.
In addition, the sukuk documentation has tangibility events. The certificates may be delisted and redeemed prior to the scheduled dissolution date of the certificates following the occurrence of a tangibility event. The documentation includes an obligation on ACC to ensure that at all times the tangibility ratio (defined as the aggregate value of the wakala assets/aggregate value of the wakala assets and the aggregate amounts of the deferred sale price outstanding) remains more than 50%. If the tangibility ratio falls below 50%, but above 33%, the servicing agent will take steps (in consultation with the sharia advisor) required to restore it to more than 50%. If the ratio falls below 33%, the certificates will be delisted and certificate holders will have the option to require the redemption of all of any of its certificates.
Fitch expects ACC to maintain the tangible asset ratio above 50%. This ratio has substantial headroom (
In a total loss event, if there is a shortfall from the insurance proceeds, ACC has undertaken to pay the total loss shortfall amount directly to the transaction account.
The payment obligations of ACC (acting in any capacity) under the transaction documents will be direct, unconditional, unsubordinated and unsecured obligations of the obligor which at all times rank equally with all other unsecured and unsubordinated obligations of ACC, present and future.
The sukuk issue includes negative pledge provisions, financial reporting obligations, ACC events, change- of-control clauses, restrictive covenants, asset disposal events, permitted security enforcement events, and cross-default terminology.
Certain aspects of the transaction will be governed by English law, while other aspects will be governed by the laws of the
Derivation Summary
The sukuk's rating is derived from ACC's Long-Term IDR and is in line with its senior unsecured rating.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:
ACSL3's Rating:
An upgrade of ACC's senior unsecured rating
ACC's IDR:
Occupancy rate consistently above 95%
EBITDAR net leverage consistently below 4.5x
Improvement of the operating environment on a sustained basis
A material reduction in asset concentration
A smoother lease maturity profile
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:
ACSL3's Rating:
A downgrade of ACC's senior unsecured rating
Adverse changes to the roles and obligations of ACC and ACSL3 under the sukuk's structure and documents
ACC's IDR:
Deterioration in the operating environment
EBITDAR net leverage above 7.0x on a sustained basis
EBITDAR fixed coverage charge under 1.75x
Occupancy rate below 90%
Liquidity and Debt Structure
For ACC's Liquidity, see 'Fitch Affirms Arabian Centres at 'BB+'/'A-(sau)' dated
ESG CONSIDERATIONS
ACC has an ESG Relevance Score of '4' for Group Structure, reflecting a high number of related-party transactions that generate more than 25% of group rental income. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation of the materiality and relevance of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
Issuer Profile
ACC is the largest real-estate company in
Date of Relevant Committee
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
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