IOI Properties Group: Growing Recurring Earnings Support Debt Servicing

Phillip Bond Desk

 |   06 Nov 2026  |    17 views

Company Overview

IOI Properties Group Berhad (IOIPG) is a Malaysia-listed property group with operations in Malaysia, Singapore and China. Its principal businesses comprise property development, property investment and hospitality, with a portfolio of residential and commercial properties, shopping malls, hotels and development land. In recent years, IOIPG has expanded its Singapore investment-property portfolio through IOI Central Boulevard Towers, the consolidation of South Beach and the acquisition of Asia Square Tower 2.


Credit View

IOI Properties Group’s (IOIPG) debt-servicing capacity improved in FY2026 as rental income grew and development earnings recovered. Pre-working-capital operating earnings rose 76% YoY to RM1.90bn, lifting cash interest coverage to 2.69x from 1.26x. However, net debt increased 27% to RM21.82bn and the September 2026 acquisition of Asia Square Tower 2 further increased financing requirements. Under our illustrative debt-funded acquisition scenario, net gearing would rise from 0.85x to approximately 1.23x, while cash interest coverage would moderate to 2.20x. We expect higher rental income to support operating stability, although the group’s capacity to reduce debt organically remains constrained by financing costs and continued investment commitments.


Credit Performance Highlights

IOIPG’s FY2026 revenue rose 45% YoY to RM4.44bn. Underlying PBT excluding fair-value gains, remeasurement gains and land disposal profits increased 51% YoY to RM1.03bn, driven by the consolidation of South Beach, higher occupancy at IOI Central Boulevard Towers and stronger underlying property sales.


(i) Property Investment: Growing recurring rental income strengthens earnings visibility. Property investment revenue increased 49% YoY to RM1.41bn in FY2026, while segment operating profit rose 82% to RM851mn. Operating margin improved to approximately 60% from 49%, supported by the consolidation of South Beach and higher occupancy at IOI Central Boulevard Towers.

IOI Central Boulevard Towers recorded RM439.9mn in revenue, up 92% YoY. Committed occupancy increased to 98% as at June 2026 from 86% at the beginning of the financial year, providing greater visibility on future rental income. IOIPG completed the S$2.47bn acquisition of Asia Square Tower 2 in September 2026. The property had committed occupancy of 95.8% as at March 2026, with estimated annual NPI of S$81.7mn based on a 3.3% acquisition yield. The additional rental income should support recurring earnings, although its contribution to debt servicing will depend on acquisition financing costs and rental growth.


(ii) Property Development: Stronger underlying sales and land disposals boosted earnings. Property development revenue increased 35% YoY to RM2.22bn in FY2026, while segment operating profit rose 62% to RM740mn. Total property sales more than doubled to RM3.91bn, including RM1.36bn of land disposals. Excluding these transactions, property sales increased 41% YoY, reflecting stronger underlying sales activity.

Land disposals at Jalan Ampang and Melaka contributed RM388mn in revenue and approximately RM274mn in operating profit. Unbilled sales stood at approximately RM2.51bn as at June 2026, providing near-term revenue visibility. Completed inventories declined 62% from RM3.05bn in FY2022 to RM1.17bn in FY2026, reducing capital tied up in completed properties. However, price adjustments in China suggest continued pressure on development margins as the group clears its remaining inventory.


(iii) Hospitality: Earnings recovered following the consolidation of South Beach.
Hospitality and leisure revenue increased 79% YoY to RM803mn in FY2026. The segment recorded operating profit of RM32.6mn, reversing a RM4.6mn loss in FY2025. The improvement was mainly driven by the consolidation of JW Marriott Singapore South Beach. Despite the recovery, operating margin stood at 4.1%, with the segment contributing only 2.0% of combined segment operating profit. Its contribution to group earnings and debt servicing therefore remains limited


Financial Metric FY2024 FY2025 FY2026
Revenue 2.94 3.06 4.44
Reported PBT 2.30 1.45 2.65
Underlying PBT 0.75 0.68 1.30
Gross Borrowings 19.17 19.59 25.35
Cash and Cash Equivalents 2.19 2.47 3.53
Net Debt 16.97 17.12 21.82
Net Gearing (x) 0.70 0.70 0.85
Operating Cash Earnings / Cash Interest (x) 0.94 1.26 2.69
Net Debt / Operating Cash Earnings (x) 19.70 15.85 11.48
Recurring Rental NPI 0.23 0.35 0.66
Net Debt / Recurring Rental NPI (x) 72.7 48.8 33.1
Investment Properties 21.30 22.25 28.13
Pledged Investment Properties 14.38 13.75 18.27
Unpledged Investment Properties¹ 6.93 8.50 9.86
Unpledged Investment Properties / Net Debt (x) 0.41 0.50 0.45
Pledged Investment Properties / Total Investment Properties (%) 67.5 61.8 65.0

Source: Company. ¹ Unpledged investment properties are calculated by deducting disclosed pledged investment properties from total investment properties. Ratios use unrounded figures where available.


Recurring rental earnings strengthened significantly. Rental NPI increased from RM233mn in FY2024 to RM659mn in FY2026, supported by the expanding Singapore investment-property portfolio. Net debt relative to rental NPI improved from 72.7x to 33.1x. The growing recurring income base improves cash-flow visibility and provides more stable earnings for debt servicing.

Cash interest coverage improved to 2.69x, supported by stronger operating earnings and lower interest payments.Operating cash earnings increased to RM1.90bn in FY2026 from RM1.08bn in FY2025, while cash interest paid declined 17.6% to RM706mn from RM856mn. This strengthened interest coverage from 1.26x to 2.69x. Nevertheless, the ratio reflects FY2026 historical financing costs and excludes the full impact of the subsequent Asia Square acquisition.

Borrowings increased with Singapore expansion, while secured debt reduces unsecured creditor protection. Gross borrowings increased 29% YoY to RM25.35bn in FY2026, reflecting additional debt associated with the group’s Singapore investments. Net debt rose to RM21.82bn from RM17.12bn, lifting net gearing to 0.85x from 0.70x. Approximately 84% of borrowings were denominated in SGD, primarily supporting IOI Central Boulevard Towers, Marina View and South Beach. The group’s SGD-denominated assets and rental receipts provide some natural currency matching. However, interest-rate sensitivity remains significant. At June 2026, approximately RM22.86bn, or 90% of borrowings, carried floating interest rates.

Secured borrowings increased to RM19.09bn from RM13.44bn, accounting for 75.3% of total debt compared with 68.6% in FY2025. This reduces residual asset protection for unsecured creditors. Refinancing requirements are also concentrated, with approximately RM14.49bn (57.2% of total borrowings) falling due within the two-to-three-year maturity bucket as at June 2026. Asset backing remains sizeable. IOIPG held RM28.13bn of investment properties, of which RM18.27bn were pledged. The remaining RM9.86bn could provide some flexibility for asset monetisation, subject to existing restrictions.

Liquidity remains supported by banking facilities.As at June 2026, IOIPG held RM3.23bn of unrestricted cash and RM10.51bn of undrawn committed banking facilities. Against current borrowings of approximately RM997mn, reported liquidity was adequate to meet near-term debt obligations.

However, these balances predate the September 2026 Asia Square Tower 2 acquisition and approximately RM881mn dividend payment. The acquisition involved a transaction value of approximately RM7.80bn, materially increasing the group’s financing requirements.


Financial Metric Jun 2026 actual Pro forma
Liquidity (RMbn)
Unrestricted cash 3.23 2.35
Undrawn committed facilities 10.51 2.71
Total available liquidity 13.74 5.06
Current borrowings 1.00 1.00
Total liquidity / current borrowings 13.78x 5.07x
Debt servicing
Operating cash earnings (RMbn) 1.90 2.16
Annual cash interest (RMmn) 706 979
Cash interest coverage 2.69x 2.20x

Source: Bond Desk. Assumes RM7.80bn acquisition financing is fully drawn from existing committed facilities at 3.5%, with long-term maturity; RM881mn dividend paid from cash; and RM258mn annualised incremental NPI. Excludes interim cash flows, transaction costs and changes to the funding structure.

Liquidity remains sufficient to cover near-term debt obligations, although acquisition funding reduces financial flexibility. Under the assumed financing structure, available liquidity would decline from RM13.74bn to RM5.06bn, equivalent to 5.1x current borrowings. Meanwhile, annualised cash interest coverage would moderate from 2.69x to approximately 2.20x following the Asia Square Tower 2 acquisition. Excluding FY2026 land-sale operating profit, coverage would decline further to 1.92x.


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