KUALA LUMPUR (Nov 10): YNH Property Bhd (KL:YNHPROP) on Tuesday said it is banking on proceeds from a proposed land disposal in Desa Sri Hartamas to Sunway Bhd’s (KL:SUNWAY) unit and sales billings from its ongoing property developments to meet its RM170 million sukuk redemption due in February 2027.
This follows its sukuk reserve-account shortfall that triggered a technical default, which prompted MARC Ratings to downgrade YNH's RM700 million Islamic Medium-Term Notes Programme to B-IS from BB-IS and place the programme on MARCWatch Negative last Friday.
The rating agency said the shortfall constituted a technical default and expressed concerns over the group's liquidity position, poor internal cash flow generation, reliance on asset disposals to meet its debt obligations, and limited earnings visibility.
The RM170 million Sukuk Wakalah is scheduled to mature on Feb 26, 2027.
YNH managing director Allan Yu Kai Leun said the February 2027 sukuk maturity is a clear priority for management.
“We would communicate our progress through concrete funding and transaction milestones so that our sukuk holders, bankers and shareholders can assess our position based on facts,” Yu said in a statement on Tuesday (Nov 10).
The property developer said it had accumulated RM54.4 million in its designated sukuk reserve account as at Oct 27. This is against the required balance of RM61.2 million, leaving a shortfall of RM6.8 million.
YNH said it was taking steps to meet the required October balance within the stipulated contractual remedy period.
“The group remains focused on fulfilling its monthly reserve account requirements while progressing its funding plan for the February 2027 maturity,” it added.
The group is prioritising completing all documentation and obligations for the RM170 million disposal of its 5.1-acre land parcel in Desa Sri Hartamas to Sunway Living Space Sdn Bhd.
The transaction is expected to generate approximately RM105 million in net cash proceeds after settling an existing RM65 million loan secured by the land, subject to completion adjustments and related costs.
The proposed disposal was first announced in May 2023 and has faced several delays. In September this year, YNH's wholly owned subsidiary Kar Sin Bhd signed a sixth supplemental agreement extending the deadline to fulfil outstanding conditions to Dec 31, 2026. Failure to meet the conditions by then would give Sunway Living Space the right to terminate the deal.
Apart from the land sale, YNH is counting on sales billings from its ongoing developments — the Solasta Dutamas project in Kuala Lumpur and township developments in Manjung, Perak — to generate cash inflows for project completion and group-level financing obligations.
However, MARC Ratings said YNH's limited development pipeline constrains near-term earnings and operating cash flow generation, reducing YNH’s capacity to rebuild liquidity organically.
Separately, YNH said it has an undeveloped landbank of more than 800 acres, which it views as a longer-term pipeline for future development and selective monetisation.
"Management takes a realistic view of these holdings, evaluating potential sales against the time and capital required to unlock their value rather than treating undeveloped land as immediate liquidity," YNH noted.
The group also said its audited financial statements for the financial year ended June 30, 2026, received an unmodified audit opinion from Morison LC PLT, following qualified opinions in the preceding three reporting periods.
The group also said its board had approved the implementation of an Investment Governance Standard Operating Policies and Procedures during FY2026.
YNH shares were unchanged at 28 sen on Tuesday's (Nov 10) noon market break, valuing the property developer at RM148 million.