Fitch rates Metropolis notes B

Fitch Ratings said it assigned a long-term foreign-currency issuer default rating of B to PT Metropolis Propertindo Utama.

The outlook is stable.

The agency also said it assigned an expected senior unsecured rating of B to its proposed senior secured dollar-denominated notes with a recovery rating of RR4.

The proposed notes are to be issued by Khatulistiwa Development Pte Ltd. and guaranteed by Metropolis.

The ratings reflect the company's high business risks characterized by low earnings visibility and high upfront investment commitments, Fitch said.

The company realizes income through the divestment of its developments predominantly to PT Lippo Karawaci Tbk. and its related structured finance vehicles, First Real Estate Investment Trust and Lippo Malls Indonesia Retail Trust.

Metropolis has a close relationship with and strategic support from the Lippo group, the agency said. However, there is significant risk to Metropolis's exit strategy on the developments because there are no formal agreements in place for Lippo group to acquire the properties with the exception of several hospitals.

The ratings also consider the company's exposure to higher risk than a typical residential property developer, Fitch said.

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