Scope has completed a monitoring review on Futureal Development Holding Kft.
Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations.
Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.
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Scope completed the monitoring review for Futureal Development Holding Kft. and Futureal Holding B.V. including their current ratings (issuer rating: BB/Negative; senior unsecured debt rating: BB) on 16 February 2023.
This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated rating history can be found on www.scoperatings.com.
Key rating factors
On 31 January 2023, Futureal issued EUR 125m in green bonds (face value) in a private placement. Net proceeds will finance real estate development, investment and refurbishment projects in accordance with the company’s green finance framework.
After the EUR 125m bond issue, the rating case for Futureal’s BB/Negative remains unchanged, which is in line with Scope’s expectations that the company will prudently continue to grow its recurring revenue base while keeping leverage under control (i.e. Scope-adjusted loan/value ratio below 60%) and Scope-adjusted EBITDA/interest cover above 1x. Furthermore, the bond issuance does not alter Scope’s ‘average’ recovery expectations for senior unsecured debt (rated BB) in a hypothetical default scenario.
The rating continues to reflect Futureal’s solid market position and strengthened diversification in terms of geographies and asset classes. The latter is further enhanced by the recently announced acquisition of majority stakes in Auxesia Homes Ltd. and St. Arthur Homes Ltd. (i.e. 60% and 63% respectively, purchased from its sister company Cordia International Zrt, rated BB/Negative), two profit-oriented providers of affordable housing in the United Kingdom. The rating is also supported by the long-dated and fixed-rate debt maturity profile, which safeguards against the impact of rising interest rates. The main rating constraints are Futureal’s high portfolio concentration in Budapest, elevated indebtedness to fund growth and limited headroom under the current interest cover.
This publication does not constitute a credit rating action. Scope affirmed the issuer ratings of Futureal Development Holding Kft and Futureal Holding B.V, and revised the Outlook to Negative from Stable, on 4 November 2022. For the official credit rating action release click here.
The methodologies applicable for the reviewed ratings and/or Outlooks (European Real Estate Rating Methodology, 25 January 2023; General Corporate Rating Methodology, 15 July 2022), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Fayçal Abdellouche, Specialist
See www.scoperatings.com under Governance & Policies/EU Regulation/Disclosures for a list of potential conflicts of interest related to the issuance of Credit Ratings.
Scope Ratings provided the following Other Services to the Rated Entity and/or its Related Third Parties within the two years preceding this Credit Rating action: Rating Assessment Service.
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