The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has today affirmed the B+/Stable issuer rating of Biggeorge Property Nyrt. (BGP). Scope has also affirmed the senior unsecured debt rating at BB-.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business risk profile: B+ (unchanged). The business risk profile reflects BGP’s strong project pipeline, high presale rates, and stable operating margins, supported by continued demand in the Hungarian residential real estate market. The group has maintained its momentum despite ongoing macroeconomic uncertainties, benefiting from sustained investor interest in real estate following significant interest rate cuts in 2024. Lower borrowing costs and declining government bond yields have made real estate a more attractive asset class, strengthening demand and investment activity. BGP’s constraints remain unchanged, driven by its geographical focus on Hungary, exposure to local economic and regulatory risks, and the cyclical nature of real estate. Its smaller scale limits resilience to downturns and rapid expansion.

BGP remained focused on residential developments in 2024 and completed handovers for 369 apartments. Pre-sales began for eight new residential projects ¬– with construction already underway for four developments – adding nearly 500 apartments to the pipeline, with handovers scheduled through 2027. At the end of 2024, BGP entered into negotiations and secured new plots for future projects, sufficient for potentially 3,500 additional units, subject to acquiring building permits.

Development activity remained strong in 2024 with seven projects at various stages of construction as of January 2025. Residential sales outperformed expectations, reaching 636 units in 2024, well above the original projection of 381 units. Reservations continue to support revenue visibility, with strong demand expected to drive sales activity in 2025 and 2026.

Momentum remains high, with five new projects set to commence in Q1 2025, followed by one in Q3 and two in Q4. Projects beyond 2025 are expected to proceed but remain subject to market conditions, which currently support development due to strong investor demand and solid presales.

BGP continues to operate primarily in Hungary, leaving it susceptible to regional market conditions, which remain highly competitive and fragmented. While the company is a significant player in the Hungarian development sector, it remains relatively small in a broader European context. To diversify its operations and reduce dependence on the Hungarian market, BGP established Biggeorge Homes International Ltd. in 2024, targeting expansion into Poland, Spain, Portugal, and Germany through co-investment funds and external investors. However, this international expansion is unlikely to materially impact the group’s financials in 2025 and 2026, as it remains in the early stages of identifying partnerships and securing viable development opportunities. The long-term success of this strategy will depend on BGP’s ability to establish a foothold in these new markets and scale its operations effectively while navigating local market dynamics.

In 2024, the Scope-adjusted EBITDA margin* declined to 37% (2023: 57%), yet remains at a healthy level, with EBITDA of HUF 3.4bn, reflecting the absence of significant investment gains realised in cash that had supported the EBITDA in the previous year. The total net investment gain in 2024 is expected to be higher than it was in 2023. EBITDA is forecasted to increase to above HUF 8.0bn in 2025 and 2026, driven by a growing project pipeline. Margins are set to decline to around 15% due to the consolidation of GroundUP, the group’s construction arm, which operates at a lower EBITDA margin typical for a construction company. While GroundUP’s lower margin impacts the blended figure, it is EBITDA-accretive and provides greater control over construction costs. Margins from the core business are expected to remain unchanged.

Financial risk profile: BB (revised from BB-). BGP’s financial risk profile is supported by high presale rates, stable debt levels, and the anticipated increase in EBITDA from 2025 onwards. While free operating cash flow (FOCF) turned negative in 2024 and is expected to remain negative in 2025, cash flows are forecast to recover significantly in 2026 and 2027, driven by the expected completion of a large number of developments currently under construction.

As of YE 2024, BGP’s interest-bearing debt primarily consists of a single bond issued in February 2022 under the Hungarian Bond Funding for Growth Scheme, along with minor shareholder loans. The bond represents 78% of total outstanding debt and carries a fixed coupon of 5.1%, shielding the company from market volatility, particularly the sharp interest rate fluctuations observed in Hungary over the past 24 months. This enhances visibility on future interest payments and ensures more predictable cash flows. Following the full consolidation of GroundUP in December 2024, BGP also holds a HUF 1.5bn construction loan, which is due for repayment in Q1 2026.

In 2024, FOCF turned negative, with realised gains of HUF 450m – significantly lower than the HUF 3.4bn recorded in 2023. However, this decline was anticipated due to developments carried out by non-consolidated holding funds and the reinvestment of the realised investment gains into new developments in 2024. BGP invested HUF 7.7bn in capex in 2024 for B-series share acquisitions, with an additional HUF 16.4bn planned in 2025. As a result, FOCF is expected to remain negative until 2026, driven by limited realised gains and continued investment in project funding. However, FOCF is expected to turn positive in 2026 and remain positive into 2027, supported by the expected completion of a number of projects and the potential for significant investment gains in both years. Given BGP’s asset-light business model, additional capex investments beyond 2026 are expected to have minimal impact on cash flow.

Biggeorge’s leverage, as measured by its debt/EBITDA ratio remained low in 2023, primarily due to a spike in EBITDA, which was boosted by investments gains. In 2024, as expected, EBITDA normalised, leading to an increase in leverage, while debt levels saw only a marginal rise. The 100% acquisition of GroundUP added HUF 1.5bn in debt, but this had a limited impact on overall leverage.

Looking ahead, EBITDA is projected to rise sharply in 2025, driven by the full integration of GroundUP, which will scale up operating income to close to HUF 60.0bn from HUF 2.8bn in 2020, reflecting an expanded project pipeline and heightened construction activity amid strong demand. In 2026, operating income is expected to increase further, although margin pressures may intensify due to rising costs and increased competition as more developers enter the market, now that the market has shown strong signs of recovery. However, any potential impact could be offset by investment gains from BG32’s investments in project funds, which may provide an additional boost to earnings. As a result, leverage is forecast to improve significantly in the short to medium term, provided no further debt is added and it remains largely stable at around HUF 7 - 9bn (YE 2024: HUF 9.3bn; preliminary).

FFO/debt is expected to improve, as debt levels remain stable while operating cash flow strengthens. The increase in EBITDA, driven by the full consolidation of GroundUP and an expanded project pipeline, will support stronger cash flow generation. Additionally, the acquisition of GroundUP is expected to improve cost efficiencies, enhancing project execution and leading to better cash conversion. As a result, higher operating cash flow is expected to strengthen financial flexibility and debt-servicing capacity over the coming years.

Liquidity: adequate (unchanged). Cash sources comfortably cover cash needs, with HUF 17.9bn in cash on the balance sheet as of YE 2024, providing more than 200% coverage for forecasted negative FOCF of HUF 3.4bn and HUF 0.5bn in short-term debt. Liquidity is further supported by no significant short-term debt repayments in the coming years and low capex requirements due to BGP’s asset-light business model.

BGP’s liquidity position was strengthened by an HUF 11.5bn equity injection from shareholders in December 2024, which contributed to an increase in total equity to approximately HUF 56.9bn. This marks a significant expansion from HUF 10.9bn at year-end 2021, prior to the issuance of BGP’s first bond.

Scope highlights that BGP’s senior unsecured bond issued under the Hungarian National Bank’s Bond Funding for Growth Scheme has a covenant requiring the accelerated repayment of the outstanding nominal debt amount (HUF 7.0bn) if the debt rating of the bond stays below B+ for more than two years (grace period) or drops below B- (accelerated repayment within 30 days). Such a development could adversely affect the company’s liquidity profile. The rating headroom to entering the grace period is one notch. Scope therefore sees no significant risk of the rating-related covenant being triggered.

Supplementary rating drivers: credit-neutral. Supplementary rating drivers have no impact on the issuer rating.

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s expectation that BGP will maintain solid credit metrics, with debt/EBITDA remaining well below 4x, supported by strong presales, a structured expansion strategy, and a more favourable macroeconomic environment. Long-term demand for residential real estate is expected to remain strong, driven by lower interest rates and improving investor sentiment.

The upside scenarios for the ratings and Outlook are (collectively):

1. Debt/EBITDA improving sustainably below 3.5x, supported by higher operating income and stable leverage.
    
2. BGP successfully expanding its operations, increasing group size and diversification, leading to stronger cash flow generation from a broader asset base.

The downside scenarios for the ratings and Outlook are (individually):

1. Debt/EBITDA rising above 5x on a sustained basis, due to weaker operating income resulting from lower demand, rising costs, or delays in project execution.
    
2. Deterioration in liquidity due to unforeseen capital outflows, weaker presales, or an inability to secure necessary project financing, limiting BGP’s ability to launch new developments.

Debt rating

The rated entity issued one senior unsecured bond through the Hungarian Central Bank’s Bond Funding for Growth Scheme. The bond was issued in February 2022 with a volume of HUF 7.0bn (ISIN: HU0000361365), a ten-year tenor and a fixed coupon of 5.1%, payable annually. Repayment is in five equal tranches (10% of the face value), commencing from February 2027, with a 50% balloon payment at maturity.

Scope’s recovery analysis is based on a hypothetical default in 2026, which assumes outstanding senior unsecured debt of HUF 7.0bn, with no undrawn credit facilities available for drawdown, as the company currently has no such facilities.

The recovery assessment results in an ‘above average’ recovery for the senior unsecured debt, which translates into a BB- rating, one notch above the underlying issuer rating.

The above average recovery is driven by the significant unencumbered asset position, which provides sufficient headroom against severe market value deterioration.

Environmental, social and governance (ESG) factors

Overall, ESG factors have no impact on this credit rating action.

All rating actions and rated entities

Biggeorge Property Nyrt.

Issuer rating: B+/Stable, affirmation

Senior unsecured debt rating: BB-, affirmation

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and/or Outlook, (General Corporate Rating Methodology, 16 October 2023; European Real Estate Rating Methodology, 28 March 2024; European Business and Consumer Services Rating Methodology, 15 January 2025), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings and/or Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Patrick Murphy, Analyst
Person responsible for approval of the Credit Ratings: Philipp Wass, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 8 February 2022. The Credit Ratings/Outlook were last updated on 19 February 2024.

Potential conflicts
See www.scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
© 2025 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, Scope Innovation Lab GmbH and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin.