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+/Negative issuer rating on Wingholding Zrt (Wing). Scope has also affirmed the B+ senior unsecured debt rating.

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

Key rating drivers

Business risk profile: BB (unchanged). Wing’s business risk profile remains supported by its position as one of the leading real estate developers and investor in Central Europe, with a solid degree of diversification across segments and geographies.

Wing has demonstrated continued resilience in both its development and investment operations. Scope-adjusted total assets* increased to EUR 3.4bn at year-end 2024, up 21% YoY, driven by the ramp-up of residential and commercial development activity and the completion of several projects.

Wing’s commercial investment portfolio remains concentrated in Budapest (64% of total GLA), yet the broader platform benefits from wide exposure to different property types (industrial, office, retail, residential and hospitality), while development activities are well distributed across Poland’s major metropolitan areas, Budapest and Berlin. Bauwert AG is planning approximately 500,000 sq m of prime residential and office space through destination projects in Berlin, underlining the strength and scaling of Wing’s German operations.

The residential development platform, mainly through Archicom in Poland, continues to show strong execution capabilities with 6,335 units under construction as of Q1 2025 and steady absorption trends. The commercial development pipeline remains well balanced in terms of phasing and number of projects.

Wing’s development activities do not entail additional risk as the group continues to execute on a balanced and phased pipeline that Scope views as commensurate with prevailing market conditions. The inherent risks associated with real estate development are mitigated by strong pre-sale and pre-letting levels, which provide solid visibility on future cash flows. At the same time, recurring income from the group’s standing investment portfolio, supported by an overall occupancy rate of 90% and a WAULT of 5.2 years, enhances cash flow resilience and provides some downside protection.

Financial risk profile: B- (unchanged). Wing’s financial risk profile remains constrained by inadequate liquidity, structurally high consolidated leverage and modest debt protection, though Scope anticipates some improvements in credit metrics driven by better earnings visibility and ongoing deleveraging efforts.

Leverage, as measured by the debt/EBITDA – remained elevated at 22.6x in 2024, reflecting the revenue recognition over time, which delayed the recording of profit from completed but undelivered units. When adjusted for this effect, leverage would have stood at below 15.0x (completion-adjusted). Scope expects leverage to reduce substantially going forward, driven by the steady EBITDA contribution of contracted sales upon handovers. This expected improvement reflects the company’s capacity to translate its contracted sales into earnings, while the pace of deleveraging remains contingent on the execution of planned asset disposals.

Debt protection, as measured by the EBITDA/interest cover weakened to 0.9x in 2024 but would have reached 1.5x under a completion-adjusted view. Scope anticipates interest cover to sustain above 1.5x from 2025 onwards, supported by higher EBITDA generation from handovers and easing interest burden. Scope notes that the group’s interest cover remains sensitive to timing mismatches between construction activity and revenue recognition, a feature inherent to its develop-to-sell model in Poland and Hungary, though partially mitigated by the stable cash flows from the leased portfolio. Such volatility is expected to ease along with the scale-up of the residential platform, which would ensure a steadier volume of annual handovers.

While Wing’s capex coverage reflects a broadly balanced funding structure, it remains moderately reliant on external sources. Despite a still-volatile earnings base, the company has managed its funding sustainably through a combination of internal operational cash flow, project-specific external financing, and a disciplined capital recycling strategy, underpinned by a consistent track record of asset disposals^1,2,3.

Reliance on external financing remains high but this is partially offset by discretionary capex flexibility and asset rotation initiatives.

Liquidity: inadequate, -1 notch (unchanged). Liquidity remains inadequate, primarily due to the group’s structurally high short-term refinancing needs relative to available internal resources. However, Scope considers near-term liquidity risks to be manageable given the proactive refinancing measures undertaken and the absence of significant bond maturities before 2027.

As of year-end 2024, Wing’s short-term financial obligations amounted to HUF 214bn, including HUF 61bn of shareholder loans. Liquidity sources – mainly cash on hand (HUF 73bn) and projected free operating cash flows – fall short of covering these obligations, resulting in a liquidity coverage ratio of below 100%. However, Scope notes that a large portion of the 2025 maturities had already been refinanced or extended as of June 2025, mitigating immediate repayment risk. Furthermore, planned disposals are expected to further bolster the cash position.

Wing continues to demonstrate good access to debt capital markets and secured lending, as evidenced by transactions completed in Hungary⁴  and Poland in H1 2025. The group’s track record of refinancing and capital recycling, combined with a relatively long-dated debt maturity profile beyond 2025, supports Scope’s view that refinancing risk remains manageable. The limited fungibility of cash within the group, however, continues to constrain the overall liquidity assessment.

Scope highlights that Wingholding Zrt.’s senior unsecured bonds 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 89bn) if the debt rating of the bonds stays below B+ for more than two years (grace period) or drops below B- (immediate repayment). Such a development could adversely affect the company’s liquidity profile. There is currently no rating headroom to entering the grace period. Given the tightening rating headroom, the company must at least maintain its current credit profile to avoid triggering the rating-related covenant.

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

Outlook and rating sensitivities

The Negative Outlook reflects continued downside risks stemming from elevated leverage and weak interest coverage, compounded by earnings volatility, which could lead to pronounced swings in credit metrics. The Negative Outlook also reflects inadequate liquidity. Although this has been managed successfully, it points to the limited capacity for reducing debt through internal cash flow, making the company reliant on asset sales and/or the extension and increase of external financing.

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

1. EBITDA interest cover above 1.5x on a sustained basis.
    
2. Debt/EBITDA below 15x on a sustained basis.

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

1. EBITDA interest cover not above 1.5x on a sustained basis.
    
2. Debt/EBITDA not below above 15x on as sustained basis.
    
3. A further downside is linked to a perceived deterioration in liquidity.

Debt rating

Scope has affirmed the B+ rating assigned to senior unsecured debt issued by Wingholding Zrt. Scope expects an ‘above average’ recovery for the outstanding senior unsecured debt in a hypothetical default scenario in 2026, based on Wing’s estimated liquidation value. The distressed enterprise value incorporates a 50% discount on inventories and a 20% decline in the market value of investment properties, consistent with a ‘B’ category stress scenario. However, Scope caps the debt rating at the issuer level, as recovery expectations fall to ‘average’ under a ‘BB’ category stress, with higher implied haircuts, thereby not justifying a rating uplift for this debt class.

With an unencumbered asset ratio above 110%, senior unsecured debt holders could also benefit from a pool of assets that have not been pledged as collateral.

Environmental, social and governance (ESG) factors

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

All rating actions and rated entities

Wingholding Zrt.

Issuer rating: B+/Negative, affirmation

Senior unsecured debt rating: B+, affirmation

*All credit metrics refer to Scope-adjusted figures.

1. Finalised sale of City 2 by Archicom
2. Sale of the Honvéd Center office buildings in Budapest
3. Bauwert AG sells residential buildings in Berlin-Kreuzberg
4. Subscription results for the WINGHOLDING 2028/I bond series
 
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, (European Real Estate Rating Methodology, 2 June 2025; General Corporate Rating Methodology, 14 February 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 Credit Ratings were not requested by the Rated Entity or its Related Third Parties. The Credit Rating process was conducted:
With the Rated Entity or Related Third Party participation        YES
With access to internal documents                                           YES
With access to management                                                    YES
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: Fayçal Abdellouche, Senior Analyst
Person responsible for approval of the Credit Ratings: Philipp Wass, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 27 August 2019. The Credit Ratings/Outlook were last updated on 5 July 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
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