S&P upgrades Aldar Properties

S&P said it raised the long-term corporate credit ratings on Aldar Properties PJSC to BBB from BBB-, along with its short-term corporate credit rating to A-2 from A-3.

The outlook is stable.

The agency also said it raised the rating on the $750 million 4.348% senior unsecured sukuk certificates due December 2018 issued by subsidiary Sukuk Funding (No. 3) Ltd. to BBB from BBB-.

The upgrades reflect a transition in Aldar's business model, which now generates significant profitability from more stable rental activities, S&P said.

Since the opening of the Yas Mall 18 months ago, Aldar's investment property portfolio has strengthened significantly, generating about 50% of the company's profitability, the agency said.

The company’s adjusted EBITDA margins improved to 52.9% as of June 30 from 23.2% in Dec. 31, 2014 despite softening market conditions, S&P explained.

These positive developments are partly offset by a view that there is now only a moderate likelihood that the government of Abu Dhabi would provide support to Aldar if needed, compared with a moderately high consideration previously, the agency said.

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