S&P Global Ratings affirmed its BB long-term issuer credit rating on DAMAC Real Estate Development Ltd., notwithstanding the "weaker" financial performance in 2017.
The outlook on the rating is stable.
The rating agency said its rating includes headroom for weakening financial performance in light of the real estate downcycle.
Citing higher marketing costs and lower margins in international operations, S&P Global Ratings noted that DAMAC's key financial ratio of debt to EBITDA was 1.7x, compared to the below 1.5x it expected in 2017. Additionally, funds from operations to debt was 55.5% versus the projected over 60%. Moving ahead, further weakening is expected in 2018 and 2019 as the Dubai real estate market softens, according to the rating agency.
The stable outlook reflects the rating agency's view that DAMAC will be able to hold its ground against the softening of Dubai's residential real estate prices over the following 12- to 24-month term.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.