S&P cuts Private Department of Skh

S&P said it cut Private Department of Skh Mohamed Bin Khalid Al Nahyan LLC’s issuer rating to BB- from BB and assigned a stable outlook.

“PD's financial risk profile has weakened, given delayed deliveries of projects affecting revenue and EBITDA growth. The Waterfront Towers (Abu Dhabi) and the Khalidia Palace Hotel (Dubai) are now expected to be delivered in the first half of 2022 and early 2023, respectively. Rental revenue in 2021 declined by 5.6% and EBITDA was UAE dirham (AED) 199 million in 2021 (AED 214 million in 2020),” S&P said in a press release.

Accounting for climbing interest rates, the agency said it forecasts the company's EBITDA interest coverage ratio likely remaining 1.3x-1.7x in 2022-2023.

“The stable outlook reflects our expectation that revenue from the residential property portfolio will increase thanks to new asset deliveries in 2022-2023, stable occupancy rates, and stable operating performance, leading to adjusted debt to EBITDA of 9x-10x in the next 18-24 months, with 2022 leverage of 11.5x-12.5x,” S&P said.

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