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Investing.com -- S&P Global Ratings has upgraded the long-term issuer credit rating of Emaar Properties PJSC, along with the issue rating on its senior unsecured debt instruments, from ’BBB’ to ’BBB+’. The upgrade is based on Emaar’s strong business performance, particularly in its domestic residential real estate development in the United Arab Emirates (UAE), where it achieved a record revenue backlog of AED 110 billion ($29.9 billion) on December 31, 2024.
The rating agency expects Emaar’s strong operating cash flow to continue in 2025-2026, supported by healthy demand and a robust balance sheet, despite increased capital expenditure, dividend payments, and the cyclical nature of real estate development in Dubai.
Emaar’s credit ratios remained strong as its revenue grew 33% and EBITDA increased 12% in 2024. The company held a net cash position with no leverage, with AED19.1 billion ($5.2 billion) of discretionary cash flow. S&P Global Ratings forecasts that strong revenue growth will continue in 2025-2026, with adjusted EBITDA margins of 42%-45%.
Emaar’s record presales of AED65.4 billion ($17.8 billion) and a revenue backlog growth of 65% to AED103 billion ($28 billion) in December 2024 for UAE development reflect positive real estate trends in Dubai. The company, being the largest developer in Dubai, has successfully leveraged its strong reputation, having delivered over 74,400 units over its history.
The company’s malls, hospitality, and entertainment businesses continued to support growth prospects, with rising EBITDA from strong tourism momentum. The mall leasing segment, which operates about 10 million square feet of gross leasable area in malls in Dubai, benefited from a significant increase in tourists.
The stable outlook on Emaar reflects S&P’s expectation that the company will maintain strong credit metrics in 2025-2026, despite much higher capital expenditure and dividends expected under its base case. The rating agency expects adjusted funds from operations (FFO) to debt will remain at about 60%, or above, and adjusted debt to EBITDA will stay below 0.5x sustainably.
S&P could lower the rating on Emaar in the next two years if its credit metrics weakened without near-term prospects of recovery. The rating agency views the probability of a positive rating action as low, given the cyclical nature of real estate development, particularly in Dubai.
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