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Rating action

Scope Ratings GmbH (Scope) has today downgraded the issuer rating of Globe Trade Centre S.A. (GTC) and its subsidiary GTC Real Estate Development Hungary Zrt. to B+ from BB+. The senior unsecured debt rating of both issuers has been downgraded to BB- from BB+. Concurrently, Scope has downgraded the rating of the green notes (XS2356039268) issued by GTC Aurora Luxembourg S.A., which GTC unconditionally and irrevocably guarantees, to BB- from BB+. All ratings have been placed under review for a developing outcome.

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

Key rating drivers

Business risk profile: BBB- (unchanged). GTC’s business risk profile remains supported by its position as one of the leading commercial real estate companies in Central and Eastern Europe (58% of income-producing GAV) and Southeastern Europe (23%), complemented by the newly acquired residential-for-rent exposure in Germany (19%).

The company remains medium-sized in a European context, with Scope-adjusted total assets* of EUR 3.0bn as of end-March 2025 (up 19% from YE 2023), primarily driven by the acquisition of the German residential portfolio. GTC maintains a geographically diversified asset base across seven countries, with Poland (32% of income-producing GAV), Hungary (26%) and Germany (19%) representing its largest markets. This diversified footprint helps mitigate concentration risks and provides resilience against country-specific disturbances.

The commercial real estate portfolio had an occupancy rate of 86% as of end-March 2025 (stable YoY) and a weighted average unexpired lease term of 3.7 years (Q1 2024: 3.4 years). Structural weaknesses persist in the office segment, particularly in Poland, where the vacancy rate stood at 25% as of Q1 2025 (down 2 pp YoY) and appears to have stabilised over recent quarters. GTC maintained solid profitability in 2024, with EBITDA margin of 76% (down 2.4 pp YoY).

Financial risk profile: B+ (revised from BB). The revision of the financial risk profile reflects the increased pressure on GTC’s credit metrics, primarily driven by a deterioration in interest coverage and elevated refinancing risk as reflected by inadequate liquidity.

EBITDA interest cover is anticipated to decline from 3.3x in 2024 to below 1.7x in 2026. This marked decline stems mainly from the increased interest burden associated with the acquisition of the German residential portfolio, coupled with the broader rise in funding costs.

GTC’s average cost of debt stood at 3.63% as of end-March 2025 and is expected to rise further due to the anticipated increase in refinancing costs, most notably the EUR 500m bond maturing in June 2026. The acquisition financing for the German residential portfolio included a new EUR 190m secured loan and the assumption of EUR 185m in existing senior loans. The full-year impact of the additional interest expense will continue to weigh on interest cover going forward.

The expected decline in interest cover heightens GTC’s vulnerability to earnings volatility. A successful execution of the divestment programme could partially ease the pressure on GTC’s interest cover, particularly if proceeds are used to pay down costly loans, thereby reducing the amount of debt that needs to be refinanced at higher rates.

GTC’s leverage, as measured by the loan/value ratio, stood at 52% as of end-December 2024 (up 4.5 pp YoY), reflecting the debt-funded acquisition of the German residential portfolio. The company intends to enhance value in the acquired portfolio through cost-efficient modernisation (supported by subsidised funding) and selective asset disposals (targeting approximately 40% of the portfolio over time). The deleveraging trajectory is contingent upon the successful execution of planned asset disposals, with proceeds expected to be used for partial repayment of the acquisition loan. Scope highlights execution risks, particularly around the timing, volume and pricing of disposals.

Leverage on a cash flow basis increased significantly, with debt/EBITDA peaking at 15.4x at end-2024 (YE 2023: 11.2x), largely due to the limited EBITDA contribution from the newly acquired residential portfolio, which closed near year-end. Scope expects only marginal improvements in leverage metrics through 2026, conditional upon the execution, timing and scale of disposals.

While GTC’s capex coverage reflects a broadly balanced funding structure, it remains moderately reliant on external sources. Capital expenditures averaged around EUR 88m annually over 2020-2024. Despite the elevated investment volumes, 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 (EUR 88m in Q1 2025). However, the resilience of this strategy is increasingly tested under the current refinancing efforts.

Liquidity: inadequate, -1 notch (revised from adequate). Liquidity is assessed inadequate, reflecting insufficient coverage of upcoming debt maturities, notably the EUR 715m falling due in H1 2026, including the EUR 500m unsecured bond in June 2026.

As of Q1 2025, GTC’s cash sources, including deposits earmarked for debt repayments and forecasted free operating cash flow, cover the EUR 167m of debt maturing by end-Q1 2026. This short-term coverage is supported by the five-year extension of the EUR 101m facility secured by Galeria Jurajska in February 2025 and Q1 2025 proceeds from disposals. The remaining 2025 maturities primarily relate to loans secured against German residential assets.

Further ahead, liquidity risks become more pronounced, with EUR 795 million of debt maturing in FY 2026, including EUR 500 million of bonds due in June 2026, and these are not covered by liquidity sources at present. GTC is addressing its refinancing needs through asset disposals and/or unsecured or secured debt. However, failure to execute this in a timely manner could significantly weaken the company’s liquidity profile.

Scope will closely monitor the company’s progress in securing necessary funding to assess whether liquidity risks ease or further rating pressure is warranted. Scope takes some comfort from GTC’s longstanding banking relationships and large pool of unencumbered assets (EUR 883m as of end-March 2025), which provide refinancing visibility and collateral headroom.

Scope highlights that the bonds issued by GTC Real Estate Development Hungary Zrt under the Hungarian National Bank’s Bond Funding for Growth Scheme have a covenant requiring the accelerated repayment of the outstanding nominal debt amount (HUF 59.4bn) if the debt rating of the bonds stays below B+ for more than two years (grace period) or drops below B- (accelerated repayment within 90 days). Such a development could adversely affect the company’s liquidity profile. The rating headroom to entering the grace period is one notch. Given the tightening rating headroom, the company must address its credit weaknesses to avoid entering the grace period.

Standalone credit assessment: B+ (revised from BB+). Considering the challenging liquidity profile and heightened refinancing risks, the revised standalone credit assessment is capped at the level of the financial risk profile, since financial risks alone will determine the company’s credit profile over the next few months.

Supplementary rating drivers: credit-neutral (unchanged). Supplementary rating drivers have no impact on the issuer rating. Ongoing investigations involving GTC’s indirect majority shareholder¹, Optima Befektetési Zrt., have not had any observable direct impact on GTC’s operations or financial standing to date. However, Scope acknowledges the potential for reputational and indirect risks to emerge over time, with market sentiment being affected.

Under review for a developing outcome

The under-review placement reflects elevated near-term refinancing risks, particularly regarding GTC’s EUR 500m senior unsecured bond maturing in June 2026. Scope will closely monitor the company’s progress in addressing this refinancing need in a timely manner, that would alleviate liquidity pressure.

Failure to timely address the refinancing of the FY 2026 maturities could result in a further deterioration of Scope’s liquidity assessment. In such a case, GTC would likely become increasingly dependent on the execution of asset disposals to generate the required capital or the extension and upscaling of secured financing, both of which are subject to execution and market risks.

Scope’s intention is to resolve the under-review status as soon as sufficient clarity and visibility on GTC’s liquidity position through to end-June 2026 has been established.

The upside scenario for the ratings and Outlook is:

1. Successful refinancing of the June 2026 bond, providing relief to the company’s liquidity profile.

The downside scenario for the ratings and Outlook is:

1. Lack of tangible and timely progress in refinancing the June 2026 bond, leaving the company increasingly dependent on external funding sources under tight market or timing conditions.

Debt ratings

GTC had EUR 650m in capital market debt outstanding as of end-March 2025. All issuances are irrevocably and unconditionally guaranteed by Globe Trade Centre S.A.

Scope’s recovery analysis suggests an ‘excellent’ recovery for senior unsecured debt in a hypothetical default scenario in 2026, based on a distressed liquidation value of EUR 1.6bn. This includes a market value decline of approximately 40% on GTC's investment properties (equivalent to a ‘BB’ category stress) and a 10% deduction for liquidation costs. This distressed value is benchmarked against forecasted secured debt of EUR 1.1bn and unsecured debt of EUR 0.6bn.

Scope has downgraded the senior unsecured debt rating to BB- from BB+, now positioned one notch above the issuer rating. Given that the debt class rating is closely linked to the issuer rating, it has also been placed under review for a developing outcome.

GTC’s unencumbered asset ratio stood above 180% as of end-March 2025, providing ample collateral to bondholders and justifying the one-notch uplift to BB-.

Environmental, social and governance (ESG) factors

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

All rating actions and rated entities

Globe Trade Centre S.A.

Issuer rating: B+/Under review for a developing outcome, downgrade and under-review placement

Senior unsecured debt rating: BB-/Under review for a developing outcome, downgrade and under-review placement

GTC Real Estate Development Hungary Zrt.

Issuer rating: B+/Under review for a developing outcome, downgrade and under-review placement

Senior unsecured debt rating: BB-/Under review for a developing outcome, downgrade and under-review placement

GTC Aurora Luxembourg S.A.

Senior unsecured (guaranteed) debt instrument rating (ISIN: XS2356039268): BB-/Under review for a developing outcome, downgrade and under-review placement

¹ English summary of the audit report on the Pallas Athéné Domus Meriti Foundation.

*All credit metrics refer to Scope-adjusted figures.

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, (General Corporate Rating Methodology, 14 February 2025; European Real Estate Rating Methodology, 2 June 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 Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
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: Thomas Faeh, Executive Director
The Credit Ratings/Outlook assigned to Globe Trade Centre S.A. and GTC Real Estate Development Hungary Zrt. were first released by Scope Ratings on 12 November 2020. The Credit Ratings/Outlook were last updated on 15 November 2024.
The Credit Rating assigned to the senior unsecured (guaranteed) debt instrument issued by GTC Aurora Luxembourg S.A. was first released by Scope Ratings on 24 January 2022. The Credit Rating was last updated on 15 November 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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