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Rating action

Scope Ratings GmbH (Scope) has today affirmed the issuer rating of Hungarian real estate developer GOPD Nyrt. at B- /Negative. Scope has also affirmed the senior unsecured (guaranteed) debt instrument (ISIN: HU0000361076) rating at B+.

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

Key rating drivers

Business risk profile: B- (revised from B). Scope’s assessment of GOPD’s business risk profile remains anchored to its main subsidiary, SunDell Estate Nyrt. (SunDell, rated by Scope at B-/Stable), which holds a modest but growing position as an emerging developer in Hungary's fragmented Budapest residential market. The revision of the business risk profile is driven by lower expected profitability and increased cluster risk.

SunDell, GOPD’s majority-owned subsidiary, is the fifth-largest residential developer in Budapest. It has completed seven projects worth HUF 69bn (1,220 units) since 2017. However, revenues are heavily exposed to cyclical demand in Budapest ('B' location). SunDell has an ongoing pipeline of four projects valued at close HUF 119bn (1,000 units).

Diversification is constrained, with near-term cash generation tied to the SunDell Port development (over 600 units through 2029), increasing cluster risks from execution delays or market shifts; the lease portfolio (39% of SunDell’s property value at end-2024) contributes under 5% of revenues and offers limited offsetting stability. Pre-sale rates exceed 80% in mass-market segments (e.g., 94% for Hun Street, 87% for Paskal Rose II as of September 2025), supporting visibility, though luxury apartment sales lag. The subsidized mortgage rate of 3% introduced by the Hungarian government is expected to increase affordability and pre-sales for energy-efficient units developed by SunDell (ESG factor credit-positive).

Early pre-sales of the SunDell Port project to SD Development Fund I – a HUF 28bn closed-end private equity fund established in December 2024 by MFB Invest (70%) and GOPD Nyrt. (30%) – supports the smooth execution of the project.

The standalone EBITDA of GOPD stems from plot incubation, with expected margins near 20%, though negative in 2023-2024. Consolidated EBITDA margins are projected at 17% for 2025-2027. This is supported by handovers at subsidiary level (SunDell), amid volatile demand influenced by high mortgage rates and stabilizing costs.

Financial risk profile: B- (unchanged). GOPD’s financial risk profile is constrained by high leverage, weak interest coverage historically, and inadequate liquidity tied to subsidiary dividends.

Debt includes GOPD's HUF 5.5bn bond and HUF 3.4bn loan, as well as consolidated SunDell bonds totalling HUF 22.0bn (HUF 18.7bn outstanding at YE2025). Debt/EBITDA was negative through 2024 but is forecasted at around 5.0x in 2025, around 4.0x in 2026, and around 11x in 2027. The anticipated improvement is driven by the aforementioned project handovers at SunDell in addition to debt amortization. The loan/value stands at 38% at end-2024, projected below 30% ahead, providing headroom for leasing or refinancing. The loan/value ratio of around 30-40% is seen conservative for a developer and leaves headroom for the company to either lease properties at sufficient cap rates to cover financing costs, to tackle a moderate downturn of the properties fair values or to tap external financing sources to cover construction costs if needed. Furthermore, GOPD may sell some of its shareholdings in SunDell.

EBITDA/interest coverage is expected to improve to around 3.0x in 2025 and 4.5x in 2026 driven by improved EBITDA from handovers and debt amortization, averaging 3.1x over 2025-2027 despite 2024 negativity, reflecting moderate protection amid volatility.

Free operating cash flow (FOCF) is tied to projected to improve markedly in 2025, bolstered by key project handovers at SunDell. Despite this, FOCF volatility persists due to the ongoing development of flagship SunDell Port, with reliance on pre-sale advances, leaving cash flows vulnerable to Budapest residential market demand shifts.

Liquidity: inadequate (unchanged). GOPD's debt service requires SunDell to pay dividends, with HUF 1,790m paid in 2025 and expected to increase to around HUF 4bn in 2026, regardless of SunDell's profits.

Liquidity is deemed inadequate, as GOPD will continue to rely on upstream dividends from the SunDell level, which in turn depends on successful project handovers. The inadequate liquidity is reflected by a negative one-notch adjustment. However, liquidity risk is manageable due to the ability of both GOPD and SunDell to incur further debt in light of GOPD's partially unpledged shares and SunDell's high level of unencumbered assets, as well as the issuer's ability to sell a minority interest in SunDell while retaining majority ownership and control.

Scope highlights that GOPD’s senior unsecured bonds issued 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 5.5bn) if the debt rating of the bonds stays below B+ for more than two years (grace period) or drops below B- (immediate accelerated repayment). Such a development could adversely affect the company’s liquidity profile. The rating headroom to entering the grace period is 0 notches. Given the tightening rating headroom, the company must address its credit weaknesses to avoid entering the grace period or the more severe event of the debt rating being downgraded below B-.  In addition to the rating deterioration covenant, bond covenants include a list of other soft covenants.

Supplementary rating drivers: credit-neutral (unchanged). No notching was applied for supplementary rating drivers. Scope notes the significant interlinkages between GOPD and SunDell, as the parent has very limited cash generation besides that from SunDell and sells incubated plots to SunDell for housing developments.

One or more key drivers of the credit rating action are considered an ESG factor.

Outlook and rating sensitivities

The Negative Outlook reflects the continuous liquidity risk to GOPD's debt service the next 12-18 months and the continued low/negative standalone profitability, which casts doubt on the issuer's internal cash generation capability and makes it dependent on cash generation at the subsidiary level (SunDell).

The upside scenarios for the ratings and Outlook are (collectively):

1. Improved operational performance in support of the anticipated recovery of credit metrics
    
2. Improved liquidity, with visibility of cash available for cash uses over the next 12-18 months

The downside scenarios for the ratings and Outlook are (individually):

1. No improvement in operational performance, which continues to put pressure on credit metrics
    
2. No visibility of cash available for cash uses over the next 12-18 months
    
3. Loss of majority ownership and/or control over SunDell

Debt ratings

In December 2021, GOPD issued a HUF 5.5bn senior unsecured bond (ISIN: HU0000361076) through the Hungarian Central Bank’s Bond Funding for Growth Scheme. The bond has a tenor of 10 years and a fixed coupon of 4.95%. The bond notional is guaranteed 80% by MFB Hungarian Development Bank. Bond repayment is in five tranches starting from 2026, with 10% of the face value payable yearly and a 50% balloon payment at maturity in 2031.

Furthermore, GOPD consolidates the two bond issuances of SunDell.

In November 2020, SunDell issued a HUF 11.0bn senior unsecured bond (ISIN: HU0000360078) through the Hungarian Central Bank’s Bond Funding for Growth Scheme. The bond has a tenor of 10 years and a fixed coupon of 3.25%. Bond repayment is in three tranches: 30% in 2025, 30% in 2027 and 40% balloon payment at maturity in 2030.

In July 2021, SunDell issued a HUF 5.5bn senior unsecured bond (ISIN: HU0000360649) under the same bond scheme. The bond has a tenor of 10 years and a fixed coupon of 3.65%. Bond repayment is in five tranches starting from 2026, with 10% of the face value payable yearly and a 50% balloon payment at maturity in 2031.

The bond proceeds were used for developing residential housing projects and acquiring a landbank.

Scope assumed a hypothetical default at YE 2026 and applied appropriate discounts to the company’s asset base. Since SunDell’s debt is not guaranteed by GOPD, Scope only considered GOPD's asset base, i.e. mainly land banks and shares in SunDell, in calculating the liquidation value.

Scope expects ‘excellent’ recovery for outstanding senior unsecured guaranteed bond in a hypothetical default scenario based on a distressed liquidation value, resulting in a two-notch uplift above the issuer rating. This translates into a B+ rating for GOPD’s bond (ISIN: HU0000361076) and is based on a guarantee of MFB Hungarian Development Bank (rated by Scope at BBB/Stable) for 80% of the bond notional. The assessment is further supported by an unencumbered asset ratio of above 100% on GOPD standalone level.

Environmental, social and governance (ESG) factors

The housing units developed by SunDell are energy-efficient (ESG factor: credit-positive) and well above minimum legal requirements. There is more demand for this type of housing than for old or renovated housing and less energy-efficient projects. SunDell was one of the first in the market to develop environmentally conscious and sustainable residential buildings with low energy and water needs and a high share of green areas. Since SunDell constructs its buildings, its properties are guaranteed to have an energy performance certificate of at least ‘BB’ under Hungarian law, considered a nearly zero-energy building (nZEB).

Scope notes that GOPD’s corporate structure is complex, requiring significant management attention due to cash flow intricacies, timing sensitivities, concentration risks, and diversification challenges from fewer active projects. This holding structure – involving subsidiaries, joint ventures, and intercompany transactions – creates additional organizational and operational complexities.

All rating actions and rated entities

GOPD Nyrt.

Issuer rating: B-/Negative, affirmation

Senior unsecured (guaranteed) debt instrument (ISIN: HU0000361076) rating: B+, affirmation

*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 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 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 scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication/. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at 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 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, the Rated Entities' Related Third Parties 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: Michel Bove, Director
Person responsible for approval of the Credit Ratings: Philipp Wass, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 3 November 2021. The Credit Ratings/Outlook were last updated on 17 October 2024.

Potential conflicts
See 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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