The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has today assigned an initial issuer rating of B/Stable to SkyGreen Buildings Kft. (SkyGreen). Scope has also assigned a short-term debt rating of S-4 and a senior secured bond (ISIN HU0000360201) rating of BB-.

The rating reflects SkyGreen’s stable cash flow from a diversified office portfolio in Budapest, supported by strong operating profitability and relatively low financial leverage. The portfolio’s favourable micro-locations – particularly in the Váci Corridor and South Buda – support rentability and cash flow stability. However, the rating remains constrained by the company’s limited size, weak tenant and geographic diversification, and modest market share in a competitive segment.

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 (new). SkyGreen’s business risk profile is constrained by its small scale, limited diversification and exposure to a single regional market, despite good asset locations and stable tenant demand.

SkyGreen is a small property company, based on its EUR 357m portfolio by market value and around 112,000 sqm of gross lettable area (GLA) as at March 2025. Despite recent investments, the company’s market share in the Budapest office segment remains modest and is estimated at around 3% based on GLA. This limits its ability to capture economies of scale and exposes it to greater cash flow volatility. The company’s main presence in the Váci Corridor (45% of GLA as at June 2025) provides some visibility in a prime submarket but does not materially improve its competitive standing.

Diversification is a material credit constraint. The company operates exclusively in Budapest and has taken no tangible steps towards expansion despite a preliminary interest in Croatia. Tenant concentration is high: the top 10 contribute around 58% of rental income and the top three 29% as at June 2025. Office assets dominate the portfolio, accounting for around 85% of rental income as at June 2025, exposing the company to cyclical shifts in the segment’s demand. For example, while Budapest’s office market has been stabilising, with vacancies falling to 12.8% as of Q2 2025 (1.2pp decrease YoY), net take-up still declined 21% YoY and demand fell by 16%.

Budapest is classified as a tier-two European city, which tend to face stronger pricing corrections and less investor demand than tier-one locations in times of macroeconomic stress or interest rate volatility. The issuer’s sole exposure to this market creates valuation and refinancing risks. However, SkyGreen’s assets have good micro-locations, easy access to public infrastructure, and a high rate of green certifications (75% of BREEAM-certified properties as of June 2025), helping rentability.

Profitability is strong, driven by high occupancy (92% as at December 2024) and efficient cost pass-through through triple-net lease structures. Thus, Scope expects Scope-adjusted EBITDA margin* to remain around 80%-85% (2024: 86%), supported by recurring income and a low-cost base.

Financial risk profile: BBB (new). SkyGreen’s financial risk profile is supported by solid interest coverage and internal cash generation that covers its modest investment needs. Leverage remains manageable, underpinned by stable rental income.

Investment needs are low. Capex averaged HUF 1.2bn yearly in 2022-2024, with similar levels expected going forward. Recurring free operating cash flow (FOCF) can comfortably cover these levels, at HUF 0.7bn in H1 2025 and HUF 5.6bn in the 12 months to June 2025. Scope forecasts HUF 2.0bn of FOCF for full-year 2025, with some potential for upside if the operating momentum is sustained. Capex coverage will remain good and internally financed, and stable given there are no plans for significant refurbishment or development.

Debt/EBITDA continues to improve, reducing to 7.2x (LTM to end-June 2025), from 9.4x at YE 2024 and 11.1x at YE 2023. The recent improvement was due to lower debt combined with higher EBITDA. Scope expects leverage to remain to around 9-10x over the forecast period, supported by recurring cash flow, limited external funding needs, and no major capex or acquisition plans. Loan/value (LTV) slightly increased to 42% in H1 2025 (up 2pp YTD) due to a lower net market value of assets but Scope forecasts a return to around 40% by end-2025, assuming a partial recovery in asset value. Scope expects moderate fair value depreciation to exert some pressure on the LTV. However, amortisation and cash flow stability will help prevent excessive leverage build-up.

Debt protection is strong with EBITDA interest cover rose to 6.1x (LTM to end-June 2025), from 4.5x at YE 2024. The improvement reflects stronger operating performance and stable financing costs. H1 2025 results suggest a slight upward trend in net interest expense, but Scope expects coverage to remain adequate over the forecast period supported by stable cash flow.

Liquidity: adequate (new). SkyGreen’s internal liquidity coverage is adequate. Cash sources, namely: cash and cash equivalents (YE 2024: HUF 2.3bn) and forecasted FOCF (2025: HUF 2.0bn; 2026: HUF 2.2bn), adequately cover cash uses (short term debt of HUF 2.0bn in 2025; HUF 1.3bn in 2026). There are no committed credit lines, but internal liquidity provides enough headroom under base case assumptions.

Supplementary rating drivers: -1 notch (new). SkyGreen’s governance structure results in a one-notch negative adjustment to the standalone credit assessment of B+. Scope’s view is based on the company’s lean organisational setup – one employee and limited managerial depth – which creates high key person risk (ESG factor: credit-negative). Further, only a few individuals undertake strategic decision-making and day-to-day oversight, with no visible institutional framework for delegation, oversight or succession planning.

Scope notes that SkyGreen’s financial policy also prioritises the parent company’s needs, upstreaming liquidity via dividends and intercompany loans, which keeps net cash balances low and limits the company’s ability to build financial buffers.

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

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s expectation that SkyGreen will maintain stable operating performance and conservative debt service capacity. Scope expects the company to sustain EBITDA interest cover above 3.5x, debt/EBITDA at around 9-10x and a stabilised LTV at around 40%. Liquidity coverage is projected to remain robust, comfortably exceeding 200% over the next three years, supported by recurring FOCF and low short-term refinancing needs.

The upside scenarios for the ratings and Outlook are (individually), both currently considered to be remote:

• Elimination of key person risk.
   
• Reduced concentration risk through geographic expansion and improved tenant diversification.

The downside scenario for the ratings and Outlook is:

• EBITDA interest cover at or below 1.7x.

Debt ratings

Scope has assigned a short-term debt rating to SkyGreen of S-4. The rating is based on the underlying B/Stable issuer rating and reflects the better-than-adequate liquidity position and adequate access to bank funding and capital markets.

Scope has assigned a BB- rating to the issuer’s senior secured bond (ISIN HU0000360201), two notches above the issuer rating. This reflects the 'excellent' recovery expectations of the bond, based on the anticipated liquidation value in a hypothetical default in 2026. This scenario assumes outstanding debt of HUF 51.9bn, most of which is secured by properties. This includes the HUF 27.2bn outstanding bond principal at the end of 2026, which is secured by a solid collateral structure, mortgages on income-generating properties – Váci Greens E and InfoPark (Buildings B, C and I), valued at HUF 65.4bn at March 2025 – as well as a second-ranked mortgage on InfoPark D.

Environmental, social and governance (ESG) factors

SkyGreen operates a concentrated real estate portfolio located entirely in Budapest, primarily focused on modern office assets. Around half of its buildings have green certifications, reflecting a moderate alignment with environmental standards and addressing the growing tenant preference for energy-efficient spaces. Social risk is limited, given the passive lease structure and lack of employees beyond a single internal resource. Governance, however, remains a weakness, as detailed under supplementary rating drivers, resulting in a one-notch negative adjustment.

All rating actions and rated entities

SkyGreen Buildings Kft.

Issuer rating: B/Stable, new

Short-term debt rating: S-4, new

Senior secured bond (ISIN HU0000360201): BB-, new

*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 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: Vishal Joshi, Analyst
Person responsible for approval of the Credit Ratings: Philipp Wass, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 17 November 2025.

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
© 2025 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, Scope Innovation Lab GmbH and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5, D-10785 Berlin. Public Ratings are generally accessible to the public. Subscription Ratings and Private Ratings are confidential and may not be shared with any unauthorised third party.