Moody's rates Damac Real Estate sukuk Ba2

Moody's Investors Service said it assigned a Ba2 corporate family rating and Ba2-PD probability of default rating to Damac Real Estate Development Ltd., DIFC.

Concurrently, Moody's assigned a Ba2 backed instrument rating to the proposed benchmark-sized senior unsecured sukuk (the trust certificates) to be issued by Alpha Star Holding VIII Ltd., a DIFC incorporated special purpose vehicle.

The outlook is stable.

The rating of Damac is supported by the company's market leading position in residential real estate development in Dubai, its track record of successfully navigating through real estate cycles, strong off-plan sales, a track record of high pre-completion payment collections through real estate cycles, strong profitability and prudent financial policies, Moody’s said.

The rating also factors in Damac's geographic concentration in a single market, Dubai, the highly competitive and cyclical nature of the real estate development industry, Moody’s expectation that the market is currently at its peak and prices will start to stabilize or slightly decline over the next 12-18 months, and the company’s exposure to construction contractors, the agency said.

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