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Abu Dhabi-based Aldar Properties 'B/B' Ratings affirmed following sales of assets to The Government; Outlook Stable

Abu Dhabi-based property company Aldar Properties PJSC's capital structure and liquidity position are likely to strengthen since it sold additional assets to the government.

We are affirming our ratings on Aldar at 'B/B'.

We continue to incorporate two notches of uplift in the ratings for our expectation of a "moderately high" likelihood of extraordinary government support.

The outlook is stable as we expect the government to continue to support Aldar , enabling it to reach a stable operational and financial performance over the medium term.

DUBAI (Standard & Poor's) January 11, 2012--Standard & Poor's Ratings Services today said it affirmed its long- and short-term corporate credit ratings on Abu Dhabi-based property company Aldar Properties PJSC (Aldar) at 'B/B'. The outlook is stable.

The issue rating on the $1.25 billion 10.75% senior unsecured bonds due May 2014 and United Arab Emirates dirham (AED) 3.75 billion of al-ijarah sukuk due June 2013, issued on behalf of Aldar , have also been affirmed at 'B', at the same level as the long-term corporate credit rating on the company. The recovery rating of '4' on these debt issues is unchanged, indicating Standard & Poor's expectation of average (30%-50%) recovery in the event of a payment default. Atlantic Finance Ltd. issued the senior unsecured bonds and Sukuk Funding (No. 2) Ltd. issued the sukuk.

The affirmation reflects our view that Aldar is likely to reach a stable operational and financial performance over the medium term, following the announcement of another AED16.8 billion of asset sales to the government, although the company remains subject to weak real estate market conditions. The government transaction reduces the risk that Aldar will not be able to sell its inventory of residential developments. In addition, proceeds from the sale of investment properties and fixed assets strengthen its capital structure and liquidity position.

The 'B' rating on Aldar is based on our view of the company's stand-alone credit profile (SACP), which we assess at 'ccc+'. It also includes two notches of uplift reflecting our opinion of a "moderately high" likelihood that the government of the Emirate of Abu Dhabi (AA/Stable/A-1+) would provide timely and what we view to be sufficient extraordinary support to Aldar in the event of financial distress. We assess Aldar 's business risk profile as "weak" and its financial risk profile as "highly leveraged" under our criteria.

Our assessment of Aldar 's SACP reflects weak property market fundamentals in Abu Dhabi, the company's high financial leverage, and weak profitability track record. Aldar 's credit strengths include, in our opinion, the group's position as one of the leading property companies in Abu Dhabi and its close relationship with the government in project planning and execution.

Our assumption about the likelihood of extraordinary government support is based on a track record of significant support measures in the form of asset acquisitions and capital injections, somewhat tempered by the Department of Finance's public statement that its purchase of assets does not signal a change in the government's policy toward Aldar .

The stable outlook reflects our expectations of continued government support for Aldar in the form of funding from local banks and government-sponsored work that should enable it to reach a stable operational and financial performance over the medium term.

We may consider lowering the ratings if Aldar fails to break even or if its liquidity position deteriorates.

We may raise the ratings if the company's operational performance improves significantly and we observe that the company is able to return to profitability and sustainably generate positive free cash flow generation without extraordinary government support.

RELATED CRITERIA AND RESEARCH

• Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers

• , Sept. 28, 2011

• Key Credit Factors: Global Criteria For Rating Real Estate Companies, June 21, 2011

• Principles Of Credit Ratings, Feb. 16, 2011

• Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010

• Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, May 27, 2009

• Standard & Poor's Approach To Rating Sukuk, Sept. 17, 2007

• Criteria Guidelines For Recovery Ratings On Global Industrials Issuers' Speculative-Grade Debt, Aug. 10, 2009

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About Standard & Poor's in the GCC
Standard & Poor's is the leading provider of financial market intelligence to customers in the Gulf's credit risk management, wealth management, and data and information markets. Since entering the region in the late 1980's, Standard & Poor's currently has public ratings on more than 100 issuers. In equity markets, Shariah-compliant versions of Standard & Poor's global and regional equity market indices - S&P 500, S&P Europe 350, S&P Japan 500 and S&P/IFCI GCC - have created new opportunities for Islamic investors to benchmark their international investments and for asset managers to create new investment products serving the Islamic community. Standard & Poor's Fund Services launched a qualitative fund management rating service for regional asset managers in 2007 assigning 17 Fund Management Ratings. For further details on Standard & Poor's regional capabilities please visit www.gcc.standardandpoors.com

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© Press Release 2012

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