Fitch moves Yuexiu REIT view to negative

Fitch Ratings said it revised the outlook on Yuexiu Real Estate Investment Trust (YXR) to negative from stable and affirmed the BBB- long-term foreign-currency issuer default rating and BBB- senior unsecured rating. The agency also affirmed the BBB- ratings on its $1.5 billion medium-term note program and $400 million of senior unsecured notes issued under the program. The MTN program is issued by YXR's wholly owned subsidiary, Yuexiu REIT MTN Co. Ltd., and is guaranteed by YXR.

The weaker outlook reflects uncertainty over the recovery of YXR's recurring EBITDA interest coverage to above the agency’s negative sensitivity, Fitch said.

“YXR's recurring EBITDA interest coverage fell to 1.6x in 2023 (2022: 2.3x), and we expect the interest coverage to only recover modestly to 1.7x by 2025, lower than our previous expectation of 1.9x, due to weaker rental income recovery expectations, primarily in the office segment. Any further weakening of rental income amid a challenging economic environment could lead to a breach of our negative rating sensitivity of 1.7x,” the agency said in a press release.

Fitch said it projects YXR’s recurring EBITDA to remain flat in the next few years.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.