Increased interest expenses and rental income constraints due to a crowded office market in China hinder Yuexiu Real Estate Investment Trust's (HKG:0405) rating potential, Fitch Ratings said in a Monday release.
The trust saw its recurring EBITDA interest coverage falling to 1.4x in H1 from 1.6x in 2023, given a large exposure to Hong Kong-dollar floating rate debt and steep interest rates.
Weak demand and the surplus in China's office market have also reduced the trust's H1 recurring EBITDA by 2% year over year.
The trust could lessen its financing costs and raise the recurring EBITDA interest coverage above Fitch's negative threshold of 1.7x by refinancing its Hong Kong dollar notes with yuan-denominated debt, the rating agency said.
Although parent Yuexiu Property's (HKG:0123) contracted sales declined 31% in the first eight months of 2024, its positive operating cash flow through decreased land purchases and construction cost outflows should mitigate working capital pressure.
The parent also preserves its leverage well below Fitch's negative trigger and maintains solid funding access, the rating agency said.
Shares of Yuexiu Real Estate Investment Trust jumped more than 4% at market close.
Price (HKD): $0.96, Change: $+0.040, Percent Change: +4.35%
免责声明:投资有风险,本文并非投资建议,以上内容不应被视为任何金融产品的购买或出售要约、建议或邀请,作者或其他用户的任何相关讨论、评论或帖子也不应被视为此类内容。本文仅供一般参考,不考虑您的个人投资目标、财务状况或需求。TTM对信息的准确性和完整性不承担任何责任或保证,投资者应自行研究并在投资前寻求专业建议。