Fitch Ratings downgraded Guangzhou R&F Properties Co. Ltd.'s foreign- and local-currency long-term issuer default ratings to BB- from BB, as well as its senior unsecured rating to BB- from BB+.
The rating agency also removed the ratings from Rating Watch Negative and assigned a negative outlook on the issuer default ratings.
The action comes on the heels of the substantial completion of the diversified real estate developer's hotel and office assets purchase from Dalian Wanda Commercial Management Group Co. Ltd.
Fitch said in a note that it expects the company's leverage, as measured by the ratio of net debt to adjusted inventory, to rise to about 65% over the next year or two. Guangzhou R&F's high leverage is attributable to its aggressive land acquisition in 2017, the rating agency added.
The negative outlook mirrors limited cushion for leverage, which is near the benchmark where the rating agency would further lower Guangzhou R&F's ratings.