Fitch Ratings placed LVGEM (China) Real Estate Investment Co. Ltd. 's B+ long-term foreign-currency issuer default rating and senior unsecured rating on rating watch negative.

The rating watch placement reflects Fitch's expectation that the company's leverage will rise to more than 45% from 2018 if it does not change its business plan, following the recently announced HK$9 billion acquisition of a Hong Kong office building by one of its subsidiaries.

The rating agency said the acquisition falls out of the company's business plan that it had disclosed to Fitch and will lead to a higher leverage over a sustained period if development sales from the building do not flow in.

Fitch said it will resolve the rating watch placement when the transaction closes and will review the company's revised business plan on account of its financial profile.

Moody's recently affirmed its B2 corporate family rating on LVGEM, with the outlook revised to negative from stable. Moody's also noted that the building is not anticipated to bring in any revenue until late 2019.