Moody's rates Yuexiu REIT notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to the proposed notes to be issued by Yuexiu REIT MTN Co. Ltd. under its $1.5 billion medium-term note program and guaranteed by Yuexiu Real Estate Investment Trust.

The outlook is stable.

The proceeds will be used to refinance existing facilities and fund general corporate purposes, Moody's said.

The new issuance will improve Yuexiu REIT's liquidity position, the agency said, and have no impact on the trust's overall credit profile.

Moody's also said it expects Yuexiu REIT's adjusted debt leverage will trend toward 8.5x to 9x over the next 12 to 18 months, from around 9.3x in 2018.

The ratings reflect the company's ownership of diversified and good quality assets in Guangzhou, the capital of the economically strong Guangdong province and its track record of stable performance and resilient occupancy rates through different economic cycles, the agency said.

The ratings also consider diversity of the company's assets, which include offices, hotels, retail malls, wholesale malls and serviced apartments, Moody's said.

The ratings are constrained by Yuexiu REIT's high debt leverage and geographic concentration in Guangzhou, although such concentration risk is mitigated partly by its recent expansion into Shanghai, Wuhan and Hangzhou, the agency said.

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