<div id="readability-page-1"><div>Fitch Ratings-Hong Kong-11 November 2025:Fitch Ratings has revised the Outlook on China-based Yuexiu Real Estate Investment Trust's (YXR) Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative, and affirmed the IDR at 'BBB-'. The agency has also affirmed YXR's senior unsecured rating, and the ratings on its USD1.5 billion medium-term note (MTN) programme and USD400 million senior unsecured notes issued under the programme at 'BBB-'. The MTN programme is issued by YXR's wholly owned subsidiary, Yuexiu REIT MTN Company Limited, and is irrevocably and unconditionally guaranteed by YXR.The Stable Outlook reflects YXR's improved financial profile following the disposal of a 50% interest in Yuexiu Financial Tower. We expect YXR's recurring EBITDA interest coverage to remain above our negative sensitivity, despite continued rental pressure on the company's office-centric portfolio.Key Rating DriversImproved Financial Profile: Fitch expects YXR's EBITDA interest coverage to recover to and remain above 1.8x (2024: 1.6x), after it repays debt with the asset sale proceeds. Fitch now includes hotel EBITDA in the EBITDA interest coverage metric, given a record of consistent performance, and we have kept the negative threshold for the metric at 1.7x. We also expect YXR's loan-to-value ratio - measured as net debt to investment-property value - to improve to around 41% (1H25: 45%).YXR completed the disposal of a 50% interest in Yuexiu Financial Tower to a wholly owned subsidiary of Guangzhou Yue Xiu Holdings Limited (GYX), the ultimate parent of YXR, on 15 October 2025. YXR will receive CNY5.3 billion in cash proceeds, which includes bank loans to be drawn down at the joint venture. YXR's stake in the tower will fall to 49.5% after the disposal, and the tower will no longer be consolidated in the company's financials.Declining Rental Income: We forecast YXR's underlying revenue (excluding the asset disposal) to fall by 7% in 2025 and 4% in 2026 (1H25: -7%), driven by the office segment, which accounted for about 55% of YXR's revenue. We forecast the office rental income to decline by 8% in 2025 and 6% in 2026 (1H25: 9%), as there is a large pipeline of new supply, which will lead to aggressive discounting by landlords.However, the prime location of YXR's office portfolio and a flight to quality by tenants should limit further downside. Performance of the non-office segments (wholesale, retail, hotels and serviced apartments) is likely to be relatively resilient as they do not face oversupply, although persistently weak consumer sentiment will limit their recovery.Reducing Funding Costs: YXR's funding cost fell to an average of 3.92% during 1H25 and we forecast the cost to average 3.6%-3.7% during 2025-2026. YXR's funding access remains strong due to its banking connections. It also issued CNY1 billion in offshore bonds at 4.1% in April 2025 and CNY600 million in onshore bonds at 2.7% in July.Rating Supported by Parent: YXR's IDR benefits from a one-notch uplift based on the support of parent GYX. We assess YXR based on its parent-subsidiary relationship with GYX as we believe support is likely to come directly from Yuexiu group, as demonstrated by the recent asset disposal. We assess the parent's operational incentive to support as 'Medium', as YXR shares the same brand and banking relationships with the parent, and we believe support would be forthcoming due to reputational reasons. Legal and strategic incentives are assessed as 'Low.'Peer AnalysisThe Wharf (Holdings) Limited's (A-/Stable) Standalone Credit Profile (SCP) is three notches higher than YXR's, reflecting its significantly lower leverage and higher interest coverage.Both YXR and Wharf derive the majority of their rental income from a relatively concentrated portfolio of properties in China. Guangzhou IFC contributes around 40% to Yuexiu REIT's net property income, while Guangzhou as a region contributes over 85%. Around 60% of Wharf's total investment-property revenue comes from Chengdu IFS and Changsha IFS combined. We consider the quality of the investment-property portfolios to be similar, but YXR's portfolio is smaller, at USD6 billion, compared with Wharf's portfolio of around USD10 billion.Singapore-based Starhill Global Real Estate Investment Trust (SGREIT, BBB/Stable) is rated two notches higher than YXR's SCP due to its higher interest coverage and lower leverage. In addition, SGREIT's rating is supported by more stable cash flow from long-dated master leases. SGREIT's investment-property portfolio quality is similar to YXR's, but YXR has a larger scale of USD6 billion than SGREIT's USD2 billion. High asset and tenant concentration is also a key constraint for SGREIT.Key AssumptionsFitch's Key Assumptions Within Our Rating Case for the Issuer- Underlying revenue to decline by 6.5% in 2025 and 4.1% in 2026 (1H25: -6.6%)- EBITDA margin of 68% in 2025 and 69% in 2026 (1H25: 66%)- Average funding cost of 3.7% in 2025-2026 (1H25: 3.9%)RATING SENSITIVITIESFactors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:- EBITDA interest coverage below 1.7x for a sustained period- Net debt/investment-property value sustained at more than 50%- Weaker operating performance than we expect, leading to larger-than-expected decline in EBITDA- A perceived weakening in GYX's incentive or ability to support YXRFactors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:- EBITDA interest coverage above 2.0x for a sustained period- Net debt/ investment-property value sustained at below 45%Liquidity and Debt StructureYXR had CNY1.6 billion of cash as of end-1H25, which was not sufficient to cover its CNY10.2 billion of short-term debt. However, we believe liquidity risk is limited given YXR's strong access to funding, supported by its status as a state-owned enterprise and unsecured property portfolio.Issuer ProfileYXR owns investment properties in China, with Guangzhou IFC and 49.5%-owned Yuexiu Financial Tower in Guangzhou accounting for 50% and 11% of its portfolio, respectively. The portfolio had a total rentable area of around 800,000 sq m and a total valuation of CNY42 billion as of end-1H25.REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG ConsiderationsThe highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.Yuexiu Real Estate Investment Trust; Long Term Issuer Default Rating; Affirmed; BBB-; Rating Outlook Stable----senior unsecured; Long Term Rating; Affirmed; BBB-Yuexiu REIT MTN Company Limited----senior unsecured; Long Term Rating; Affirmed; BBB-Contacts:Primary Rating AnalystSamuel Hui,Director+852 2263 9981samuel.hui@fitchratings.comFitch (Hong Kong) Limited19/F Man Yee Building 60-68 Des Voeux Road CentralHong KongSecondary Rating AnalystRebecca Tang, CFADirector+852 2263 9933rebecca.tang@fitchratings.comCommittee ChairpersonTyran Kam,Senior Director+852 2263 9909tyran.kam@fitchratings.comMEDIA RELATIONS: Jack Li, Beijing, Tel: +86 10 5957 0964, Email: jack.li@thefitchgroup.comLeslie Tan, Singapore, Tel: +65 6796 7234, Email: leslie.tan@thefitchgroup.comAdditional information is available on www.fitchratings.comApplicable ModelNumbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).Corporate Monitoring &amp; Forecasting Model (COMFORT Model), v8.1.0 (1)ADDITIONAL DISCLOSURESDodd-Frank Rating Information Disclosure FormSolicitation StatusAdditional Disclosures For Unsolicited Credit RatingsEndorsement StatusEndorsement PolicyALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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Fitch Ratings has revised the Outlook on Yuexiu Real Estate Investment Trust's (YXR) Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative, affirming it at 'BBB-'. The revision reflects YXR's improved financial profile after selling a 50% interest in Yuexiu Financial Tower, with expectations for EBITDA interest coverage to remain above 1.8x. However, underlying revenue is forecasted to decline due to rental pressures, particularly in the office segment. YXR's funding costs are decreasing, and its IDR benefits from support from parent company GYX.

Fitch Revises Outlook on Yuexiu REIT to Stable, Affirms at 'BBB-'