(Bloomberg) — SBB, the landlord at the center of Sweden’s commercial property crisis, was slammed with a downgrade of five steps further into junk by Fitch Ratings in a fresh blow for its new chief executive’s efforts to stabilize finances.

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Fitch on Monday slashed the issuer default rating of Samhallsbyggnadsbolaget i Norden AB — as the company is formally known — to B-. That’s one step higher than peer S&P Global Ratings, which last month lowered its credit grade on the company to CCC+ with a negative outlook.

While Fitch noted that SBB’s portfolio remains solid, the downgrade came with a warning that more cuts could be on the way amid struggles to raise cash to repay bonds.

“Fitch points out several of the drivers we have highlighted as important to deal with in the near term,” SBB Chief Executive Officer Leiv Synnes said. “One such driver is liquidity to handle next year’s maturities. I am confident in the actions we are taking to improve SBB’s situation and outlook.”

Grappling with an $8 billion debt pile, SBB has become emblematic of how a year of central bank rate hikes have upended real estate in the biggest Nordic economy. Property empires built on cheap credit are teetering after suddenly facing a twin challenge of sliding asset values and higher financing costs.

The industry is now trying to figure out how to repay mountains of debt, and investors have taken note. SBB’s bonds have long been trading at distressed prices, reflecting junk-grade rating levels. Its shares have lost more than 90% of their value since the start of last year.

SBB shares fell as much as 6.8% as trading started in Stockholm on Tuesday, extending Monday’s 16% drop.

The landlord, which mainly owns public-sector buildings, lost its investment grade status in early May and has been racing to close a self-identified cash shortfall of 8.1 billion Swedish kronor ($740 million) over the next 12 months.

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The firm’s downward spiral led to the switch of its chief executive in June. Synnes, who was brought in to replace SBB founder Ilija Batljan, looks to be overhauling the company’s top ranks as he seeks to forge a sustainable business plan.

Chief Financial Officer Eva-Lotta Stridh on Friday announced she was leaving the firm after seven years in the role. Stridh had helped oversee the expansion of SBB’s debt and asset base during the era of ultra-low rates, but that business model began to unravel earlier this year following a jump in interest rates and investor concern over its ability to service its debt.

SBB has continued to seek ways to lighten its balance sheet amid falling property valuations, including asset disposals and even putting itself up for sale.

Amid a shortage of buyers, the company has made “insufficient progress” on divestments, Fitch said on Monday, adding that unfavorable real estate and capital-market conditions are contributing to the deterioration of its cash position.

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Fitch said it expects to resolve the negative ratings watch when there’s news on raising liquidity. Timing is running short as the company has 6.8 billion kronor in bonds maturing in February next year.

Fitch noted that SBB’s downgrades stem from its “heightened refinance risk” rather than a souring real estate portfolio. The assets are “stable,” due to long-term tenants and regulated rents, the ratings company said.

SBB’s portfolio “fundamentals are less sensitive to economic cycles” than those of commercial office property companies “that are reliant on open market conditions,” Fitch said.

–With assistance from Christopher Jungstedt.

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