High Financial LeverageA D/E of ~2.8 indicates material leverage that increases interest expense and refinancing sensitivity. Over several months this constrains capital flexibility, raises downside risk in a rate shock or property slowdown, and limits the company's ability to fund new projects internally.
Negative Operating And Free Cash FlowPersistent negative operating and free cash flow undermines the firm's ability to service debt, fund developments, or return cash to shareholders without external financing. Structurally weak cash generation increases refinancing and liquidity risk, especially given elevated leverage.
Weakened Gross Margin And Profitability VolatilityDeclining gross margins point to rising development or operating costs and compress unit economics. Coupled with historical profit volatility, this reduces predictability of earnings and ROE, making long-term returns less reliable absent sustained cost control or pricing power.