Moody’s Investors Service last week downgraded Miami-based Neff Corp.’s rating to Caa1 from B3 with a negative outlook, citing weaker than expected operating performance following the leveraged acquisition of Neff by New York-based private equity firm Lightyear Capital LLC.

Neff continues to face operational and financial challenges including downturns in the U.S. rental economy, which is hurting operating profits, the continued need to fund and maintain its rental fleet and weakened credit metrics, Moody’s said. The agency added that the company’s highly leveraged capital structure is constraining financial flexibility.

Neff is highly concentrated in California and Florida, where the drop in housing construction has negatively impacted the company’s fleet, which is heavily focused on earthmoving equipment.

Moody’s also cut Neff’s second lien, senior secured bank credit facility to Caa1 from B3, and senior unsecured notes from Caa2 to Caa3.

Neff Rental is No. 11 on the RER 100.