Swedish landlord SBB grips nettle as debt crisis looms

Stockholm — Struggling Swedish real estate group SBB is broadening a strategic review to include the options of a potential sale of the whole company or some of its business segments, it said on Monday, sending its shares up more than 9%.

Rising interest rates, soaring inflation and growing debt have hit real estate companies in Sweden, something that policymakers see as a risk to financial stability.

In recent weeks SBB — Sweden’s most shorted stock, according to data from the country’s financial regulator and which has seen its credit ratings cut to junk status — has made several changes to improve its liquidity and appease investors, such as halting dividend payments, scrapping a planned rights issue and selling its stake in builder JM.

The credit rating cuts make it harder for the heavily indebted landlord to refinance its debt load, where a large amount is due within the next two years.

SBB, one of Sweden’s largest commercial landlords and which owns many rent-regulated residential and community service properties, has previously said it aims to reduce its debt by selling off assets amounting to roughly 6-billion Swedish kronor ($591m) during the coming year.

“The fact that SBB is looking to sell all or part of the business is due to higher interest costs as a result of the downgraded credit rating, although the business still has positive earnings capacity after interest costs,” Carlsquare analyst Bertil Nilsson said, noting the company was now valued at 28% of net asset value.

Shares in SBB, which have fallen more than 70% in the past year, were up more than 9% on Monday.

Reuters