Embattled SBB slashes portfolio value by 10% amid higher rates

SBB, the landlord at the centre of Sweden’s property crisis, reported a 10 per cent decline in property values in the third quarter compared with the prior three-month period.

Real estate holdings at Samhallsbyggnadsbolaget i Norden AB – as the group is officially known – stood at 118 billion Swedish crown (S$14.7 billion) at the end of the third quarter, down from 131 billion crown in the preceding quarter.

“Hopefully, we are at the end of the correction in market prices brought about by higher market interest rates,” said chief executive officer Leiv Synnes in the report on Monday (Nov 13).

The downward revision comes amid a volatile few days for the landlord after a US hedge fund, Fir Tree Partners, last week said it was demanding immediate repayment of two social bonds because of an alleged breach of a key debt term, the interest-coverage ratio.

While the fund’s holdings of US$49.2 million represent only 1 per cent of the company’s overall bond stock, the development underscores the pressures facing over-leveraged property borrowers such as SBB as they continue to grapple with surging borrowing costs.

“SBB refutes the accusations and deems the claim from the eurobond holder to be groundless,” the company said.

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Troubled real estate firm SBB faces bond repayment demand

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“SBB needs to continue adapting the business based on challenging financial markets,” the CEO said. “Over a slightly longer time perspective than the next quarter, it is possible to take a confident view of the value trend for SBB’s property portfolio.” BLOOMBERG