Swedish landlord SBB may seek buyer as debt crisis looms

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 (May 29), sending its shares up more than 9 per cent.

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 US$591 million 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 per cent of net asset value. REUTERS