Swedish real estate problems spread
Wolfgang Münchau discusses the growing problems in Sweden, the epicentre of Europe’s real estate crisis. One firm, SBB, has been hit particularly badly, with shares plummeting above 66 krona to around 4. SBB’s woes reach beyond Sweden, however, with the ECB owning SBB bonds as part of its portfolio. The problem isn’t with the resulting losses, but rather the role the ECB itself played in the property bubble to begin with. In 2016 it warned of such a bubble forming, yet was buying up bonds in firms like SBB. If the real estate sector’s problems become a more serious issue, there will have to be an appraisal of how monetary policy decisions contributed to it. Achieving an objective at the expense of collateral is one thing, but causing the damage whilst struggling to meet the objective is another.
Edition: 175
- 08 December, 2023
Samhallsbyggnadsbolaget (SBBB SS) Sweden
Real Estate
Stuck in a doom loop - the Swedish real estate group has announced its intention to pause dividend payments on all share classes and cancel the SEK 2.6bn rights issue. The announcement followed S&P’s decision to downgrade SBB to sub-investment grade status. The company’s share price has plunged ~45% as a consequence. SBB (class B/D) equity holders will need to face any one of alternative scenarios ahead. All are fraught with risks.
Edition: 160
- 12 May, 2023
Nordic Property Cos: In search of a miracle
Real Estate
Castellum and Samhallsbyggnadsbolaget are both Swedish property companies with complex ownership structures, impaired corporate governance and stretched balance sheets. The current challenging macroeconomic backdrop has now lifted the veil on the many risks embedded in their corporate structures. In this report Green Street explores the various implications of the recent announcements made by companies’ CEOs and provides insights on how to navigate the current market volatility.
Edition: 148
- 11 November, 2022