One of the biggest public property groups in Sweden goes by the name SBB. It goes by that acronym because its actual name is the tongue-bending Samhällsbyggnadsbolaget i Norden. The company has a portfolio of 2,000 properties that was valued at $12 billion at the end of the first quarter. Now the company is sitting on $8 billion dollar of debt obligations, more than a third of which is coming due in the next two years. This is going to be a problem since the interest rates in Sweden have gone from 0% to 3.5% in a few months and are scheduled to continue to increase.
In order to prevent insolvency SBB is now looking for a strategic partnership or out right sale. Sweden’s property industry has been seen as particularly exposed to interest rate hikes, much of the country uses floating rate mortgages and short term loans. Because of this SBB was one of the most shorted stocks in the country. Selling a company is never easy but selling it when it is headed towards bankruptcy is much harder. If SBB does find a buyer rest assured that they will be getting the properties at a discount, something that could reset prices in the entire country.