Swedish property group SBB reported a Q2 2024 loss of 3.5 billion crowns (USD 343.79 million), marking its ninth consecutive quarterly loss, but an improvement from a 10 billion crown loss a year earlier. The company, burdened by debt from property acquisitions, also wrote down 1.6 billion crowns in property value. Despite ongoing restructuring, CEO Leiv Synnes expressed optimism, forecasting a recovery in property prices and a return-to-profitability in the second half of 2024, aided by anticipated interest rate cuts. SBB's net debt decreased to 49 billion crowns, and the company successfully refinanced some debt through private bonds.
Sweden's debt-laden property group SBB reported a pre-tax loss of 3.5 billion Swedish crowns (USD 343.79 million) for Q2 2024, an improvement from the revised 10 billion crown loss recorded during the same period last year. This marks the company's ninth consecutive quarterly loss as it continues to navigate a challenging restructuring process amidst high interest rates and a sluggish economy.
SBB, which accumulated significant debt through the acquisition of properties like schools and hospitals, has been one of several European real estate firms forced to reduce debt and restructure. Sweden has been particularly affected by these conditions, making the property sector especially vulnerable. The company also faced a 1.6 billion crown write-down in property values during the quarter.
Despite these challenges, SBB's CEO, Leiv Synnes, remains optimistic, citing a shift in market sentiment. He anticipates that falling interest rates and improving capital markets will provide relief for property companies, predicting a potential rebound in property prices in the upcoming quarter. Synnes further expressed confidence that SBB will return to profitability in the second half of the year.
Sweden's central bank has already lowered its key interest rate and projected additional cuts later this year, which could alleviate some of the financial pressures on companies like SBB. However, the company has struggled with refinancing its substantial debts, especially since its credit rating was downgraded to junk status last year, leading to diminished investor confidence and limited access to bond markets.
By the end of June, SBB had reduced its net debt to 49 billion crowns, down from 56 billion crowns at the end of March. The company also announced that Nordiqus, its joint venture owning school properties, successfully refinanced part of its bank debt through private placement bonds-a sign of potential market improvement. Similarly, struggling competitor Heimstaden Bostad issued bonds in the Swedish market for the first time since 2022.
However, the Q2 loss was greater than anticipated, with analysts like Bertil Nilsson of Carlsquare noting worse-than-expected results due to declining property values and high restructuring costs. Synnes acknowledged these concerns but projected that these costs would significantly decrease by the end of next year.
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