Swedish property group SBB’s losses widen, ready to take bondholder to court

By Marie Mannes and Greta Rosen Fondahn

STOCKHOLM (Reuters) -Troubled Swedish property group SBB reported on Monday that its losses widened in the third quarter and said it was ready to take a bondholder to court over payment demands.

SSB is at the epicentre of a property crash that threatens to engulf the Swedish economy, having racked up vast debt by buying public property, including social housing, government offices, schools and hospitals.

On Monday, the landlord said it was looking for equity partners to help reduce its debt after it reported a pre-tax loss of 3.13 billion Swedish crowns ($287 million) for continuing operations in the third quarter, compared to a revised loss of 2.56 billion a year earlier.

SBB shares were down 4% at 3.27 crowns at 1325 GMT and have lost almost 95% of their value since peaking in 2021.

SBB said last Thursday that one of its creditors, later identified by media as U.S hedge fund Fir Tree Partners, had requested that the group immediately repay a bond, saying the group was in breach of a debt clause, the first such official demand faced by the landlord.

SBB, which is saddled with a large amount of short-term debt, much of it in bonds held by foreign investors, and has been hit by rising interest rates, a wilting economy and a cut in its credit rating to junk status, firmly denied it had breached its debt clause.

The dispute hinges on how the interest coverage ratio, a key debt clause, is calculated.

“We think that our way of calculating key figures is the way that the market calculates the key figure,” SBB’s CEO Leiv Synnes said in an earnings call, and separately told Reuters that the company was prepared to fight the bondholder in court if needed.

SBB also said it planned on finding equity partners for its unit Sveafastigheter in 2024 so it could repay some of its bonds for 2025 and 2026.

However, Synnes told Reuters that if it fails to do so it would also be open to looking for a partner for its community unit, which includes hospitals and care homes.

“It’s not our first priority at the moment, but if for whatever reason we fail to do something with the residential part, we can consider doing something with the community part,” Synnes said.

SBB has slashed the value of its property portfolio by nearly 9% since the start of the year, it said. This came after analysts had warned property values could continue to see pressure from high interest rates.

(Reporting by Marie Mannes and Greta Rosen Fondahn; editing by Terje Solsvik, Miral Fahmy and Susan Fenton)