Swedish Property Giants Report Billions In Write-Downs

Two of Sweden's major property companies announced substantial write-downs in their 2023 results as they confronted challenges amid a European property downturn, according to a report by Marie Mannes, Greta Rosen Fondahn, and John O'Donnell for Reuters.

Heimstaden, a property investor with a substantial presence in cities like Stockholm and Berlin, wrote down the value of its investment properties by 31 billion crowns. I Photo: Heimstaden Facebook

The European property market, particularly in Germany and Sweden, experienced significant growth fueled by declining interest rates. However, a sharp increase in rates has now punctured this bubble, leading to adjustments in asset valuations.

SBB, Sweden's largest commercial landlord, recorded a write-down of over 13 billion Swedish crowns ($1.3 billion), reducing its portfolio to 73 billion crowns from 135 billion crowns through asset sales.

The company reported a loss of more than 22 billion crowns for 2023.

Similarly, Heimstaden, a property investor with a substantial presence in cities like Stockholm and Berlin, wrote down the value of its investment properties by 31 billion crowns, resulting in a pre-tax loss of 29 billion crowns.

Following Fitch's credit rating downgrade, including a deeper descent into "junk" territory, Heimstaden's preferential shares plummeted over 30%.

Additionally, the company announced its decision to defer interest payments on hybrid bonds, as reported by Simon Johnson for Reuters.

These significant write-downs reflect the challenges faced by property companies in adjusting to the changing economic landscape, highlighting the impact of rising interest rates on the European property market.

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