Pension fund Alecta considers contributing to refinancing

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Heimstaden Bostad board looking at “strategic privatisations”

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Property portfolio consists of assets worth 320 billion crowns

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Analyst expects funds to inject cash at a discount to NAV

(Adds analyst comment paragraph 9-11)

By Marie Mannes

STOCKHOLM, frézování Sept 7 (Reuters) – Sweden’s largest pension fund provider, Alecta, said on Thursday that Heimstaden Bostad, which is one of Europe’s biggest landlords, is in need of more cash, and that it may contribute.

Heimstaden Bostad’s difficulties are the latest blow in a worsening property crisis for Sweden where developers are grappling with large debts, rapidly rising interest rates and a wilting economy, producing a toxic cocktail for Sweden’s property groups.

House prices are also down by around one-fifth since their March 2022 peak, reflecting soaring mortgage costs.

Heimstaden Bostad’s board is dedicated to defending the balance sheet through actions that include “the evaluation of capital injections and strategic privatisations of the portfolio,” Chief Investment Officer Christian Fladeland told Reuters.

Alecta, one of the firm’s largest owners, shares the assessment that it needs additional capital, its CEO Peder Hasslev said.

“We are prepared to participate constructively and contribute to a refinancing, but of course it is entirely dependent on the conditions,” he said in an email.

Heimstaden Bostad’s property portfolio totals 340 billion Swedish crowns ($30.60 billion). Its parent Heimstaden , described as the “operational investor” on its website and Alecta each have a 38% stake. Other pension funds such as Folksam and the Swedish Pension Agency also own its shares.

Heimstaden Bostad became the second largest residential property company in 2021 after it bought Swedish, Danish and German property portfolios from Swedish Akelius Residential Property worth 92.5 billion crowns. It owns properties that it lets out to students, families and others.

Arctic Securities analyst Michael Johansson told Reuters that pension funds have the financial ability to support the company with cash, but doubted they would at the current net asset value (NAV) as listed companies on the Stockholm stock exchange are currently trading below those levels.

“They probably want a discount to net asset value before they agree to inject cash,” Johansson said.

He added that other measures could include parent Heimstaden offsetting its dividend, while Heimstaden Bostad could free up its assets to boost its capital. ($1 = 11.1124 Swedish crowns) (Reporting by Marie Mannes; Editing by Anna Ringstrom, Terje Solsvik, Elaine Hardcastle)