SBB’s buyer for a SEK8 bn (€760 mln) mainly offices portfolio has pulled out, scuppering one route the listed company was pursuing to cut debt.
SBB wants to reduce leverage as part of its takeover of Swedish rival Hemfosa. It had agreed to sell the assets to opportunistic investor Nyfosa.
Nyfosa signed a letter of intent in January when it said it expected to enter into binding agreements in March 2020. Instead it has decided to postpone the acquisition due to the changes in market conditions arising from the coronavirus crisis.
One experienced Nordics capital broker said: ‘My guess is that deals that have been put on ice like this one will not recover. There is going to need to be a completely new start for those transactions.’
Jens Engwall, CEO of Nyfosa, said: ‘We remain interested in the property portfolios but the acquisition will now not go ahead since the market has changed so drastically since we signed the letter of intent.
‘It is always regrettable to withdraw from a transaction but we are now looking ahead and focusing on new opportunities.’
SBB’s takeover of Hemfosa is designed to create the leading Nordic investor in residential and social infrastructure properties such as care homes and schools. Adding Hemfosa’s assets takes SBB’s combined portfolio to SEK70 bn.
Rating agency Fitch has affirmed SBB’s rating at BBB- saying: ‘SBB needs to complete planned disposals to reduce its leverage. Nyfosa withdrew its offer to acquire one tranche of planned disposals, but Fitch understands that this is not representative of wider domestic market conditions, particularly for community service assets, which are less affected by coronavirus events.’
To maintain its rating, Fitch has calculated that SBB needs to sell at least SEK10 bn of assets this year, with SEK2 bn achieved.