SBB Norden (SBB) Investor Presentation summary

Transaction overview and bond offering

• SBB is consolidating its residential assets into Sveafastigheter, creating a pure-play residential company with about 14,200 apartments across 237 properties, and dissolving JV structures like Unobo and Hemvist.

• Sveafastigheter is optimizing its capital structure with a SEK 10.4bn secured bank financing, a parent company loan of SEK 1.8–2.3bn, and a contemplated senior unsecured bond issue of up to SEK 2.5bn (SEK/EUR), targeting an opening LTV of 43% and ICR of 1.7x.

• SBB bondholders can exchange their existing bonds for new Sveafastigheter bonds via an unmodified Dutch auction, receiving 80% in new bonds and 20% in cash, with the exchange offer running from June 13 to July 2, 2024.

• The new bonds mature in January 2027, carry a 4.75% fixed coupon, and include a net LTV maintenance test (<55%) and ICR incurrence test (≥1.5x).

• SBB is exploring alternatives for minority ownership disbursement in Sveafastigheter, which may occur in 2024.

Company profile and portfolio

• Sveafastigheter is a focused residential platform with 100% owned subsidiaries, in-house management, and a portfolio valued at SEK 23.7bn, with 94% of assets in metropolitan and university cities.

• The company has a sizable project pipeline, with ongoing and planned developments primarily in Stockholm-Mälardalen and university cities, targeting ~7,200 new apartments and SEK 1.9bn in market value at completion.

• The management team and board have extensive experience in property management, development, and transactions, supporting operational efficiency and governance.

• The business model leverages economies of scale, local presence, and a strong focus on sustainability and tenant satisfaction.

• The company aims for increased profitability through reduced admin costs, higher occupancy, apartment upgrades, and energy efficiency initiatives.

Market and operating environment

• The Swedish residential market is characterized by rent regulation, low vacancy, and high demand, with 80% of Sveafastigheter’s municipalities reporting a housing deficit in 2023.

• Population and income growth in Sveafastigheter’s regions outpace the national average, supporting long-term rental expansion and low vacancy.

• Rent increases have historically outpaced inflation, and the company sees further potential through value-of-use tests and upgrades.

• The market faces a structural housing deficit, limited building starts, and long waiting times for rental apartments, especially in Stockholm.

• Property valuations are below new construction costs and listed market values, offering potential for value uplift.