The list of challenges facing Leiv Synnes, the recently appointed head of embattled Swedish landlord SBB, grew even longer on Friday as Chief Financial Officer Eva-Lotta Stridh announced she was leaving the firm after seven years in the role.
(Bloomberg) — The list of challenges facing Leiv Synnes, the recently appointed head of embattled Swedish landlord SBB, grew even longer on Friday as Chief Financial Officer Eva-Lotta Stridh announced she was leaving the firm after seven years in the role.
The departure adds another element of uncertainty for Synnes, 52, who was brought in to run Samhallsbyggnadsbolaget i Norden AB — as the company is officially known — 11 weeks ago after its founder was ousted as CEO amid a slump in SBB’s share price and concern over its ability to manage an $8 billion debt pile.
While Stridh’s resignation came as a surprise, Synnes had been widely expected to bring in new leadership as the company looks for ways to sell assets and raise cash away from the bond markets. “The CEO wants to put his own team in place and this change was relatively expected in my view,” Michael Johansson, a real estate analyst at Arctic Securities, said in an interview.
Alongside founder Ilija Batljan, Stridh oversaw SBB’s finances during a period of rapid expansion for the Stockholm-based landlord. Since 2016, the company has used cheap bond financing to amass a portfolio of more than 2,000 community and rent-regulated properties worth $13 billion. But the company’s business model began to unravel earlier this year following a jump in interest rates and investor concern over its ability to service its debt.
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“As we start the recruitment of a new CFO, we are looking for experience to support the company through this transformative phase,” said Synnes in emailed comments. Stridh will work through her three-month notice period, according to a statement released late on Friday.
The success or failure of SBB’s transformation under Synnes — himself a former finance chief at rival landlord Akelius Residential Property AB — could have major ramifications for Europe’s real estate sector, as the landlord is at the center of Sweden’s commercial property crisis.
The Nordic nation is viewed by investors as a bellwether for broader real estate trends as much of its debt is short term and attached to floating rates, making it particularly vulnerable to interest rates hikes. This year, debt maturities have remained relatively manageable at $4.9 billion, but that will more than double to $12.1 billion in 2024. Competitor Heimstaden Bostad AB has the largest amount of bond debt at $2.5 billion, while SBB has $765 million, according to data compiled by Bloomberg.
Read More: Sweden’s Debt-Laden Landlords Veer Closer to Forced Sales
SBB is now racing to address a self-identified cash shortfall of 8.1 billion Swedish kronor ($737 million) over the next 12 months. The company has suffered a spate of rating downgrades since losing its investment grade status in early May, and has since put itself up for sale and continued to seek ways to lighten its balance sheet amid falling property valuations and a dearth of buyers in the transaction market.
The landlord took in 2.4 billion kronor in cash last week after finalizing an agreement for its SBB Residential Property unit to issue preferential shares to a fund managed by Morgan Stanley. SBB is also considering carving out its entire residential business — whose portfolio is valued at 36.5 billion kronor — for an initial public offering, Bloomberg News reported earlier this month.
SBB’s shares fell as much as 10% during early trading in the Swedish capital on Monday. The company has shed more than 90% of its market value since hitting a high toward the end of 2021.
(Updates with context throughout)
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