Interim Report Q3 2025
SBB has increased its property exposure by SEK 1.4bn during the year. Our financial position has improved and value-generating transactions strengthened all business areas.
Growth in property exposure
SBB’s total property exposure grew by SEK 500m in the third quarter to more than SEK 94bn. Transaction activity in the portfolio continues to be dominated by growth in subsidiaries and associated companies, with our stake in these holdings being included in property exposure.
A natural partner for essential activities
SBB continued to cultivate successful relationships with its tenants. Municipalities around the country appreciate SBB as a long-term and reliable partner for the public sector. Our long leases with municipalities and regions provide a solid foundation for continued collaboration, and we remain an active partner where modern premises are needed for healthcare, social care, education and public administration. A current example is the 15-year lease recently signed with the City of Stockholm for the Kulltorp 3 property in Södermalm, where we are jointly developing healthcare and social care services in modern and sustainable premises. We have also noted that SBB’s offering to the residential sector is appreciated by both municipalities and tenants. We are committed to preserving the trust that we have built over time.
Emergence of strong companies
SBB continues to strive for a stronger financial structure and for better conditions for creating long-term shareholder value. This is largely achieved by creating wholly owned and jointly owned companies that finance themselves in an optimal manner. The ultimate goal is the efficient management of all properties in transparent and financially robust companies.
Nordiqus, SBB’s associated company in education infrastructure, was established back in 2022 and already has an optimized structure and can leverage its market-leading position. The company pays dividends and is growing profitably through acquisitions.
Sveafastigheter, SBB’s subsidiary in residential properties, has made investments in the past year that have enabled its listing on Nasdaq Stockholm, its inclusion in the EPRA index and its establishment in the capital market where it can raise financing on favorable terms with an investment grade rating. As the largest pure-play residential company on the stock exchange and with a management team focused on the long-term improvement of net operating income, the company has a solid platform to deliver better returns than the industry as a whole. Over the next few years, I believe that there will be particularly favorable conditions for strong net operating income development thanks to generally healthy rent growth in the market and planned improvement measures. But there are already clear signs of a positive trend.
Public Property Invest is routinely making acquisitions to strengthen the company’s market position and profitability. Efforts to create a Nordic platform for mainly public properties has been facilitated by good access to equity and borrowed capital. I am convinced that the company will be able to grow with good profitability as we move forward.
We are continuing to work with SBB Samhälle (Community) and SBB Utveckling (Development), with property exposure of SEK 39bn. SBB Samhälle (Community) manages cash-flow generating properties, with elderly care units as the largest sub-segment, and that are attractive in the capital market. SBB Utveckling (Development) owns properties that will require further resources to transform their potential into long-term value. Moving forward, SBB will be able to present more value-creating measures, similar to the project sold in April where the Swedish Prison and Probation Service will rent 34,600 m2 comprising ultra-modern sustainable premises.
SBB benefits from improved capital market
The tide already turned a few years ago, but conditions in the capital market are continuing to improve. In addition to generally brighter market conditions, the market position for SBB’s subsidiaries and associated companies is gradually improving, yielding lower credit margins. My assessment is that Nordiqus, Sveafastigheter and PPI will secure more favorable financing than the market average in the not too distant future. This will mean the SBB’s property exposure will be financed with lower credit margins going forward.
The overall stronger financing market is supporting an increase in the transaction volume in the property market and a favorable trend in property demand. We should be able to report positive value changes going forward if we can continue to increase income from our properties.
Stabilization in portfolio and continued positive earnings trend
Demand in SBB’s core segments – community service properties, residential properties and education – has remained stable, supported by index-linked contracts, long-term rental relationships and rental apartments in a regulated market.
SBB´s net operating income for comparable portfolios increased by 2.9 percent during the January to September 2025 period compared with the corresponding period in 2024. Income increased by 1.6 percent in comparable portfolios and the occupancy ratio of 94.2 percent, excluding development properties, shows continued stability in the portfolio. The residential segment in particular is performing well, and over the coming quarters new investments and lettings in community service properties should increasingly contribute to higher income.
Lower total net operating income year-on-year was mainly due to divestments completed to strengthen the balance sheet and the establishment of joint ventures.
Strengthened organization – normalized central costs
It is gratifying that the measures to reduce administration costs is moving in the right direction. For the quarter accounted for 11 percent of rental income compared with the comparative period of 2024 when the figure was 21 percent of rental income. Improvement work initially requires the investment of additional resources to optimize structures, systems and working methods. High-performing employees have been added to independent subsidiaries and associated companies and the structures of these have been improved, which is an investment for the future. The Parent Company’s functions, including finance, legal and accounting, have been given extra resources to raise quality and implement structural improvements. This includes the insourcing of economic administration and accounting systems, which was completed at the end of the year. Insourcing is associated with initial costs but will subsequently generate long-term savings.
It is gratifying that the measures to reduce administration costs is moving in the right direction. For the quarter accounted for 11 percent of rental income compared with the comparative period of 2024 when the figure was 21 percent of rental income. Improvement work initially requires the investment of additional resources to optimize structures, systems and working methods. High-performing employees have been added to independent subsidiaries and associated companies and the structures of these have been improved, which is an investment for the future. The Parent Company’s functions, including finance, legal and accounting, have been given extra resources to raise quality and implement structural improvements. This includes the insourcing of economic administration and accounting systems, which was completed at the end of the year. Insourcing is associated with initial costs but will subsequently generate long-term savings.
Favorable debt management
SBB’s average interest rate at the end of the period was 2.4 percent, with an average term of 2.5 years. SBB will continue to repay short-term financing, which has the effect that the average interest rate may decrease in the medium term. This is because SBB’s long-term bonds have low interest rates. Favorable market conditions for financing will contribute to significantly improved management results in wholly owned and partly owned companies going forward. This is positive as it will have an indirect positive impact on SBB.
SBB’s property exposure is gaining better access to both equity and borrowed capital, which is largely due to the generally strong capital market and the structural improvements that have been implemented.
Continued implementation of the strategic plan
We are gradually implementing the plan we presented back in 2023. SBB is experiencing a stronger tailwind during the final phase of its strategic plan and we are already seeing the results of the measures taken. The combined effect of regular rent increases, rising demand from population growth and a low level of new development should contribute to a stable increase in net operating income and good long-term value growth.
There is a sense that there is good potential for yield requirements on properties to fall, among other thing as a result of stronger capital markets, which would have a positive impact on the value. Taken together you could say that residential properties and community service properties are experiencing a tailwind on several levels. Finally, I would like to thank all employees for their commitment and tenants and partners for their continued strong trust.
Leiv Synnes
CEO