Interim Report Q2 2021

SBB’s shares are popular among the general public, with about 1 percent of the Swedish population being shareholders.

Samhällsbyggnadsbolaget i Norden AB (SBB) owns properties valued at SEK 117bn and continues to deliver strong profits, secure cash flows and high growth with ever-increasing earnings capacity per share as a result.

Samhällsbyggnadsbolaget i Norden AB (SBB)’s income comprises secure cash flows from property management of social infrastructure, which are supplemented with three income-generating value-adding strategies: building rights development & new production, investments in existing portfolios and value-generating transactions.

Earnings capacity, SEK 3.79 per series A and B share

SBB’s 12-month rolling earnings capacity rose by 49 percent compared with the second quarter of 2020 and amounted to SEK 5,368m (3,686) at the end of the first half of 2021. As of 30 June 2021, the earnings capacity per series A and B share was SEK 3.79, an increase of 30 percent over the past year.

Profit after tax was 9.3bn, which together with increased earnings capacity leads to a higher forecast for a profit of SEK 7.80 per series A and B ordinary share for full year 2021.

Profit after tax was SEK 9.3bn, an increase of 258 percent compared with the first half of last year. Adjusted for non-recurring costs for, for example, the repayment of expensive loans and deductions for earnings attributable to preference shares, series D shares, hybrid bonds and minority interests, profit for the period amounted to SEK 6.09 per series A and B ordinary share. For the 2021 full year, we forecast earnings of SEK 7.80 per series A and B ordinary share. This is based on SBB’s current earnings capacity and profit for the first half of 2021.

Profit from property management increased by SEK 428m, corresponding to 33 percent

Adjusted for non-recurring costs, profit from property management increased by 33 percent in comparison with the first half of 2020 to SEK 1,713m (1,285). In addition to loan-repayment costs, non-recurring costs also included costs for loan redemption (SEK 168m), restructuring costs (SEK 29m) and unrealized currency effects (SEK 74m).

The highest net asset value growth 2019-2021…

Two years ago, we communicated our goal of being able to deliver the highest annual increase in net asset value among all listed Swedish property companies for the years 2019-2021. The outcome for 2019 ended up at a high 73 percent per series A and B ordinary share. Last year, we continued to deliver strongly, increasing our net asset value per series A and B ordinary share by 41 percent. During the first six months of the current year, the long-term net asset value has increased by 10 percent to SEK 31.02. The net asset value shows only a part of SBB’s values and operations. One could relate the net asset value to SBB’s property management operations and, in this case management, profit from property management for the first half of the year of SEK 1.7bn, that is, profit from property management of SEK 1.29 per series A and B share for the six month period. As mentioned, however, in SBB’s case, property management is supplemented by three additional value-adding strategies whose value is not reflected in the net asset value.

… and even stronger profit growth from the three value-adding strategies

Our value-adding strategies continue to out-deliver at all levels. By itself, the profit from our two value-adding strategies (Development of building rights & new production, and Investments in existing portfolio) ended up at SEK 1.7bn for the first half of 2021, corresponding to earnings per series A and B share of SEK 1.27 per share A and B for the six month period.

1) Profit from Building rights development & new production for the first half of 2021 amounted to SEK 1,452m, compared with the target of SEK 1.0-1.4bn on an annual basis. At the end of the first half of the year, SBB’s building rights and production portfolio, including joint ventures, amounted to approximately 59,000 apartments. Adding the 37,000 apartments in the JM portfolio, SBB would, with a total exposure of 96,000 apartments, be the European company with the greatest potential from future housing production.

2) Profit from Investments in the existing portfolio in the first half of 2021 amounted to SEK 233m, compared with the target of SEK 600m on an annual basis. In the first half of 2021, SBB completed renovations that improve the net operating income of 375 apartments. A further 98 apartments are currently being renovated and the leases on 181 apartments have been terminated, with renovation planned to commence within a three-month period. In addition to apartment renovations, SBB is continuously upgrading the company’s portfolio of community service properties. The total volume of these projects is approximately SEK 3,048m and, when these are completed, they will contribute to an increase in net operating income of SEK 181m on an annual basis. At the same time, the yield on cost for these value-generating projects is 5.9 percent, paving the way for strong value growth.

3) The transaction team continues to deliver with property transactions for a total SEK 17.4bn during the second quarter of 2021. Examples of value-adding transactions are sales of office properties in some transactions and, in some cases, 20 percent above the most recent valuation, the acquisition of 70 percent of the shares in Riksbyggen’s residentials company Unobo and sale of the holding in Entra at a 10 percent profit, approximately SEK 300m during the holding period.

An important part of the company’s social sustainability initiative is to contribute new elderly care units and LSS housing. The number of elderly care units to be managed in-house is set to increase sharply, with the target of doubling the total rental income from elderly care and LSS housing between 2020 and 2025, from the level of slightly more than SEK 800m to SEK 1.6bn annually. By the end of the first half of 2021, our income from elderly care units and LSS homes had increased to SEK 1,180m.

Key ratios for a BBB+ rating have been delivered

At the end of the period, our pro forma net debt, adjusted for cash inflows from properties that have been sold but not yet transferred, liquid financial assets and 12 months’ earnings divided by total capital, in accordance with S&P’s definition of the loan-to-value ratio, amounted to 48 percent. We continue to raise our interest coverage ratio, which was a multiple of 5.2 at the end of the first half of the year. SBB has a very strong financial position with strong banking relations and access to the European credit market. At the end of the first half of the year, SBB had available funds in the form of cash and cash equivalents, liquid financial assets and available credit commitments of SEK 26.1bn. We have slightly more than SEK 112bn in non-pledged assets and long capital and fixed interest maturities. SBB had an average interest rate of 1.13 percent at the end of the first half of the year.

We have delivered the key figures required for a BBB + rating, although this is not yet reflected in the actual rating. We have respect for the fact that the rating institutes work in longer cycles and we will work to further strengthen our position. In line with this, we adjust our goal to reach a BBB + rating in the short term. We maintain the goal of reaching A- in the long term.

Sustainability is the core of our business model

SBB’s focus on being completely climate neutral by 2030 is based on holistic thinking with a focus on energy investments, life cycle investments with a focus on building in wood and reduced carbon dioxide emissions from new production in concrete, and on generating renewable energy. Energy investments are being made with the aim of halving energy consumption. More than half of SBB’s new production currently in development is built of wood. Wood is renewable, has a lower climate impact from refinement processes compared with other building materials and also has the capacity to store carbon dioxide. SBB is taking initiatives to generate conditions for being climate positive by producing renewable energy. We produce geothermal heat, builds solar cell plants to generate power and is planning for wind power.


For the 2021 full year, we are raising our forecast to earnings of SEK 7.80 per series A and B ordinary share. Today we are a large family with about 100,000 shareholders and some 300 employees who are located in many places in several countries. Our employees and our infra- structure form a unique investment platform that will continue to deliver strong earnings, secure cash flows and high growth. The quality of our assets, both in terms of the security of the rental flows and of their liquidity in the transaction market, has proven to be among Europe’s most secure in challenging times. This commits us to continue building Europe’s largest property company focused on secure assets.

Of our SEK 117bn in property assets, residentials account for approximately SEK 52.5bn (45 percent), education properties for SEK 31bn (26 percent), health and medical care properties for approximately SEK 8bn (7 percent), and central government infrastructure, building rights and the judiciary for SEK 12bn (11 percent). In addition to residential properties on its own balance sheet, SBB has major housing exposures through joint ventures and associated companies including Hemvist, JM, Publicus, Origa Care, Magnolia, Odalen, etc., as well as through investments in housing companies including Heba, Klarabo, Amasten, Studentbostäder i Norden and Solon Eiendom.

Even today, SBB’s shares are popular among the general public, with about 1 percent of the Swedish population being shareholders. We look forward to an increasing number of Swedes owning SBB shares and thus contributing to the existence of a strong professional European player that secures social infrastructure while they receive safe and secure returns with ever-increasing dividends. For the roughly 300 of us who work at SBB, it is a matter of continuing to work hard. And this year, 200 young people will have the opportunity to work with us during the summer.

Ilija Batljan
CEO and founder