The real estate sector is affected by macroeconomic factors such as the economic trend, growth, employment, the degree of new builds, infrastructure, population growth, inflation and interest rates. In a poorer economic climate, the value of the company’s properties may decline.
The company’s revenues consist of rent payments for homes and premises. If the rental level of homes and premises decreases, the company’s revenues will decline. Revenues could also decline if the payment ability of the tenants in the properties deteriorates, leading to failure to pay rent. The company’s costs of managing the properties depends on the general cost trend in Sweden. The company’s interest-bearing liabilities give rise to liquidity, refinancing and interest-rate risk. ‘Liquidity and refinancing risk’ refers to the risk of inability to obtain financing at maturity, or only at a substantially higher cost, and inability to honour payment obligations due to insufficient liquidity. ‘Interest-rate risk’ refers to altered market terms potentially leading to higher financing costs.