“Heimstaden Bostad’s Property Empire, owned by Ivar Tollefsen, seeks rent hikes for 6,000 apartments in Malmö to counter rising financing costs, according to Bloomberg”

Ivar Tollefsen’s property empire Heimstaden Bostad wants according to Bloomberg to increase the rent for 6,000 apartments in Malmö, to meet rising financing costs.

It also reports Today’s Industry.

According to Bloomberg, the company wants to increase the rent by 2 percent, just five months after an agreement was made to increase the rent by 5 percent. In Sweden, the rent is usually negotiated annually, between landlords and the tenants’ association.

“Rental levels must reflect cost trends over time,” commented Heimstaden’s investment director Christian Fladeland in an email, according to Bloomberg. He is also said to have pointed out that the tenants have benefited from low costs in recent years, and that it is natural that they too take part in the cost increases.

Huge debt

Tollefsen has become a housing king by buying a lot of property with a low return at a time with even lower loan rates.

In one year, however, market interest rates have risen from zero or minus to between 3.5 and 4 per cent before credit surcharges of 0.8 to 1.2 per cent in the banking market and between 2 and 4 per cent in the bond market, while Heimstaden Bostad in the fourth quarter of 2022 reported a average return of 3.17 per cent on its entire housing portfolio.

Heimstaden has a significant debt due in the next two to three years, amounting to over SEK 56 billion, according to S&P Global Ratings, when they downgraded the company’s rating to negative at the end of last year.

Investment director Fladeland is said to have commented to Bloomberg that the property company has good control over its interest costs thanks to a solid liquidity position, long loan periods and a high degree of fixed interest rates. The company is said to have also bought back bonds for SEK 20 billion since the summer.