Akelius Residential Property AB

financial risks

Real estate companies' two main financial risks related to properties are

  • decreasing property values
  • lower rental income

Akelius mitigates the property risk by investing in

  • residential properties
  • stable countries
  • growing metropolitan cities
  • attractive locations

Real estate companies main financial risks related to debt are

  • liquidity
  • leverage
  • interest payments

A low property risk mitigates debt related financial risk, because

  • stable income supports interest payments
  • stable property values stabilize leverage
  • attractive properties in liquid property markets support liquidity
  • lenders prefer stable assets

mitigate liquidity and re-financing risks

Akelius has a policy to mitigate liquidity and re-financing risks.

The policy stipulates that Akelius should have

  • a liquidity of at least EUR 500 million
  • liquidity sources larger than liquidity uses

cash uses and cash sources 12 months forward, 2024-03-31, MEUR

Akelius prioritizes long-term loans to mitigate
re-financing risks. 
The average debt maturity is 3.3 years.
Short-term loans amount to 25 percent of total loans.

debt maturities per year, 2024-03-31, MEUR

loan-to-value sensitivity

Akelius' policy is to be able to withstand a 25 percent decrease in property values.
Such a decrease would increase loan-to-value from 34 to 50 percent.

Akelius' bond terms stipulate that the company cannot take on additional debt or pay any net dividends if the loan-to-value exceeds sixty percent. 

interest coverage sensitivity

Akelius' policy is to be able to withstand a five percentage point increase in interest rates. 
Akelius secures interest rates for long periods. 
This reduces the effect of sudden interest rate increases.

Akelius' bond terms stipulate that the company cannot take on additional debt or pay any net dividends if the interest coverage ratio is below 1.5.

The risk for not being able to pay interest is mitigated by high liquidity and low leverage.

In the period July 2022 to September 2023, net interest expenses were positive, hence interest coverage ratio can not be calculated.

interest expense, January to March 2024, and liquidity as of 2024-03-31, MEUR

property fair value sensitivity

To mitigate negative effects of the change in capitalization rate,
property holdings are diversified across countries.

value change, percent, due to increased capitalization rate, percentage points, 2023-12-31