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Thursday, July 25, 2024

Oscar Properties of Sweden Sells Real Estate at a 27% Discount, Valued at $214 Million, to Repay Loans Amid Financial Struggles

Swedish real estate firm Oscar Properties has reluctantly agreed to sell properties at a discounted price of 2.2 billion Swedish crowns ($214 million) in an effort to repay loans from Norwegian bank DNB and other smaller creditors. The decision comes as high debts, rising interest rates, and a weak economy have placed significant financial strain on Swedish property companies, leading them to grapple with soaring borrowing costs and diminished demand.

CEO Carl Janglin expressed regret over the forced sale, stating, “We would have liked to have continued to own these properties, but our senior bank DNB wanted to have its loans repaid.” The real estate involved in the sale is estimated to be worth around 3 billion crowns, representing a 27% discount.

Following the announcement, shares in Oscar Properties initially surged by 85%, though gains were later pared to close up around 19%. Over the past 12 months, the company’s stock has experienced a decline of more than 80%.

Oscar Properties indicated that discussions would continue with owners and remaining lenders to explore options for restoring equity and attracting new capital. The company acknowledged the possibility of further reductions in organization and central costs, as well as potential corporate restructuring.

In October, Oscar Properties had highlighted the impact of high interest rates on its liquidity, emphasizing the need for new capital to ensure its survival. In subsequent months, the company faced additional challenges as two banks demanded immediate loan repayments, and a proposed rescue plan was rejected by one of the banks in November.

The buyer of the properties in this recent sale is property mogul Erik Selin, acting through his company Erik Selin Fastigheter. The deal may have broader implications for property values in the first quarter, as Carlsquare analyst Bertil Nilsson noted little competition compared to previous auctions.

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