Nordic Credit Rating (NCR) has affirmed its 'BB' long-term issuer rating on Sweden-based commercial property manager Stenhus Fastigheter i Norden AB (publ). The outlook is stable. At the same time, NCR affirmed its 'N4'' short-term issuer rating and 'BB-' senior unsecured issue rating.
Rating rationale
The affirmation reflects Stenhus's continued solid operational performance and our expectation of a slight rebound in the company's occupancy rate. The rebound is driven by divestment of assets with lower occupancy than those acquired and marginally positive net letting trends. We expect operating margins and cash flow to benefit from improved cost efficiency and limited growth in overhead expenses.
The company has significantly reduced financing costs by refinancing a large portion of its borrowings at competitive rates, taking advantage of the current favourable financing environment. With lower market interest rates, which are quickly reflected in the company's interest expenses due to its short fixed-interest period, we expect net interest coverage to rebound to approximately 2.7x over 2026–2027e, well above its long-term target of above 2.25x. While the company has deleveraging capacity supported by robust cash flows, we expect it to prioritise shareholder-friendly actions to grow net asset value. Measures such as dividend payments, share repurchases and acquisitions are expected to keep net LTV at around 55% through 2027e. Overall, we believe the company's shift from portfolio expansion to growing net asset value improves visibility of debt requirements compared to its initial growth phase. We assess that extension option of up to two years on a significant share of the company's debt offset some risk to liquidity, despite debt maturities being concentrated.
The rating is constrained by the company's brief operating history, high growth rates and shareholder friendly policy. The rating is further constrained by the company's short fixed-interest period and concentrated debt maturity profile, which heighten sensitivity to adverse market conditions. The rating also reflects the company's high-yielding property portfolio, which is typically located outside central areas and is expected to attract cyclical tenants. While we expect the company's cash flow generation to remain strong and interest coverage to improve, the leverage is likely to remain moderately high.
The weaknesses are partly offset by Stenhus Fastigheter's long lease terms, strong profitability and high occupancy. The company's primary geographic focus, the Mälardalen region including Stockholm, has strong economic fundamentals, which we view as a credit strength. We take a positive view of Stenhus Fastigheter's 19% exposure to public-sector tenants, which provides stability, while strong cash flows allow for organic deleveraging, if the company chooses.
Stable outlook
The stable outlook reflects our expectation that Stenhus Fastigheter's net interest coverage will improve over our forecast period through 2027. The outlook also reflects our expectation that the company will remain cautious with capital expenditures and balance acquisitions with other measures to increase net asset value. We also expect the company to maintain adequate liquidity, proactively manage refinancing and continue to focus on its currently targeted property subsectors and regions.
We could raise the rating to reflect a more conservative financial strategy, with improved debt maturity and interest-fixing profile, and a net loan to value (LTV) ratio below 50% and net interest coverage above 3.5x and net debt/EBITDA around 9x over a prolonged period.
We could lower the rating to reflect weakened liquidity profile due to concentrated debt maturities, a deterioration in credit metrics, with net LTV approaching 60% over a protracted period, or worsening market fundamentals adversely affecting profitability.
Related rating actions
i) Stenhus Fastigheter outlook revised to stable; 'BB' long-term issuer rating affirmed, 9 Oct. 2024.
Related publications
i) Strong financing climate for Swedish real estate companies in an uncertain environment, 16 Sep. 2025.
ii) Swedish real estate snapshot (Q2 2025): Compressing credit margins upon refinancing expected to improve interest coverage, 1 Sep. 2025.
iii) Swedish real estate snapshot (Q1 2025): Strong access to capital contains financial risk, 27 May 2025.
iv) Comparison of Swedish industrial and logistics property managers, 1 Apr. 2025.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BB | BB |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N4 | N4 |
| Senior unsecured issue rating: | BB- | BB- |
Contacts:
Gustav Nilsson, analyst, +46735420446, gustav.nilsson@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Rating Methodology published on 8 May 2023, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.