Nordic property companies are expected to write down the value of their real estate further in the upcoming results season, with analysts citing rapidly rising interest rates and high levels of debt as significant factors. The region has struggled with high interest rates and inflation, leading many companies to refinance short-term bond loans and see their credit ratings reduced to junk status.
Goldman Sachs predicts a potential 7% decline in property values for real estate companies in Europe, with continued declines expected into the first half of 2024. The balance sheets of Nordic firms are considered the most exposed due to their leverage being higher than the European sector average. Falling property values could increase loan-to-value ratios, raising the risk of debt covenant breaches.
