Swedish residential investor Heimstaden plans to sell 12,000 of its 13,500 rental homes in the Netherlands in response to the tough economic climate and government plans to further regulate rental prices.
The company, which entered the Dutch market in 2019 with a €1.4 bn portfolio deal, has confirmed local media reports that it is seeking to dispose of 2,500 homes over the next two years.
Heimstaden said the move was aimed at keeping the company ‘financially strong’ and enabling it to grow in the future, including in the Netherlands.
It denied reports the disposal plan was motivated by an urgent need for capital, with ratings agencies Fitch and S&P looking to downgrade the company’s BBB credit rating, as suggested by Dutch financial daily Het Financieele Dagblad.
Company spokesman Edward Touw reiterated Heimstaden was not in financial distress.
'Operationally, we booked strong results again in the last quarter. The steps we are taking now are therefore a response to both changing economic conditions such as increased interest rates and declining real estate values as well as the hostile political climate - as we have indicated from the beginning.'
Heimstaden was not in need of a financial injection, he stressed, referring to a statement put out by parent company Heimstaden Bostad in early October.
The statement read: ‘In recent months, some media outlets have portrayed Heimstaden Bostad as a company in crisis with a high loan to value (LTV) unable to meet loan conditions, and in need of equity from its owners.
Let’s be clear: Heimstaden Bostad is not in need of an equity injection.’
It continued: ‘Over the next 18 months, we have SEK 24 billion in maturing bonds. With SEK 27 billion in cash and accessible credit lines, coupled with over SEK 50 billion in secured bank financing since early 2022, we have firm control over maturities until Q3 2025. This underscores the financial attractiveness of our properties, even in the current market environment.’
Despite a 12% valuation decrease in the past year, Heimstaden said its ‘prudent financial approach and substantial equity injections in recent years’ had positioned the company well, helping it maintain an LTV margin that meets S&P's threshold for a BBB rating.
In its Q2 report, Heimstaden said its Loan-to-Value (LTV) ratio had increased to 54.4% from 52.7% in Q1.
Job cuts
Nor is Heimstaden planning to shed 8-10% of its workforce in the Netherlands as a result of the disposals, said Touw, referring to the FD report.
'Of course the strategy change has an impact on a number of functions and for those colleagues we will look for a good solution - for example by finding another position within the organisation. Unfortunately we can’t avoid having to part with a number of our colleagues, but that is very different from cutting 8 to 10% of jobs,’ he said.
Under the new Dutch policy measures, more homes will fall under rent controls, in a move aimed at giving central government more say in residential property development, and ensuring that the target of 900,000 new homes are built by 2030.
Two-thirds of new housing would be classed as affordable – either rent controlled, mid-market rentals (up to around €1,100 per month) or for sale at affordable prices.
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