By Marie Mannes
STOCKHOLM (Reuters) -Swedish property group SBB on Friday ruled out state support as it sought to repair its battered finances, marred by a heavy loss and dwindling liquidity.
The $13 billion group, which owns swathes of property across Sweden including hospitals and schools, racked up a pre-tax loss of 11.1 billion Swedish crowns ($1.09 billion) in the second quarter, while liquidity ebbed.
"I don't think we need general support from the state," CEO Leiv Synnes told Reuters. "Our situation is not alarming." Synnes said his focus was on improving liquidity.
As of June 2023, the company had around 1.9 billion Swedish crown of cash and equivalents, less than half the level in December.
The company's stock was down 8.5% by 0850 GMT at 5.5 Swedish crowns.
SBB said speculation about its future had hurt its ability to secure new funding. Synnes said he was in talks about selling further property, but declined to be drawn on whether there was a buyer in sight for the entire group.
The company said earlier this year it was looking at options including finding a buyer of all or parts of its business.
Net operating income for the second quarter fell 6% to 1.32 billion crowns, down from 1.41 billion - roughly in line with analysts' expectations.
SBB built up vast debts buying public property including social housing, government offices, schools and hospitals.
The company is now scrambling to salvage its finances after recently seeing its credit rating downgraded to junk, with some looking at the government as a potential saviour. Its shares have lost more than 90% of their value since peaking in 2021.
Hit by soaring interest rates, it was forced to cancel its dividend and scrap a share issue. Last month it said its founder, former social democrat politician Ilija Batljan, was stepping down as CEO.
SBB's problems are unfolding as Sweden struggles to contain a wider property crisis, with high debts, rising interest rates and a wilting economy producing a toxic cocktail for Sweden's commercial property companies.
Problems in the industry, as well as alarming investors, have prompted the Swedish central bank to issue several warnings.
Earlier this year, it cautioned that problems in heavily indebted commercial property companies could spill over and hit the economy more widely, as well as the stability of the financial system itself.
It has also warned of a domino effect on banks, who have lent ever more to property companies, as well as the risk that such firms are forced to sell large numbers of buildings, sending prices into a spiral.
($1 = 10.2285 Swedish crowns)
(Reporting by Marie Mannes in Stockholm; additional reporting by Chiara Elisei in London; editing by John O'Donnell and Jan Harvey)
