The founder and dominant shareholder of Swedish property company Samhallsbyggnadsbolaget i Norden AB (SBB), Ilija Batljan, has resigned as CEO. The decision comes amid a series of challenges for the company, which owes around $8bn and needs to rely on refinancing to manage its debt obligations. Batljan had previously been the driving force behind SBB’s rapid expansion but lost credibility after making dismissive comments regarding the firm's vulnerabilities. SBB announced that Batljan would be replaced by Leiv Synnes, former CFO of Akelius Residential Property, on June 5.
Following the announcement of the leadership change, SBB saw its shares surge more than 69%. It is widely expected that SBB will focus on selling individual assets, with Brookfield Asset Management one of the investors reported to be considering taking over the firm's portfolio.
SBB's share price and investor confidence have been damaged in recent months. Batljan's pledge to increase dividends for the next "100 years", previously applauded by SBB's retail investors, has been postponed, while the tumbling share price has heightened investor concern further.
SBB owns a large proportion of Sweden's public-sector buildings, leading to concerns that, if the company was to significantly underperform, the ramifications would be felt across sectors as far-reaching as housing, infrastructure, and welfare.
Synnes, as Batljan's successor, faces a difficult task in restoring confidence in SBB. His appointment is designed to emphasise the company’s commitment to strategic review during the current period of upheaval. Analysts estimate that investor interest in SBB will focus on its residential units and elderly care homes, with a company-wide full sale unlikely. SBB faces the challenge of rolling over $1.6bn in maturing bond payments in the coming years, with Europe's heavy reliance on borrowed capital marking the firm as a test-case for whether this borrowing strategy remains viable.
SBB's low-key appointment of Synnes, combined with continued investor reluctance to buy shares across Europe's property sector, highlights the sharp fall from grace that SBB has suffered in recent months. With JPMorgan Chase & Co and SEB AB enlisted to help drum-up support ahead of Synnes' takeover, the new CEO will have a challenging period of restoring faith in the company ahead of him.