Nordic Credit Rating (NCR) said today that it had placed its 'BB' long-term issuer rating on Swedish community service property manager Offentliga Hus i Norden AB (publ) (Offentliga Hus) on Watch with positive implications. The Watch placement follows the acquisition of a 54.3% stake in the company by Samhällsbyggnadsbolaget i Norden AB (publ) (SBB). At the same time, NCR affirmed the 'BB' long-term and 'N-1' short-term issuer ratings on the company.

The Watch placement signals a high likelihood of a one- or two-notch upgrade in the next 90 days pending the outcome of an anticipated offer by SBB to the remaining shareholders in Offentliga Hus.

Rationale
On 18 Dec. 2020, SBB entered into an agreement with Aktiebolaget Fastator (publ), Offentliga Nordic Property Holding SARL, CLBRM Private S.A., SICAR on behalf of its compartment Real Assets, and Nordact AB to acquire their shares in Offentliga Hus, corresponding to 54.3% of the shares and votes in the company. The parties agreed on a price of SEK 15.40 per share, paid 70% with cash and 30% with newly issued D-shares in SBB. The price corresponds to a premium of 21% over the closing price of 17 Dec. 2020.

The transaction is expected to close on 23 Dec. 2020, triggering an obligation on the part of SBB to make a public offer for the remaining shares in Offentliga Hus within the following four weeks, in accordance with Swedish takeover rules.

NCR understands that SBB is committed to acquiring a larger share of the company and consequently we expect SBB to make an attractive offer for the remaining shares in Offentliga Hus. Both Offentliga Hus and SBB focus on the community service property market and we believe a likely outcome would be for SBB to merge the operations of Offentliga Hus into its own, in a manner similar to its acquisition of Hemfosa Fastigheter AB (publ) in 2019–2020.

Watch positive
The Watch placement reflects our expectation of one of the following two outcomes materialising within the next 90 days;

We could raise the long-term issuer rating by up to two notches upon resolution of the Watch placement, depending on SBB's resulting equity stake and ownership control. As SBB has a stronger credit profile than Offentliga Hus, we view the commitment to a higher ownership stake as positive for Offentliga Hus' financial profile and creditworthiness as well as its outstanding obligations.

We could affirm the ratings on Offentliga Hus should SBB's ownership share remain in line with the announced acquisition of 54.3% without any material impact on Offentliga Hus' financial position, or if a deal is not finalised.

We will closely monitor any changes in Offentliga Hus' ownership. We expect to resolve the Watch placement within three months.

All research for this issuer is available here.

If you have any questions, please contact:
Marcus Gustavsson, credit rating analyst, +46700442775, marcus.gustavsson@nordiccreditrating.com
Mille O. Fjeldstad, credit rating analyst, +4799038916, mille.fjeldstad@nordiccreditrating.com

The methodology documents used for this rating are NCR's Corporate Methodology published on 14 Aug. 2018 and NCR's Rating Principles published on 16 Sep. 2019. For the full regulatory disclaimer please see the rating report.

About Us

Nordic Credit Rating AS is a credit rating agency headquartered in Oslo with a branch in Stockholm. The company provides credit ratings to companies and financial institutions in the Nordic region, and bases its analysis on local insights. Nordic Credit Rating is registered with the European Securities and Markets Authority (ESMA).

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Offentliga Hus i Norden AB (publ) 'BB' long-term issuer rating on Watch positive

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