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Debt Funds: Alternative Financing on the Swedish Real Estate Market
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Banking and Finance.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Banking and Finance.
2019 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesisAlternative title
Skuldfonder : Alternativ Finansiering på den Svenska Fastighetsmarknaden (Swedish)
Abstract [en]

Banks have become increasingly restrictive in their lending towards real estate, a development that is expected to continue due to further regulations, such as the Basel framework, and the emergence of new alternative financing options. As described by interview respondents, companies have shown an increased preference for a mix of capital sources following the financial crisis of 2008, which has led to an increase in demand on the capital and alternative markets. Factors that may have affected this development is the inflated corporate interest in maintaining a good credit rating and a change in investor sentiment towards a wider diversification. On the Swedish market, the so-called debt funds are a relatively new phenomenon and the purpose of this paper is to investigate how and what conditions that exist and have been necessary for this development. Debt funds already play a prominent role in real estate funding on other markets, such as US and UK, which could indicate a similar development on the Swedish market henceforth. However, as shown in the paper the markets are different on a systematic level, which makes it hard to draw parallels. Furthermore, as described in the empirical study the Swedish AIF market is underdeveloped in many respects since Swedish companies traditionally have used bank loans or turned to the capital markets - with a preference for equity before debt. With new regulations being introduced in the banking sector, the bank risk appetite has become more volatile, however, the banks retain a strong position and a continued large exposure to the real estate sector which may be due to the banks being well capitalized and an overall increased demand for capital. The increased demand for capital may also have given rise to favorable conditions for alternative financing options. However, in order for debt funds to continue to grow the key is most likely going to be offering loans with more favorable terms and longer maturities compared to other financing options.

Place, publisher, year, edition, pages
2019. , p. 76
Series
TRITA-ABE-MBT ; 19199
Keywords [en]
Debt funds, Real Estate, Alternative financing options, Swedish Real Estate Market
Keywords [sv]
Skuldfonder, Fastigheter, Alternativa Finansieringslösningar, Svenska Fastighetsmarknaden
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:kth:diva-254941OAI: oai:DiVA.org:kth-254941DiVA, id: diva2:1336612
Subject / course
Finance
Educational program
Bachelor of Science - Real Estate and Finance
Presentation
2019-05-28, KTH, Stockholm, 09:00 (Swedish)
Supervisors
Examiners
Available from: 2019-08-13 Created: 2019-07-09 Last updated: 2019-08-13Bibliographically approved

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