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Capital Structure and Diversification Strategies - A Study of Swedish Real Estate Companies Over Time
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management.
2016 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesisAlternative title
Kapitalstruktur och diversifieringsstategier – En studie av svenska fastighetsbolag över tid (Swedish)
Abstract [en]

This thesis’ aim is to study four Swedish real estate companies between the years 2006-2015 to see whether their capital structure and investment strategies have changed over the years. The data upon which the thesis is based, is gathered from the four companies’ annual reports. These years are of interest due to the changing economic environment, both in Sweden and the world, during this time period. The time period includes one financial crisis and a never before experienced interest rate environment with rates around zero percent. Traditional capital structure- and diversification theories have been overviewed and serves as the base for the discussion regarding the results from the gathered data.

Two hypotheses have been constructed to study this topic:

 The low interest rate environment has provided the real estate sector with access to more capital, which has led to real estate companies increasing their financial leverage, i.e. the capital structure has changed.

 The accessibility of capital in the market, combined with funds actively seeking return on capital in real estate, increases the competition and decreases yield spreads, which in turn leads to real estate companies investing capital in markets associated with higher risks.

The result indicates that the hypotheses are incorrect. The real estate companies have not increased their financial risk through an increase in their long term debt at the end of the studied time period. However, the companies have increased their borrowing but the financial risk has not increased since their equity has increased proportionally.

The studied real estate companies have not been mainly investing in markets associated with higher risk. Increased investment volumes have been observed all over Sweden. The investment strategies differ between the companies; some invest mainly in the bigger cities while some invest mainly in smaller cities.

Abstract [sv]

Uppsatsen handlar om hur kapitalstrukturen samt fastighetsinnehavet (geografiskt och fastighetstyp) hos fyra svenska fastighetsbolag har förändrats under tidsperioden 2006-2015. Data från de fyra fastighetsbolagens årsredovisningar ligger till grund för studien. Dessa år har studerats på grund av det förändrade ekonomiska läget i både Sverige och världen med gott finansiellt klimat, en finanskris och ett tidigare aldrig upplevt ekonomiskt klimat med räntor kring 0 procent. Traditionella kapitalstruktur- och diversifieringsteorier har behandlats och ligger till grund för diskussionen kring resultatet av den insamlade datan.

Två hypoteser har konstruerats för att undersöka detta ämne:

 Fastighetsbolagens långfristiga skulder har ökat de senare åren av tidsperioden till följd av ränteläget dessa år eftersom kostnaderna för kapital under denna tid har minskat. Detta har ökat företagens finansiella risk i slutet av perioden jämfört tidsperiodens start.

 Det låga ränteläget i slutet av tidsperioden har medfört att fastighetsbolagen har sökt nya marknader för att kunna få avkastning på sitt kapital, d.v.s. sökt sig till marknader med högre risk utanför Sveriges storstäder.

Resultatet pekar på att hypoteserna inte stämmer. Fastighetsbolagen har inte ökat sin finansiella risk till följd av ökad lånefinansiering i slutet av tidsperioden. Däremot stämmer det att bolagen har ökat sina långfristiga skulder mot tidsperiodens slut, dock ökar inte den finansiella risken eftersom det egna kapitalet ökar proportionellt med deras ökade belåning.

De studerade fastighetsbolagen har inte endast sökt sig till marknader med högre risk i mindre städer i Sverige, utan en ökning av investeringsvolymer har observerats i hela Sverige. Investeringsstrategierna skiljer sig åt mellan fastighetsbolagen, en del investerar främst i storstäderna medan andra investerar kapital i mindre städer

Place, publisher, year, edition, pages
2016. , 56 p.
Keyword [en]
Capital Structure, Property Diversification Strategies, Debt to Equity Ratio, Real Estate, Sweden
Keyword [sv]
Kapitalstruktur, Diversifieringsstrategier, Skuldsättningsgrad, Fastigheter, Sverige
National Category
Engineering and Technology
Identifiers
URN: urn:nbn:se:kth:diva-190204Archive number: 449OAI: oai:DiVA.org:kth-190204DiVA: diva2:952091
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Available from: 2016-08-11 Created: 2016-08-11 Last updated: 2016-08-11Bibliographically approved

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