Troubled Swedish landlord SBB hit by probe over accounting

The landlord at the center of a commercial property crisis in Sweden is being investigated by the country’s financial watchdog over whether it violated accounting rules, adding to the troubles facing the embattled company.

The Financial Supervisory Authority will determine if Samhallsbyggnadsbolaget i Norden AB — more commonly known as SBB — breached certain rules when compiling its 2021 accounts, the regulator said in a statement on Thursday. The probe was prompted by a public authority that’s responsible for monitoring listed firms’ disclosures.

“If we find that there has been a breach, we can proceed with either a rectification order or a sanction,” FSA’s spokesman Tomas Tolonen said via email, adding that the authority is looking into whether SBB has made its valuations and accounting according to regulations. He declined to go into further detail.

SBB has “continuously had dialogue” with the Swedish authority that prompted the probe and “has retained the view that SBB’s assessments of the treatment of the transactions and valuations are correct,” the company said in a separate statement.

SBB shares fell close to record-lows, declining as much as 13.1%.

With Swedish property values declining, SBB is struggling to manage an $8 billion debt pile amid sharply rising interest rates. The company’s credit rating was downgraded to junk by S&P Global Ratings in early May, making refinancing options more costly. To conserve cash and give it time to sell assets, the company postponed a dividend. It also ousted its founder Ilija Batljan as chief executive officer. 

SBB’s accounting has previously come under fire from short-seller Fraser Perring’s Viceroy Research LLC, which in a series of reports last year made allegations about governance, related-party transactions and inflated valuations. 

The FSA’s probe includes the valuation of properties in connection to SBB’s Trygge Barnehager and Laeringsverkstedet portfolios, the accounting of asset acquisitions regarding Amasten and Offentliga hus and alternative key metrics, the watchdog said.