Akelius Residential Property AB

The stable outlook reflects our expectation of continued favorable demand for midsize residential apartments in most of Akelius' markets, where new supply remains limited. We also anticipate that Akelius' leverage will increase but remain in line with its financial policy, with our adjusted ratio of debt to debt plus equity at around 53% and EBITDA interest coverage remaining broadly stable at 2.0x-2.2x over the next 12-24 months. We could lower the rating if Akelius' leverage increased, with debt to debt plus equity well above 55%, because of rising operational costs or debt-funded acquisitions, or if EBITDA interest coverage declined back to 1.5x or below. This could result from further material disposals or an increase in the cost structure, causing a

...We anticipate that Akelius' leverage ratios will increase because of its updated financial policy. In February 2021, Akelius announced that it had amended its financial policy, with its maximum reported loan-to-value ratio raised to 45% from 40%. This translates into S&P Global Ratings-adjusted debt to debt plus equity of about 55%, the downside threshold for the current '###' rating on the company. In line with the new strategy, we expect Akelius' adjusted ratio of debt to debt plus equity ratio to increase to about 52.0%-53.0% in 2021 from 47.5% in 2020, maintaining sufficient headroom under its target. We expect the company will use a balanced mix of equity and debt for any future acquisitions. Akelius is likely to expand its portfolio in the next 12-24 months in line with its recently revised business model, which includes an enhanced focus on cost efficiency. In August 2020, Akelius revised its business model and now plans to double the size of its current real estate portfolio of...

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