Fastighetsbolagens strategiska handlingsutrymme vid stigande avkastningskrav : En studie av fastighetsbolags operativa och finansiella åtgärder för att motverka ökade belåningsgrader

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Abstract Title: Strategic Discretion of Real Estate Companies Amidst Rising Yield Requirements - A study of real estate companies´ operational and financial measures to counteract rising loan-to-value ratios Authors: Hugo Sjölin & Milton S. Lindstrii Purpose: The purpose of this study is to describe and analyse how real estate companies have chosen to adapt to changing financing conditions. Research questions: How has the strategic discretion of real estate companies been constrained as market conditions changed? & How have real estate companies adapted their strategies to manage the challenges brought on by the crisis? Following a prolonged period of low interest rates and rising asset values, the Swedish real estate sector has faced a rapid shift in market conditions. Between 2020 and 2025, Riksbanken raised the policy rate from a negative level to four percent, putting pressure on companies´ financing, valuations and investment capacity. Previous research has addressed capital structure, covenants and strategic flexibility separately, but industry-specific studies of how these mechanisms interact in practice are lacking. The purpose of this study is to describe and analyse how real estate companies have chosen to adapt to changing financing conditions. This study is a qualitative multiple case study including six real estate companies with different ownership and financing structures. The empirical material consists of semi-structured interviews with senior executives as well as document analysis of the companies´ annual reports from the period 2020-2025. The results show that financing structure, rather than the form of ownership, decides both how discretion is restricted and which strategies remain available. For market-exposed companies, creditor discipline operates already in daily decision making well before covenants are at risk of being breached. Furthermore, the interest coverage ratio (ICR) has replaced the loan-to-value (LTV) ratio as the primary metric in credit dialogue. Municipally financed companies face a corresponding form of discipline through cash flow constraints and politically set return requirements. The study therefore groups the companies into three categories based on their financing structure: financially shielded, buffered and exposed.