Before the global financial crisis, Nordic property businesses used to operate with high loan-to-value (LTV) ratios. While leverage has decreased from what was then often normal levels of some 70%, Nordic real estate businesses still operate with comparably high LTVs on the international stage. But how and why does it work?
“As an investor in the stock market, you get higher returns on leverage, so I like it, because it means that I can get a better performance,” says Jonas Andersson, lead portfolio manager of Alfred Berg’s Fastighetsfond Norden – a fund investing in Nordic property stocks. “If it’s a stable company I can live with high leverage but I want loan-to-value levels to be well in line with what the banks are comfortable with.”
