Owning and managing properties with high and stable long-term returns is the base of Kungsleden’s business. Kungsleden endeavours to achieve a 15 per cent return on equity with the lowest risk possible. This means continuous development work on the assets and liabilities sides of our Balance Sheet.
How we work with our assets and liabilities
Our properties represent our asset side, where the objective is to increase property yields and reduce the risk level of the portfolio. We achieve this through means including adapting properties to customer needs and by optimising the tenant structure and operating nets of properties.
The risk on the asset side is weighed up against the liability side, which consists of items including loan to value ratios and interest sensitivty. Higher financial risk can be combined with lower property risk through means including long agreements and secure cash flows.
How we maximise our risk-adjusted returns
Maximising portfolio risk-adjusted return means Kungsleden systematically evaluating different possibilities. Making appropriate business transaction decisions sets challenges for being able to value a property at any given transaction opportunity.
Kungsleden’s internally developed model generates a continuous stream of decision-support data, property by property. What are considered good properties for Kungsleden may not be the appropriate properties for other players. Kungsleden often goes its own way to get the goodies.
Strategic risk diversification
For Kungsleden, diversification is a way to achieve the company’s objective of maximising the property portfolio’s risk-adjusted return. Through our broad geographical diversity, location-specific risk is reduced. By having many different types of property, property-specific risk, i.e. changes in an individual property type and risk affecting the returns of the whole portfolio, are also reduced.