Kungsleden endeavours to enhance its property portfolio by increasing the return from properties and limiting their risks.
The company addresses the industrial/warehouse, office and retail property types. By focusing on three property types, Kungsleden improves its knowledge of customer needs and market conditions. This helps strengthen customer relations and improve Kungsleden’s capability to manage and improve its properties.
Kungsleden prioritises its presence in growth regions with focus on Greater Stockholm, the Mälaren Valley, south-western Sweden and growth locations in northern Sweden.
Value creation in property management and the improvement process
The primary valued-creating components are management efficiency, customer care and lettings, as well as the progress of operating net. Close collaborations and good relationships are prerequisites for satisfied customers. This is facilitated by responsiveness, flexible actions and short decision-paths.
Value creation through portfolio optimisation
Active portfolio optimisation involves Kungsleden purchasing or selling properties with the aim of increasing the risk-adjusted returns of its property portfolio. Maximising risk-adjusted returns is about Kungsleden’s skill in selecting the right type and property at each given buying opportunity.
The right price of a property not only depends on its type, performance or location, but also its specific site within a location. Fluctuations in rent levels are often lower outside city centres, and therefore, so is risk.
In a property transaction, Kungsleden’s appraisal may differ from other players on the market, assuming a lower risk on the cost side, or a greater opportunity on the revenue side, for example. Market required returns vary in an interval over time, and Kungsleden’s objective is to purchase a property in this interval when yields are at their highest, and sell when yields are at their lowest.
Examples of portfolio optimisation
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When value is appraised as greater than price, a purchase is initiated if the yield exceeds what could be achieved from alternative investments with equivalent risk. |
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| When value is apprasied as less than price, a sale is initiated if a better yield could be achieved on alternative investments with equivalent risk. |
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