External

External risks are mainly those that lie outside our scope of operations, for example in the form of changing market conditions.

Property values are affected by our own property management activities and general market conditions. Having properties in attractive locations lowers the risk of falling values during an economic downturn. As of December 31, 2018, the estimated market value amounted to about SEK 46 billion. A change in value of +/- 10 percent is equivalent to a change in value of around SEK 4.6 billion. Small changes in the yield requirement can result in large changes in value. A general change of plus/minus 0.25 percentage points in property yield requirements is equivalent to about SEK -2.8 billion or SEK +3.2 billion.

Factors such as interest rate increases result in higher costs and have a large impact on profits. Wallenstam’s management includes a loan portfolio with different maturities, where the loans are spread among various forms of credit and lenders. Interest rate derivatives are used to spread risk.

Supply and demand for Wallenstam’s products can vary over time. Wallenstam owns and manages properties in attractive areas, which are characterized by growth and strong demand. We have a flexible business model, which provides the possibility to adapt supply, form of tenure etc. in the event of changing demand. A keen awareness for market trends as well as advance planning are two key factors.

Wallenstam follows developments in legislation and regulations linked to issues concerning our operations. Legal cases and regulatory changes, which may result in changed conditions are interpreted and we are proactive in meeting new requirements, practice and laws.

Sensitivity Analysis, Cash Flow 12/31/2017SEK million
Change in rental income, apartments, 1% 8.0
Change in rental income in renegotiable
commercial contracts, 1%
1.7
Change in operating costs, 1% 4.4
Change in loan interest rate 
1 percentage point (annual)
90
Annual wind, change 10% 11.5
El. price change 5 öre 12.2
Sensitivity Analysis, Changed Yield
Requirement for Properties 12/31/2017
SEK million
0.5 percentage point lower 47,460
0.25 percentage point lower 44,185
Property value according to our estimate 41,410
0.25 percentage point higher 38,998
0.5 % percentage point higher 36,904