The chosen capital structure is pivotal for the financial returns and risk exposure anticipated by owners. Among the factors influencing the choice are business risk and tax shield, as well as the risks and costs associated with increased borrowing. By the time Castellum was listed, it had already established that the company would have a low level of financial risk – expressed today in the formulation that the long-term loan-to-value ratio should not exceed 50% and that the interest coverage ratio should be at least 200%.

As of 31 December 2020, Castellum’s assets amounted to SEK 110 billion and the loan-to-value ratio was 44%, while the interest coverage ratio during the year was 530%.

Financing, 31 Dec 2020
Distribution of financing, 31 Dec 2020
Secured credit facilities, 31 Dec 2020

Financial policy and monitoring

Castellum’s financial activities are conducted in accordance with the financial policy established by the Board, and in such a way that ensures the need for long- and short-term financing, and liquidity is fulfilled. Moreover, the aim is to achieve low, stable net interest expenses, after taking established risk mandates into account. Trends in the financial markets have a great impact on Castellum. Reflecting and supporting the goals and conditions of business operations are of importance to financial operations. Using the financial policy, the Group can control and manage financial risks and ensure risk management through close control and monitoring. The financial risks are monitored and reported quarterly to both the Audit and Finance Committee and the Board. The Board annually conducts a review of the financial policy.

Castellum regularly follows up and monitors future financing needs based on assumptions about earnings, net investment volume, property value growth and maturity profile of the existing debt portfolio, covenants in credit agreements and interest-rate risk exposure. Furthermore, the Group carries out sensitivity analyses to understand how changes in the asset portfolio – as well as movements in market interest rates and property values – affect the balance sheet and earnings.

Castellum's financial policy and commitments in credit agreements








LTV ratio


Not exceeding 50%


Not exceeding 65%



Interest coverage ratio


At least 200%


At least 150%



The share of secured borrowing/total assets




Not exceeding 45%



Funding risk







– average debt maturity


At least 2 years




3.8 yrs

– maturing within 1 year


No more than 30% of loans outstanding and unutilised credit agreements





– average credit price tenor


At least 1.5 years




3.0 years

liquidity reserve


Secured credit agreements corresponding to MSEK 750 and 4.5 months upcoming loan maturities





Interest rate risk







– average interest duration


1.5–4.5 years




2.6 years

– maturing within 6 months


No more than 50%





Credit and counterparty risk







– rating restriction


Credit institutions with high ratings, at least S&P BBB+





Currency risk







– translation exposure


Shareholders’ equity is not hedged





– transaction exposure


Handled if exceeding MSEK 25





Financial strategy

Castellum’s financing strategy is to support operations and manage the Group’s financial risks while promoting an open and transparent climate. The strategy will be reflected in the financial policy – all to ensure risk management through close control. Castellum’s financial strategy can be summarised by five cornerstones: diversification, liquidity, strength, transparency and flexibility.

Castellum’s five financing cornerstones


Castellum is to have a diversified loan portfolio and avoid dependence on both single sources of financing and counterparties.

In addition, the maturity of various sources of financing and individual credits is to be distributed over time. Castellum will monitor and follow developments on financial markets for the purpose of acting quickly and matching the needs of the operation.

At year end, Castellum’s interest-bearing financing amounted to SEK 45.6 billion, of which SEK 38 billion came from capital market financing (an MTN programme totalling 19.3 billion, an EMTN programme totalling MEUR 9.8, and a programme for commercial paper totalling SEK 8.8 billion) equivalent to 83% and the remainder comprising loans in major Nordic banks and credit institutions. As regards loan-to-maturity structure, it averaged 3.8 years at year end and the interval for the loans ranged from 1 month to 20 years.


Castellum will have unused credit facilities available to respond rapidly to the needs of the operations and the opportunities provided. Moreover, there will be revolving credit facilities for the purpose of reducing the need to invest the surplus liquidity.

At year end, Castellum had SEK 63.5 billion in credit agreements, of which SEK 45.6 billion was unutilised.


The Group’s financial key ratios must be strong, with a loan-to-value ratio not exceeding 50% and an interest coverage ratio of at least 200%. The strength of our asset portfolio is enhanced by the quality of our cash flow as well as by the composition of our debt and interest rate portfolio.

Castellum aims to reduce the risk of a sudden negative impact on net financial items arising from changes in the general interest rate and/or the assessment of Castellum as a borrower, that cannot be offset by earnings from operating activities.

The loan-to-value ratio was 44% at year end, while the interest coverage ratio for 2020 was 530%.


Castellum encourages long-term relationships with both banks and other lenders and investors; its aim is to be transparent in order to increase the relevant parties’ understanding of the Group’s operations and thereby its credit exposure.


Castellum must have flexible financing arrangements in order to support the development of operations in relation to acquisitions, divestments and project development. Our credit facilities will provide us with strong flexibility to withdraw and repay on short notice and at no extra cost. Furthermore, Castellum is to have access to flexibility, both in terms of pricing (fixed and floating) and maturities.

At year end, Castellum had SEK 25.5 billion in credit agreements, of which SEK 18 billion was unutilised.

Interest rate risk

By definition, interest rate risk refers to a potentially negative impact on the income statement and balance sheet caused by a change in market interest rates. To limit fluctuations in net interest costs, Castellum will feature a mix of fixed interest rate durations on loans and interest rate derivatives. However, as long as the STIBOR 3 month rate is negative, derivatives in the form of interest rate swaps do not always provide a stable cost structure for Castellum when combined with bank credits, since elements of the floor for the STIBOR rate occur in individual cases. The choice of interest-rate profiles should take the Group’s Business Plan, as well as anticipated inflows and outflows, into account.

Interest costs are the single largest cost item and have a major impact on growth in income from property management. These are partly affected by changes in market interest rates, and partly by the margin required by creditors as compensation for lending money. The short-term market interest rate is primarily controlled by the Riksbank, whereas the long-term market interest rate is affected by other factors such as expectations of future growth and inflation. The credit margin is controlled both by supply and demand for credit and by regulations in the credit and capital markets. Both interest and credit markets can change rapidly, but are beyond Castellum’s control.

Rising market interest rates are normally considered a result of economic growth and rising inflation, which in turn are also presumed to result in increased demand for commercial premises, thereby leading to increased rents and/or reduced vacancy rates. Falling market interest rates are normally assumed to have opposite causes and effects. Given this reasoning, rising or falling market interest rates are thus met by rising or falling rental income, over time. Changes in credit margins may occur regardless of prevailing economic conditions; recently, they have been affected by factors such as an broader offering of property-related bonds in the capital markets and regulatory changes, primarily in the banking credit market. Changes in market interest rates and credit margins affect net financial items. How quickly – and by how much – largely depends on the chosen fixed interest term and the duration of credit margins.

To ensure a low and stable net interest cost in the cash flow, Castellum has chosen to restrict the proportion of fixed maturities due within six months at a maximum 50% of net debt; the average fixed interest term will be between 1.5 and 4.5 years. The interest coverage ratio is the financial key ratio that describes a company’s risk level and resilience to fluctuations in net interest.

Castellum’s strategy includes an interest coverage ratio of at least 200%. For 2020, the interest coverage ratio was 530% (502). The average fixed interest term at 31 December 2020, was 2.6 years (3.3), while the share of maturities due within 6 months was 44%. The average loan-to-maturity structure for utilised borrowing facilities including extension options at year end was 3.8 years (3.8), whereas the average credit price tenor at the same point in time was 3.0 years (3.2). At the end of the year, the net debt to EBITDA ratio was 11 (10).

Net interest for 2020 amounted to an expense of MSEK 786 (expense: 782) with an average interest rate of 1.9% (2.0), and consisted of market interest rates at issue dates plus creditors’ margins. The average effective rate at 31 December 2020 was 1.69% (1.82) excluding unutilised credit agreements, and 1.82% (1.99) including unutilised credit agreements.

In the table, credit margins and fees are distributed according to the maturity segments for the reported credit volumes, while credit fees and rate differences in MTN and EMTN are reported in the segment for 0–1 year.

Funding risk

Funding risk refers to the risk that financing is not available or is very unfavourable at a given time. It is by far the Group’s largest funding risk. The Group’s assets – primarily commercial properties – should be seen as long-term investments, which thereby comply with demands for a long-term approach to financing the asset portfolio. However, pricing in the credit market should also be taken into account.

Castellum should have sufficient, and competitive, financing so the Group’s activities can be conducted in a suitable and cost-efficient manner. The funding risk is managed through advance planning, an appropriate capital maturity structure, balanced loan pricing, diversification of financing sources and maturities, and a reasonable liquidity reserve.

At the end of the year, Castellum held credit agreements totalling MSEK 63,500 (60,604) of which MSEK 46,894 (49,433) were long-term and MSEK 16,606 (11,171) were short-term.

After deduction of cash of MSEK 161 (173), net interest-bearing liabilities were MSEK 45,559 (40,653), of which MSEK 29,127 (27,512) were bonds outstanding and MSEK 8,844 (5,136) commercial paper outstanding (nominal MSEK 29,145 and MSEK 8,853 respectively).

During the year, bank credit facilities of approximately MSEK 1,620 were raised with new counterparties, approximately MSEK 7,400 were extended and approximately MSEK 4,000 were settled. As part of its Swedish MTN program, Castellum also issued new bonds during the year with a nominal amount of MSEK 5,250 while bonds with a nominal value of MSEK 3,250 matured. At the end of the year, the framework amount for the Swedish MTN programme was raised to MSEK 25,000.

Issued commitments in credit agreements – known as covenants – stipulate a loan-to-value ratio of not more than 65% and an interest coverage ratio of at least 150% and, for EMTNs, also that the share of secured borrowing may not exceed 45% of the Group’s total assets, which Castellum accomplished by a wide margin: 44%, 530%, and 7% respectively.

Credit maturity structure, 31 December 2020





Utilised in

Maturity date






MTN/Comm. paper




Share, %

0–1 year











1–2 years











2–3 years











3–4 years











4–5 years











>5 years






















Interest rate maturity structure, 31 December 2020

Credit agreements




Share, %


Average interest rate, %1)


Average fixed interest rate term

0–1 year









1–2 years









2–3 years









3–4 years









4–5 years









>5 years



















Including fees for utilised credit agreements and exchange rate differences for MTNs.


Calculated on the net volume of interest-bearing liabilities and derivatives.

Credit and counterparty risk

Credit and counterparty risk is the risk that the counterparty cannot fulfil its commitments, such as liquidity supply or payment. In financial operations, credit and counterparty risk arises primarily in connection with long-term credit agreements, derivative contracts and the investment of cash and cash equivalents. Castellum limits this risk by requiring high credit ratings from its counterparties, which are currently all major Nordic banks.

Currency risk

Currency risk refers to a negative impact on the income statement, balance sheet and cash flow due to changes in exchange rates. Currency risk can be divided into translation exposure and transaction exposure. At year end, Castellum owned properties in Denmark and Finland totalling MSEK 9,091 (7,333), which means that the Group is exposed to currency risk. The currency risk primarily occurs when income statements and balance sheets in foreign currency are translated into Swedish kronor. As a rule, shareholders’ equity is not hedged for translation exposure, while transaction exposure is hedged if the exposure in any currency exceeds an exchange value of MSEK 25.

Secured interest-bearing liabilities

Long-term bank facilities are mainly secured with collateral comprising the company’s property holdings, and commitments also include a number of covenants. Castellum’s bonds under the EMTN programme are also covered by financial covenants.

Issued MTNs, commercial paper and certain short-term bank loans – such as overdraft credits – are unsecured. Of net interest-bearing liabilities totalling MSEK 45,559 (40,653), MSEK 7,588 (7,249) was secured against property deeds and MSEK 37,971 (33,404) was unsecured, which means that approximately 17% (18) of loans outstanding were secured. Castellum’s share of unsecured assets at the end of the year was 61% (57). Secured borrowing in relation to total assets was 7% (7).

Undertakings issued in credit agreements and EMTNs mean that the loan-to-value ratio may not exceed 65%, the interest coverage ratio may not be less than 150%, and the share of secured borrowing may not exceed 45% of the Group’s total assets. Additionally, there are general commitments that Castellum is to provide its creditors with such financial information as annual reports, interim reports and property valuations. In some cases, the banks have the right to renegotiate credit agreements due to a significant change in business direction or delisting, and bondholders have the right to early repayment due to a change in the majority ownership of Castellum AB.


Interest rate derivatives

Under the IFRS 9 accounting standard, derivatives are subject to market valuation. For interest rate derivatives, this means that a surplus or a deficit occurs if the contracted interest rate varies from the current market rate. Castellum recognises this change in value in profit or loss. By extending the fixed interest term, the interest rate risk in terms of cash flow is limited, whereas the risk for accounting-based changes in value is higher. It is worth noting that loans with long-term fixed interest rates that are less flexible, but can – from an interest rate risk perspective – primarily be compared with extension via interest rate derivatives, are normally not subject to market valuation under applicable accounting standards.

Currency derivatives

Castellum’s need for financing in Danish kroner and euros can be achieved through borrowing in Danish kroner and euros respectively and by using currency derivatives. The exposure is the same, but in accordance with the accounting standards in IFRS 9, derivatives are subject to market valuation, which means that a surplus or deficit arises if the stipulated exchange rate differs from the current exchange rate. Castellum applies hedge accounting under IFRS 9, which means that the effective portion of the change in value is reported in other comprehensive income.


All financial risk management is centralised in the Parent Company. The internal bank is responsible for the Group’s credit supply, risk management, financing for subsidiaries and Group-wide cash management. The Parent Company also includes a back-office and compliance function, which provides accounting and independent control of financial operations.

Listed property companies

Source: Rolling annual values based on each company’s Q3 2020 report.

Credit maturity structure

Bank-TL: Bank Term Loan RCF limits: Revolving Credit Facility – limits

Development of capital market financing, 2014–2020

Current list of MTNs outstanding available at

Financial facilities

Credit/facility type


Frame/facility type


Utilised 31 Dec 2020











Commercial paper1)





Bank credits incl. overdrafts






Nominal volume

Secured borrowing



31 Dec 2020

Secured borrowing, share of total borrowings



Secured borrowing, share of total property value



Secured borrowing, share of total assets