As an effect of the dramatic fall in market interest rates the
subvalue in Castellum's interest rate derivatives portfolio has
increased with approx. SEKm 800.
Castellum has a financial policy which implies that a maximum of 50%
of interest bearing loans may have maturity within the next 6 months
and that the average fixed interest term should be 0.5-3 years. The
policy is meant to secure a low and stable net cash flow of interest
income/costs over time. To act within in the given risk mandate
according to the policy the interest rate term for loans with short
term interest rates are extended by the use of interest rate
derivatives, preferably interest rate swaps.
According to the accounting standard IAS39 interest rate derivatives
are subject to market valuation, which means that there is a
theoretical surplus / sub value if the stipulated interest rate vary
from the current market rate, where the change in value, for
Castellum, should be accounted for in the income statement. When the
calculation is made, the actual market rate is expected to remain
unchanged during the entire fixed interest term. By securing interest
rates for a longer period of time the risk in cash flow from interest
income/cost is decreased, while the risk for accounting changes in
valuations increase. Make note that loans with long term interest
rates, which are less flexible but from a risk and interest rate
point of view are equal to extending the interest rate term by
interest rate derivatives, are not subject to market valuation
according to the accounting standards.
The recent dramatic fall in market interest rates will over time have
a positive effect on Castellum's net interest income/costs.
Castellum has currently approx. SEKm 15,000 in interest bearing
liabilities of which approx. SEKm 9,000 have long term interest rates
with interest rate maturity spreading between 1 to 10 years. Since
the long term interest rates has decreased with 1.6% - 2.3% since
October depending on the term to maturity this means, that the
subvalue of the interest rate portfolio has increased with approx.
SEKm 800 since the interim report 30 September 2008 and amounts at
the moment to approx. SEKm 950. The value of the interest rate
derivatives portfolio fluctuates dramatically with changes in the
market interest rates and reached its earlier lowest point during the
summer of 2005 with a subvalue of SEKm 546 based on an underlying
portfolio of approx. SEKm 9,000.
The change in value, which is based on accounting principles and do
not affect the cashflows, nor affect the loan to value ratio or
stipulations in Castellum's existing credit agreements.
Castellum is one of the major listed real estate companies in Sweden.
The fair value of the real estate portfolio amounts to approx. SEK 29
billion, and comprises commercial properties. The real estate
portfolio is owned and managed by six wholly owned subsidiaries with
strong local roots in five growth regions: Greater Gothenburg, the
Öresund Region, Greater Stockholm, Mälardalen and Eastern Götaland.
Castellum is listed on OMX Nordic Exchange Large Cap.
For further information, please contact
Håkan Hellström, CEO, phone +46 31 60 74 00 / mobile +46 705-60 74 56
Anette Engström, Financial Director, phone +46 31 60 74 00 / mobile +
46 706-64 97 17
Castellum AB (publ) discloses the information provided herein
pursuant to the Securities Markets Act and/or the Financial
Instruments Trading Act.
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.