(Bloomberg) -- The chief executive of SBB is professing his faith in a market reversal after the struggling Swedish landlord cut the valuation of its properties for the seventh consecutive quarter.

“Last year, market rates were climbing and the risk premiums for credit were high, which caused asset prices to fall,” Chief Executive Officer Leiv Synnes said in an interview on Tuesday after publishing fourth-quarter earnings. “This year, we will see the opposite trend, which implies a possible recovery for property prices.”

Samhallsbyggnadsbolaget i Norden AB, as the company is formally known, shaved off 2.78 billion Swedish kronor ($271 million) from the valuation of its portfolio in the final quarter of the year, equivalent to about 2.9%. In the full year, the negative value change came to about 12%.

The portfolio’s total value was 73.2 billion kronor at the end of the year. That’s about half the size from a year earlier, following numerous divestments.

The Stockholm-based company remains at the center of Sweden’s property crisis as landlords struggle to refinance billions of dollars of bond debt taken on in the cheap-money era. SBB is navigating debt maturities of nearly 19 billion kronor this year and next.

“For SBB, a more normalized situation in the property market means that the company has the largest negative asset value developments behind it, and that value increases in the coming years cannot be ruled out,” Synnes said in the report.

After falling as much as 8.4% in early trading, shares reversed losses and were up 5.7% at 1:27 p.m. in Stockholm.

SBB’s latest move, on Sunday, was to form a joint venture with Castlelake LP. The new endeavor is called SBB Infrastructure and comprises community properties. The jointly held company entered a loan agreement with Castlelake as part of the deal, supported by Atlas SP Partners. It borrowed about 5.2 billion kronor, which will be used to buy properties from SBB and to refinance debt.

“Banks continue to act cautious and no new undrawn credit facilities were added during the quarter,” Pareto Securities AS analysts said in a note.

The landlord is also working on carving out its residential portfolio through its subsidiary Sveafastigheter AB, with plans to diversify its ownership during the year.

“We are probably ready to start marketing that company during the spring. Then we’ll get a view of the level of interest and the market climate,” Synnes said. “But since we have secured liquidity there is no rush.”

In early February, US hedge fund Fir Tree Partners filed a claim in UK courts, seeking early redemption of bond holdings totaling about $49.5 million, arguing that SBB defaulted on its bonds after breaching bond covenants in last year’s first-quarter results. SBB has refuted the claim.

Read More: Hedge Fund Seeks Early Redemption of SBB Bonds in UK Court

For SBB’s fully indexed properties, the real decline in value can be estimated at 34.5% over the past 21 months, Synnes said in the report.

--With assistance from Stephen Treloar and Libby Cherry.

(Updates with CEO comments, shares, further details throughout)

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