Selvaag Bolig's debt can be divided into three categories with differing purposes and priorities – top-up, land and construction loans.

Because of the group’s activity as a property developer, a large part of its operations are financed through separate project companies.

The long-term goal is that all working capital will be concentrated in parent company Selvaag Bolig ASA, while land loans and associated construction loans will be established in separate single purpose entities (SPEs).

Top-up loans

These loans represent top-level financing in parent company Selvaag Bolig ASA, and are independent of the group’s level of activity. They comprise two overdraft facilities and a bond loan.

One of the overdraft facilities is allocated for financing the start-up of new construction projects, while other top-up loans will be used for general company purposes.

Land loans

Land loans represent the debt related to financing undeveloped sites for future housing development. Normally, land purchases are financed 50-50 by equity and land loans, where the latter is secured in the site.

Interest charges and development costs are paid from equity until construction begins in the specific housing project. Once building has started, the relevant land loan is normally converted to a construction loan – assuming that 60 per cent of the housing units have been sold in advance.

Construction loans

Construction loans follow the building projects, and depend on the level of activity in the group. Separate construction loans are raised for each project, and fully fund building costs. If a project involves several construction phases, the normal practice is to use a revolving credit facility.

Interest charges are added to the construction loan (are capitalised along the way) and capitalised interest costs are recognised as operating expenses since they relate directly to the building process. Construction loans are redeemed when the relevant building project has been completed and delivered.

Debt structure

At 30 June 2018, Selvaag Bolig had NOK 2 755 million in interest bearing debt. This broke down as follows:

  • Corporate loans: 0 per cent
  • Land loans: 44.5 per cent
  • Construction loans: 55.5 per cent

NOK 2 172.1 million is non-current.