(Bloomberg) -- Struggling landlord SBB struck a second financing deal with investment firm Castlelake LP as it seeks to stave off a funding crunch that underscores the still precarious state of Sweden’s commercial real estate industry.

Over the weekend, Samhallsbyggnadsbolaget i Norden AB — as the company is formally known — said it would get a cash injection of 5.7 billion kronor ($535 million) having created a joint venture with Castlelake that allows it to shift properties off its books in return for cash. The arrangement with the US firm follows similar transactions with Morgan Stanley and Canada’s Brookfield Asset Management Ltd. 

The deal was initially cheered by SBB’s investors with shares rising 10% before a reversal that saw the stock fall 1% at 11:45 a.m. in Stockholm. The stock is down about 92% from a peak in 2021 following a spate of credit rating downgrades that has raised concerns about how the company will tackle its 59.2 billion kronor debt pile.

“The transaction will likely entail substantial cash inflows for SBB, although to what extent is uncertain as parts of the loan proceeds will be used to refinance external debt,” said Danske Bank A/S credit analyst Marcus Gustavsson in an interview. “Despite this, SBB’s debt burden remains substantial and more actions are needed to delever the balance sheet.”

SBB did not respond to a request for comment when contacted by Bloomberg.

SBB’s near-term challenges have been exacerbated by the commercial paper market drying up. In its latest quarterly report the company said it had no commercial paper outstanding at the end of the March and further warned “general uncertainty in the market and specific uncertainty for SBB has made it difficult to extend bank loans far in advance.”

Read More: SBB Will Run Out of Cash by June Without Refinancing, Fitch Says

With longer-term bond markets also out of reach, that leaves SBB seeking more equity partners and readying the initial public offering of its residential unit, Sveafastigheter, for sometime this year. Without a successful launch, lending banks may be reluctant to extend financing.

The Stockholm-based company is scheduled to hold its annual general meeting on June 28, with investors closely watching for the proposals it plans to put forward and who it nominates to the board to oversee the deleveraging. Issues such as dividends, capital structure and discharging board members of liability could be hotly debated. 

SBB founder and ousted chief executive officer Ilija Batljan currently retains a seat on the board.

©2024 Bloomberg L.P.