The chief executive of struggling Swedish landlord SBB says no other creditors have made a similar claim to that of a US hedge fund, which last week alleged the real estate company had breached a key term in its debt.

SBB’s Chief Executive Officer Leiv Synnes on Monday pushed back against Fir Tree Partners’ method of calculating the alleged covenant breach.

“The interest-coverage ratio is there to measure cash flow,” Synnes said in a phone interview. “Fir Tree wants to include property value changes in the measure and that’s neither in the spirit of the agreement nor common practice.”

His comments follow a turbulent few days for the landlord after US-based Fir Tree said it was demanding immediate repayment of two social bonds because of the perceived breach. While the hedge fund’s holdings of €46 million ($49.2 million) represent only 1% of the company’s overall bond stock, the development underscores the pressures facing over-leveraged property borrowers such as SBB as they continue to grapple with surging borrowing costs.

Read More: US Hedge Fund Tells Swedish Landlord SBB to Pay Back Bonds

Samhallsbyggnadsbolaget i Norden AB, as the company is formally known, had an interest-coverage ratio of 2.6 times at end of September and its reported loan-to-value ratio was 53%, it said in its third-quarter report. While both metrics weakened over the period, neither of them are in breach of covenant ratios as set out in the terms of the company’s debt.

“SBB refutes the accusations and deems the claim from the eurobond holder to be groundless,” the company said in the report.

The bonds in question were little changed following the news on Friday, closing at deeply discounted prices of 56.5 and 55.7 euro cents, according to data compiled by Bloomberg.

Earnings, Strategy

The Stockholm-based landlord reported a 10% decline in property values to 118 billion Swedish kronor ($10.8 billion) in the three-month period ending September compared to the second quarter, which was broadly in line with declines seen elsewhere in the sector.

In terms of liquidity, the company said it had capital sources of 14.6 billion kronor over the next 12 months to cover uses of 18.2 billion kronor, and that it expects to refinance an additional 5 billion kronor in bank loans. However, it warned that untapped credit facilities totaling 3.5 billion kronor cannot currently be used.

What Bloomberg Intelligence Says:

“SBB’s latest creditor demand for repayment raises concerns about its outlook as the prospectus states any holder can ‘declare any note held by it to be forthwith due and payable’ if there’s been a default event, which SBB refutes. Amid twice-delayed results, only a slight liquidity reprieve from the Brookfield deal, covenant questions and uncertainty around recurring revenue, there’s a risk this may not be the last creditor to call time on its turnaround effort. No other creditors have made breach claims, but valuation losses, lower rental income, rate sensitivity, a capital sources-to-uses ratio of 0.8 over the next year and concerning comments on available liquidity will add to investors’ and raters’ concerns. Proposed solutions, including asset sales and external investment in residentials, may not suffice.”

— Tolu M. Alamutu, senior credit analyst. Click here for more.

The company’s occupancy rate rose slightly to 96.3% from 95.2%.

The report is the first since SBB announced a major reorganization to split the company into three units and secure fresh funds to cover a near-term funding gap of about $730 million. Those funds will come in the form of a repaid intra-company loan after SBB agreed to cede control of its education portfolio to Canada’s Brookfield Asset Management Ltd.

“All the financial conditions of the Brookfield deal have now been fulfilled,” Synnes told Bloomberg. “We expect to complete the transaction in November rather than by the end of the year.”

As well as the education portfolio, the company plans to also carve out its residential portfolio into a standalone entity. “We are on a dual track looking at an IPO or bringing in external partners,” the CEO said, reiterating a previously announced target to complete that process next year.

The third and final portfolio being split out is the community portfolio, comprising assets such as elderly care homes, hospitals and police stations.

“Here we are seeing interest in buying certain assets where investors will become a partner similar to Brookfield,” Synnes said.

Read More: SBB 3Q Portfolio Value Falls by about 10% From End-2Q

--With assistance from Veronica Ek, Christopher Jungstedt, Alastair Reed and Steven Arons.

(Updates with comments from phone interview with CEO.)