(Reuters) -Struggling Swedish real estate group SBB said on Sunday it had agreed to enter into a joint venture with U.S.-based investment manager Castlelake in a deal which will help SBB to pay off its debt.
Under the deal, Castlelake will lend the joint venture, SBB Infrastructure, approximately 5.2 billion Swedish crowns ($504.4 million), SBB said in a statement.
SBB Infrastructure will use part of the loan to acquire properties from SBB and part to refinance debt to SBB, which the group will use to strengthen its financial position and pay off its debt, the statement added.
The Swedish real estate group is at the center of a property market turmoil that threatens to engulf the Swedish economy, having racked up vast amounts of debt by buying public property, including social housing, government offices, schools and hospitals.
The group will give properties worth 3.7 billion crowns as collateral to provide the newly-formed joint venture security for the loan.
SBB recently came under fire after its creditors started legal proceedings against the property group to recover their debt.
($1 = 10.3104 Swedish crowns)