Risks & risk management

Managing our risks

In its activities, Eastnine is exposed to various kinds of risk. Risk management is handled by the Company’s management in accordance with relevant policies that have been established by the Board. 

Risks associated with operations and financing

With an investment strategy focused on acquiring modern and sustainable office properties in prime locations in Poland and the Baltics, and the financing strategy for this purpose, the Company is exposed to risks, such as interest-rate, credit, rental and vacancy risks.

Eastnine manages its own capital for the purpose of achieving the Company’s financial targets and ultimately the overarching goal of return to the shareholders. Financial governance and capital structure are regulated by the Company’s financial policy, which ultimate aim is to achieve balanced and low financial expenses considering the inherent risks of the chosen strategy. The debt financing base is diverse, and includes several banks in various European countries. 

Eastnine monitors the development on the property and office markets as well as of the demand from tenants relating to the design of office space, in order to be able to customise office premises according to needs and wishes. The risk of negative value changes is primarily handled by offering modern and attractive office premises in the best locations, and thereby attracting and retaining stable tenants, which reduces the risk of vacancies and rent reduction levels.

A majority of Eastnine’s leases are triple-net, meaning that tenants are liable to pay costs relating to their premises. Triple-net agreements reduce the effect of rising property expenses, while increased vacancies may increase property expenses for Eastnine.

Furthermore, risks related to data security and cyber threats have increased due to digitalisation. Eastnine works preventively with measures against cyber-attacks, to obstruct unauthorised access and limit the effects of any attacks. Eastnine continuously updates its IT systems, implementing security measures and prioritises raising awareness among staff to minimise the risk of data breaches. 

Risks related to the external factors

Risks related to the external factors and operating environment include regional, political and planning risks, as well as economic cycles and geopolitical risks, all of which may impact Eastnine’s operations. The level of geopolitical risk has increased in recent years due to war in Europe and the Middle East, the position of powers and a general deterioration in the security situation. Trade conflicts and tariffs on goods flow also pose risks that could directly or indirectly impact tenants’ operations, their ability to pay and their demand for office space. Additionally, stricter climate-change regulations may, in the long-run, lead to higher costs and a shift in demand.

Sustainability risks

Sustainability risks consist of climate-related physical risks, climate transition and regulatory compliance, risks associated with conducting responsible operations including the Company's value chain, business ethics and integrity, as well as and skills management and inclusion.

Eastnine’s goal is to achieve net-zero greenhouse gas emissions by 2040 across the entire value chain, including halving emissions per sq.m. between 2024 and 2030. Energy efficiency improvements, a higher share of renewable energy and local production of renewable energy are our foremost strategies for limiting risk. Eastnine carries out a systematic analysis of local, physical climate-related risks in the property portfolio. Also, Eastnine regularly monitor stricter regulatory requirements and demand for modern offices and has integrated requirements in investment processes, acquisition due diligence and property plans. In addition, Eastnine actively work to strengthen the sustainability performance of properties through certifications, energy efficiency and follow-ups to meet the demand for high sustainability standard office properties.

Eastnine works systematically with corporate culture and values, focusing on ethical operations and zero toleration for corruption and nepotism. Training on anti-corruption and business ethics takes place at least once a year where all employees discuss and analyse hypothetical cases where problems may arise. Observations or suspicions of unethical behaviour can be reported anonymously to a whistleblower function on Eastnine’s website. Sustainability inspection of all strategic suppliers is carried out.

A detailed description of Eastnine's risks

Click the image to see a probability and impact matrix of all identified risks.

Eastnine's risks and risk management are described in more detail in the Annual Report on pages 59-66 and in note 28 on pages 91-92, as well as the latest interim report.

Download the risk document for a more detailed description of the risks.