The 8.75% return is a fixed contractual obligation of the borrower, secured by the pantbrev registered over the property. It accrues from the date capital is drawn down — regardless of how the battery or generation systems perform.
A loan investor evaluating any infrastructure-backed instrument should ask two separate questions: how is the return generated, and what happens to the return if the underlying infrastructure underperforms? For HNordic's loan instrument, these have different answers — and the distinction matters.
The return is not generated by energy income. It accrues as a fixed obligation of the borrower. Whether the battery earns more or less than projected in a given period has no effect on the investor's contractual entitlement to 8.75% per annum.
The loan instrument is a skuldebrev — a Swedish promissory note — under which the borrower (the portfolio holding company) is obligated to repay the principal advanced and all accrued interest at the exit event (property sale or refinancing). Interest accrues daily at 8.75% per annum on the outstanding principal from the drawdown date. There are no interim payments; the full obligation is settled as a single bullet at exit.
This obligation is a contractual debt — not a participation in returns. The borrower owes it regardless of how the portfolio performs. If the battery earns less than projected, the debt obligation is unchanged. If a property takes longer to exit, interest continues to accrue, compounding the obligation. HNordic's incentive to exit promptly is structural: everything above the fixed repayment obligation accrues to HNordic, not to the investor.
The obligation is secured by three independent layers registered over real assets:
Layer 1 — Pantbrev: A Swedish registered property mortgage over each property in the portfolio, registered with Lantmäteriet (the Swedish land registry). A pantbrev is the strongest form of security available on Swedish real estate — equivalent to a registered first charge in English law. In insolvency proceedings, the pantbrev holder has statutory priority over unsecured creditors. The investor's capital is protected by a registered charge over the title, not by a contractual promise alone.
Layer 2 — Share pledges: A pledge over the shares of each property company and the energy operating entity. The pledge is held but not exercised during normal operation; it becomes exercisable on default, allowing the investor to take ownership of the entire group in a single step without requiring a court-supervised insolvency process.
Layer 3 — Equipment and contract charge: A floating charge over the energy equipment installed at each property — battery storage, EV charging infrastructure, wind and solar generation — and over the revenue contracts associated with it. The energy income that funds the portfolio's operating surplus and ultimately the exit proceeds stays within reach of the security package.
The three layers are not alternatives. If one route to recovery is contested or unavailable in a specific scenario, the others remain independently available.
The energy infrastructure is the mechanism through which HNordic creates the exit surplus — the gap between the portfolio's acquisition cost plus upgrade investment and its exit valuation. That surplus accrues entirely to HNordic (and to equity participants, if any) after the loan obligation is discharged in full.
For the loan investor, the relevant question is not whether energy income covers the interest obligation. The borrower's obligation to repay principal and interest is unconditional and secured by the property. The energy income flows to the portfolio holding company and contributes to the portfolio's overall financial performance — but the investor's entitlement does not rise or fall with it.
This is why the loan instrument is characterised as a creditor position rather than a participation. The investor is owed a defined amount at a defined rate, secured by registered assets. They do not share in the upside if energy income exceeds projections, and their entitlement is not reduced if energy income falls short.
The investor's return is fixed; their outcome depends on whether the borrower can repay at exit. The factors that could affect this:
Exit value below loan obligation: If the portfolio exits at a total proceeds figure below the outstanding loan balance plus accrued interest — because properties are sold at a loss or remain unsold — the investor faces a shortfall. The security package (pantbrev, share pledges, equipment charge) provides recovery routes, but recovery from security is not guaranteed to cover the full obligation in a severe downside scenario. This is the investor's primary risk.
Exit timing: The loan is repaid as a bullet at the exit event. If exit takes longer than the target horizon, interest continues to accrue — increasing the repayment obligation. Longer hold periods increase the total amount owed at exit, which HNordic must cover from exit proceeds.
Currency and legal jurisdiction: The pantbrev is registered in Sweden; the security is governed by Swedish law. Investors outside Sweden should assess their familiarity with Swedish insolvency and enforcement procedures as part of their due diligence.
This page provides general information only and does not constitute financial, legal, or tax advice. Prospective investors should seek independent professional advice, including Swedish law advice on the security package, before making any investment decision.
See also: What is the difference between the equity partnership and the loan instrument? · What is a pantbrev? · Full FAQ