Interim Report January September 2016

Transcription

1 Interim Report January September AB Sagax is a property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industry segment.

2 The period in brief JANUARY-SEPTEMBER Rental revenue increased 2% to SEK 1,134 M (947 for the year-earlier period). Profit from property management increased 24% to SEK 812 M (654). Profit from property management per common share after dilution rose 28% to SEK 4.57 (3.57). In total, property revaluation affected profit by SEK 927 M (472), of which joint ventures and associated companies accounted for SEK 225 M (13). Revaluation of financial instruments had a negative impact of SEK 243 M (pos: 1) on profit. Fixed-income derivatives accounted for a loss of SEK 267 M (profit: 1), of which joint ventures and associated companies accounted for a loss of SEK 91 M (profit: 12). Profit after tax for the period was SEK 1,23 M (876). Cash flow from operating activities before changes in working capital amounted to SEK 75 M (516), corresponding to SEK 4.18 (2.7) per common share after dilution. During the period, Sagax invested a net amount of SEK 2,1 M (1,612), of which acquisitions of properties accounted for SEK 2,411 M. THIRD QUARTER OF Rental revenue increased 22% to SEK 43 M (33 for the year-earlier period). Profit from property management rose 14% to SEK 296 M (259). In total, property revaluation affected profit by SEK 125 M (41), of which joint ventures accounted for SEK 74 M (41). Revaluation of financial instruments had a positive impact on profit totaling SEK 18 M (neg: 86). Fixed-income derivatives accounted for profit of SEK 1 M (loss: 86), of which joint ventures accounted for profit of SEK 7 M (loss: 33). Profit after tax for the period amounted to SEK 336 M (154). Cash flow from operating activities before changes in working capital amounted to SEK 229 M (193). During the third quarter of, Sagax invested a net amount of SEK 777 M (842). Sagax acquired 28 properties and divested 11 properties during the quarter. ADJUSTED FORECAST FOR Profit from property management for, meaning profit before revaluations and tax, based on the current property portfolio and announced acquisitions and divestments, is expected to amount to SEK 1,9 M. The previously submitted forecast was for profit of SEK 1,6 M and was presented in conjunction with the publication of the interim report for January-March. Selected key performance indicators Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Profit from property management per common share, SEK Change compared with preceding year 28% 29% 31% 37% 27% 4% 14% Earnings per common share, SEK Dividend per common share, SEK Dividend per preference share, SEK Properties market value, 19,331 15,333 16,189 13,428 1,825 9,396 8,961 Yield 7.4% 7.6% 7.4% 7.6% 7.7% 7.8% 7.7% Lease term, years Interim Report January - September

3 CEO s comments EARNINGS AND FINANCIAL POSITION Sagax s profit from property management for the first nine months of the year amounted to SEK 812 M, a year-on-year increase of SEK 158 M. The higher profit from property management was attributable to a larger property portfolio and to lower average interest expenses. Profit after tax for the year was SEK 1,23 M, up SEK 354 M. In addition to the higher profit from property management, the earnings improvement derived from the rising market value of the company s property portfolio. The return on equity during the period was 25% and Sagax is well underway to realize its financial objective of a return on equity of 15% for full-year. Sagax s operating cash flow rose by SEK 234 M to SEK 75 M, whereby the interest-coverage ratio increased to a multiple of 3.5. Interest-bearing net debt corresponded to 8.7 times operating profit (EBITDA) over the past 12 months. In relation to the market value of the properties, net debt was 62%. My assessment is that the earnings' trend and financial position remain favorable. VACANCY RATE Sagax s leasing rate has been around 96-97% in recent years, which is high for a commercial property company. In addition, the limited vacancies that have existed in our portfolio have primarily related to project properties, which we have intentionally vacated to enable us to refurbish, or to very difficult premises that, in practice, have represented structural vacancies. During the first nine months of, as in previous years, Sagax continued to uphold the leasing rate in its current portfolio. In the third quarter, we had an opportunity to do a number of attractive acquisitions that included relatively sizeable vacancies. These included a property portfolio in Finland with only 63% occupancy, as well as two completely vacant properties in Stockholm and Paris. The vacancies acquired in the third quarter increased the vacancy value by SEK 71 M to SEK 13 M. In Finland, Sagax has had a leasing rate exceeding 9% in recent years and I expect us to be able to significantly reduce vacancies in the properties mentioned above. The vacant properties in Stockholm and Paris have already been leased and are now being refurbished for the new tenants. All in all, I see favorable prospects to increase Sagax s earnings by letting the acquired vacancies. FINANCIAL TARGETS Sagax adjusted its financial targets during the current quarter and also introduced a new target pertaining to a cap for the company s net debt in relation to its operating profit (EBITDA). The financial targets are described on page 2 of this report, and no further explanations are probably required for the adjustments of the previous targets. However, it may be worth commenting the new target. As market interest rates have declined since the 28 is financial crisis, the interest-coverage ratios (ICRs) of property companies have risen despite increased borrowing. Since the ever lower interest rates have simultaneously led to rising property values, the loan-to-value (LTV) ratio has declined despite an increase in liabilities. The purpose of a property company s financial targets expressed as interest-coverage ratio and LTV is to provide an expression of the company s financial risk. However, when the market interest rate is zero and property values rise because of this, it is difficult to interpret the risk level that the said performance ratios represent. Expressed differently: when the interest rate is zero, property prices are high and access to capital is excellent, even fundamentally high debt levels appear conservative from an ICR and LTV perspective. To avoid this distortion and to communicate Sagax s view of the financial risk, we have decided to also express the company s risk assumption as the maximum net debt that we are willing to accept in relation to Sagax s profitability. This target is not affected by either the market's interest rates or property prices and provides the shareholders with a fundamental risk profile to which they can relate. At the end of the period, Sagax s interest-bearing net debt was 8.7 times EBITDA for the preceding 12 months (please see the definition on page 31). When the shareholders interpret this financial target it may be worth bearing in mind that net debt is measured on the balance sheet date, meaning a specific point in time, while operating profit pertains to the preceding 12 months, meaning a period. For property companies that are not expanding, this circumstance lacks relevance. However, for an expanding property company, this performance indicator underestimates payment capacity because net debt arises immediately while earnings deriving from the investments funded by the aformentioned debt do not fully impact the key ratio until 12 months later. ADJUSTED FORECAST The first nine months of the year was a period of development for Sagax, which included establishment of the company in the Netherlands and substantial investments in both Finland and France. This is also reflected in the earnings trend and our current estimate for is that profit from property management will total SEK 1,9 M based on the current property portfolio and the announced acquisitions and divesiments. The previously submitted forecast based on the same conditions was for profit of SEK 1,6 M and was presented on May 3 in conjunction with the publication of the interim report for January-March. Stockholm, October 25, DAVID MINDUS Chief Executive Officer Interim Report January - September 1

4 Business concept, goals and strategies BUSINESS CONCEPT Sagax is a property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industry segment. COMPANY GOALS The overriding objective is the long-term generation of the maximum risk-adjusted return to the company s owners. To achieve this objective, Sagax has set the following business targets: Operations must generate a long-term sustainable return and strengthen cash flow. Net debt/ebitda Multiple Net debt/ebitda, rolling 12 month Over the long term, must never exceed 9.5 The company is to continue to grow through property acquisitions after taking into account the risk-adjusted return. Measured in real terms, the company is to create cash-flow growth from the existing property portfolio. FINANCIAL TARGETS The return on equity, measured over a five-year period, should not fall below 15% per year. During the period, it was 25%. The average return over the past five years has been 22% per year. Profit from property management per common share should increase by a minimum of 15% per year. During the period, profit from property management rose to SEK 4.58 (3.58) per common share, up 28% compared with the year-earlier period. The average annual increase over the past five years has been 24%. The long-term target for the interest coverage ratio is a minimum of 2%. The interest coverage ratio was 352% and the average over the past five years has been 264%. The long-term target for the LTV ratio is that it should be less than 65%. The LTV ratio was 58% and the average over the past five years has been 61%. The long-term target for the net debt/ebitda ratio is that it should be less than a multiple of 9.5. The Net debt/ebit- DA ratio was a multiple of 8.7 and the average over the past five years has been a multiple of 9.1. The diagram below illustrates the outcome for the past five years in relation to the financial targets. Return on equity Profit from property management per common share % 5 SEK 6 % Return on equity Return on equity, rolling five years Objective for return on equity over a five-year period Profit from property management per common share, rolling 12 months Annual growth rate, rolling 12 months Objective for annual growth rate Interest-coverage ratio Debt ratio % 4 % Interest coverage ratio Over the long term, must never be less than 2% Debt ratio Over the long term, must never exceed 65% 2 Interim Report January - September

5 STRATEGIES Investment strategy Sagax invests primarily in warehouse and industrial properties. As a result of a high yield in combination with a low rate of new production and stable leasing rates, properties designed as warehouses and for light industries are attractive investment objects. Sagax invests in complementary acquisitions and in existing properties. Property acquisitions and investments in the existing portfolio are aimed at increasing cash flow and diversifying rental revenue to thereby reduce the company s operational and financial risks. The diagram below illustrates the trend in the properties market value and lettable area. Financing strategy The financial structure of Sagax is designed with a clear focus on operating cash flow and the interest coverage ratio. This is expected to create excellent prerequisites for expansion and an attractive return on shareholders equity. The diagram below shows Sagax s profit from property management and cash flow from operating activities. As illustrated, cash flow corresponds closely to profit from property management. The deviation is due mainly to profit from joint ventures, which is not recognized as cash flow. Dividends received from joint ventures are recognized as cash flow from operating activities. Sagax adopts a conservative approach to the assumption of risk and endeavors to achieve well-balanced fixed interest-rate and maturity structures to secure operating cash flow. The average fixed-interest period was 2.9 (3.3) years at the end of the quarter. The long fixed-interest period reduces interest-rate sensitivity but results in a higher average interest rate than a shorter fixed-interest period. The company also endeavors to have a low refinancing risk. The average maturity period was 3.7 (4.5) years at the end of the quarter. The company has three classes of shares: Class A common shares, Class B common shares, and preference shares. The preference shares attract investor categories that value a steady stream of dividends. The preference shares diversify Sagax s capital base and allow the company to increase the Group s equity without increasing the number of common shares. Class B shares have been issued to positively impact the liquidity and pricing of common shares while contributing to enhancing the company s financial flexibility. An Extraordinary General Meeting held on October 7,, see page 29, resolved to approve the Board of Directors motion for an issue of Class D common shares. In common with preference shares, Class D shares provide entitlement to an annual dividend of SEK 2., but do not confer preferential rights. The Class D common shares create improved conditions for Sagax to achieve an investment grade in the future, which is estimated to result in lower financing costs and a lower financial risk. Management strategy Sagax pursues efficiency and a long-term approach in its management strategy. The management strategy includes actively pursuing long leases. This applies equally to new leases and to the management of existing leases. The company s policy is to abstain from maximizing rent levels at all points of time in favor of signing leases of a longer duration with solvent tenants. This is regarded as being advantageous since it reduces the risk of vacancies, while leading to lower costs for letting premises and adapting premises to tenant needs.. On September 3, the average remaining term under the company s leases was 7. years (7.6). Strategy for tenants Sagax endeavors to attract reputable and creditworthy tenants. The company mainly enters into triple net leases and that are thus only affected to a limited extent by changes in consumption or changed rates, pertaining to such utilities as heating, electricity, property tax, water and sewage. Strategy for the rental market Sagax invests primarily in regions experiencing stable population growth and that have diversified business activities. Sagax s greatest exposure to the rental market occurs in Stockholm and Helsinki, which are the markets regarded as offering the best potential for long-term growth in the Nordic region. The risk of a decline in the leasing rate and rent levels due to a weaker rental market is regarded as low in view of the stable demographic growth and the diversified business operations in these regions. Read more about this in the Sagax Annual Report for. Market value and area of properties Profit from property management and cash flow s square meters 2,5 2, 1,5 1, 5 25, 2, 15, 1, 5, 1,2 1, Lettable area Market value Profit from property management, rolling annual value Cash flow from operating activities before change in working capital, rolling annual value Interim Report January - September 3

6 Earnings, revenue and expenses The profit/loss and cash flow items below refer to the period January through September. The comparative items refer to the year-earlier period. Amounts for the balance-sheet items and comparative figures refer to the position at the end of the period this year and end of the year-earlier period. EARNINGS Profit from property management rose 24% to SEK 812 M (654), of which joint ventures and associated companies accounted for SEK 184 M (175). The increase was mainly attributable to property acquisitions. Profit from property management per common share after dilution rose 28% to SEK 4.57 (3.57). Changes in the value of properties increased profit by SEK 927 M (472), of which the revaluation of joint ventures and associated companies accounted for SEK 225 M (13). Revaluation of financial instruments had a negative impact of SEK 243 M (pos: 1) on profit. Fixed-income derivatives accounted for a loss of SEK 267 M (gain: 1), of which joint ventures accounted for a loss of SEK 91 M (gain: 12). All changes in the value of financial instruments were unrealized. Falling market interest rates during the period were the reason for the negative changes in value and the increased reserve for the deficit value of fixed-income derivatives. Profit after tax for the period was SEK 1,23 M (876). REVENUE Rental revenue increased 2% to SEK 1,134 M (947). Revenue was positively affected mainly by property acquisitions, as well as revenue-increasing investments in the existing property portfolio. Other revenue of SEK 9 M (2) primarily comprised compensation from insurance companies regarding insurance claims and compensation from a tenant who prematurely vacated premises. Profit from property management Economic leasing rate /Quarter /Year 1,2 1, 8 6 % Profit from property management per quarter Rolling annual value Leasing rate Average, past 12 months Rental revenue /Quarter /Year 2, 1,6 1, Rental revenue per quarter Rolling annual value 4 Interim Report January - September

7 CHANGE IN ECONOMIC LEASING RATE The economic leasing rate was 93%, compared with 96% at year-end. During the period, the vacancy value rose SEK 18 M (16) due to tenants vacating premises and declined SEK 24 M (2) due to occupancies. Discounts provided on a fixedterm basis amounted to SEK 22 M (18) on an annual basis at the end of the period, up SEK 5 M during. The terms for the discounts are described in the table below. Stockholm and Helsinki accounted for 71% (75) of the vacancy value. The closing vacancy value was SEK 13 M (57), a net rise of SEK 71 M in the period, primarily due to vacancies totaling SEK 79 M in acquired properties, mainly in Finland. The closing vacancy value was reduced by SEK 8 M due to property sales. of renegotiation accounted for SEK 3 M (1) and notice of vacating the premises for SEK 39 M (26). Of the leases for which notice of vacating the premises had been received, vacancies corresponding to SEK 2 M will occur in and SEK 37 M during the period The rate of vacating premises is described in the table below. New lettings that have not yet been occupied reduced the adjusted vacancy value by SEK 26 M (2). The adjusted closing vacancy value was SEK 145 M (82), a net increase of SEK 79 M in, of which SEK 79 M was due to vacancies in acquired properties and a negative SEK 8 M to vacancies in sold properties. SEK 11 M was due to the aforementioned increase in notice of vacating premises, but which have not yet been vacated. FUTURE VACANCY CHANGES Notice of termination had been served for leases with a rental value of SEK 42 M (27) at the end of the period, of which notice Vacancy changes Jan-Dec Opening vacancy for each year Vacancies Occupancies Change in discounts provided 5 11 Vacancy value, acquired properties 79 2 Vacancy value, sold properties 8 5 Change in exchange rates 1 Closing vacancy value Terminated for renegotiation 3 2 Terminated lease, not vacated New letting, not occupied Adjusted closing vacancy value Terms for discounts provided Year of expiry >22 1 Total 22 Leases terminated for vacancy Year of vacancy No. of leases Rental value, Total Vacancies, October 1, Area Rental value, Vacancy value, 1) Economic vacancy rate 1) Lettable area, sqm Vacant area, sqm Leasing rate by area vacancy rate Stockholm % 621, 39, 6% Helsinki % 471, 48, 1% Rest of Sweden % 458, 17, 4% Rest of Finland % 496, 28, 6% Other % 19, 17, 9% Total 1, % 2,235, 149, 7% 1) The vacancy value and vacancy rate take into account both vacancies and discounts provided. Interim Report January - September 5

8 PROPERTY EXPENSES Operating and maintenance costs rose to a total of SEK 94 M (78). The increase was due primarily to property acquisitions. Property tax and site leaseholds amounted to SEK 49 M (43). Costs for property administration amounted to SEK 28 M (17). CENTRAL ADMINISTRATION Costs for the Group s central administration amounted to SEK 45 M (41). Administration costs increased year-on-year due to the growth of the company. The Parent Company, AB Sagax, is responsible for stock market issues, such as financial reporting and stock market information. The Parent Company is also responsible for credit market issues, such as borrowing and financial risk management. Services between Group companies are charged on commercial terms and conditions and in accordance with market-based pricing. Intra-Group services comprise management services and internal interest charging. During the period, the Parent Company s fees for property and company management amounted to SEK 24 M (23) from Group companies and to SEK 12 M (12) from joint ventures. The Parent Company s income statement and balance sheet are shown on page 2. At the end of the period, the Group had 4 (36) employees, of whom 16 (15) were women. 25 employees (25) work at the Parent Company and are stationed at the company s office in Stockholm, 12 employees (1) work in one of the Finnish subsidiaries and are stationed in Helsinki and 3 (1) work in France and are stationed in Paris. The other subsidiaries have no employees. Functions such as property maintenance and on-call operations are outsourced. PROFIT FROM JOINT VENTURES AND ASSOCIATED COMPANIES Profit from joint ventures and associated companies amounted to SEK 184 M (175) and pertained to Sagax s shares in the earnings of the company s joint ventures and associated companies; refer also to page 13 for more information. Profit for the period amounted to SEK 317 M (316), of which profit from property management accounted for SEK 184 M (175) M, changes in the value of fixed-income derivatives for a loss of SEK 91 M (profit: 12) and changes in the value of properties for SEK 225 M (13). Profit was charged with deferred tax of SEK 72 M (63). NET FINANCIAL ITEMS Financial expenses amounted to SEK 3 M (296). The average interest rate was 3.2% (3.4%) at September 3,. Interest-bearing liabilities have increased to SEK 12,462 M (1,14) due to financing of property acquisitions. For more information about financing at Sagax, see page 14. The LTV ratio has decreased successively at the same time as financial expenses have declined in relation to Group revenues, thus resulting in a rise in the interest coverage ratio; see diagram below. Interest-bearing net debt has averaged 8.8 (8.5) times net operating income for the past 12 months. REVALUATION OF PROPERTIES At September 3,, the property portfolio comprised 431 (23) properties with a market value of SEK 19,331 M (15,333). The value trend for operations in Sweden was an increase of SEK 37 M (36) while the value trend for foreign operations was an increase of SEK 44 M (decrease: 19). New lettings and renegotiations of leases increased the market value of the properties by SEK 255 M (95), primarily due to the extension of the lease with medical devices company Baxter until 237 for production facilities in Germany. Vacancies and renegotiations reduced the value by SEK 3 M (48). The general change in market value for the company s properties amounted to SEK 485 M (294), primarily due to lower yield requirements in the market. The market value of the Debt ratio and interest-coverage ratio Net debt/net operating income Interest-coverage ratio, % Debt ratio, % Multiple Interest-coverage ratio Debt ratio Net debt/net operating income Covered net debt/net operating income Interim Report January - September

9 property portfolio was revalued by a total amount of SEK 711 M (341), excluding currency effects. The change in the market value of the property portfolio is also described on page 12. Unrealized changes in value New lettings/renegotiations 65 Vacancies/Renegotiations 4 General market value changes 246 Sub-total, Sweden 37 New lettings/renegotiations 19 Vacancies/Renegotiations 26 General market value changes 239 Sub-total, International 44 Total unrealized changes in value 711 SEK 641 M (531); refer to the section on financing on page 14. Earnings were also impacted by a negative SEK 91 M (pos: 12) revaluation of fixed-income derivatives in joint ventures. In its consolidated financial statements, Sagax continuously recognizes the company s share of deficit values for its joint ventures fixed-income derivatives. Revaluation of listed shares resulted in an unrealized change in value of SEK 24 M ( ). TAX Sagax recognizes a current tax expense of SEK 24 M (13) primarily pertaining to foreign operations. The deferred tax expense for the period amounted to SEK 17 M (173). The Group s deferred tax assets and tax liabilities at the end of the period amounted to SEK M (2) and SEK 678 M (66), respectively. Sagax is not involved in any tax disputes. The weighted yield requirement used in the valuations was 7.8% (7.6). The weighted cost of capital for the present value calculation of cash flows and residual values amounted to 8.2% (8.6) and 9.% (9.6), respectively. See also the section on analysis and general conditions on page 12. REVALUATION OF FINANCIAL INSTRUMENTS The revaluation date for financial derivatives and listed shares was September 3,. The financial derivatives comprised fixed-income derivatives in the form of nominal interest-rate swaps and interest-rate caps. All financial derivatives are recognized at market value and changes in market value are recognized in profit or loss. Net changes in value for the period amounted to negative SEK 175 M (neg: 11) and comprised unrealized changes in value. The negative change in value was due to falling market interest rates during the period. At the end of the period, the reserve for the deficit value of fixed-income derivatives was Deferred tax liabilities by country Sep 3, Sweden 333 Finland 283 Germany 62 Denmark 1 Tax liabilities 678 CASH FLOW Cash flow from operating activities before changes in working capital amounted to SEK 75 M (516). Changes in working capital had a positive impact of SEK 3 M (neg: 2) on cash flow. Investing activities had a negative impact of SEK 2,118 M (neg 1,696) on cash flow, while cash flow from financing activities contributed SEK 1,361 M (1,326) to Sagax. In total, cash and cash equivalents rose SEK 25 M (143) during the period. See page 17 for the statement of cash flows. Interim Report January - September 7

10 Forecast and current earnings capacity ADJUSTED FORECAST FOR Profit from property management for, meaning profit before revaluations and tax, based on the current property portfolio and announced acquisitions and divestments, is expected to amount to SEK 1,9 M. The previously submitted forecast of profit of SEK 1,6 M was presented in conjunction with the publication of the interim report for January-March. CURRENT EARNINGS CAPACITY The table below shows Sagax s earnings capacity on a 12-month basis at October 1,. It is important to note that this capacity cannot be compared with a forecast for the forthcoming 12 months because it does not contain assessments about, for example, future vacancies, the interest-rate scenario, currency effects, rent trends or changes in value. Nor does it take into account loan repayments, when agreed rent supplements come into effect or when discounts provided cease to apply. Sagax reports its current earnings capacity in conjunction with interim reports and year-end reports. The rental value is based on contractual rental revenue on an annual basis, with supplements for estimated market rents for vacant premises. Property expenses are based on actual outcomes over the past 12 months adjusted for the holding period. Central administration costs are based on actual outcomes over the past 12 months. Net financial items are calculated based on interest-bearing liabilities and assets on the balance sheet date. Expenses for interest-bearing liabilities are based on the Group s estimated average interest rate, plus financing costs allocated over time. Tax is calculated at the standard tax rate of 22% and is deemed to predominantly comprise deferred tax. Sagax s share of profit in joint ventures and associated companies is calculated in accordance with the same assumptions as for Sagax, taking into account the size of the participation. Since the Class D common shares had not been issued at October 1,, the authorized owners of such shares are not taken into account in the table below. Current earnings capacity Current earnings capacity before tax Oct 1, Jan 1, Rental value 1,791 1,453 Vacancy Rental revenue 1,661 1,394 Property expenses Net operating income 1,416 1,199 Central administration Joint ventures and associated companies Net financial items Profit from property management 1,169 1,8 Tax Profit after tax of which, holders of preference shares of which, holders of common shares ,2 1, Profit from property management Yield and lending rate Difference between yield and lending rate % 1 % Yield of Sagax s properties Sagax s average lending rate Ten-year swap rate Difference between yield of Sagax s properties and ten-year swap rate Difference between yield of Sagax s properties and Sagax s average interest rate 8 Interim Report January - September

11 Property portfolio At September 3,, the property portfolio comprised 431 (23) properties with a lettable area of 2,235, (1,789,) square meters. The average remaining lease term was 7. years (7.6). The focus of the portfolio is on the Stockholm region where 39% (42) of the market value and 33% (38) of the rental value is concentrated. At the end of the period, the total rental value and contractual annual rent amounted to SEK 1,791 M (1,48) and SEK 1,661 M (1,351), respectively. This corresponds to an economic leasing rate of 93% (96). INVESTMENTS During the period, Sagax invested SEK 2,625 M (1,633), of which property acquisitions accounted for SEK 2,411 M (1,492). Properties were acquired for SEK 1,77 M in Finland, of which Helsinki accounted for SEK 775 M. SEK 543 M was invested in France, of which Paris accounted for SEK 438 M. Sagax acquired 221 properties during the period with a total lettable area of 448,8 square meters; see the compilation on page 1. A total of SEK 214 M (141) was invested in the existing property portfolio. SEK 79 M of the investments for the period were made against rent supplements, SEK 33 M was invested in conjunction with new lettings, SEK 68 M in conjunction with new production and SEK 34 M pertained to property maintenance. The acquisition of a property portfolio in France comprising 27 properties for SEK 47 M was agreed during the period, with possession estimated to be taken in December. An agreement was also signed for the acquisition of a property in the Netherlands, where possession was taken in October. A property in Stockholm was acquired and possession taken after the end of the period. DIVESTMENTS During the period, 16 properties with a total lettable area of 73,3 square meters were divested for a total of SEK 615 M; see compilation on page 1. After the end of the period, three properties in the Rest of Sweden were divested for the equivalent of SEK 163 M. The purchase consideration has been received in the form of newly issued shares in the listed company, NP3 Fastigheter. This makes Sagax the fourth largest shareholder in NP3 Fastigheter, with a shareholding of 6%. YIELD The properties yield is a yield measurement whereby the net operating income for the period, adjusted for holdings, is compared with the properties carrying amounts at the end of the period. The yield provides an overview of profit generation before financial expenses and central administration costs are taken into account. The yield reported by Sagax for the period was 7.4% (7.6), see page 11. Property investments January-September Property acquisitions Existing portfolio Total Stockholm Helsinki Rest of Sweden 7 7 Rest of Finland Other Total 2, ,625 Summary of property portfolio, October 1, Segment No. of properties Lettable area, sqm Vacant area, sqm Market value Rental revenue SEK per sqm Rental value, Percentage of rental value Economic leasing rate Share Stockholm , 39, 7,571 12, % 93% % Helsinki , 48, 4,283 9, % 9% % Rest of Sweden , 17, 2,572 5, % 98% % Rest of Finland , 28, 3,11 6, % 95% 39 19% Other 24 19, 17, 1,795 9, % 89% 151 9% Total 431 2,235, 149, 19,331 8,6 1,791 1% 93% 1,661 1% Interim Report January - September 9

12 Property acquisitions January-September Property Municipality Segment Lettable area, sqm Miklaholt 2 Stockholm Stockholm 1,9 19 Rue Blanc Mesnil Blanc Mesnil (Paris) Other 13,8 First quarter 15,7 Muonamiehentie 14 ( ) Helsinki Helsinki 2,8 Niittytie 13 ( ) Vantaa Helsinki 7,4 Niittyvillankuja 2 ( ) Vantaa Helsinki 6,1 Koskelontie 27 A Espoo Helsinki Koskelontie 27 B Espoo Helsinki Property portfolio (3 supermarkets) Tuusula Helsinki 4,1 Property portfolio (183 supermarkets) 86 different Finnish municipalities Rest of Finland 152,1 Second quarter 172,5 Handelsweg 23, Hallenstraat 16 Bladel Other 7, Property portfolio (4 properties) Lyon Other 33, Property portfolio (8 properties) Paris Other 42,7 Property portfolio (8 properties) 2 different Finnish municipalities Helsinki 11,5 Property portfolio (4 properties) 4 different Finnish municipalities Rest of Finland 54,6 Tuottajantie 49 Seinäjoki Rest of Finland 12, Resan 1 Sollentuna Stockholm 1,2 Romben 2 Sollentuna Stockholm 8,6 Third quarter 26,6 Total 448,8 Property sales January-September Property Municipality Segment Lettable area, sqm Kungsängen 32:6 Uppsala Rest of Sweden 1, Kungsängen 32:8 Uppsala Rest of Sweden 1,1 Stockholmsledet 11 Lund Rest of Sweden First quarter 2,2 Instrumentet 14 Stockholm Stockholm 1,9 Grävskopan 2 Borlänge Rest of Sweden 1,4 Second quarter 3,3 Lilla Hillhult 2:4 Vetlanda Rest of Sweden 2,2 Linnavuorentie 28 Helsinki Helsinki 6,6 Property portfolio (8 supermarkets) 7 different Finnish municipalities Rest of Finland 47, Tuottajantie 49 Seinäjoki Rest of Finland 12, Third quarter 67,8 Total 73,3 1 Interim Report January - September

13 Lease terms Contractual annual rent Expiry yr No. of leases Area, sqm Share 79 32, 21 3% , 162 7% , 138 8% , 167 1% , % > ,248, % Total 1,87 2,85, 1,661 1% Calculation of yield Net operating income according to statement of comprehensive income Sep 3 Sep Addition for translation to annual value Holding adjustment for acquisitions and divestments 13 7 Currency translation to closing rate 24 3 Adjusted net operating income 1,422 1,156 Carrying amount of properties 19,331 15,282 Yield, % Year of maturity of annual rent Group s rental value Other 9% Rest of Finland 18% Rest of Sweden 12% Stockholm 33% Helsinki 27% Interim Report January - September 11

14 Market value of property portfolio Sagax prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). Sagax has chosen to recognize its properties at fair value in accordance with the Fair Value Method. At September 3,, the total market value of Sagax s 431 (23) properties was SEK 19,331 M (15,333). The depreciation of the SEK against the EUR during the period led to foreign property values increasing SEK 421 M (decline: 49). The total unrealized change in value during the period was SEK 711 M (341). Refer also to the table Unrealized changes in value on page 7. VALUATION METHOD AND IMPLEMENTATION The valuations were carried out in accordance with generally accepted international valuation methods. As of September 3,, all valuation objects had been valued separately by authorized property appraisers from independent valuation agencies, except for the five German properties which, as a result of high valuation costs in Germany, were most recently valued externally at March 31,. The principle method of appraisal used was cash flow calculations in which the present value of net operating income, investments and residual values was calculated. The calculation period was adjusted to the remaining term of existing leases and varies between five and 2 years. As a rule, the calculation period is ten years. All properties have been inspected over the past three-year period. These inspections include public areas and a selection of premises with specific emphasis on major tenants and vacant premises. The purpose of the inspections is to assess the properties overall standard, maintenance requirements, market position and the attractiveness of the premises. ANALYSIS AND GENERAL CONDITIONS The cost of capital for the present value calculation of cash flows ( %), the cost of capital for the present value calculation of residual values ( %) and the yield requirement for the residual value calculations ( %) are based on analyses of transactions carried out and on individual assessments of the risk level and market position of each property. The weighted cost of capital for the present value calculation of cash flows and residual values for the property portfolio was 8.2% (8.6) and 9.% (9.6), respectively. The weighted yield requirement was 7.8% (7.6) at September 3,, compared with an average yield requirement of 7.7% at December 31,. By comparison, the yield reported by Sagax for the period was 7.4% (7.6). Weighted yield requirements are compared with the recognized yield over time below. Change in carrying amount of properties Yield compared with yield requirement Property portfolio, December 31, 16, Acquisition of properties 2, Investments in the current portfolio 214 Property sales Subdivision of property 1 Translation difference regarding foreign property values 421 Unrealized changes in value 711 Property portfolio, September 3, 19, No. % Reported yield Yield requirement used in valuations Yield on 1-year government bonds 214 Market value of properties Other 9% (SEK 1,795 M) Rest of Finland 16% (SEK 3,11 M) Rest of Sweden 13% (SEK 2,572 M) Helsinki 22% (SEK 4,283 M) Stockholm 39% (SEK 7,571 M) 12 Interim Report January - September

15 Joint ventures and associated companies Sagax s joint ventures and associated companies contributed a total of SEK 184 M (175) to profit from property management during the period. Sagax s share of changes in the value of properties amounted to SEK 225 M (13) and the share of changes in the value of fixed-income derivatives was a negative SEK 91 M (pos: 12) during the period. The carrying amount of Sagax s share of equity in joint ventures and associated companies was SEK 1,312 M (1,135) at September 3,. Sagax owns 5% of Söderport Holding AB, with the remaining share owned by Hemfosa Fastigheter AB. Via Hemsö Intressenter AB, Sagax indirectly owns 15% of Hemsö Fastighets AB, with the remaining share owned by the Third Swedish National Pension Fund. During the period, Sagax also sold the company s shares in a small associated company. SÖDERPORT HOLDING AB On behalf of Söderport, Sagax handles the property management and financial administration of the Söderport Group. Hemfosa performs property management activities in Gothenburg. A total of 47% of Söderport s lettable property area of 667, square meters was located in Stockholm at September 3,. Söderport s economic vacancies amounted to SEK 19 M (43) at the end of the period, corresponding to a vacancy rate of 3% (7). Of the economic vacancies, SEK 7 M (9) comprised fixed-term rent discounts provided for new lettings. These discounts corresponded to 36% (21) of the economic vacancies, equivalent to 1.5 percentage points of the vacancy rate. At the end of the period, Stockholm accounted for 75% of the vacant area. HEMSÖ INTRESSENTER AB Hemsö Fastighets AB conducts operations in Sweden, Germany and Finland. Operations consist of owning, managing and developing public properties. There were 333 properties in the company s property portfolio with a total property value of SEK 3.2 billion at September 3,. The properties, which are located in the three Swedish metropolitan regions of Stockholm, Gothenburg and Malmö, accounted for 48% of the properties market value. The international property portfolio accounted for 16% of the properties market value. Of Hemsö s properties, 157 are homes for the elderly, 91 school premises, 76 healthcare premises and nine properties for the justice and legal sector. Of Hemsö s rental value, 59% derives from municipalities, county councils or the state. 1,853 leases with an average term of 8. years combined with financially stable tenants and a low vacancy rate ensure stable rental revenue. More information on Hemsö Fastighets AB is available on the company s website, hemso.se. Sagax s joint ventures Sep 3 Söderport Hemsö Sep 3 Sep 3 Sep 3 Sagax s participating interest, % Rental revenue, ,624 1,483 Profit from property management, Profit for the period, Sagax s share of profit from property management, No. of properties Rental value, ,227 2,47 Properties market value, 5,715 5,77 3,186 25,115 Lettable area, sqm 667, 749, 1,587, 1,469, Lease term, years Economic vacancy rate, % Interest-bearing liabilities. 3,81 3,433 23,74 16,695 Capital tied-up, years Fixed interest, years Market value of fixed-income derivatives, , Interim Report January - September 13

16 Financing EQUITY At the AGM on May 3,, it was resolved that SEK 299 M (246) would be distributed to shareholders. The Group s equity amounted to SEK 7,57 M (5,246) at September 3,. INTEREST-BEARING LIABILITIES Sagax s interest-bearing liabilities at the end of the period amounted to SEK 12,462 M (1,14). Of these interestbearing liabilities, an amount corresponding to SEK 5,453 M (3,7) was recognized in EUR. Interest-bearing net debt was SEK 12,177 M (9,796), or 63% (64) of the market value of the properties. Interest-bearing gross debt to banks of SEK 8,384 M corresponded to 43% (52) of the market value of the properties at September 3,. The remaining gross debt corresponded to 21% (13) of the properties market value and comprised listed bond loans of SEK 2,96 M (2,47) and commercial paper of SEK 1,172 M ( ). Sagax s two commercial paper programs allow the company to implement issues in SEK and EUR. The limits are SEK 1,5 M and EUR 2 M, and the maximum term is one year. At September 3,, commercial paper of SEK 1,172 M ( ) was outstanding with an average remaining term of.3 years. Sagax has available long-term credit facilities that cover all outstanding commercial paper at any time. SEK 3,97 M in new loans was raised, of which SEK 752 M consisted of an increase in issued commercial paper and SEK 578 M of issued bond loans. SEK 1,45 M was repaid during the period. Interest-bearing liabilities rose SEK 247 M (decline: 33) due to exchange-rate fluctuations. In line with IAS 39, allocated borrowing costs of SEK 74 M (62) reduced interest-bearing liabilities in the balance sheet. Interest-bearing liabilities of SEK 12,388 M (9,952) were recognized. The average remaining fixed-interest and loan maturity terms were 2.9 years (3.3) and 3.7 years (4.5), respectively, at the end of the period. The average interest rate for the company s interest-bearing liabilities was 3.2% (3.4) including effects of derivatives at the end of the period. The average interest rate has been lowered during the past 12 months as a consequence of new borrowing at lower interest rates and fixed-income derivatives renewed at lower interest rates. To limit interest-rate risk and increase the predictability of the company s profit from property management, interest-rate caps and interest-rate swaps are utilized with a total nominal value of SEK 6,827 M (5,865), of which interest-rate swaps with an average interest rate of 2.5% (2.7) accounted for SEK 4,48 M (4,468); see table below. Accordingly, in the foreseeable future, changes in general interest rates will only affect the company s profit from property management to a limited extent; refer to the sensitivity analysis on page 26. The reserve for the negative market value of fixed-income derivatives rose by SEK 175 M (decline: 2) during the period. The total market value of Sagax s fixed-income derivatives had a deficit value of SEK 641 M (deficit: 531) on the balance sheet date. The reserve of SEK 641 M will be gradually dissolved and recognized in profit/loss by the expiry date of the derivative contracts, regardless of the interest-rate scenario. All other things being equal, the time factor alone entails that reserves for the deficit value of fixed-income derivatives in Sagax will be dissolved in a total amount of SEK 122 M over the next year. Over a five-year period, based on the time factor alone and assuming unchanged market interest rates, a total of SEK 561 M would be recognized as revenue in the consolidated financial statement. WORKING CAPITAL AND LIQUIDITY Sagax s working capital, excluding current interest-bearing liabilities, amounted to SEK 24 M (neg: 12) at September 3,. At the same date, Sagax s available access to funds was SEK 75 M (65), of which SEK 276 M (21) in the form of bank deposits and SEK 474 M (395) in the form of unutilized lines of credit. Lines of credit used to cover outstanding commercial paper are not included in available liquidity. No additional collateral needs to be pledged to utilize these lines of credit. Fixed-interest period and loan maturity, September 3, Fixed interest Loan maturity Interest-rate swaps Year of expiry Interest rate Share Share Interest rate 4, % 4% 37 % % 7% 511 4% % 7% 1,29 1% % 6% 3,423 27% % % 5% 1,929 15% % >22 4,447 4.% 36% 5,273 42% 3, % Total/average 12, % 1% 12,462 1% 4,48 2.5% Derivative contracts, September 3, Nominal amount Years to maturity Market value Sep 3, Market value Dec 31, Change for the period Nominal interest-rate swaps 4, Interest-rate caps 2, Total 6, Interim Report January - September

17 Statement of comprehensive income Jul-Sep Jul-Sep Jan-Dec Rolling 12 months Rental revenue 1, ,291 1,477 Other revenue Operating expenses Maintenance costs Site leaseholds Property tax Property administration Net operating income ,14 1,263 Central administration Profit from joint ventures and associated companies of which, profit from property management of which, changes in value of which, tax Financial income Financial expenses Profit including changes in value of joint ventures and associated companies ,1 1,242 of which, profit from property management ,53 Changes in value: Properties, realized Properties, unrealized ,47 Financial instruments, realized Financial instruments, unrealized Profit before tax 1,424 1, ,832 2,194 Deferred tax Current tax Profit/loss for the period 1, ,681 2,35 Other comprehensive income items that may be reversed to profit and loss: Translation differences for foreign operations Share of other comprehensive income for joint ventures Translation differences pertaining to hedge accounting in foreign operations Tax on items that may be reversed to profit and loss Comprehensive income for the period 1, ,599 2,127 Earnings per common share, SEK Earnings per common share after dilution, SEK Average number of common shares, millions Average number of common shares after dilution, millions Interim Report January - September 15

18 Condensed statement of financial position Sep 3 Sep 3 Dec 31 Investment properties 19,196 15,266 16,68 Investment properties for sale Participations in joint ventures and associated companies 1,312 1,135 1,259 Deferred tax assets 2 Financial derivatives Other fixed assets Total fixed assets 2,77 16,452 17,48 Cash and bank balances Other current assets Total current assets Total assets 21,349 16,783 17,843 Equity 7,57 5,246 5,981 Long-term interest-bearing liabilities 1,668 9,785 9,959 Deferred tax liabilities Financial derivatives Other long-term liabilities Total long-term liabilities 12,17 1,937 1,921 Commercial paper 1, Other current interest-bearing liabilities Other current liabilities Total current liabilities 2, Total equity and liabilities 21,349 16,783 17, Interim Report January - September

19 Statement of cash flows Jul-Sep Jul-Sep Jan-Dec Rolling 12 months Profit before tax 1,424 1, ,832 2,194 Change in value of financial instruments Change in value of properties ,36 Loss from ownership of joint ventures and associated companies Loss from joint ventures and associated companies Dissolution of allocated borrowing costs Tax paid Other items not included in cash flow Cash flow from operating activities before changes in working capital Cash flow from changes in current receivables Cash flow from changes in current liabilities Cash flow from operating activities ,3 Acquisition of properties 2,411 1,492 1, ,199 3,118 Property sales Investments in existing properties Acquisition of shares Capital contribution to joint ventures Advance payments for property acquisitions Divestment of participations in associated companies Increase in other fixed assets Cash flow from investing activities 2,118 1, ,523 2,946 Issue of shares Dividend paid to shareholders Incentive Plan Borrowings 2,269 2, ,85 3,13 Repayment of loans Redemption of financial derivatives 3 3 Deposits from tenants Increase in other long-term liabilities Reduction in long-term liabilities 3 3 Cash flow from financing activities 1,361 1, ,945 1,979 Cash flow for the period Exchange rate differences in cash and cash equivalents Change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at the end of period Interim Report January - September 17

20 Statement of changes in equity Share capital Other contributed capital Reserves, translation differences Profit earned incl. net. profit for the period Total equity Equity, December 31, , ,479 4,544 New issue of preference shares Transaction costs 1 1 Dividends Redemption of Incentive Plan Incentive Plan 1 1 Comprehensive income, January-September Equity, September 3, 381 1, ,95 5,246 Comprehensive income, October-December Equity, December 31, 381 1, ,899 5,981 Dividends Redemption of Incentive Plan 2 2 Incentive Plan 2 2 Comprehensive income, January-September 165 1,228 1,393 Equity, September 3, 1) 381 1, ,81 7,57 1) Equity is attributable in its entirety to the Parent Company s shareholders. Segment information Changes in value, properties Profit items Profit from property per segment Rental revenue 1) management Unrealized Realized Jan-Jun Income before tax Stockholm Helsinki Rest of Sweden Rest of Finland Other Sub-total 1, ,4 881 Financial instruments Joint ventures Other, non-specified Total 1, ,424 1,62 Asset items per segment Market value properties Sep 3 Sep 3 Investments properties Acquisitions properties Divestment properties Stockholm 7,571 6, Helsinki 4,283 2, Rest of Sweden 2,572 2, Rest of Finland 3,11 2, Other 1, Sub-total 19,331 15, ,411 1, Other, non-specified Total 19,331 15, ,411 1, ) All rental revenue pertains to external tenants. 18 Interim Report January - September

21 Key performance indicators Jan-Dec 214 Jan-Dec 213 Jan-Dec 212 Jan-Dec 211 Jan-Dec Property-related Yield, % Surplus ratio, % Leasing rate by area, % Economic leasing rate, % Lease term, years Lettable area, s of square meters 2,235 1,789 1,86 1,634 1,336 1,159 1,144 No. of properties Financial Return on total capital, % Return on equity, % Average interest rate, % Fixed-interest period incl. derivatives, year Capital tied-up, years Equity/assets ratio, % Debt ratio, % Net debt/market value of the properties, % Interest coverage ratio, multiple ) 2) Data per common share Share price at the end of period, SEK ) ) ) 44. 3) ) EPRA NAV, SEK Equity, SEK Equity after dilution, SEK Profit, SEK Profit after dilution, SEK Profit from property management, SEK Profit from property management after dilution, SEK Cash flow, SEK Cash flow after dilution, SEK Dividend per share, SEK No. at end of period, millions No. at end of period after dilution, millions Average number, millions Average number after dilution, millions Data per preference share Share price at the end of period, SEK Equity, SEK Profit, SEK Dividend per share, SEK No. at end of period, millions Average number, millions ) Comparative figures have been adjusted for the bonus issue of Class B shares in 213, by multiplying the number of shares by 11. The conditions of the bonus issue were ten Class B shares for each Class A share. 2) Excluding 1,, Class B shares bought back by AB Sagax. 3) Pertains to the share price for the Class B share. Interim Report January - September 19

22 Parent Company income statement Jan-Dec Net sales Administration costs Loss before financial income and expenses Loss from participations in Group companies 16 Profit from participations in joint ventures Financial income Financial expenses Profit/loss before tax and appropriations Group contributions 19 Tax 16 2 Profit/loss for the period Condensed Parent Company balance sheet Sep 3 Sep 3 Dec 31 Tangible fixed assets Receivables from Group companies 2,234 1,419 1,844 Other financial fixed assets 2,577 1,545 2,294 Total fixed assets 4,812 2,965 4,139 Cash and bank balances Receivables from Group companies 3,16 2,187 1,817 Other current assets Total current assets 3,99 2,214 1,919 Total assets 7,911 5,179 6,58 Equity 1,276 1,54 1,524 Long-term interest-bearing liabilities 2,95 2,474 2,297 Liabilities to Group companies Deferred tax liabilities 2 Total long-term liabilities 3,643 3,214 3,35 Liabilities to Group companies 1, Other current liabilities 1, Total current liabilities 2, ,499 Total equity and liabilities 7,911 5,179 6,58 2 Interim Report January - September

23 The Sagax share and shareholders At period-end, Sagax had 8,146 (7,682) shareholders and market capitalization of SEK 16,752 M (11,257). Sagax has three classes of shares Class A common shares, Class B common shares, and preference shares which are listed on Nasdaq Stockholm, Mid Cap. There are a total of 13,416,822 Class A shares, 144,858,13 Class B shares and 58,25, preference shares outstanding. 1,, previously bought back Class B shares were held in treasury. Each preference share entails a preferential right to SEK 2. in annual dividends. The share price trend and information about share trading are provided below. Trade in the shares on the Nasdaq Stockholm Price paid, SEK Turnover rate on an annual basis, % Average trading volume per trading day, Sep 3, Sep 3, Jul-Sep Jul-Sep Jul-Sep Jul-Sep Class A shares Class B shares Preference shares Price trend of preference shares for the past 12 months Price trend of Class B shares for the past 12 months SEK Number 4 3, Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Preference share Trade number of shares, 1, per week SEK Number Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Class B share Trade number of shares, 1, per week Carnegie Real Estate Index OMX Stockholm_Pl Voting rights and proportion of share capital Class of share Number of shares Voting rights per share Number of votes Proportion of votes Proportion of share capital Class A shares 13,416, ,416,822 4% 6% Class B shares 145,858, ,585,813 43% 67% Preference shares 58,25,.1 5,825, 17% 27% Total 217,524,952 33,827,635 1% 1% Interim Report January - September 21

24 WARRANTS Sagax has three warrant plans for the company s employees. In total, Sagax s employees hold warrants corresponding to.7% of the number of common shares outstanding. The company s CEO and Board members are not participating in the plans. These plans are valid for three years, encompassing the periods , -218 and Warrants entitle the holder to subscribe for new common shares in June 217, June 218 and June 219, respectively. The subscription price corresponds to the price paid for the common share at the start of the warrant plans, converted using the average share price trend for the listed property companies in accordance with Carnegie s property index (CREX) during the corresponding period. Accordingly, the warrants will have a value on condition that the price performance of the Sagax share exceeds the average for the listed property companies during each three-year period. PROFIT FROM PROPERTY MANAGEMENT PER COMMON SHARE Profit from property management per common share after dilution on a rolling 12-month basis amounted to SEK 5.91 (4.55) which, compared with the share price of the common share at the end of the period, corresponded to a multiple of 15.5 (13.). EQUITY PER COMMON SHARE Equity per common share after dilution amounted to SEK (21.49). EPRA NAV per common share amounted to SEK (31.86). For definitions of key ratios, see page 31. The share price for the Class B share at the end of the period was 277% (276) of equity per common share and 196% (186) of EPRA NAV per common share. Key data per common share 1) Sep 3 Sep 3 1) Comparative figures have been adjusted for the bonus issue of Class B shares in 213, by multiplying the number of shares by 11. The conditions of the bonus issue were ten Class B shares for each Class A share. 2) Profit from property management and cash flow pertain to a rolling 12 months. 3) Cash flow pertains to cash flow from operating activities before changes in working capital. 4) See page 31 for definition. Dec Dec Dec Dec Dec 31 Price of Class B share at the end of the period, SEK Profit from property management after dilution, SEK 2) Cash flow after dilution, SEK 2) 3) Equity after dilution, SEK EPRA NAV, SEK 4) Price of Class B share/profit from property management, multiple 2) Price of Class B share/cash flow, multiple 2) 3) Price of Class B share/equity, % Price of Class B share/epra NAV, % Share price/profit from property management per common share Multiple Share price in relation to equity and EPRA NAV % Share prince/profit from property management per Class B share, rolling 12 months Share price/equity per Class B share Share price/epra NAV per Class B share 22 Interim Report January - September

25 Ownership structure, September 3, 1) No. of shares No. of shareholders 1 5 3, , 889 1,1 2, 813 2,1 5, 1,84 5,1 1, 562 1,1 5, 57 5,1 243 Total 8,146 1) Including shares held by AB Sagax. Shareholder category No. Share of voting power Private individuals residing in Sweden 7,52 9% Private individuals residing abroad 65 1% Companies/institutions in Sweden % Companies/institutions abroad 355 7% Total 8,146 1% Shareholders by country No. Share of voting power Sweden 7,726 93% Luxembourg 22 3% UK 45 1% Norway 26 1% USA 53 1% Other countries 274 1% Total 8,146 1% Largest shareholders, September 3, 1) Class A shares No. of shares Class B shares Percentage of Preference shares Share capital Votes 2) David Mindus and companies 5,15, 37,693, % 26.% Salén family and companies 1,998,733 17,485,33 78,595 9.% 11.1% Rutger Arnhult and companies 2,736,29 16,278, , % 13.% Third Swedish National Pension Fund _ 12,178,829 _ 5.6% 3.6% Länsförsäkringar Fastighetsfond _ 11,365,552 _ 5.2% 3.4% Fourth Swedish National Pension Fund 2,858 2,23,167 2,875, % 1.5% Catella Hedgefond 4,733, % 1.4% Swedish Foundation for Strategic Research 3,25,45 1.5% 1.% Avanza Pension 28, ,638 2,247, % 1.% Volvo Pensions Foundation 2,94, 1.4%.9% Robur Realinvest 25, 2,359,141 _ 1.2% 1.4% Erik Selin Fastigheter 443,233 1,795, _ 1.% 1.8% Robur Småbolagsfond Sverige 133,731 1,863,275 _.9%.9% ICA-Handlarnas Förbund Finans 1,94,173.9%.6% Sifonen 14, 1,668,45 1,33.8%.9% Stiftelsen Stockholms Sjukhem 1,8,.8%.5% Banque Carnegie Luxembourg 696, , 5,.7% 2.3% Skandia Liv 134,472 1,448,824 _.7%.8% Patrik Brummer 1,5,.7%.4% Second Swedish National Pension Fund _ 1,476,25 _.7%.4% Total 2 largest shareholders 11,579,255 19,427,954 21,624, % 73.2% Other shareholders 1,837,567 35,43,176 36,625, % 26.8% Sub-total 13,416, ,858,13 58,25, 99.5% 1.% Treasury shares held by AB Sagax _ 1,, _.5%.% Total 13,416, ,858,13 58,25, 1.% 1.% of which, Board and employees 7,345,761 58,854,743 79, % 39.2% 1) Ownership structure at September 3 based on information from Euroclear Sweden. 2) Voting rights for treasury shares held by AB Sagax have been excluded. Interim Report January - September 23

26 Tikkurilantie 146 in Vantaa has been acquired during and encompasses 11,6 square meters of lettable area. The property is located just south of Helsinki Airport and north of Ringroad III, only two kilometers from the Aviapolis development area. On October 3,, possession was taken of an industrial property in Dordrecht, 25 kilometers southeast of central Rotterdam. This is the second Sagax acquisition in the Netherlands. The investment corresponds to SEK 81 M. The property comprises a site of 25,7 square meters and lettable area of 41, square meters, principally for warehouse and production purposes. The buildings were constructed in 2 and the property is fully leased. 24 Interim Report January - September