Year end report, January to December 2015

Transcription

1 Year end report, January to December 2015 Rental income SEK 4,339 million (3,602) Rental income increased by 4.3 per cent (3.4) for comparable properties Operating surplus SEK 2,175 million (1,882) Operating surplus increased by 4.0 per cent (7.1) for comparable properties Change in property value SEK 8,026 million (1,412), or 13.9 per cent (3.2) Change in value of derivative instruments SEK 533 million (-1,149) Net profit before tax SEK 9,206 million (852) Earnings per share SEK 2.33 (0.15) Investments in property holdings SEK 2,216 million (1,881) Purchases of properties SEK 12,093 million (9,678) Sales of properties SEK 5,755 million (1,084), 23 per cent (14) higher than fair value at the beginning of the year Summary Oct-Dec Oct-Dec Jan-Dec Jan-Dec Rental income, SEK million 1, ,339 3,602 Operating surplus, SEK million ,175 1,882 Operating profit, SEK million 4, ,977 3,226 Profit before tax, SEK million 4, , Earnings per share before and after dilution, SEK Rent level increase for comparable properties, per cent Real vacancy rate residential, per cent Loan-to-value, per cent Property fair value, SEK million 72,764 57,736 72,764 57,736 Number of apartments 51,231 47,896 51,231 47,896 1

2 Currency war boosts real estate prices The current currency war, with new printed money and interest rates used as weapons, has given a boost to real estate prices. We report a change in property value of SEK eight billion, of which SEK five billion is attributable to the current currency war, SEK one billion to property sales and SEK two billion to an increased operating surplus. Some markets are hot today, maybe even overheated. We will likely buy fewer properties in 2016 than we did in Our concentration in metropolitan areas has increased. At the end of the year, 72 per cent of our properties were in cities with a population of more than one million. This is an increase of 9 percentage points since the end of Apartments for metropolitans is our thing. During the year, we entered the United States with the purchase of properties in New York, Washington D.C. and Boston. We grew even further with additional purchases in London, Berlin, Hamburg, Toronto, Stockholm, Paris and Montreal. Property purchases totalled SEK twelve billion, of which SEK 5.5 billion were in the United States. Sales were carried out in Sweden, Germany, England and Canada. Our sales volumes reached nearly SEK six billion, 23 per cent above fair value at the beginning of the year. Among the sales, we sold a portfolio of 900 apartments in Germany - 43 per cent above fair value - and Hamlet Gardens in London with 121 apartments - 18 per cent above fair value. In the capital market, we issued both preferred shares for SEK two billion and bonds for SEK five billion. We started to issue certificates, the outstanding volume is SEK two billion. Standard & Poor s gave us a credit rating of BBB-. Loan-to-value has fallen from 52 to 48 per cent. For secured loans, loan-to-value went down from 47 to 36 per cent. The equity to assets ratio has risen by three percentage points to 41 per cent. Liquidity is SEK eight billion, SEK four billion more than short-term loans. Investments in properties amounted to SEK 2.2 billion, 18 per cent more than in Almost half of the investments were related to upgrading of vacant apartments. We are working tirelessly to provide both current and future tenants with better living in the megacities of the Western world. Pål Ahlsén CEO, Managing Director Reception at West Square, Boston. 2 Lobby at West Square, Boston.

3 Property portfolio Country Lettable space, thousand sqm Fair value Residential units Residential Commercial Total SEK million SEK/sqm Sweden 23,520 1, ,850 31,727 17,148 Germany 20,307 1, ,311 24,892 18,986 Canada 3, ,859 21,424 United States 1, ,451 48,769 England 1, ,840 67,660 France ,640 Total 51,231 3, ,587 72,764 20,284 Sweden 23,520 Canada 3,999 England 1,404 Germany 20,307 France 467 United States 1,534 3

4 Sweden Total property portfolio Average rent, SEK/sqm/year Residential units 23,520 Total portfolio ,156 Fair value, SEK million 31,727 Sales -1 - SEK per sqm 17,148 Comparable portfolio ,155 - required yield, per cent 4.30 Increase in comparable portfolio 2.6 % 30 Vacancy rate, residential, per cent 1.5 Comparable portfolio ,185 - due to upgrades, per cent 92 Purchases -1 - real vacancy rate, per cent 0.1 Total portfolio ,184 Haparanda 151 apartments* Umeå 572 apartments* Östersund 968 apartments* Stockholm 8,957 apartments Eskilstuna 604 apartments Lysekil 295 apartments Trollhättan 700 apartments Gothenburg 1,186 apartments Skövde 821 apartments Borås 1,496 apartments Halmstad 1,162 apartments Helsingborg 2,345 apartments Malmö 3,975 apartments Lund 288 apartments *) Sold per

5 Germany Total property portfolio Average rent, EUR/sqm/month Residential units 20,307 Total portfolio Fair value, SEK million 24,892 Sales SEK per sqm 18,986 Comparable portfolio required yield, per cent 4.35 Increase in comparable portfolio 5.1% 0.40 Vacancy rate, residential, per cent 5.0 Comparable portfolio due to upgrades, per cent 60 Purchases real vacancy rate, per cent 2.0 Total portfolio Kiel 406 apartments* Rostock 278 apartments Hamburg 4,143 apartments Lüneburg 99 apartments* Berlin 12,274 apartments Düsseldorf 740 apartments Cologne 587 apartments Frankfurt 635 apartments Mainz 410 apartments Munich 735 apartments *) Sales agreement signed, hand-over date during the first quarter

6 Canada Total property portfolio Average rent, CAD/sqft/month Residential units 3,999 Total portfolio Fair value, SEK million 4,859 Sales - - SEK per sqm 21,424 Comparable portfolio required yield, per cent 4.37 Increase in comparable portfolio 3.6 % 0.07 Vacancy rate, residential, per cent 11.1 Comparable portfolio due to upgrades, per cent 68 Purchases real vacancy rate, per cent 3.6 Total portfolio Toronto 82% of market value Montreal 18% of market value 10 km 10 km 6

7 England Total property portfolio Average rent, GBP/sqft/month Residential units 1,404 Total portfolio Fair value, SEK million 4,840 Sales SEK per sqm 67,660 Comparable portfolio required yield, per cent 4.22 Increase in comparable portfolio 11.5 % 0.19 Vacancy rate, residential, per cent 8.0 Comparable portfolio due to upgrades, per cent 65 Purchases real vacancy rate, per cent 2.8 Total portfolio London 20 km Properties with red dots were sold in January

8 France Total property portfolio Average rent, EUR/sqm/month Residential units 467 Total portfolio Fair value, SEK million 995 Sales - - SEK per sqm 62,640 Comparable portfolio required yield, per cent 4.21 Increase in comparable portfolio 47.3 % 6.82 Vacancy rate, residential, per cent 35.3 Comparable portfolio due to upgrades, per cent 96 Purchases real vacancy rate, per cent 1.3 Total portfolio Paris 10 km 8

9 Year end report, January to December 2015 United States Total property portfolio Residential units Fair value, SEK million - SEK per sqm - required yield, per cent Vacancy rate, residential, per cent - due to upgrades, per cent - real vacancy rate, per cent 1,534 5,451 48, Average rent, USD/sqft/month Total portfolio Sales Comparable portfolio Increase in comparable portfolio Comparable portfolio Purchases Total portfolio Boston1 New York 62% of market value 10 km 10 km Washington D.C.2 10 km 1) 29% of market value 2) 9% of market value 9

10 Total property return January-December 2015 SEK million Growth Jan-Dec Fair value, ,736 Revaluations 8, % Investments 2, % Purchases 12, % Sales -5,755 - Translation difference -1,551 - Fair value, , % Operating surplus 2, % SEK million p.a. Total property return 10, % Annual property return Per cent Jan Dec 2010 Jan Dec 2011 Jan Dec 2012 Jan Dec 2013 Jan Dec 2014 Jan Dec 2015 Jan Dec Income return Value growth Average 10

11 Interim report January to December 2015 Result January-December 2015 Operating surplus SEK 2,175 million Rental income for the year increased by SEK 737 million to SEK 4,339 million (3,602). Of the total increase in rental income, SEK 612 million is due to the purchase of new properties and SEK 125 million is due to increased rental income for comparable properties. Rental income for comparable properties, adjusted for changes in exchange rates, increased by 4.3 per cent compared to The real vacancy rate was 1.3 per cent, which is 0.3 percentage points higher than at the end of The vacancy rate was 4.3 per cent, of which 70 per cent was due to apartment upgrades and planned apartment sales. Property expenses amounted to SEK 2,164 million (1,720), of which SEK 408 million (314) relates to maintenance, equal to an average annual expense of SEK 116 per square meter. The operating surplus adjusted for currency differenses for comparable properties increased by 4.0 per cent. For the total portfolio, the operating surplus margin was 50.1 per cent (52.2). Increase in value of properties 13.9 per cent The increase in value of the properties was SEK 8,026 million (1,412), equivalent to 13.9 per cent (3.2). The increase in value is mainly due to a lower required yield. For comparable properties the required yield has decreased by 0.36 percentage points. Net financial items SEK -771 million Interest expenses for the year were SEK 1,277 million (1,191). The average interest rate was 3.44 per cent, 0.50 percentage points lower than at the end of Derivative financial instruments increased in value by SEK 533 million (-1,149) during the year, mainly due to a shorter duration. Other financial items amounted to SEK -26 million (-32). Rental income, comparable properties SEK million 2,909 Jan-Dec 2014 Operating surplus, comparable properties SEK million 1,684 Jan-Dec % 4.0% Real vacancy rate Percentage 3,034 Jan-Dec ,752 Jan-Dec 2015 Net profit before tax SEK 9,206 million Net profit before tax was SEK 9,206 million (852) Tax expenses SEK -2,035 million Tax expenses for the year amounted to SEK 2,035 million (350), of which SEK 2,001 million mainly relates to deferred tax from unrealized gains on properties. SEK 34 million is reported as current tax, mainly on sale of properties. Akelius Residential Property Group has no ongoing tax disputes. 1 Jan Jan

12 Property portfolio changes Property purchases SEK 12,093 million 45 per cent of purchases were made in the United States, 14 per cent in Germany, 14 per cent in England, 11 per cent in Canada, 9 per cent in Sweden and 7 per cent in France. The average required yield was 4.38 per cent. Property investments SEK 2,216 million Investments in properties totalled SEK 2,216 million (1,881), equivalent to an annual investment of SEK 628 per square meter. 42 per cent of investments refers to apartment upgrades. Property sales SEK 5,755 million We sold properties in Sweden for SEK 2,718 million, in Germany for SEK 1,559 million, in England for SEK 1,367 million and in Canada for SEK 111 million. Selling prices were 23 per cent higher than the fair value at the beginning of the year. In total 2,752 apartments, with a profit of SEK 800 million, including SEK 121 million in selling expenses. Well-kept residential properties are attractive investments for many types of investors, thus helping residential properties provide good liquidity. This year, we have sold properties to individuals, to small local businesses and large investors. Property market value SEK 72,764 million The market value was SEK 72,764 million (57,736), which is equivalent to an average of SEK 20,284 per square meter. The average required yield for the entire portfolio was 4.33 per cent, which is 0.39 percentage points lower than at the beginning of the period. Required yield Per cent Opening, Purchases Sales Comparable Exchange rate differences 0.00 Closing, Purchases SEK million New York London Boston Berlin Toronto Stockholm Paris Washington Montreal Others Purchases SEK 000s/ sqm SEK 000s Sales SEK million 3,822 22% ,682 1,689 1,597 1,392 Required yield United States France England Canada Germany Sweden 23% 5,755 3,362 % Purchase Fair value Sale price price plus beginning investments of the year 12

13 Financing Equity to assets ratio 41 per cent During the year, equity increased by SEK 8,084 million to SEK 30,667 million. The equity to assets ratio increased from 38 to 41 per cent. Loan-to-value 48 per cent Interest-bearing debt increased during the year by SEK 5,619 million to SEK 35,955 million. The loan-to-value ratio decreased from 52 to 48 per cent. Loan-to-value per cent % 36% Secured loans decreased by SEK 540 million to SEK 27,126 million. The secured loan-to-value decreased from 47 to 36 per cent. The ambition is for the loan-to-value for secured loans to be 25 percent at end of The secured loans have been borrowed from 35 banks in six countries. Unsecured loans encompass three listed bond loans, commercial papers and loans from related companies. These increased during the year by SEK 6,159 million to SEK 8,829 million. The nominal value of unsecured bonds and commercial papers has increased by SEK 5,846 million to SEK 7,196 million, fully in line with the ambition to increase our presence in the capital market. Pledged assets amounted to SEK 34,921 million and consist mostly of real estate mortgages. Capital tied up 5.7 years Interest-bearing debt was tied up for an average of 5.7 years, compared to 4.5 at the end of The loans that mature within one year amount to SEK 3,847 million. The refinancing risk is mitigated by strong liquidity, highly diversified funding and a low loan-to-value. Interest rate hedge 4.3 years SEK 11,883 million had a fixed interest rate term of more than five years and SEK 9,257 million had a fixed interest rate term of less than one year. The average interest rate of 3.44 per cent is 0.50 percentage points lower than at the end of The average interest rate hedge was 4.3 years, as compared to 4.2 years at the end of Liquidity SEK 7,704 million Available funds in the form of cash and unutilized credit facilities totalled SEK 7,704 million. The unborrowed share of the properties fair value corresponded to SEK 45,637 million Loan-to-value secured Average interest rate per cent Dec Dec Dec Dec Dec Interest coverage ratio times 3.0 Realized value growth EBITDA Loan-to-value unsecured Jan-Dec 2015 See page 21 for more information Pro forma 12 months 13

14 Other financial information Cash flow for the year Cash flow before changes in working capital increased by 29 per cent to SEK 855 million (661). Operating activities generated a cash flow of SEK 974 million (702). Net cash from investing activities was SEK -8,182 million (-10,657). Cash flow required for acquisitions of properties is secured before signing acquisition agreements. Profitable and non-mandatory upgrades can, if needed, be stopped within a three-month period. Cash flow from financing activities was SEK 7,166 million (10,174). Preference shares In April 2015, Akelius carried out an issue of 6,060,606 new preference shares at a price of SEK 330 per preference share, which provided the company with SEK 2,000 million before transaction costs. The total number of preference shares at the end of the period amounted to 18,835,606, equivalent to SEK 6,020 milion reported in equity. Preference shares represent 0.65 per cent of the total number of shares in Akelius Residential Property AB. At ember 2015, the price paid per preference share was SEK During 2015 Akelius paid dividends to the owners of preference shares of SEK 346 million. An additional dividend of SEK 5 per preference share was paid on February 5, 2016, for a total of SEK 94 million. Akelius rating In June 2015, Standard & Poor s Rating Services rated Akelius as BBB- with a stable outlook. Listed bonds are rated as BB+. Parent company The parent company s net financial income for the year amounted to SEK 127 million (-448), while profit before tax totalled SEK 1,127 million (-624), which is attributable to positive changes in the fair value of derivative financial instruments of SEK 291 million (-440) and dividends received for SEK 943 million. Fourth quarter Net income for the quarter amounted to SEK 3,374 million (-271) and has been impacted by change in the fair value of derivative financial instruments of SEK 275 million (-338) and of properties of SEK 4,093 million (231). During the fourth quarter, rental income increased to SEK 1,145 million (983) and property costs increased to SEK 650 million (559), which resulted in an improvement in the operating surplus to SEK 494 million (424). Net financial items totalled SEK -70 million (-667), including change in the fair value of derivatives. Cash flow for the fourth quarter amounted to SEK -163 million (157). Cash flow generated from operations was SEK 682 million (196). Net cash flow from investing activities amounted to SEK -1,624 million (-4,642), which is essentially explained by the acquisition of investment properties for SEK -3,239 million (-4,009) and the sale of properties for SEK 2,523 million (27). Financing activities had a positive effect on cash flow of SEK 779 million (4,603). Assets held for sale Akelius has signed an agreement for the sale of real estate in Östersund, Umeå and Haparanda for SEK 1,878 million, a total of 1,693 apartments and 133 commercial premises. An agreement was signed to sell four properties with a total of 121 apartments and a value of SEK 207 million outside London, England. Agreements have also been signed in Germany for the sale of properties in Kiel with a value of SEK 431 million, in Rostock with a value of 219 million, and apartments in Hamburg with a value of SEK 65 million. Fair value measurement is based on the purchase price stated in the signed purchase agreement between buyers and sellers when agreements have been signed. The purchase price is considered to belong to Level 1 of the fair value hierarchy IFRS

15 Other financial information When no signed agreement exists, the fair value is determined in the same way as for investment properties. As of December 31, 2015, the disposal group consisted of assets of SEK 2,802 million minus liabilities amounting to SEK 158 million, consisting of a deferred tax liability of SEK 122 million and other liabilities of SEK 36 million. Basis of presentation Statement of compliance The Akelius Residential Property Group s Interim report has been prepared in accordance with IAS 34, Interim Financial Reporting. The financial statements of the parent company Akelius Residential Property AB, corporate identity number , have been prepared in accordance with the Swedish Annual Accounts Act and the accounting standard RFR 2, Accounting for Legal Entities. The accounting policies adopted in the preparation of the interim report are consistent with those followed in the preparation of the Group s annual financial statements for the year The figures in this interim report have been rounded up or down, while the calculations have been made without rounding up or down. As a result, the figures in certain tables and key figures may appear not to add up correctly. Estimates and assessments Estimates and assessments are evaluated continuously based on empirical factors and other aspects, including anticipation of future events that are reasonable under the prevailing circumstances. The same principles are followed in the interim reporting as in the previous annual report. Derivative instruments Derivative instruments consist mainly of interest rate swaps. Estimates of the fair value of derivatives are based on Level 2 of the fair value hierarchy. Compared to 2014, no transfers have occurred between the different levels of the hierarchy, and no significant changes have been made regarding the valuation method. Cash flow in the derivative contracts is compared to the cash flow that would have been received if the contracts have been concluded at market prices on the closing date. The difference in the cash flows is discounted using an interest rate that takes into account the credit risk. The present value obtained is reported in the balance sheet at fair value. Changes in fair value are recognized in the income statement without the application of hedge accounting. Valuation of properties The fair value of all properties was assessed by internal valuations on the closing date. The valuations are based on a cash flow model for each individual property, with separate assessments of future earning ability and required rates of return. The cash flow model is based on actual income and expenses adjusted for a normalized future cash flow. Risks and uncertainties The operational risks are limited through concentration of the property portfolio to residential properties in metropolitan areas. Strong residential rental markets in Sweden, Germany, Canada, England, France and the United States reduce the risk for long-term vacancies. In order to further reduce the risk, or variations in cash flow, interest rates are secured on a longterm basis. Access to capital from a large number of banks, through the capital market and from private individuals, mitigates the refinancing risk. Overseas investments are hedged to reduce the impact of currency movements on the Group s equity to assets ratio. No material changes in the company s assessment of risks have occurred since the publication of the 2014 annual report. 15

16 Other financial information New accounting principles The following standards, amendments to standards and interpretations have been issued but are not yet effective for annual periods beginning on and after 1 January Those which may be relevant to the Group are set out below. The Group does not plan to early adopt these standards. IFRS 9 Financial Instruments. IFRS 9 introduces new requirements for the classification and measurement of financial assets. Under IFRS 9, financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS 9 introduces additional changes relating to financial liabilities. The IASB currently has an active project to make limited amendments to the classification and measurement requirements of IFRS 9 and to add new requirements to address the impairment of financial assets and hedge accounting. IFRS 9 is effective for annual reporting periods beginning on or after , with early adoption permitted. IFRS 15 Revenue from Contracts with Customers. IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programs. IFRS 15 is effective for annual reporting periods beginning on or after , with early adoption permitted. At this time, the impact of the above publications is not expected to be material to the Group. Other The Annual Report will be available on Akelius website on The Annual General Meeting will be held on in Stockholm. Announcement will be posted on the company s website. As the Board has yet to decide on proposal for allocation of profit, this information will be presented in the notice convening the Annual General Meeting. Personnel At the end of the period, 558 (454) people were employed in the Group. Related party transactions During the year, Akelius purchased architectural services from affiliates of the board member Igor Rogulj amounting to SEK 2 million. Akelius Residential Property AB sold the subsidiary Akelius Spar AB to the majority shareholder Akelius Apartments Ltd for SEK 116 million. Loans from related parties have decreased by SEK 1,239 million. In addition to these transactions, transactions occurred with companies in Akelius Foundation Group. The scope and focus of these operations has not changed significantly during the year. All transactions were executed on market terms. Events after balance sheet date We have acquired properties with 258 apartments in Boston and 415 apartments in Montreal. We have sold properties in northern Sweden for SEK 1,878 million and 121 apartments in London for GBP 16.7 million. Stockholm, Sweden, , Pål Ahlsén, CEO, Managing Director The interim report has not been examined by the company s auditors. 16

17 Consolidated statement of comprehensive income SEK million 2015 Oct-Dec 3 months 2014 Oct-Dec 3 months 2015 Jan-Dec 12 months 2014 Jan-Dec 12 months Rental income 1, ,339 3,602 Operating expenses ,756-1,406 Maintenance Operating surplus ,175 1,882 Central administration Other income and expenses Net income from the disposal of investment properties* Net income from the revaluation of investment properties 3, ,105 1,293 Operating profit 4, ,977 3,226 Interest income Interest expenses ,277-1,191 Other financial income and expenses Change in fair value of derivative financial instruments ,149 Profit before tax 4, , Tax -1, , Profit for the period / year 3, , Items that will be reclassified to profit or loss: Translation difference Comprehensive income for the period / year 2, ,561 1,248 Profit attributable to: - owners of the parent company 3, , no-controlling interests Total comprehensive income attributable to: - owners of the parent company 2, ,443 1,245 - no-controlling interests Earnings per share before and after dilution, SEK *) SEK 121 million refer to transaction cost for 2015 and SEK 21 million for

18 Consolidated statement of financial position SEK million Assets Intangible assets Investment property 69,963 57,736 Tangible fixed assets Derivative financial instruments 25 - Deferred tax 8 9 Financial fixed assets Total non-current assets 70,164 57,899 Trade and other receivables Derivative financial instruments 12 - Cash and cash equivalents Assets held for sale* 2,802 - Total current assets 3, Total assets 74,024 58,789 Equity and liabilities Total equity 30,667 22,583 Interest-bearing liabilities 32,108 26,519 Derivative financial instruments 1,983 2,466 Deferred tax 4,175 2,384 Other liabilities Total non-current liabilities 38,315 31,402 Interest-bearing liabilities 3,847 3,816 Derivative financial instruments 2 53 Trade and other payables 1, Liabilities held for sale Total current liabilities 5,042 4,804 Total equity and liabilities 74,024 58,789 Borrowings - unsecured 8,826 2,670 - secured 27,126 27,666 Total 35,955 30,336 *) SEK 2,801 million was attributable to investment properties including SEK 1,878 million for the sale of apartments in Norrland, Sweden. 18

19 Consolidated statement of cash flows SEK million 2015 Oct-Dec 3 months 2014 Oct-Dec 3 months 2015 Jan-Dec 12 months 2014 Jan-Dec 12 months Operating surplus ,175 1,882 Central administration Other income and expenses Reversal of depreciation and impairment losses Interest paid ,213-1,173 Income tax paid Cash flow before changes in working capital Change in current assets Change in current liabilities Cash flow from operating activities Investments in intangible fixed assets Investment in properties ,216-1,881 Acquisition of investment properties -3,239-4,009-12,093-9,678 Acquisition of net assets Proceeds from sales of investment properties 2, ,755 1,064 Proceeds from sale of net assets Purchase and sale of other fixed assets Cash flow from investing activities -1,624-4,642-8,182-10,657 New share issue - 2,975 1,974 8,960 Shareholder contribution ,377 Loans raised 2,987 5,047 19,026 10,087 Repayment of loans -1, ,385-6,043 Purchase and sale of derivative instruments Dividend , ,136 Cash flow from investing activities 779 4,603 7,166 10,174 Cash flow for the period / year Cash and cash equivalents at beginning of year Translation difference in cash and cash equivalents Cash and cash equivalents at end of year

20 Consolidated statement of changes in equity SEK million Attributable to owners of the parent company Share capital Share premium Currency translation reserve Retained earnings Total Noncontrolling interests Total equity Balance at ,263 1, ,896 15, ,169 Acquired minority Redistribution Hybrid loan ,365 1,365 Dividend - -1, ,211-4, ,200 Share issue 475 8, ,960-8,960 Profit for the year Other comprehensive income Balance at ,737 8, ,120 21,187 1,396 22,583 Acquired minority Redistribution Dividend Share issue 4 1, , ,974 Group contribution Tax on group contribution Profit for the year ,055 7, ,171 Other comprehensive income Balance at ,741 10, ,748 29,178 1,489 30,667 20

21 Additional information on the financial key figures Realized value growth Akelius manages and develops residential properties with the ability to generate a stable and growing operating surplus. A higher operating surplus leads to positive value development for our properties. A part of the business model is to realize value growth, which is defined as sales revenue, less acquisition value and investments. Profit before tax and revaluation including realized value growth is a good indicator of the ability to generate cash flow. Pro forma Operating surplus and value growth are reinvested in current and new properties. This leads to a growing operating surplus. It is therefore more appropriate to analyze the business based on the situation on the balance sheet date. The pro forma is based on the property portfolio s gross rent, real vacancy, estimated operating expenses and maintenance costs during a normal year, as well as central administration expenses. The interest expenses ibased on net debt on the balance date calculated according to the average rate. No tax has been calculated as it relates largely to deferred tax, which does not affect cash flow. The pro forma is not a forecast for the coming twelve months as it contains no estimate of rental, vacancy, currency exchange, future property purchases and sales or interest rate changes. SEK million Jan-Dec 2015 Pro forma, 12 months revenue and cost at balance sheet date Rental income 4,339 4,635 Operating expenses -1,756-1,784 Maintenance Operating surplus 2,175 2,505 Central administration excluding depreciation EBITDA 2,073 2,402 Net interest expense -1,273-1,255 Other financial income and expenses Profit before tax and revaluation 770 1,117 Realized value growth 1,812 - Interest coverage ratio Interest coverage ratio excluding realized value growth Net debt as per ,718 35,718 Net debt/ebitda Net debt/ebitda including realized value growth

22 Interest-bearing liabilities Duration Years Interest rate hedge Amount in SEK million Interest rate hedge Average interest rate, per cent Share, per cent Capital tied up Amount in SEK million Share, per cent 0-1 9, , , , , , , , , , , , , , , ,785 5 > 10 1, , Total 35, , Segment information January-December 2015, SEK million Sweden Germany Other Total Rental income 2,216 1, ,339 Operating expenses ,756 Maintenance Operating surplus 1, ,175 Revaluation of investment properties 2,947 3,732 1,346 8,026 Total property return 4,058 4,579 1,563 10,201 Total property return, per cent Property fair value 31,727 24,892 16,145 72,764 January-December 2014, SEK million Sweden Germany Other Total Rental income 2,101 1, ,602 Operating expenses ,406 Maintenance Operating surplus 1, ,882 Revaluation of investment properties ,412 Total property return 1,901 1, ,294 Total property return, per cent Property fair value 29,571 21,171 6,694 57,736 22

23 Statement of comprehensive income for the parent company SEK million 2015 Oct-Dec 3 months 2014 Oct-Dec 3 months 2015 Jan-Dec 12 months 2014 Jan-Dec 12 months Rental income Operating costs Maintenance Operating surplus Depreciation, write down and reversals of fixed assets Gross profit Administration expenses Other income Profits from sales of properties Operating profit Profit from shares in subsidiaries Finance income ,093 Finance expences ,032-1,101 Change in fair value of derivatives Profit before appropriations , Appropriations Profit before tax , Tax Profit of the period / year , Comprehensive income ,

24 Statement of financial position for the parent company SEK million Assets Intangible assets 1 5 Total intangible fixed assets 1 5 Shares in subsidiaries 13,164 13,270 Receivables from group companies 9,231 1,055 Deferred income tax assets Total financial fixed assets 22,726 14,702 Total non-current assets 22,727 14,707 Receivables from group companies 20,182 7,911 Derivative financial instruments 12 - Other current receivables 1 7 Prepaid expenses and accrued income Cash and cash equivalents Total current assets 20,461 8,131 Total assets 43,188 22,838 Equity and liabilities Total equity 14,114 11,410 Interest-bearing liabilities 9,112 3,108 Interest-bearing liabilities, group companies 17,379 2,510 Derivative financial instruments Total non-current liabilities 26,965 6,289 Interest-bearing liabilities 1, Interest-bearing liabilities, group companies 74 3,984 Accounts payable 2 2 Other current liabilities Accrued expenses and prepaid income Total current liabilities 2,109 5,139 Total equity and liabilities 43,188 22,838 24

25 Key figures Equity Equity, SEK million 30,667 22,583 15,169 9,970 8,567 Equity to assets ratio, per cent Net asset value to assets ratio, per cent Return on equity, per cent Interest-bearing liabilities Loan-to-value, secured loans, per cent Loan-to-value, per cent Interest coverage ratio including realized value growth Interest coverage ratio excluding realized value growth Capital tied up, year Fixed interest rates Average interest rate, per cent Fixed interest term, year Properties Number of apartments 51,231 47,896 41,319 35,443 35,151 Rentable area, thousand sqm 3,587 3,472 2,992 2,576 2,632 Growth in rental income 1, per cent Growth in operating surplus 1, per cent Real vacancy rate residential, per cent Vacancy rate residential, per cent Fair value of properties, SEK million Opening balance 57,736 44,104 35,437 32,352 28,269 Change in fair value 8,026 1,412 1,569 2,671 1,025 Investments 2,216 1,881 1,531 1,493 1,138 Purchases 12,093 9,678 6,901 1,663 3,792 Sales -5,755-1,084-1,801-2,383-1,828 Reclassification Exchange differences -1, Closing balance 72,764 57,736 44,104 35,437 32,352 Fair value, per sqm 20,284 16,629 14,736 13,755 12,292 Required yield, per cent Change in required yield 1, per cent

26 Key figures Properties Sweden Average residential rent, SEK /sqm/year 1,184 1,156 1,114 1,074 1,026 Growth in average residential rent 2, per cent Growth in rental income 3, per cent Growth in operating surplus 3, per cent Fair value, SEK million 31,727 29,571 26,797 23,456 22,574 Fair value, SEK per sqm 17,148 14,899 14,115 13,809 12,055 Required yield, per cent Number of apartments 23,520 24,407 23,867 21,707 23,354 Properties Germany Average residential rent, EUR /sqm/month Growth in average residential rent 2, per cent Growth in rental income 3, per cent Growth in operating surplus 3, per cent Fair value, SEK million 24,892 21,171 15,549 11,981 9,778 Fair value, SEK per sqm 18,986 16,752 15,398 13,649 12,903 Required yield, per cent Number of apartments 20,307 19,423 15,769 13,736 11,797 Properties Canada 4 Average residential rent, CAD /sqft/month Growth in average residential rent 2, per cent Growth in rental income 3, per cent Growth in operating surplus 3, per cent Fair value, SEK million 4,859 3,432 1,758 1, Fair value, SEK per sqm 21,424 21,808 20,710 22,026 19,833 Required yield, per cent Number of apartments 3,999 2,823 1,683 1, Properties England 5 Average residential rent, GBP /sqft/month Growth in average residential rent 2, per cent Growth in rental income 3, per cent Growth in operating surplus 3, per cent Fair value, SEK million 4,840 3,395 1,792 1, Fair value, SEK per sqm 67,660 53,606 36,430 32,730 22,872 Required yield, per cent Number of apartments 1,404 1,

27 Key figures Properties France Average residential rent, EUR /sqm/month Growth in average residential rent 2, per cent Growth in rental income 3, per cent Growth in operating surplus 3, per cent Fair value, SEK million Fair value, SEK per sqm 62,640 60, Required yield, per cent Number of apartments Properties United States Average residential rent, USD /sqft/month Growth in average residential rent 2, per cent Growth in rental income 3, per cent Growth in operating surplus 3, per cent Fair value, SEK million 5, Fair value, SEK per sqm 48, Required yield, per cent Number of apartments 1, ) For comparable properties. The property portfolio in England was bought from fellow subsidiaries in March The table for ember 2015 shows the development as if the properties had been owned since 1 January ) Growth from period start to period end for comparable portfolio. 3) Growth for the period compared to the previous year s period for comparable portfolio. 4) The property portfolio in Toronto, Canada, was bought from a fellow subsidiary at the end of The tables above show the development as if the properties had been owned since ) The property portfolio in England was bought from fellow subsidiaries in March The tables above show the development as if the properties had been owned since

28 Definitions Equity to assets ratio Interest coverage ratio Loan-to-value Net assets Net asset value Net asset value to assets ratio Net debts Operating surplus margin Property portfolio Realized value growth Real vacancy rate Return on equity Vacancy rate Equity in relation to total assets. Operating surplus plus central administration expenses, realized value growth, other financial income and expenses with add back of depreciation and impairment charges in relation to net interest. Net assets divided by net debts. Total assets minus cash, pledged cash and liquid assets. Equity, deferred tax and derivatives. Net asset value in relation to net assets. Interest bearing debts minus cash, pledged cash and liquid assets. Operating surplus in relation to rental income. Investment property and investment property classified as assets held for sale. Proceeds from the sale of investment properties minus acquisition costs, accumulated investments and cost of sale. The total number of vacant apartments less the number of apartments vacant due to renovation work or planned sales, in relation to the total number of apartments. Real vacancy is measured on the first day after the month end. Comprehensive income divided by opening equity. The number of vacant apartments in relation to the total number of apartments. Vacancy is measured on the first day after the month end. 28

29 Akelius in brief Head office Svärdvägen 3A Box 104, S Danderyd Tel +46 (0) Sweden Rosenlundsgatan 50 Box Stockholm Tel +46 (0) akelius.se Germany Leipziger Platz 14 D Berlin Tel +49 (0) akelius.de Canada 289 Niagara Street Toronto M6J 0C3 Tel +1 (416) akelius.ca England Coin House 2 Gees Court London W1U 1JA Tel +44 (0) akelius.co.uk Frankrike 67 Boulevard Haussmann Paris Tel akelius.fr Apartments for metropolitans 80 per cent of the portfolio is situated in Berlin, Hamburg, London, Toronto, Montreal, New York, Boston, Stockholm, Gothenburg and Malmö. Better living Our mission is to provide our current and future tenants with a better living, by continuously upgrading our buildings and our service. Acquire via cherry picking Akelius prefers to make smaller acquisitions of exactly the right properties - to cherry pick - rather than a smaller number of larger acquisitions of not quite the right properties. Strong capital structure, low refinancing risk Akelius has agreements with thirty-five banks, listed preference shares and listed senior unsecured bonds. Akelius is Sweden s largest listed property company. We have sixteen thousand shareholders. First-class personnel More than one hundred and forty employees have graduated in Residential Real Estate Management from Akelius University. Financial calendar Annual report Interim report Jan-Mar Interim report Jan-June Interim report Jan-Sep United States 101 Federal Street Suite 1900 Boston, MA akelius.us 29