Interim Report Januari-September 2021

Interim report January-September 2021

Strong performance

July-September

• Rent revenue for the period amounted to SEK 46.9 million (39.1)
• Net operating income amounted to SEK 40.3 million (31.2)
• Income from property management amounted to SEK 28.4 million (9.0)
• Earnings per share amounted to SEK 1.42 (0.29).
• Investments in existing properties amounted to SEK 3.4 million (65.4)
• External valuations of investment properties in September yielded an increase in fair value of SEK 70.9 million (12.5)

Q3

January-September

• Rent revenue for the period amounted to SEK 137.5 million (108.4)
• Net operating income amounted to SEK 116.7 million (80.6)
• Income from property management amounted to SEK 69.3 million (20.3)
• Earnings per share amounted to SEK 2.45 (0.47).
• Long-termnet asset value per share amounted to SEK 39.5 (35.7).
• The fair value of investment properties amounted to SEK 3,624.3 million (3,003.1).
• Investments in existing properties amounted to SEK 43.5 million (110.8)
• Acquisition of Peab Center Helsingborg at a fair value amounting to SEK 131 million - the property is certified in accordance with the Swedish Green Building Council Silver, with energy classification B.
• Redemption of leasehold rights in Helsinki at a value of EUR 9.2 million
• Acquisition of logistics property in Södertälje with an underlying property value of SEK 96.5 million to be taken into possession in Q2 2022 - the property will be certified in accordance with the Swedish Green Building Council Silver, with energy classification B

Net operating income	Property value	Economic occupancy rate
30 September 2021	30 September 2021	30 September 2021

SEK 117million	SEK	3,624	million		96%
Summary of the Group's performance
			Jul-Sep		Jan-Sep	Full year
SEK million			2021 1		2020 2	2021 1	2020 2	2020 3
Rent revenue			46.9		39.1	137.5	108.4	151.5
Net operating income			40.3		31.2	116.7	80.6	115.0
Income from property management			28.4		9.0	69.3	20.3	16.0
Income from property management excl. Items affecting comparability		28.4		16.8	69.3	28.0	45.0
Income from property management excl. Items affecting comp. per share, SEK	0.48		0.15	1.17	0.34	0.76
Net income for the period			83.8		17.3	144.7	27.6	71.8
Net income for the period per share, SEK			1.42		0.29	2.45	0.47	1.22
Net loan-to-value ratio, %			34.3		31.9	34.3	31.9	33.1
Equity/assets ratio, %			55.9		62.6	55.9	62.6	54.4
Interest-coverage ratio, multiple			3.6		2.0	3.0	1.6	1.4
Interest-coverage ratio excl. items affecting comparability, multiple		3.6		2.0	3.0	1.6	2.0
Economic occupancy rate, %			96.0		94.0	96.0	94.0	95.5
Return on equity, %			3.8		0.9	6.6	1.4	3.5
Surplus ratio, %			85.9		79.9	84.8	74.4	75.9

Q3

CEO's comments

Strong quarter for Annehem

During the third quarter, income from property management rose 29.7 percent compared with the preceding quarter. The economic occupancy rate was 96.0 percent. Annehem's tenant structure, combined with long leases, provides a stable foundation that makes for a good platform for our ongoing growth journey. The leases have an average duration of 5.8 years. To summarise, it means that Annehem stands strong, even in more challenging times, which entails major opportunities for the company.

Annehem conducted external valuations in the third quarter. What we have seen is that the direct market has been very strong for the type of property that Annehem owns. The market's lower return

requirement, combined with increasingly effective property management, entailed an increase in fair Jörgen Lundgren, CEO value of SEK 70.9 million during the quarter. The net asset value per share amounted to SEK 39.5.

Annehem's net loan-to-value ratio amounted to 34.3 percent. The green financing that we currently have in place in the market nearly halves the interest margin compared with our initial financing.

Continued strong focus on our sustainability work

The important green transition is here now, and it is important that we all take it seriously. Annehem has made good progress, while we also understand that there is still much more to be done. A key step for the company is the certification process that was started together with Cicero - work that was further accelerated during the quarter to achieve certification under Green Equity.

We have an excellent platform as a starting point, since our property portfolio largely comprises modern, newly built properties and acquired projects with new buildings under construction. Our property portfolio provides us with favourable conditions to meet the demands made regarding green rent revenue.

During the quarter, work commenced to certify two existing properties, Sadelplatsen 4 and Partille Port 11:60, in accordance with Breeam-In-Use. The certification is expected to be completed during the fourth quarter.

In our business parks in Ängelholm and Ljungbyhed, a survey is being conducted as part of the energy declarations that are currently under way. The energy declarations will lead to an action plan to further reduce energy consumption in the business parks. We own large plots of land adjacent to the parks, where the possibilities of installing a solar farm are now being assessed.

Annehem is continuing to develop its logistics business, with the environment and electrification in focus. The transition to green transportation is now progressing at a fast pace and as a property owner in field of logistics, we have an important function to make this possible. Annehem is part of this journey and we very much look forward to creating the best conditions for Postnord in its future establishment in Södertälje. The property will be certified according to Swedish Green Building Council Silver, with energy classification B. We will further grow our exposure towards logistics, with quality and sustainability being prioritised ahead of volume.

Higher demands on attractive offices and flexibility

The importance of the office as a place that the employee genuinely wants to spend time in, the shared spaces have to promote well-being and a sense of community to a larger extent. Well-being and work environment are in focus and offices need to support the success of this transition. We are seeing that more companies are now implementing new work methods, with employees being increasingly offered the possibility to work from home. This entails, among other aspects, that offices are planning for fewer workplaces than their number of employees. The transition of the office market is often described as a threat, with reduced demand for office premises, but we regard it as an opportunity, since the demand for flexible offices is steadily increasing.

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Q3

Working from home also brings challenges for many, since household crowding has increased and it can be difficult to concentrate on work when the workplace has moved into the home. Accordingly, well- adapted offices are an important bridge to enable the employers' and employees' interests to coincide constructively. It is a challenging adjustment that imposes great demands on the tenant and the property owner. We want to support our tenants and potential tenants in this adjustment, which is facilitated by our properties offering a high level of flexibility. At Annehem, we are pleased that our property portfolio enables an effective partnership with our tenants in this respect.

Market commentary

During the quarter, optimism regarding growth in Sweden strengthened further. According to Statistics Sweden, GDP growth is expected to be 4.6 percent for 2021. For the 2022-2023 period, there is a return to the long-term trend line with growth figures of 3.9 percent and 2.3 percent, respectively. The corresponding GDP growth forecast for our neighbouring countries, where Annehem also has operations, was 2.7 percent for Norway in 2021, and then 3.7 percent and 1.9 percent for 2022 and 2023, respectively. Growth in Finland is estimated at 3.2 percent in 2021, and then 3.0 percent and 1.6 percent for 2022 and 2023, respectively.1

The concern about rising inflation has increased in a short time, leading to higher long-term interest rates. The long-term interest rate trend is primarily determined by the interest trend in the US. It will now be particularly important to monitor macro-economic developments. Strong increases in freight prices combined with higher energy prices are driving inflation upward. The shortage of labour may also drive the salary trend in the long term.

Jörgen Lundgren

CEO

1 Source: Nordic Outlook September 2021, SEB

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This is Annehem

Fastigheter

Business concept

Annehem Fastigheter owns and manages high-quality commercial, community service and residential properties located near good transport links. The properties are located in growth areas in the Nordics and possess a clear environmental profile. Annehem Fastigheter builds lasting relationships and value through management close to customers.

Vision

Annehem Fastigheter is to always be the number one choice for customers and employees wherever we choose to operate.

Mission

Annehem Fastigheter creates attractive and sustainable meeting places and homes. We believe that workplaces, meeting places and homes are tools for nurturing growth and attractiveness. The positive development of our customers in turn creates growth and attractiveness in the cities in which we operate.

Annehem Fastigheter's current property portfolio has the following geographic range:

• Capital Region: Stockholm, Helsinki and Oslo
• South Region: Malmö, Ljungbyhed, Ängelholm, Gothenburg and Helsingborg

Q3

Capital Region

Property value, SEK 2,490 million

South Region

Property value, SEK 1,134 million

	Helsingfors
Oslo	Stockholm
Göteborg
Ängelholm
Helsingborg
Malmö

Ultimes I&II in Finland

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Comments on

the Group's performance

Income statement

Third quarter

Rent revenue amounted to SEK 46.9 million (39.1), other property income amounted to SEK 8.6 million (8.7), and total property expenses to SEK 15.2 million (16.5), which means that net operating income increased to SEK 40.4 million (31.2). The positive trend for rent revenue was mainly attributable to the additional properties compared with the year-earlier period, but also to somewhat lower vacancies compared with the preceding year. The increase in rent revenue contributed to a sharp improvement in the surplus ratio from 79.9 percent in the third quarter of 2020 to 85.9 percent in the third quarter of 2021.

Other property income was in line with the year-earlier period. Other property income comprises invoiced operating costs and the rental guarantees issued (by Peab) for Peab Center Malmö, Ultimes I&II and Peab Center Helsingborg, which amounted to SEK 2.1 million during the quarter. The guarantees, made by Peab, cover 100 percent of the vacant spaces in Peab Center Malmö (from 1 March 2020), Ultimes I&II (from 1 July 2020), and Peab Center Helsingborg (from 1 May 2021). These guarantees are valid until the areas are let, but not longer than for 36 months from the issuing date.

Income from property management amounted to SEK 28.4 million (9.0) in the quarter. During the quarter, SEK 4.5 million was received from the sale of a subdivided property in Valhall park. Interest expenses amounted to SEK 11.0 million (9.4), which is somewhat higher than the year-earlier period due to higher borrowing. Other financial items amounted to SEK -0.3 million and mainly comprised currency effects of SEK 1.5 million and changes in value of currency futures of SEK -1.8 million.

The effects of unrealised changes in value of properties amounted to SEK 70.9 million (12.5).

Tax expense for the period amounted to SEK 16.8 million (4.3). Tax expense is due primarily to deferred tax on the growth in value of the property portfolio and the market valuation of derivatives.

Income for the period amounted to SEK 83.8 million (17.3).

January to September period

Rent revenue amounted to SEK 137.5 million (108.4), other property income amounted to SEK 29.4 million (18.9), and total property expenses to SEK 50.1 million (46.7), which means that net operating income increased to SEK 116.8 million (80.6). The positive trend for rent revenue was mainly attributable to the additional properties compared with the year-earlier period, but also to somewhat lower vacancies. The increase in rent revenue contributed to a sharp improvement in the surplus ratio from 74.4 percent in the January-September 2020 period to 84.8 percent in the same period in 2021.

Other property income developed positively following the rental guarantees issued (by Peab) for Peab Center Malmö, Ultimes I&II and the newly added Peab Center Helsingborg, which amounted to SEK 7.4 million for the January-September period. The guarantees, made by Peab, cover 100 percent of the vacant spaces in Peab Center Malmö (from 1 March 2020), Ultimes I&II (from 1 July 2020), and Peab Center Helsingborg (from 1 May 2021). These guaranties are valid until the areas are let, but not longer than for 36 months from the issuing date.

Income from property management amounted to SEK 69.3 million (20.3) in the quarter. During the quarter, SEK 4.5 million was received from the sale of a subdivided property in Valhall park.

Interest expenses amounted to SEK 34.3 million (35.7) and decreased year-on-year, as a result of lower indebtedness. Other financial items amounted to SEK 2.6 million and mainly comprised currency effects of SEK 6.1 million and changes in value of currency futures of SEK -3.5 million.

The effects of unrealised changes in value of properties amounted to SEK 106.1 million (16.4).

Tax expense for the period amounted to SEK -32.3 million (-9.1). Tax expense is due primarily to deferred tax on the growth in value of the property portfolio and the market valuation of derivatives.

Income for the period amounted to SEK 144.7 million (27.6).

Q3

Net operating income per quarter

SEK million

45

40

35

30

25

20

15

10

5

0

2020	2020	2021	2021	2021
Q3	Q4	Q1	Q2	Q3

Income from property management per quarter

excl. items affecting comparability

SEK million 30 27 24 21 18 15 12

9

2020 2020 2021 2021 2021

Q3 Q4 Q1 Q2 Q3

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