Hufvudstaden

Quarterly Report • Nov 9, 2023

Q3Interim Report January–September 2023

Interim Report January–September 2023

• • Net revenue from property management was SEK 1,515 million (1,365), an increase of 11 per cent. Including intra-Group rental revenue, net revenue from property management was SEK 1,654 million (1,515).
• • Gross profit from property management increased by 13 per cent, totalling SEK 1,030 million (914). Including intra-Group rental revenue, gross profit from property management was SEK 1,169 million (1,064).
• • Net result for the period was SEK -1,585 million (1,053), equivalent to SEK -7.83 per share (5.20). The decrease is attributed to negative unrealised changes in the value of the property holdings.
• • The fair value of the property holdings was SEK 47.5 billion (49.5 at year-end), resulting in a net reinstatement value (EPRA NRV) of SEK 188 per share (201 at year-end). Unrealised changes in the value of the property holdings amounted to SEK -2,854 million (495) for the period.
• • The equity ratio was 59 per cent (61), the net loan-to-value ratio was 21 per cent (18) and the interest coverage ratio was 5.2 (8.0).
• • The rental vacancy rate at the end of the period was 8.8 per cent (7.8). Excluding current development projects, the rental vacancy level was 5.7 per cent (5.1).
• • Hufvudstaden has the most satisfied office tenants in the industry, and won Customer Satisfaction Index for the sixth consecutive year in the large company category.

OPERATING EVENTS DURING THE THIRD QUARTER

In Bibliotekstan, the rebuilt Vildmannen 7 property was inaugurated. Behind the preserved façade, a unique and modern building was created with mainly office space and retail premises.

Simon Kucher and HCL Tech have signed respective leases for approximately 900 square metres and around 550 square metres of office space in the redeveloped Hästhuvudet 13 property.

A decision was taken to make the NK department stores cashless. Cash payments account for a low percentage of the total sales. The decision also strengthens the safety and security. The Charlotte Tilbury Beauty cosmetics brand has been launched at NK and CAIA Cosmetics is to open its first physical store on the entrance level of the NK department store in Stockholm. CAIA Cosmetics is one of Europe's fastest growing cosmetics brands and the pop-up store will open in the atrium.

On the men's floor in the NK department store in Stockholm, the NK Man department has developed the concept and extended the leased space.

The baby and kids clothing brand Newbie is moving to a larger store on street level in the Femman shopping centre in Gothenburg.

PERFORMANCE MEASURES

	Jan-Sep	Jan-Sep	Jan-Dec
SEK m	2023	2022	2022
Net revenue, property management, gross	1,654	1,515	2,055
Rent revenue, intra-Group	-139	-150	-200
Net revenue, property management, net	1,515	1,365	1,855
Gross profit, property management	1,030	914	1,235
Unrealised changes in property value, investment properties	-2,854	495	-209
Operating result	-1,797	1,451	1,089
Net result for the period	-1,585	1,053	722
Fair value of properties, SEK bn	47.5	50.0	49.5
Net loan-to-value ratio, properties, %	21.1	18.3	18.7
Interest coverage ratio, multiple	5.2	8.0	7.7
EPRA vacancy rate, %	5.7	5.1	4.0
EPRA EPS, SEK	3.95	3.78	5.07
EPRA NRV per share, SEK	188	203	201

The market for offices in attractive city locations remained stable in the third quarter. Even if the letting process has become slightly more protracted, several new contracts have been signed in Stockholm. We also received the good news that we have confirmed our top ranking in the large company category of this year's Consumer Satisfaction Index for office tenants.

Our low risk profile gives us stability and the opportunity to complete our development projects despite the higher interest rate environment. One of these projects is Vildmannen 7, which was inaugurated in August. Most of the premises are already leased to operations that enhance Bibliotekstan as a marketplace.

The situation in the retail sector is currently challenging with high inflation and rising interest rates. Despite the situation we are observing that vacancies which arising in our attractive marketplaces are relatively quickly let to new concepts. Attention and customer flows for the CAIA Cosmetics pop-up store at the Stockholm NK department store have been exceptional. This is a good example of how physical and digital retail complement each other.

Anders Nygren PRESIDENT

GROUP

RESULTS

Property management

Net revenue from property management excluding intra-Group rents of SEK 139.2 million (150.0) totalled SEK 1,515.1 million (1,364.7) for the period. The increase was attributable primarily to indexation as well as higher gross rents in conjunction with new leases and renegotiations. Since early 2022, net revenue was charged with vacant premises attributable to the entire Inom Vallgraven 12 block in Gothenburg being emptied for the Johanna project. Operating expenses amounted to SEK -485.1 million (-450.3). The increase was mainly attributable to higher costs for development projects, property tax and property management. Gross profit was SEK 1,030.0 million (914.4) excluding intra-Group rents.

The sales-based rent supplement is reported in the fourth quarter. The sales-based rent supplement for the preceding year totalled SEK 12.0 million, of which the NK properties accounted for SEK 9.9 million. Apart from the sales-based rent supplement, there are no other material seasonal variations in rents.

The property management results for each business area are reported on page 10.

Other segments

Other segments comprise NK Retail and other operations. Other operations consist of Cecil Coworking, NK e-commerce and the parking business in Parkaden.

Net revenue for NK Retail amounted to SEK 546.4 million (540.0). Costs excluding intra-Group rents of SEK -82.0 million (-100.3) were SEK -520.2 million (-499.2). Gross profit for NK Retail excluding intra-Group rental costs was SEK 26.2 million (40.8). The result was impacted by weak sales. Sales for NK Retail are impacted by seasonal variations, with the first quarter of the year

normally being the weakest and the fourth quarter the strongest.

Net revenue for other operations amounted to SEK 101.6 million (95.3). Costs excluding intra-Group rents of SEK -57.2 million (-49.7) were SEK -62.5 million (-55.5). Gross profit excluding intra-Group rental costs was SEK 39.1 million (39.8).

For further information, see Segment Reporting on page 10.

Other profit and loss items

Central administration totalled SEK -38.1 million (-38.8). Unrealised changes in value of investment properties totalled SEK -2,854.3 million (494.6). For further information, see pages 4-5.

Financial income and expense

Net financial income and expense totalled SEK -198.2 million (-123.8). Interest income was SEK 6.6 million (0.2). Borrowing costs totalled SEK -187.8 million (-106.9), of which fees for withdrawal of new mortgage deeds comprised SEK 0.0 million (-5.1). Interest expenses for leasing, primarily ground rents, totalled SEK -17.0 million (-17.1). The increase in financial expenses for borrowing was largely attributable to a higher average interest rate. For further information, see page 6.

Tax

The Group's tax for the period was SEK 410.4 million (-274.4), of which SEK -59.3 million (-66.7) in current tax and SEK 469.7 million (-207.7) in deferred tax. The change in deferred tax is attributed to the period's negative unrealised changes in the value of the property holdings.

Net result for the period

The consolidated net result was SEK -1,584.9 million (1,052.6). The decrease is attributed to the period's negative unrealised changes in the value of the property holdings.

PROPERTY HOLDINGS

The fair value of the Hufvudstaden property holdings is based on an internal valuation, where classification takes place on level 3 according to IFRS 13. The assessed value as of September 30, 2023 was SEK 47,507 million (49,547 at year-end). The decrease can be attributed to negative unrealised changes in the value of the property holdings but was partially offset by investments during the period. Rentable floor space totalled approximately 390,800 square metres (386,600 at year-end), the increase is attributable to the completion of the Vildmannen 7 property.

The total rental vacancy rate as of 30 September 2023, was 8.8 per cent (7.0 at year-end) and the total floor space vacancy rate was 12.9 per cent (11.2 at year-end). The rental vacancy rate, excluding current development projects (EPRA vacancy rate), totalled 5.7 per cent (4.0 at year-end). The increase was mainly attributable to the vacation of a few office and retail premises and a couple of additional vacant floor spaces in the completed Vildmannen 7 property. New leases have already been signed for some of these premises.

Acquisitions and investments

Total investments amounted to SEK 867.7 million (714.1).

At present, current and planned projects are worth approximately SEK 3 billion. Major projects are presented in the table below.

During the third quarter, the Vildmannen 7 property in Bibliotekstan was mainly completed and inaugurated. The remaining activities includes work in the retail premises. Cirio Law Firm has moved in to its leased offices of approximately 2,900 square metres. Chanel Fragrance and Beauty Boutique and A.P.C. have accessed their leased retail premises, each of around 100 square metres. During the fourth quarter, ATP Atelier will access a store of around 80 square metres. The new building offers highly modern and efficient offices as well as attractive stores in a unique environment.

In the Hästhuvudet 13 property, at the Sveavägen and Kungsgatan intersection in Stockholm, a major redevelopment of approximately 3,100 square metres of office space and upgrade of technical installations is in progress. The strategy and market consulting company Simon Kucher has signed a lease for approximately 900 square metres and the IT consultancy company HCL Tech for around 550 square metres of office space. The extensive

redevelopment and expansion of the Johanna project continues at the Inom Vallgraven 12 block in Gothenburg. During the quarter, work with sheet piling and piling was completed. Works on the foundation and frame as well as façades and new window openings are being carried out. The new frame has in parts achieved full construction height and part of the block has been weatherproofed. Installation work is in progress in the basement level of the existing part. The project comprises a total of approximately 44,000 square metres gross area and rentable floor space is expected to increase approximately 11,600 square metres. Completion is expected to be in late 2025 or early 2026.

Property value and net asset value

At the end of each quarter, Hufvudstaden carries out an internal valuation of each individual property. The purpose of the valuation is to assess the fair value of the property holdings. To assure the quality of the valuation, external valuations of parts of the property holdings are obtained at least once a year. A continuous update is made during the year of the internal valuation of the properties in order to take account of purchases, sales and investments. Hufvudstaden also examines on a continuous basis whether there are other indications of changes in the fair value of the properties. These indications could take the form, for example, of major leases, terminations, and material changes in the yield requirements.

In the light of the above, the unrealised change in the value of the property holdings for the period was SEK -2,854.3 million (494.6). The total value of the property holdings as of September 30, 2023, was SEK 47.5 billion, including investments made during the period. The unrealised decrease in value was due to increasing yield requirements, but was offset to some extent by the effect of higher rents.

The average yield requirement increased 5 basis points compared to the second quarter of 2023 and was 4.0 per cent at the above valuation (3.7 at year-end).

Valuation method

Valuation of the property holdings is carried out by assessing the fair value of each individual property. The valuation is conducted using a variation of the location price method, known as the net capitalisation method. The method means that the market yield requirements are put in relation to the net operating income of the properties. In the case of other project properties and undeveloped land, the valuation is based on a completed building with a deduction of construction costs, as well as financial expenses and the cost of vacant space that arose during the construction period.

City	Property	Status	Type of premises	Project floor space (sq m)	Of which added floor space (sq m)	Estimated investment1) (SEK m)	Estimated completion (year)
Stockholm	Vildmannen 7	Final stage	Office, retail & residential	4,800	4,800	800	2023
Stockholm	Hästhuvudet 13	Current	Office	3,100	–	135	2023/2024
Stockholm	Orgelpipan 7	Local planning	Office	–	–	–	–
Gothenburg	Inom Vallgraven 12 block	Current	Office, retail & restaurant	31,600	11,600	2,200	2025/2026
Gothenburg	NK Gothenburg	Local planning	Office, retail & restaurant	–	–	–	–

Major current and planned projects in the third quarter 2023

1) Includes estimated costs for rent losses and financing that are continuously recognised in profit and loss as well as costs for evacuation. The investment in the Vildmannen 7 property includes extraordinary costs resulting from the fire in 2017.

The yield requirement is based on information compiled about the market's yield requirement for actual purchases and sales of comparable properties in similar locations. If few or no deals have been concluded in the property's sub-area, transactions in the adjoining area are analysed. Even transactions that have yet to be finalised or other impacting factors provide guidance on market yield requirements.

The yield requirement can vary between different regions and different sub-areas within the regions. Account is also taken of the type of property, the technical standard, the construction of the building, and major investment requirements. For leasehold properties, the calculation is based on a yield requirement that is 0.20 percentage points higher than for equivalent properties where the land is freehold. The net operating income of the properties is based on market rental revenue, the long-term rental vacancy rate, and normalised operating and maintenance costs. If there is greater uncertainty than normal, this is offset by the increased direct yield requirements in the valuation.

When carrying out the valuation, the following yield requirement figures for office and retail properties have been applied:

Yield requirements, property valuation1)

Stockholm	3.6-4.0 per cent
Gothenburg	4.5-4.8 per cent
Property holdings, average	4.0 per cent

1) Valuation date: September 30, 2023.

Sensitivity analysis

Fair value is an assessment of the probable sales price on the market at the time of valuation.

However, the price can only be set when a transaction has been completed. In the case of an external property valuation, a range is often given to indicate the degree of uncertainty surrounding the estimates of fair value. The value range is usually +/- 5 per cent but can vary depending, among other things, on the market situation, the technical standard of the property, and investment requirements. Hufvudstaden's property holdings are valued at SEK 47.5 billion, with a degree of uncertainty of +/- 5 per cent, which means that the estimated fair value varies by +/- SEK 2.4 billion. Below are the key factors that influence the valuation and the consequent impact on profit or loss before tax.

Sensitivity analysis, property valuation1)

	Change, +/-	Impact on profit or loss before tax, +/-
Rental revenue	SEK 100/sq m	SEK 1,010 m
Property costs	SEK 50/sq m	SEK 505 m
Rental vacancy rate	1.0 percentage points	SEK 640 m
Yield requirement	0.25 percentage points	SEK 3,075 m

1) Valuation date: September 30, 2023.

Net asset value

Based on the valuation of the property holdings, the net reinstatement value (EPRA NRV) is SEK 38.0 billion or

SEK 188 per share. Net tangible assets (EPRA NTA) were SEK 35.8 billion or SEK 177 per share following a deduction of estimated actual deferred tax liabilities. This assessment is based on current tax legislation and market practice, which means that properties can be sold via a limited company without tax implications. The estimated actual deferred tax has been assumed to be 5 per cent.

Net asset value, September 30, 2023

	SEK m	SEK/share
Equity	29,130.8	144
Reversal
Recognised deferred tax1)	8,902.1	44
EPRA NRV	38,032.9	188
Deduction
Intangible assets	-96.7	0
Estimated actual deferred tax 5%	-2,160.7	-11
EPRA NTA	35,775.5	177
Reversal
Intangible assets as above	96.7	0
Recognised deferred tax1) less
estimated actual deferred tax	-6,741.4	-33
EPRA NDV	29,130.8	144

1) Deferred tax according to the balance sheet related to investment properties and right-of-use assets attributable to ground rents.

HUFVUDSTADEN HAS THE MOST SATISFIED OFFICE TENANTS IN THE INDUSTRY

Fastighetsbarometern1) is the industry's Customer Satisfaction Index. With a score of 88 on a 100-point scale, Hufvudstaden topped the large company category for the sixth consecutive year. The average for the entire industry was 79. Hufvudstaden's customers assigned the highest score in the areas of contact person, image, location, problem reporting and communication.

RENTAL MARKET

The office rental market in Stockholm City reported a stable trend during the third quarter. The letting process took somewhat longer compared with the start of the year. The demand was mainly for modern and flexible office premises in the best locations. Vacancy levels remained within the normal range and in Stockholm's most attractive locations – Bibliotekstan, Norrmalmstorg/Hamngatan, and the Hötorget area – market rents for modern offices were estimated at SEK 6,900–9,600 per square metre and year, excluding the property tax supplement. Market demand for retail premises was stable and several leases were signed. The market rents for retail premises in prime commercial locations were in the range of SEK 11,000– 24,000 per square metre and year, excluding the property tax supplement.

In the central sub-markets of Gothenburg, the demand was mainly for modern and flexible office premises. Vacancies were higher than the normal range and market rents in the most attractive locations were between SEK 3,200–4,000 per square metre and year, excluding the property tax supplement. For retail premises in central commercial locations, market rents were between SEK 3,000–13,000 per square metre and year, excluding the property tax supplement.

¹⁾ Fastighetsbarometern (The Property Barometer) is organised by the Swedish Property Federation and the consulting company CFI Group.

The outcome from the Group's renegotiations was positive for office premises and negative for retail premises. During the period, a total of 41,800 square metres were renegotiated at an annual rental value of SEK 304 million. On average, the renegotiations resulted in an increase in rent of approximately 1 per cent.

FINANCING

Hufvudstaden's financing requirements are met through a number of the major Nordic banks and the capital market. Total borrowings as of September 30, 2023, amounted to SEK 9,600 million (9,000 at year-end). Interest-bearing net debt was SEK 9,275 million (8,547 at year-end). In addition, the lease liability according to IFRS 16 amounted to SEK 729 million (712 at year-end), and total net debt was SEK 10,004 million (9,259 at year-end). In addition to loans outstanding, there are unutilised loan commitments amounting to SEK 5,000 million.

Hufvudstaden has an MTN programme totalling SEK 12,000 million, and a commercial paper programme amounting to SEK 3,000 million. The amount outstanding in bonds was SEK 5,800 million and there was SEK 1,300 million in commercial paper.

Hufvudstaden ensures that at any point in time there are unutilised loan assurances to cover all outstanding commercial paper. As of September 30, 2023, cash and cash equivalents and unutilised loan commitments amounted to SEK 5,325 million, which covers all bond and commercial paper maturities for the next three years.

Financing facilities, SEK m, September 30, 2023

	Framework/
Loan/facility type	facility volume	Unutilised
MTN programme	12,000	6,200
Comm. paper programme	3,000	1,700
Bank loans and commitment	7,500	5,000

The average fixed interest period was 1.2 years (1.7 at year-end), the average capital tie-up period was 2.4 years (2.6 at year-end), and the average effective rate of interest was 3.3 per cent (1.9 at year-end) including, and 3.1 per cent (1.7 at year-end) excluding, the cost of unutilised loan commitments. The capital tie-up period for commercial paper loans was calculated based on the underlying loan commitments. To achieve the desired interest payment structure, borrowing takes place at both a fixed and a variable rate of interest. Of the long-term borrowings, SEK 4,500 million carries a fixed rate of interest. Financial assets and liabilities are recognised at amortised cost, which essentially concurs with fair value, apart from the bond loans. For bond loans with a fixed rate of interest, the surplus value is SEK 334.1 million (397.3 at year-end). These values have been calculated according to level 2 in IFRS 13, i.e., the value has been calculated based on official market listings.

Fixed interest structure, September 30, 2023

Maturity, year	Credit, SEK m	AER, %	Proportion, %
<1	5,100	5.01)	52
1–2	1,500	1.1	16
2–3	1,500	1.2	16
3–4	1,500	1.6	16
Total	9,600	3.32)	100

1) Including costs for unutilised loan commitments.

2) The average effective rate excluding costs for unutilised loan commitments was 3.1 per cent.

Capital tie-up structure, SEK m, September 30, 2023

Maturity,	Bank	Bonds/	Total	Unutilised
year	loans	Comm.paper	liabilities	commitments
<1	500	1,800	2,300	–
1–2	1,000	2,300	3,300	1,000
2–3	–	1,500	1,500	2,000
3–4	–	1,500	1,500	1,000
4–5	1,000	–	1,000	1,000
Total	2,500	7,100	9,600	5,000

Green financing

The aim of green financing is to finance green properties and investments in projects promoting climate transition and sustainability. Hufvudstaden has a total of SEK 4.3 billion in green financing, corresponding to 45 per cent of total borrowing. Green bonds are issued in accordance with Hufvudstaden's framework, which complies with the Green Bond Principles. The frameworks of the issuing institutions are complied with when taking up green bank loans. Of the total green financing, bonds amounted to SEK 2.3 billion and bank loans amounted to SEK 2.0 billion. The goal is to gradually increase the share of green financing.

THIRD QUARTER

Net revenue from property management excluding intra-Group rents of SEK 42.6 million (49.4) totalled SEK 511.2 million (459.3), an increase of 11 per cent. The increase was attributable primarily to indexation as well as higher gross rents in conjunction with renegotiations and new leases. Property management expenses amounted to SEK -156.0 million (-143.8). The increase was primarily due to a rise in property tax and higher maintenance costs. Gross profit from property management excluding intra-Group rents of SEK 42.6 million (49.4) totalled SEK 355.2 million (315.5).

Net revenue for NK Retail amounted to SEK 177.8 million (181.5). Costs excluding intra-Group rents of SEK -23.4 million (-33.0) were SEK -166.6 million (-165.1). Gross profit for NK Retail excluding intra-Group rental costs was SEK 11.2 million (16.4).

Net revenue for other operations amounted to SEK 33.0 million (31.0). Costs excluding intra-Group rents of SEK -19.2 million (-16.4) were SEK -18.8 million (-18.9). Gross profit excluding intra-Group rental costs was SEK 14.2 million (12.1).

Changes in the value of investment properties amounted to SEK -559.3 million (85.0). Net financial income and expense totalled SEK -79.4 million (-42.1).

SHARES AND SHAREHOLDERS

Hufvudstaden Class A shares are listed on Nasdaq Stockholm. The company's Class C shares were delisted from Nasdaq Stockholm in January 2020. The company had 33,677 shareholders at the end of the period. The proportion of foreign ownership as of September 30, 2023 was 19.9 per cent (21.0 at year-end) of the total number of shares outstanding. The Class A share price as of September 30, 2023 was SEK 121.00, and total market capitalisation of all shares based on the Class A share price was SEK 25.6 billion.

Conversion of Hufvudstaden's Class C shares

At the 2001 Annual General Meeting, a conversion clause was added to Hufvudstaden's Articles of Association. Shareholders have the right at any time to request conversion of Class C shares into Class A shares. During the period, 1,097 Class C shares were converted to Class A shares. No shares were converted in the third quarter of 2023.

Share structure as of September 30, 2023

	Number of	Number of
Share class	shares		votes Equity, % Votes, %
A (1 vote)	203,001,207	203,001,207	96.1	19.7
C (100 votes)	8,270,726	827,072,600	3.9	80.3
Total		211,271,933 1,030,073,807	100.0	100.0

Shares bought back

Treasury shares held as of September 30, 2023 totalled 8,965,000 Class A shares, corresponding to 4.2 per cent of all shares issued and 0.9 per cent of the total number of votes. No buyback took place during the period or after the end of the reporting period. At the 2023 Annual General Meeting, the Board of Directors was granted renewed authorisation to acquire Class A shares up to 10 per cent of all issued shares and to transfer treasury shares held by the company.

Share buybacks as of September 30, 2023

Total		Other shareholders
number of	Treasury
211.3	9.0	202.3
–	–	–
211.3	9.0	202.3
	shares As of September 30, 2023	shares

MATERIAL RISKS AND UNCERTAINTIES

The Group is mainly exposed to financing, interest and credit risks and changes in the value of its property holdings.

The security situation in the world has deteriorated sharply due to wars in Ukraine and the Middle East. This has resulted in negative effects on the financial markets and great volatility in the energy market with periodically significantly higher prices. Inflation remains high, and to offset this several central banks have gradually raised policy rates. The Swedish Security Service has raised the terrorist threat level to 4 on a five-level scale, which means that the threat level in and against Sweden is assessed as high. Hufvudstaden is monitoring these developments and follows the recommendations and advice provided by the authorities.

Other than the above, no other material risks or uncertainties have been identified apart from those described in the Annual and Sustainability Report 2022.

MATERIAL TRANSACTIONS WITH RELATED PARTIES

No material transactions with related parties took place during the period.

ACCOUNTING POLICIES

Hufvudstaden applies the EU-endorsed IFRS standards. This interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting, and applicable provisions of the Swedish Annual Accounts Act. Disclosures according to IAS 34.16A are presented in both the financial statements and in other parts of the interim report. Accounting policies and computation bases remained unchanged from the most recent Annual and Sustainability Report.

New standards and interpretations

New and amended standards that took effect in 2023 have not had any significant effects on the Group's financial reporting.

FORTHCOMING INFORMATION

Year-End Report 2023	February 15, 2024
Annual and Sustainability Report 2023	February 2024
Annual General Meeting 2024	March 21, 2024

The information in this Interim Report is information that Hufvudstaden AB (publ) is obligated to publish under the EU Market Abuse Regulation and the Securities Market Act. The information was published through the auspices of the persons named below on November 9, 2023.

This information is also published on Hufvudstaden's website, www.hufvudstaden.se/en

Questions can be answered by Anders Nygren, President, and Åsa Roslund, Vice President and CFO, on telephone +46 8 762 90 00.

REPORT ON RESULTS – SUMMARY

	July September	July September	January September	January September	January December
GROUP, SEK m	2023	2022	2023	2022	2022
Net revenue1)
Property management, gross	553.8	508.7	1,654.3	1,514.7	2,054.7
Rent revenue, intra-Group	-42.6	-49.4	-139.2	-150.0	-199.8
Property management, net	511.2	459.3	1,515.1	1,364.7	1,854.9
Other segments	210.8	212.5	648.0	635.3	890.9
	722.0	671.8	2,163.1	2,000.0	2,745.8
Property management expenses
Maintenance	-11.1	-4.7	-33.5	-21.1	-32.1
Operation and administration	-83.1	-88.4	-268.1	-256.1	-355.0
Property tax	-60.2	-49.2	-178.7	-168.6	-227.0
Depreciation	-1.6	-1.5	-4.8	-4.5	-5.9
Property management expenses	-156.0	-143.8	-485.1	-450.3	-620.0
Other segments, gross expenses	-228.0	-233.4	-721.9	-704.7	-972.0
Rental expenses, intra-Group	42.6	49.4	139.2	150.0	199.8
Other segments, net expenses	-185.4	-184.0	-582.7	-554.7	-772.2
Operating expenses	-341.4	-327.8	-1,067.8	-1,005.0	-1,392.2
Gross profit	380.6	344.0	1,095.3	995.0	1,353.6
– of which Property management	355.2	315.5	1,030.0	914.4	1,234.9
– of which Other segments	25.4	28.5	65.3	80.6	118.7
Central administration	-12.5	-13.3	-38.1	-38.8	-55.7
Operating profit before changes in value	368.1	330.7	1,057.2	956.2	1,297.9
Changes in value, investment properties	-559.3	85.0	-2,854.3	494.6	-209.1
Operating result	-191.2	415.7	-1,797.1	1,450.8	1,088.8
Financial income and expense	-79.4	-42.1	-198.2	-123.8	-184.5
Result before tax	-270.6	373.6	-1,995.3	1,327.0	904.3
Tax	58.2	-77.1	410.4	-274.4	-182.3
Net result	-212.4	296.5	-1,584.9	1,052.6	722.0
Other comprehensive income	–	–	–	–	–
Total comprehensive income or loss for the period	-212.4	296.5	-1,584.9	1,052.6	722.0
Average number of outstanding shares	202,306,933	202,306,933	202,306,933	202,306,933	202,306,933
Net earnings for the period per share before and
after dilution, SEK	-1.05	1.46	-7.83	5.20	3.57

1) For breakdown of net revenue, see table on page 10.

REPORT ON FINANCIAL POSITION – SUMMARY

	September 30,	September 30,	December 31,
GROUP, SEK m	2023	2022	2022
Investment properties	47,507.0	49,959.9	49,546.9
Right of use assets	727.5	708.9	711.0
Other non-current assets	185.3	161.2	165.4
Total non-current assets	48,419.8	50,830.0	50,423.3
Current assets	778.8	901.2	812.1
Total assets	49,198.6	51,731.2	51,235.4
Equity	29,130.8	31,592.6	31,262.0
Non-current interest-bearing liabilities	7,300.0	6,000.0	6,500.0
Deferred tax liabilities	8,783.5	9,369.8	9,253.2
Non-current leasing liabilities	720.6	701.8	702.8
Other non-current liabilities	99.5	101.4	104.0
Other provisions	28.1	30.8	31.7
Total non-current liabilities	16,931.7	16,203.8	16,591.7
Current interest-bearing liabilities	2,300.0	3,000.0	2,500.0
Current leasing liabilities	7.9	7.9	9.0
Other liabilities	828.2	926.9	872.7
Total current liabilities	3,136.1	3,934.8	3,381.7
Total equity and liabilities	49,198.6	51,731.2	51,235.4

REPORT ON CHANGES IN EQUITY – SUMMARY

GROUP, SEK m	January September 2023	January September 2022	January December 2022
Equity, opening balance	31,262.0	31,066.0	31,066.0
Total comprehensive income or loss for the period	-1,584.9	1,052.6	722.0
Dividend	-546.2	-526.0	-526.0
Equity, closing balance	29,130.8	31,592.6	31,262.0

REPORT ON CASH FLOWS – SUMMARY

	January	January	January
GROUP, SEK m	September 2023	September 2022	December 2022
Income before tax	-1,995.3	1,327.0	904.3
Depreciation/impairments	34.9	45.6	53.4
Changes in value, investment properties	2,854.3	-494.6	209.1
Other changes	-3.6	-1.3	-0.4
Income tax paid	-59.3	-66.7	-91.2
Cash flow from current operations	831.0	810.0	1,075.2
before changes in working capital
Increase/decrease in inventory	-27.0	-32.2	-69.9
Increase/decrease in operating receivables	-62.6	-63.5	-35.2
Increase/decrease in operating liabilities	-49.0	105.9	54.2
Cash flow from current operations	692.4	820.2	1,024.3
Investments in properties	-814.5	-675.7	-966.3
Investments in other non-current assets	-53.2	-38.4	-51.5
Cash flow from investments	-867.7	-714.1	-1,017.8
Loans raised	4,500.0	1,800.0	2,800.0
Amortisation of loan debt	-3,900.0	-2,000.0	-3,000.0
Amortisation of leasing debt	-6.8	-7.1	-9.5
Dividend paid	-546.2	-526.0	-526.0
Cash flow from financing	47.0	-733.1	-735.5
Cash flow for the period	-128.3	-627.0	-729.0
Cash and cash equivalents at the beginning of the period	453.0	1,182.0	1,182.0
Cash and cash equivalents at the period-end	324.7	555.0	453.0
Cash flow from current operations per share, SEK	3.42	4.05	5.06
Cash flow for the period per share, SEK	-0.63	-3.10	-3.60

SEGMENT REPORT – SUMMARY

The Group's operations are divided into three segments, property management, NK Retail and other operations. Other operations comprise of Cecil Coworking (Business Area Stockholm) and NK e-commerce and the parking business in Parkaden (Business Area NK). The segments are divided into the business areas, which are in line with the Company's operational control system.

	Business Area Stockholm		Business Area NK		Business Area Gothenburg		Intra-Group elimination		Total
GROUP, SEK m	Jan-Sep 2023	Jan-Sep 2022	Jan-Sep 2023	Jan-Sep 2022	Jan-Sep 2023	Jan-Sep 2022	Jan-Sep 2023	Jan-Sep 2022	Jan-Sep 2023	Jan-Sep 2022
Property management
Net revenue	1,048.1	942.6	361.7	352.9	244.5	219.2	-139.2	-150.0	1,515.1	1,364.7
Property management expenses	-225.8	-213.4	-180.7	-158.8	-78.6	-78.1			-485.1	-450.3
Gross profit property management	822.3	729.2	181.0	194.1	165.9	141.1	-139.2	-150.0	1,030.0	914.4
NK Retail
Net revenue			546.4	540.0					546.4	540.0
Expenses			-602.2	-599.5			82.0	100.3	-520.2	-499.2
Gross profit NK Retail			-55.8	-59.5			82.0	100.3	26.2	40.8
Other operations
Net revenue	33.5	30.0	68.1	65.3					101.6	95.3
Expenses	-31.5	-26.2	-88.2	-79.0			57.2	49.7	-62.5	-55.5
Gross profit other operations	2.0	3.8	-20.1	-13.7			57.2	49.7	39.1	39.8
Central administration									-38.1	-38.8
Changes in value, investment properties									-2,854.3	494.6
Operating profit or loss									-1,797.1	1,450.8
Financial income and expense									-198.2	-123.8
Profit or loss before tax									-1,995.3	1,327.0

BREAKDOWN OF NET REVENUE

		Group		Parent Company
SEK m	Jan-Sep 2023	Jan-Sep 2022	Jan-Dec 2022	Jan-Sep 2023	Jan-Sep 2022	Jan-Dec 2022
Rent revenue	1,527.7	1,377.0	1,870.8	1,143.3	1,028.5	1,397.2
Service revenue	89.0	83.0	114.8	39.7	34.1	47.2
Sale of goods	546.4	540.0	760.2	–	–	–
Total net revenue	2,163.1	2,000.0	2,745.8	1,183.0	1,062.6	1,444.4

PERFORMANCE MEASURES

	September 30,	September 30,	Full year
GROUP	2023	2022	2022
Property-related
Rentable floor space, 1,000 m2	390.8	386.5	386.6
Rental vacancy rate, %	8.8	7.8	7.0
Floor space vacancy rate, %	12.9	12.8	11.2
Fair value, SEK bn	47.5	50.0	49.5
Surplus ratio, %	70.7	70.3	69.8
Net operating income, SEK m	1,169.2	1,064.4	1,434.7
Financial
Return on equity, %	-4.5	4.0	2.3
Return on capital employed, %	-3.6	4.3	2.6
Equity ratio, %	59	61	61
Interest coverage ratio, multiple	5.2	8.0	7.7
Debt/equity ratio, multiple	0.3	0.3	0.3
Net loan-to-value ratio, properties, %	21.1	18.3	18.7
Gross margin, %	50.6	49.8	49.3
Data per share
Net earnings per share for the period, SEK	-7.83	5.20	3.57
Equity, SEK	143.99	156.16	154.53
Properties, fair value, SEK	234.83	246.95	244.91
Number of outstanding shares, 1,000	202,307	202,307	202,307
Average number of outstanding shares, 1,000	202,307	202,307	202,307
Number of issued shares, 1,000	211,272	211,272	211,272
EPRA
EPRA Earnings (Earnings from property mgmt. after nom. tax), SEK m	799	765	1,025
EPRA EPS, SEK	3.95	3.78	5.07
EPRA NRV (Net reinstatement value), SEK m	38,032.9	41,078.5	40,635.1
EPRA NRV per share, SEK	188	203	201
EPRA NTA (Net tangible assets), SEK m	35,775.5	38,686.1	38,270.8
EPRA NTA per share, SEK	177	191	189
EPRA NDV (Net disposal value), SEK m	29,130.8	31,592.6	31,262.0
EPRA NDV per share, SEK	144	156	155
EPRA vacancy rate, %	5.7	5.1	4.0

PERFORMANCE MEASURES PER QUARTER

GROUP	Jul-Sep 2023	Apr-Jun 2023	Jan-Mar 2023	Oct-Dec 2022	Jul-Sep 2022	Apr-Jun 2022	Jan-Mar 2022	Oct-Dec 2021
Share price, series A share, SEK	121.00	128.10	140.70	148.30	122.30	113.00	133.80	135.20
Net revenue, SEK m	722	726	715	746	672	684	644	703
Return on equity, %	-4.4	-3.0	0.5	2.4	4.2	4.0	3.1	9.8
Return on equity, adjusted %	3.1	3.0	2.8	2.9	2.9	2.9	2.6	3.0
Equity ratio, %	59	59	60	61	61	61	60	61
Gross margin, %	52.7	51.0	48.2	48.1	51.2	50.8	47.1	48.7
Surplus ratio, %	71.8	71.4	68.8	68.6	71.7	71.2	67.8	68.2
Net operating income, SEK m	397.8	392.2	379.2	370.3	364.9	361.2	338.3	333.3
Net profit or loss per share for the
period, SEK	-1.05	-4.31	-2.47	-1.63	1.46	1.86	1.88	8.33
Equity per share, SEK	143.99	145.04	149.36	154.53	156.16	154.70	152.84	153.56
EPRA EPS, SEK	1.33	1.37	1.25	1.29	1.30	1.33	1.15	1.28
EPRA NRV per share, SEK	188	189	195	201	203	201	199	199
Cash flow per share from current
operations, SEK	0.66	1.25	1.51	1.01	1.36	1.45	1.24	1.47

ALTERNATIVE PERFORMANCE MEASURES

Hufvudstaden applies the European Securities and Markets Authority (ESMA) Guidelines on Alternative Performance Measures. According to these guidelines, alternative performance measures refer to a financial measurement of earnings performance, financial position, financial result or cash flow not defined according to IFRS or the Swedish Annual Accounts Act. Hufvudstaden is also a member of the European Public Real Estate Associations (EPRA) and reports financial key figures defined by EPRA. Below is the derivation of alternative performance measures. For definitions, see page 15.

September 30, September 30,	Full year
SEK m 2023 2022	2022
Net asset value, see page 5.
Net debt
Non-current interest-bearing liabilities 7,300 6,000	6,500
Non-current leasing liabilities 721 702	703
Current interest-bearing liabilities 2,300 3,000	2,500
Current lease liabilities 8 8	9
Cash and cash equivalents -325 -555	-453
Net debt 10,004 9,155	9,259
Equity ration
Equity 29,131 31,593	31,262
Total assets 49,199 51,731	51,235
Equity ratio, % 59 61	61
Net loan-to-value ratio, properties
Net debt 10,004 9,155	9,259
Carrying amount, properties 47,507 49,960	49,547
Net loan-to-value ratio, properties, % 21.1 18.3	18.7
Interest coverage ratio
-1,7092) 1,6042) Profit or loss before tax	904
Reversal of changes in value 2,854 -495	209
Financial expense1) 2732) 1592)	166
Total 1,418 1,268	1,279
Financial expense1) 2732) 1592)	166
Interest coverage ratio, multiple 5.2 8.0	7.7
EPRA Earnings (Earnings from property mgmt. after nom. tax)
Operating profit or loss before changes in value 1,057 956	1,298
Financial income and expense -198 -124	-185
Earnings from property management 859 832	1,113
Current tax, earnings from property management -60 -67	-88
EPRA Earnings (Earnings from property mgmt. after nom. tax) 799 765	1,025
Average number of outstanding shares, million 202.3 202.3	202.3
EPRA EPS, SEK 3.95 3.78	5.07
EPRA vacancy rate, %
Rental value for vacant space, in total 210 175	155
Rental value for vacant space, project 74 59	68
Total rental value 2,394 2,231 Vacancy rate, in total, % 8.8 7.8	2,214 7.0
Vacancy rate, project, % 3.1 2.7	3.0
EPRA vacancy rate, % 5.7 5.1	4.0

1) Excluding fees for withdrawal of mortage deeds.

2) Recalculated 12 months.

RESULT AND FINANCIAL POSITION

Net revenue amounted to SEK 1,183.0 million (1,062.6). The increase was attributable primarily to indexation as well as higher gross rents in conjunction with new leases and renegotiations. Since early 2022, net revenue was charged with vacant premises attributable to the entire Inom Vallgraven 12 block in Gothenburg being emptied for the Johanna project.

Operating expenses amounted to SEK -684.0 million (-607.7). Maintenance costs increased mainly due to larger development projects. Gross profit was SEK 499.0 million (454.9). Net financial income and expense was SEK -169.3 million (-100.3).

Cash and cash equivalents at the end of the period amounted to SEK 308.8 million (536.7). Investments in properties and inventory amounted to SEK 459.6 million (348.9).

MATERIAL RISKS AND UNCERTAINTIES

The company is mainly exposed to financing, interest and credit risks. Other than what is stated for the Group on page 7, no other material risks or uncertainties have been identified apart from those described in the Annual and Sustainability Report 2022.

MATERIAL TRANSACTIONS WITH RELATED PARTIES

No material transactions with related parties took place during the period.

ACCOUNTING POLICIES

The Parent Company applies RFR 2 Accounting for Legal Entities and the Swedish Annual Accounts Act. This interim report has been prepared in accordance with Section 9 of the Annual Accounts Act, Interim Financial Statements. The accounting policies and basis for calculations remain unchanged from the Annual and Sustainability Report 2022.

INCOME STATEMENT – SUMMARY

	July September	July September	January September	January September	January December
PARENT COMPANY, SEK m	2023	2022	2023	2022	2022
Net revenue1)	395.9	356.3	1,183.0	1,062.6	1,444.4
Operating expenses	-217.7	-199.1	-684.0	-607.7	-835.3
Gross profit	178.2	157.2	499.0	454.9	609.1
Central administration	-12.5	-13.4	-38.1	-39.0	-55.8
Items affecting comparability2)	–	–	-51.4	–	–
Operating profit	165.7	143.8	409.5	415.9	553.3
Other financial income and expenses	-66.5	-34.2	-169.3	-100.3	4.7
Profit after financial items	99.2	109.6	240.2	315.6	558.0
Appropriations	–	–	–	–	-115.1
Profit before tax	99.2	109.6	240.2	315.6	442.9
Tax	-20.6	-23.7	-51.5	-66.4	-91.3
Profit for the period	78.6	85.9	188.7	249.2	351.6
Statement of comprehensive income, SEK m
Profit for the period	78.6	85.9	188.7	249.2	351.6
Other comprehensive income	–	–	–	–	–
Total comprehensive income for the period	78.6	85.9	188.7	249.2	351.6

1) For a breakdown of net revenue, see table on page 10.

2) Pertains to the demolition of a building in the Inom Vallgraven 12 block, where the Johanna project is ongoing.

BALANCE SHEET – SUMMARY

	September 30,	September 30,	December 31,
PARENT COMPANY, SEK m	2023	2022	2022
Investment properties	8,860.9	8,467.6	8,589.5
Other non-current assets	6,383.0	6,086.9	6,086.5
Total non-current assets	15,243.9	14,554.5	14,676.0
Current assets	785.4	918.5	771.6
Total assets	16,029.3	15,473.0	15,447.6
Restricted equity	1,978.7	1,978.7	1,978.7
Non-restricted equity	2,078.5	2,333.6	2,436.0
Total equity	4,057.2	4,312.3	4,414.7
Untaxed reserves	51.0	52.8	51.0
Provisions	909.5	909.7	911.5
Non-current liabilities	7,393.2	6,095.7	6,597.8
Current liabilities	3,618.4	4,102.5	3,472.6
Total equity and liabilities	16,029.3	15,473.0	15,447.6

Stockholm, November 9, 2023

Anders Nygren President

This interim report has not been reviewed by the company's auditors.

DEFINITIONS AND GLOSSARY

Finance

Capital employed. Total assets reduced by non-interest-bearing liabilities and deferred tax liabilities.

Central administration. Costs for Group management and Group staff functions, costs for maintaining the Company's stock exchange listing, and other costs common to the Company.

Debt/equity ratio. Net debt in relation to equity at the end of the period.

EPRA. European Public Real Estate Association. An interest association for listed property companies in Europe.

EPRA Earnings – Earnings from property management after nominal tax. Operating profit or loss before items affecting comparability and changes in value minus financial income and expense and computed current tax, excluding a carry forward of unutilised tax losses. The tax deducted has been calculated with account taken of tax-deductible depreciation and investments.

EPRA NDV – Net Disposal Value. Shareholders' equity according to the balance sheet.

EPRA NRV – Net Reinstatement Value. Shareholders' equity according to the balance sheet after reversal of interest rate derivatives and deferred tax according to the balance sheet, excluding deferred tax on assets and/or liabilities other than investment properties and right-of-use assets attributable to ground rents.

EPRA NTA – Net Tangible Assets. Shareholders' equity according to the balance sheet after reversal of derivative instruments and deduction for intangible assets, adjusted for estimated actual deferred tax instead of nominal deferred tax.

Equity ratio. Equity at the end of the period in relation to total assets.

Gross margin. Gross profit in relation to net revenue.

Interest coverage ratio. Profit or loss after net financial income/expense, excluding items affecting comparability and changes in value, plus financial expense in relation to financial expense. In the interim accounts, net profit or loss after net financial income/expense, excluding items affecting comparability and changes in value, as well as financial expense, have been recalculated on a full-year basis with no adjustments for seasonal variations that normally arise in the operations.

Items affecting comparability. Items of a non-recurring nature and which make it difficult to compare between two given periods.

MTN programme. Medium Term Note is a bond programme with a term of 1-15 years.

Net debt. Interest-bearing liabilities including lease liabilities and decided dividend minus current investments and cash and cash equivalents.

Net loan-to-value ratio, properties. Net debt in relation to the carrying amount of properties.

Earnings from property management. Operating profit or loss before items affecting comparability and changes in value minus financial income and expense.

Return on capital employed. Profit or loss before tax plus financial expense in relation to average capital employed. In the interim accounts, the return has been recalculated on a full-year basis with no adjustments for seasonal variations that normally

arise in the operations and with the exception of items affecting comparability and changes in value.

Return on equity. Net profit or loss in relation to average equity. In the interim accounts, the return has been recalculated on a full-year basis with no adjustments for seasonal variations that normally arise in the Company's operations and with the exception of items affecting comparability and changes in value.

Return on equity, adjusted. Net profit or loss, excluding changes in value, in relation to average equity. In the interim accounts, the return has been recalculated on a full-year basis with no adjustments for seasonal variations that normally arise in operations.

Tax. Total tax for the Group comprises both current tax and deferred tax.

Shares

Average number of outstanding shares. Weighted average number of outstanding shares during a defined period.

Earnings per share. Net profit or loss for the period in relation to the average number of outstanding shares during the period.

EPRA EPS. EPRA Earnings in relation to the average number of outstanding shares during the period.

Equity per share. Equity in relation to the number of outstanding shares at the end of the period.

Property

Annual rent. Gross rent at the end of the period, including supplements, calculated on an annual basis. Vacant premises are reported at the Estimated Rental Value (ERV).

Bibliotekstan. The area between Norrmalmstorg, Birger Jarlsgatan, Stureplan, and Norrlandsgatan, and which contains stores with high-class brand, restaurants and cafes.

EPRA vacancy rate. Estimated Market Rental Value (ERV) of vacant space divided by the ERV of all property holdings. Current development projects are excluded.

Fair value. The estimated market value of the properties.

Floor space vacancy rate. Vacant floor space in square metres in relation to the total rentable floor space.

Fredstan. The area around Fredsgatan between Brunnsparken and Trädgårdsföreningen, where the vision is to offer a unique range of stores, restaurants, and cultural events and facilities.

Market value, properties. The amount for which the properties could be exchanged between knowledgeable, willing parties in an arm's length transaction. In accounting terms, this is known as "fair value".

Net operating income. Net revenue from property management including intra-Group rent revenue less costs for property management.

Property tax supplement. Property tax payments received from tenants.

Rental vacancy rate. Estimated Market Rental Value (ERV) of vacant space divided by the ERV of all property holdings.

Surplus ratio. Net operating income as a percentage of net revenue from property management including intra-Group rent revenue.

In some cases, there has been rounding off, which means the tables and calculations do not always tally. This document is in all respects a translation of the original Interim Report in Swedish. In the event of any differences between this translation and the Swedish original, the latter shall prevail.

HUFVUDSTADEN

Hufvudstaden was founded in 1915 and rapidly became one of the leading property companies in Sweden. Today it is one of the country's strongest brands in the property sector. The brand is well known and represents high quality, good service, and long-term thinking in the management and development of the Company's commercial properties in the most attractive business locations in Stockholm and Gothenburg.

PURPOSE

Shaping the city of the future together, since 1915.

VISION

Hufvudstaden will be consistently perceived as, and prove to be, the most attractive property company in Sweden.

BUSINESS CONCEPT

With properties in central Stockholm and central Gothenburg, Hufvudstaden will offer successful companies high-quality office and retail premises in attractive marketplaces.

FINANCIAL OBJECTIVES

• Hufvudstaden shares will have good dividend growth over time, and the dividend will amount to more than half the net profit from current operations.
• The equity ratio will be at least 40 per cent over time.

OPERATING OBJECTIVES

Hufvudstaden will:

• gradually increase profit from current operations.
• have the most satisfied customers in the industry.
• have the most developed property holdings in the industry.
• have the most professional employees in the industry, with firm commitment to the customer, good business acumen and professional know-how.

STRATEGIES TO ACHIEVE THE OBJECTIVES

Customer focus. Hufvudstaden will work in close cooperation with its customers and contribute to continuously improving their business potential and competitiveness.

Quality. Systematic quality management will ensure the highest possible level of quality in all of the company´s products and services.

Competence development. Systematic development of the knowledge and skills of personnel will be ensured, with focus on professional know-how and values.

Business development. Active business development and adaptation to the digitalization of society will create added value in the property holdings.

Sustainability. Hufvudstaden will work actively and in the long term to ensure financial, environmental and social sustainability.

OUR BRANDS

HUFVUDSTADEN AB (PUBL)

NK 100, SE-111 77 Stockholm Visiting address: Regeringsgatan 38 Telephone: +46 8 762 90 00 E-mail: info@hufvudstaden.se Website: www.hufvudstaden.se/en Company registration number: 556012-8240 Registered office: Stockholm