AB Sagax

Quarterly Report • Jul 17, 2023

INTERIM REPORT JANUARY – JUNE 2023

AB Sagax is a property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industrial segment

Interim report January – June 2023

FIRST SIX MONTHS OF 2023

• Rental revenue increased 15% to SEK 2,048 M (SEK 1,787 M in the year-earlier period).
• Profit from property management increased 21% to SEK 1,956 M (1,620).
• Profit from property management per Class A and B share after dilution rose 22% to SEK 5.74 (4.69).
• Property revaluation had an impact on profit of SEK –1,367 M (3,113).
• Revaluation of financial instruments had an impact on profit of SEK –707 M (–2,194).
• Loss after tax for the period was SEK –214 M (profit: 1,742).
• Cash flow from operating activities before changes in working capital rose 8% to SEK 1,782 M (1,643), corresponding to SEK 5.19 (4.77) per Class A and B share after dilution.
• Net investments in properties amounted to SEK 1,390 M (2,578), of which property acquisitions accounted for SEK 1,096 M (2,263).

SECOND QUARTER OF 2023

• Rental revenue increased 15% to SEK 1,040 M (SEK 902 M in the year-earlier period).
• Profit from property management increased 22% to SEK 1,014 M (834).
• Profit from property management per Class A and B share after dilution rose 23% to SEK 2.97 (2.42).
• Property revaluation had an impact on profit of SEK –708 M (1,707).
• Revaluation of financial instruments had an impact on profit of SEK –182 M (–1,961).
• Profit after tax for the quarter amounted to SEK 53 M (161).
• Cash flow from operating activities before changes in working capital declined 3% to SEK 944 M (973), corresponding to SEK 2.76 (2.85) per Class A and B share after dilution.
• Net investments in properties amounted to SEK 1,228 M (1,462), of which property acquisitions accounted for SEK 1,078 M (1,299).
• Sagax's CEO was elected a new member of Nyfosa's Board of Directors at the Annual General Meeting held on 25 April 2023. With this election, Sagax is considered to have a significant influence in Nyfosa and thus the shareholdings are recognised as associated company according to the equity method.
• Sagax completed a directed issue of 10,000,000 Class B common shares. The issue raised SEK 2,040 M to the company.

ADJUSTED FORECAST FOR 2023

Profit from property management for 2023, meaning profit before revaluations and tax, based on the current property portfolio, announced acquisitions and divestments and current exchange rates, is expected to amount to SEK 3,800 M. The previously submitted forecast amounted to SEK 3,600 M and was presented in the 2022 year-end report.

Selected key performance indicators1)2)
	2023 Jan-Jun	2022 Jan-Jun	2022 Jan-Dec	2021 Jan-Dec	2020 Jan-Dec	2019 Jan-Dec	2018 Jan-Dec
Profit from property management per Class A and B share after dilution, SEK	5.74	4.69	9.70	7.99	6.62	5.51	4.31
Change compared with preceding year, %	22	22	21	21	20	28	16
Earnings per Class A and B share after dilution, SEK	–1.07	5.08	7.75	30.04	10.78	12.13	9.24
Dividend per Class A and B share, SEK	–	–	2.70	2.15	1.65	1.30	1.00
Net debt/EBITDA, multiple	6.8	7.5	7.1	5.8	6.4	6.6	7.4
Interest coverage ratio, multiple	6.5	8.3	7.1	6.5	5.7	4.9	4.2
Debt ratio at the end of the period, %	43	45	45	42	43	44	47
Properties' market value at the end of the period, SEK M	55,476	52,004	52,682	46,067	37,548	32,625	29,024
Yield, %	6.2	5.7	5.8	6.0	6.3	6.4	6.8

1) Definitions of key performance indicators are provided on pages 32-33.

2) The calculation of alternative performance measures is provided on pages 34–35

Business concept, targets and strategies

Sagax's business concept is to invest in commercial properties, mainly in the warehouse and light industrial segments.

OPERATIONAL TARGETS

Sagax's goal is to generate attractive risk-adjusted return for the company's shareholders. This is to be achieved by accomplishing the following operational targets:

• The company's operations are to generate long-term sustainable return and strong cash flows.
• The company is to continue to grow through new investments if attractive risk-adjusted returns are expected to be achieved.
• Cash flow growth in existing operations is to exceed inflation.

FINANCIAL TARGETS

Sagax has the following financial targets:

• Return on equity, measured over a five-year period, shall exceed 15% per year.
• Profit from property management per Class A and B share shall increase by a minimum of 15% per year.

The table and charts below illustrate the outcome for the past five years in relation to the financial targets:

Financial targets
	Outcome rolling 12 months	Five-year average
Return on equity, measured over a five-year period, shall exceed 15% per year	2%	19%
Profit from property management per Class A and B share shall increase by a minimum of 15% per year	22%	22%

STRATEGIES

Return on equity

Sagax has a long-term "buy and hold" approach to its investments. Sagax does not engage in property trading activities other than occasional sales of properties that no longer meet the company's investment criteria. Sagax's property development activities are limited and projects are carried out primarily after they have been let.

To achieve the company's operational and financial targets the company has adopted the following strategies.

Investment strategy

Property acquisitions and investments in the existing portfolio aim to increase cash flow and diversify rental revenue, thereby reducing the company's operational and financial risks.

Sagax invests in commercial properties, mainly in the warehouse and light industrial segments. These property segments combine low rates of new construction with stable occupancy levels, generating stable cash flow and opportunities for long-term value creation. Sagax invests in add-on acquisitions and in existing properties.

In addition to direct investments Sagax invests in properties via joint ventures and associated companies. This enables the company to invest in markets that Sagax cannot reach successfully on its own. The indirect investments allow Sagax to team-up with specialised management teams and to leverage Sagax's general industry knowledge to develop attractive investments.

Financing strategy

The financial structure of Sagax is designed with a clear focus on operating cash flow and interest coverage ratio. This is expected to create both good prerequisites for expansion and attractive return on equity.

The chart on page 4 shows that Sagax's cash flow from operating activities largely corresponds to its profit from property management. The difference is mainly due to joint ventures and associated companies, where dividends instead of profit from property management are recognised as cash flow from operating activities.

Sagax endeavours to have well-balanced fixed interest and loan maturity profiles to secure its operating cash flow. The company's interest-bearing debt mainly consists of senior unsecured bonds issued in the EUR market. Sagax also finances its operations via issuance of commercial paper in EUR and SEK. Sagax can also raise bank loans in EUR and in SEK when this is deemed to be advantageous. Moody's Investors Service has rated Sagax Baa3 with "Positive outlook".

The company has three classes of shares: Class A, B and D common shares. The Class A and B shares participate fully in the company's profit or equity. The Class D shares participate in an annual dividend of

Profit from property management per Class A and B share

Financial target growth rate is 15% per year

up to SEK 2.00 per share. The aim with the Class D shares is to attract investor categories that value stable and regular dividends while limiting dilution for the holders of common shares of Class A and B.

Asset management strategy

Sagax's long-term perspective applies to the company's asset management strategy. Sagax endeavours to attract reputable and creditworthy tenants. The company prioritises long-term customer relationships even if this entails foregoing higher rental levels. This is regarded as being advantageous since it reduces the risk of vacancies, while leading to lower costs for letting premises and adapting premises to tenant needs.

Sagax invests primarily in regions experiencing stable population growth with diversified business activities. The risk of a decline in occupancy rates and rent levels due to a weaker rental market is regarded as low due to the stable population growth and diversified business operations in these markets. Sagax's largest markets are Stockholm and Helsinki, which are regarded as offering favourable conditions for longterm growth.

The company mainly enters into net leases. This strategy protects the company's operating cash flow from increased expenses deriving from changes in property taxes, consumption levels or for utility rates.

SUSTAINABILITY ACTIVITIES

The aim of Sagax's sustainability activities is to avoid short-term gains arising at the expense of negative longer-term consequences. The company's investing activities, management and funding are conducted to achieve the best possible long-term – meaning sustainable – outcome. The planning, governance and monitoring of sustainability activities follow Sagax's organisational structure with well-defined delegation of responsibilities and authorities. Sustainability activities are based on applicable legislation and internal policies. Sagax has identified the following focus areas:

750 1,500 2,250 3,000 3,750 4,500 1,000s square metres SEK M

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

10,000 20,000 30,000 40,000 50,000 60,000

Market value and lettable area of properties

0

Market value Lettable area

Environmental and resource efficiency

Heating and the use of electricity account for the largest share of properties' energy use. Sagax takes regular measures to reduce energy consumption. Sagax obtains sustainability ratings for new buildings that are constructed and is working to have existing buildings sustainability rated.

Business ethics

Sagax works actively to combat all forms of corruption, and has a whistle-blower function available on the Sagax website and a Code of Conduct for Suppliers.

Financial sustainability

Sagax's business model is characterised in all areas by a long-term approach. Short-term gains are subordinate to the company's long-term value creation. Accordingly, sustainability work is integrated into the business model.

Professional and dedicated employees

The development of the company is dependent on highly skilled employees. For this reason, it is important that the company is an attractive employer that can recruit and has the ability to retain highly skilled personnel. Sagax employees are expected to assume responsibility for their work duties and serve as good representatives of the company's values and culture.

Additional information on Sagax's sustainability activities is available in the sustainability report in Sagax's 2022 Annual Report.

Profit from property management, rolling 12 months Cash flow from operating activities before change in working capital, rolling 12 months

Sagax acquired a portfolio of six properties in Helsinki, Finland, in the second quarter. The properties encompasses a total of 39,000 square metres of lettable area and are fully let.

Profit, revenue and expenses

The profit/loss and cash-flow items below refer to the January to June 2023 period. The comparative items refer to the year-earlier period. Amounts for the balance-sheet items and comparative figures refer to the position at the end of the period.

PROFIT

Profit from property management rose 21% to 1,956 M (1,620), of which joint ventures and associated companies accounted for SEK 437 M (391). Profit from property management increased following primarily property acquisitions, currency effects and rent indexation. Profit from property management per Class A and B share after dilution rose 22% to SEK 5.74 (4.69).

Changes in the value of properties impacted profit by SEK –1,367 M (3,113), of which SEK –525 M (1,255) referred to changes in value from joint ventures and associated companies. The changes in value were primarily due to changed capitalisation rates and inflation expectations.

Revaluation of financial instruments had an impact on profit of SEK –707 M (–2,194), of which SEK –614 M (–248) referred to the revaluation of listed shares.

Loss after tax for the period was SEK –214 M (profit: 1,742).

REVENUE

Rental revenue rose 15% to SEK 2,048 M (1,787). Revenue was primarily positively affected by property acquisitions, indexation and the strengthening of the EUR against the SEK. Rental revenue was negatively impacted by the sale of 36 properties in Spain.

During the period, rental revenue in comparable portfolios increased 6.6% (4.3) excluding currency effects. The segments with the largest increases were the Netherlands with 12.9%, Spain 9.4% and Sweden 7.9%.

Other revenue amounted to SEK 9 M (12).

Rental revenue, comparable portfolios

	2023	2022
Amounts in SEK M	Jan-Jun	Jan-Jun
Rental revenue	2,048	1,787
Acquisitions and divestments	–163	–122
Currency adjustment1)	–	102
Total	1,885	1,767

1) The preceding period has been adjusted so that the exchange rate is the same as in the current period.

Profit from property management

Rental revenue

Rental revenue, comparable portfolios

Average, rolling12 months Occupancy rate

%

Economic occupancy rate

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Change in rental revenue in comparable portfolio, excluding currency effects, compared to the same period previous year

CHANGE IN THE ECONOMIC OCCUPANCY RATE

The economic occupancy rate amounted to 96% (96). During the period, the vacancy value rose SEK 126 M (73) due to tenants vacating premises and declined SEK 103 M (86) following new lettings. Fixed-term rent discounts fell SEK 6 M (increase: 12) to SEK 33 M (49) on an annual basis at the end of the period. Acquisitions and property divestments during the period increased the vacancy value by a net SEK 3 M (9). Total vacancy value at the end of the period amounted to SEK 197 M (147).

FUTURE VACANCY CHANGES

At the end of the period, notice of termination had been served for leases with a rental value of SEK 99 M (156), of which leases with notice of vacating the premises accounted for SEK 96 M (151) and leases with notice of renegotiation for SEK 3 M (5). Of the leases for which notice had been received, vacancies corresponding to a rental value of SEK 45 M will occur in 2023. Lettings of premises to tenants who have not yet occupied reduced the adjusted vacancy value by SEK 45 M (40). Net lettings corresponding to a rental value of SEK 39 M will occur in 2023. The adjusted vacancy value was SEK 250 M (263).

Vacancy changes
	2023	2022
Amounts in SEK M	Jan-Jun	Jan-Dec
Opening vacancy for each year	171	135
Vacancies	126	220
New lettings	–103	–207
Change in discounts provided	–6	1
Vacancy value, acquired properties	4	19
Vacancy value, sold properties	–1	–5
Change in exchange rates	6	8
Closing vacancy value	197	171
Terminated for renegotiation	3	3
Terminated lease, not vacated	96	104
Letting, not occupied	–45	–49
Adjusted closing vacancy value	250	229

Vacancies, 1 July 2023

PROPERTY EXPENSES

Operating and maintenance costs amounted to a total of SEK 232 M (209). Expenses for property tax increased to SEK 103 M (89). Other property expenses rose to SEK 42 M (39). The increase was primarily due to property acquisitions and increased heating and electricity costs.

CENTRAL ADMINISTRATION

Central administration costs amounted to SEK 80 M (77), corresponding to 3.9% (4.3) of the period's rental revenue, related to a larger organisation.

At the end of the period, Sagax had 94 (91) employees. Functions such as property caretaking and on-call operations are outsourced. Sagax has offices in Stockholm, Helsinki, Paris, Rotterdam, Barcelona and Frankfurt.

Number of employees

Country	Total
Sweden	38
Finland	28
France	12
Netherlands	9
Spain	6
Germany	1
Total	94

Signed leases and leases terminated

	Lettings, not occupied			Terminations
Year of occupancy and vacancy	No. of leases	Rental value, SEK M	No. of leases	Rental value, SEK M
2023	28	39	53	45
2024	2	6	22	34
2025	–	–	3	6
2026	–	–	1	2
2027	–	–	1	8
>2027	–	–	–	–
Total	30	45	80	96

Total	4,517	197	4%	3,979,000	181,000	5%
Rest of Europe	13	–	–	6,000	–	–
Germany	115	4	3%	85,000	8,000	9%
Spain	232	2	1%	303,000	5,000	2%
Netherlands	587	11	2%	606,000	5,000	1%
France	725	26	4%	614,000	24,000	4%
Finland	1,823	80	4%	1,449,000	71,000	5%
Sweden	1,022	75	7%	916,000	68,000	7%
Segment	Rental value, SEK M	Vacancy value, SEK M1)	Economic vacancy rate1)	Lettable area, sqm	Vacant area, sqm	Vacancy rate by area

1) The vacancy value and economic vacancy rate take into account both vacancies and discounts granted.

PROFIT FROM JOINT VENTURES AND ASSOCIATED COMPANIES

Profit from joint ventures and associated companies for the period amounted to SEK –90 M (1,530), of which profit from property management accounted for SEK 437 M (391), changes in the value of properties for SEK –525 M (1,255) and changes in the value of fixed income derivatives for SEK –5 M (248). Tax on profit from joint ventures and associated companies amounted to SEK 11 M (392). Other changes in value amounted to SEK 15 M (29). For additional information, see page 13.

NET FINANCIAL ITEMS

Financial income amounted to SEK 271 M (85) and primarily referred to non-recurring income of SEK 59 M for repurchased bonds, financial income of SEK 121 M attributable to the current financial lease asset that arose as a result of the contracted divestment of 36 properties in Spain, and SEK 45 M (26) in dividends on listed shares, of which dividends from Nyfosa amounted to SEK 39 M.

Financial expenses, excluding the interest component of IFRS 16 Leases, increased to SEK –336 M (–229) due to the increase in interestbearing liabilities and higher market interest rates impacting the Group's borrowing. The average interest rate on interest-bearing liabilities was 1.8% (1.5) on the balance sheet date.

The interest component of IFRS 16 Leases amounted to SEK –15 M (–14). This expense primarily comprised site leaseholds and ground rents.

REVALUATION OF PROPERTIES

Sagax uses external valuations to determine the market value of its properties. As per the balance sheet date, a corresponding 97% of the market value of the properties had been externally valued. The changes in value for the properties amounted to SEK –842 M (1,858), of which unrealised changes in value amounted to SEK –842 M (1,866). Of this unrealised change in value, SEK 399 M (214) was attributable to property management and SEK –1,241 M (1,652) was related to general changes in market value, see table below. See also page 12 for additional information.

REVALUATION OF FINANCIAL INSTRUMENTS

The change in value of financial instruments was SEK –702 M (–2,442). Realised changes in value attributable to the divestment of financial instruments amounted to SEK 23 M (2). The unrealised change in value attributable to fixed income derivatives amounted to SEK 7 M (85). Revaluation of listed shares resulted in a change in value of SEK –630 M (–2,722), of which the shareholding in Nyfosa was revalued by SEK –525 M (–2,462). The revaluation of financial instruments attributable to joint ventures amounted to SEK –41 M (189). Other financial instruments were revalued by SEK –61 M (4).

TAX

Sagax recognised a tax expense of SEK 101 M (434) comprising of a current tax expense of SEK 100 M (42) and a deferred tax expense of SEK 1 M (392). Tax revenue recognised in other comprehensive income amounted to SEK 9 M (–18). The Group's deferred tax liabilities at the end of the period amounted to SEK 3,914 M (3,561).

CASH FLOW

Cash flow from operating activities before changes in working capital amounted to SEK 1,782 M (1,643). Changes in working capital had an impact of SEK –177 M (–96) on cash flow. Investing activities had an impact of SEK 322 M (–4,218) on cash flow, and cash flow from financing activities contributed SEK –1,982 M (2,694) to Sagax. In total, cash and cash equivalents changed with SEK –55 M (20) during the period.

PARENT COMPANY

The Parent Company, AB Sagax, is responsible for stock market issues, such as financial reporting and stock market information. Services between Group companies are charged on commercial terms and conditions and in accordance with market-based pricing. Intra-Group services comprise management services. The Parent Company's management fees from Group companies amounted to SEK 44 M (39).

Unrealised changes in the value of properties
Amounts in SEK M	Jan-Jun 2023
New lettings/Renegotiations	527
Vacancies/Renegotiations	–127
General change in market value	–1,241
Total	–842

Unrealised changes in the value of properties per quarter

Total	–842
Second quarter	–508
First quarter	–333
Amounts in SEK M

Forecast and current earnings capacity

ADJUSTED FORECAST FOR 2023

Profit from property management for 2023, meaning profit before revaluations and tax, based on the current property portfolio, announced acquisitions and divestments and current exchange rates, is expected to amount to SEK 3,800 M. The previously submitted forecast amounted to SEK 3,600 M and was presented in the 2022 year-end report.

CURRENT EARNINGS CAPACITY

Current earnings capacity is reported in conjunction with interim reports and year-end reports.

The table below shows the company's earnings capacity on a 12-month basis on 1 July. It is important to note that this capacity is not equivalent to a forecast for the forthcoming 12 months since it does not contain assessments about, for example, future vacancies, interest rate scenario, currency effects, rent trends or changes in value.

The rental value is based on contractual rental revenue on an annual basis, with addition for estimated market rents for vacant premises. Property expenses are based on actual outcomes over the past 12

Current earnings capacity

Amounts in SEK M	1 July 2023	1 Jan 2023
Rental value	4,517	4,195
Vacancy	–197	–171
Rental revenue	4,320	4,024
Property expenses	–770	–704
Net operating income	3,550	3,319
Central administration	–176	–174
Joint ventures and associated companies	1,012	818
Net financial items	–516	–398
Lease expenses	–30	–28
Profit from property management	3,839	3,538
Tax	–691	–637
Profit after tax	3,148	2,902
– of which, holders of Class D shares	252	252
– of which, holders of Class A and B shares	2,896	2,650
Run rate yield, %	6.3	6.3
Net debt/run rate EBITDA, multiple	6.3	6.5

months adjusted for the holding period. Central administration costs are based on actual outcomes over the past 12 months. Net financial items are calculated based on interest-bearing liabilities and assets on the balance sheet date. Expenses for interest-bearing liabilities are based on the Group's estimated average interest rate, plus financing costs allocated over time and costs attributable to credit facilities that were unutilised on the balance sheet date. Lease expenses essentially pertain to site leasehold fees that are based on actual outcomes over the past 12 months adjusted for the holding period. Dividends attributable to the company's holdings of listed shares were not taken into account in the earnings capacity. Tax is calculated at the standard tax rate of 18% (18). Translation from EUR took place at the closing rate of SEK 11.79. Translation from EUR of the earnings capacity on 1 January 2023 took place at a rate of SEK 11.13.

Shares in profit from joint ventures and associated companies are calculated in accordance with the same principles as for Sagax, taking into account the size of the participations.

Current earnings capacity before tax

Yield and interest rate

Difference between yield and interest rate

Property portfolio

The property portfolio comprised 773 (748) properties with a lettable area of 3,979,000 square metres (3,974,000). At the end of the period, the rental value and contractual annual rent amounted to SEK 4,517 M (3,891) and SEK 4,320 M (3,744), respectively. This corresponds to an economic occupancy rate of 96% (96).

INVESTMENTS

During the period, Sagax invested SEK 1,412 M (2,583), of which property acquisitions accounted for SEK 1,096 M (2,263).

A total of SEK 315 M (321) was invested in the existing property portfolio. SEK 83 M referred to property maintenance and SEK 112 M to new construction. In addition, SEK 107 M was invested in connection with new lettings and SEK 13 M against rent supplements. Of total investments, SEK 6 M referred to investments in energy-saving measures.

DIVESTMENTS

Three properties in France were divested during the period for a total purchase consideration of SEK 21 M. In addition, Sagax signed an agreement for the sale of a property in Germany, which will be transfered after the end of the period.

PROPERTY PORTFOLIO YIELD

The yield for the period in relation to market value at the end of the period amounted to 6.2% (5.7).

Summary of property portfolio, 1 July 2023

	Market value
Segment	SEK M	Share	SEK per sqm	No. of properties	Lettable area, sqm	Vacant area, sqm	Rental value, SEK M	Economic occupancy rate	Contractual annual rent, SEK M
Sweden	14,723	27%	16,100	120	916,000	68,000	1,022	93%	947
Finland	19,583	35%	13,500	229	1,449,000	71,000	1,823	96%	1,743
France	8,438	15%	13,700	194	614,000	24,000	725	96%	699
Netherlands	7,731	14%	12,800	133	606,000	5,000	587	98%	576
Spain	3,464	6%	11,400	86	303,000	5,000	232	99%	230
Germany	1,394	3%	16,400	9	85,000	8,000	115	97%	112
Rest of Europe	144	0%	22,300	2	6,000	–	13	100%	13
Total	55,476	100%	13,900	773	3,979,000	181,000	4,517	96%	4,320

Property investments January-June 2023

Amounts in SEK M	Property acquisitions	Existing portfolio	Total	Share of total investments	Divestments	Net investments
Sweden	186	191	378	27%	–	378
Finland	726	49	775	55%	–	775
France	46	46	92	7%	–21	71
Netherlands	94	17	111	8%	–	111
Spain	42	11	53	4%	–	53
Germany	1	2	3	0%	–	3
Rest of Europe	–	–	–	–	–	–
Total	1,096	315	1,412	100%	–21	1,390

LEASE STRUCTURE

Sagax has a diverse lease structure, which improves the company's possibilities to maintain an even occupancy rate. To reduce the risk of lower rental revenue, Sagax endeavours to create long-term relationships with the company's tenants and to achieve diversification in terms of the duration and size of its leases.

Sagax's annual rent at the end of the period was distributed between 2,282 leases (2,246). The table below presents the size of Sagax's leases in relation to the Group's annual rent at the end of the period. The table shows that 2,274 leases (2,237) each had a rental value of less than 1% of the Group's annual rent. The total rental value for these leases accounted for 88% (85) of Sagax's annual rent. In addition, Sagax is party to seven leases (seven) with a rental value corresponding to 1–2% of the Group's annual rent. Combined, these leases total 9% (9) of Sagax's annual rent. Only one (two) of Sagax's leases had an annual rental value that accounted for more than 2% of the Group's annual rent. This lease represented 2% of the Group's contractual annual rent.

Sagax's tenants operate in a variety of sectors. Companies in the manufacturing industry account for 15% (15) of rental revenue. The automotive-related industry, including sales, service and manufacturing, accounts for 14% (12) of rental revenue and food-related operations for 10% (14). Diverse tenant industries are considered to lower the risk of vacancies and rent losses. The main industries are presented in the pie chart below.

According to Sagax's asset management strategy, the company strives to secure long-term leases and an even distribution of contract maturities over the years. This is deemed to reduce the risk of significant variations in the Group's occupancy rate. Leases representing 51% of the annual rent expire in or after 2027. 7–15% of annual rent expires each year between 2023 and 2026.

Distribution of leases						Industry exposure
Share of contractual	Annual rent		No. of	Average annual rent,	Lease term,
annual rent	SEK M	Share, %	leases	SEK M	years
> 2%	104	2	1	104	14
1–2 %	408	9	7	58	6
< 1%	3,808	88	2,274	2	4
Total	4,320	100	2,282	2	5

Lease terms
Year of expiry	No.	Area, sqm	SEK M	Share
2023	545	219,000	284	7%
2024	526	541,000	648	15%
2025	411	669,000	649	15%
2026	300	463,000	548	13%
2027	157	429,000	434	10%
> 2027	343	1,478,000	1,756	41%
Total	2,282	3,798,000	4,320	100%

Year of maturity of annual rent

Market value of property portfolio

Sagax prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). The company has decided to measure its properties at fair value according to Level 3 of IFRS 13 Fair Value Measurement.

Sagax uses external valuations to determine the market value of its properties. The valuations are carried out by independent valuation companies and updated on a quarterly basis.

The total market value of Sagax's 773 properties (748) was established at SEK 55,476 M (52,004) on 30 June 2023. Exchange rate fluctuations during the period resulted in property values denominated in EUR and DKK increasing by SEK 2,245 M (1,492).

The unrealised change in value for the period amounted to SEK –842 M (1,866) corresponding to a change in value of –1.5%. In the same period, weighted inflation was 2.4% in the markets where Sagax is active. Accordingly, the real change in value amounted to –3.8%.

Of this unrealised change in value, SEK 399 M was attributable to property management and SEK –1,241 M mainly related to assumptions of higher capitalisation rates, changed expectations regarding inflation, higher property expenses and higher real estate transfer tax in the Netherlands.

Higher interest rates and less favourable funding terms continued to negatively affect liquidity in the property market. A number of transactions in Sagax's market segments were carried out during the period, although the turnover rate is low compared with prior years. Uncertainty in the value assessments thus remain higher than normal.

VALUATION METHOD AND IMPLEMENTATION

The valuations were carried out in accordance with generally accepted international valuation methods. Properties corresponding to 97% of the property value have been valued by authorised property appraisers from independent valuation companies as per 30 June 2023. For other properties, the market value was determined as the acquisition price or internal valuations were applied.

The principal method of appraisal used was cash flow calculations in which the present value of net operating income, investments and residual values was calculated. The calculation period was adjusted to the remaining term of existing leases and varies between five and 20 years. As a rule, the calculation period is ten years. For more information, see Sagax's 2022 Annual Report, page 96.

ANALYSIS AND GENERAL CONDITIONS

The discount rate for the present value calculation of cash flows (5.0– 16.1%), the discount rate for the present value calculation of residual values (5.0–16.1%) and the capitalisation rate for the residual value calculations (4.0–14.0%) are based on comparable transactions and by individual assessments of the risk level and market position of each property.

The weighted discount rate for the present value calculation of cash flows and residual values for the property portfolio increased to 7.9% (7.4) and 8.0% (7.5), respectively. The weighted capitalisation rate rose to 6.3% (6.2).

Change in the carrying amounts of the property portfolio

	SEK M	No.
Property portfolio, 31 December 2022	52,682	751
Acquisition of properties	1,096	25
Investments in the existing portfolio	315
Divestment of properties	–21	–3
Currency translation effect	2,245
Unrealised changes in value	–842
Property portfolio, 30 June 2023	55,476	773

Group's rental value Market value of properties

Joint ventures and associated companies

In addition to the directly owned property portfolio, Sagax has invested in joint ventures and associated companies since 2010. The investment objective is to reach markets that Sagax does not have the capacity to reach, but which are considered attractive for the shareholders. The accumulated investments amounted SEK 7,301 M, which have generated an accumulated dividend of SEK 3,061 M for Sagax. The carrying amount of these investments amounted to SEK 13,458 M (11,152), of which 93% comprised of Hemsö Fastighets AB, Nyfosa AB, Söderport Property Investment AB and NP3 Fastigheter AB.

These investments contributed a total of SEK 437 M (391) to profit from property management during the period and SEK 405 M (531) to the cash flow. Sagax's share of changes in the value of properties amounted to SEK –525 M (1,255) and the share of changes in the value of derivatives was SEK –5 M (248).

JOINT VENTURES

Hemsö Fastighets AB (Hemsö)

Sagax indirectly owns 15% of Hemsö, with the remaining share owned by the Third Swedish National Pension Fund. Hemsö conducts operations in Sweden, Germany and Finland. Operations consist of owning, managing and developing public properties. For more information, refer to www.hemso.se.

Söderport Property Investment AB (Söderport)

Sagax owns 50% of Söderport, with the remaining share owned by Nyfosa AB. Söderport's operations consist of owning, managing and developing properties in Sweden. Sagax handles the financial administration and most of the asset management.

A corresponding 75% of Söderport's rental value of SEK 1,082 M was located in Stockholm on 30 June 2023.

Fastighetsaktiebolaget Ess-Sierra (Ess-Sierra)

Sagax owns 50% of Ess-Sierra, with the remainder owned by NP3 Fastigheter AB. The operations entail owning and managing properties for primarily building supply stores. The lettable area amounts to 184,000 square metres, the majority of which comprises warehouse premises and building supply stores. Most of the properties are situated in university and regional cities. Sagax handles the financial administration and asset management.

ASSOCIATED COMPANIES Nyfosa AB (Nyfosa)

Sagax owns shares corresponding to 23.3% of the votes and capital in Nyfosa. Sagax's CEO was elected a new member of Nyfosa's Board of Directors at the Annual General Meeting held on 25 April 2023, after which Sagax is deemed to have a significant influence in Nyfosa. Consequently, the holdings in Nyfosa are subsequently recognised as an associated company in accordance with the equity method. Reclassification took place on 25 April 2023 based on the market value on the same date and resulted in an unrealised change in value of financial instruments of SEK –525 M. The market value of Sagax's shareholding amounted to SEK 2,652 M (2,921) and the carrying amount to SEK 3,023 M (–) on 30 June 2023.

Nyfosa is a property company active in the Swedish, Finnish and Norwegian markets with a focus on commercial properties in growth cities. The property portfolio encompassed 512 properties with a total property value of SEK 41.0 billion and a rental value of SEK 3,881 M on 30 June 2023. Nyfosa is listed on Nasdaq Stockholm, Large Cap. For more information, refer to www.nyfosa.se.

NP3 Fastigheter AB (NP3)

Sagax owns shares corresponding to 21.3% of the votes and 15.8% of the capital in NP3. The market value of Sagax's shareholding amounted to SEK 2,140 M (2,574) and the carrying amount to SEK 2,166 M (2,085) on 30 June 2023. NP3 is a property company focusing on commercial properties with high yields mainly in northern Sweden. The property portfolio encompassed 503 properties with a total property value of SEK 20.0 billion and a rental value of SEK 1,924 M on 30 June 2023. NP3 is listed on Nasdaq Stockholm, Large Cap. For more information, refer to www.np3fastigheter.se.

Fastighetsbolaget Emilshus AB (Emilshus)

Sagax owns shares corresponding to 24.0% of the votes and 21.8% of the capital in Emilshus. The market value of Sagax's shareholding amounted to SEK 590 M and the carrying amount to SEK 660 M (517) on 30 June 2023. Emilshus acquires, develops and manages commercial properties in Småland and nearby growth regions. The property portfolio encompassed 126 properties with a total market value of SEK 7.2 billion and a rental value of SEK 593 M on 30 June 2023. Emilshus is listed on Nasdaq Stockholm, Mid Cap. For more information, refer to www.emilshus.com.

Sagax's joint ventures

	Hemsö			Söderport	Ess-Sierra
	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2023	Jan–Jun 2022
Sagax's ownership, %	15	15	50	50	50	50
Sagax's share of comprehensive income, SEK M	–224	667	102	497	–16	55
Sagax's share of profit from property management, SEK M	152	152	117	120	15	16
Rental revenue, SEK M	2,386	1,980	512	443	48	46
Profit from property management, SEK M	1,187	1,184	234	256	31	33
Profit/loss for the period, SEK M	–1,842	4,790	203	1,061	–32	110
	30 Jun 2023	30 Jun 2022	30 Jun 2023	30 Jun 2022	30 Jun 2023	30 Jun 2022
Carrying amount of ownership interest, SEK M	4,502	5,329	2,806	2,762	297	323
No. of properties	484	466	85	84	39	39
Carrying amounts of properties, SEK M	85,071	84,683	14,418	14,269	1,540	1,617
Lettable area, sqm	2,438,000	2,311,000	773,000	769,000	184,000	184,000
Lease term, years	9.7	9.7	3.9	4.4	7.0	6.1
Economic occupancy rate, %	98	98	94	94	100	100
Interest-bearing liabilities, SEK M	53,645	46,361	7,308	6,994	862	872
Loan maturity, years	5.8	6.4	1.9	1.9	1.4	2.4
Average fixed interest rate period, years	5.1	5.7	1.4	2.9	0.4	1.2
Market value of derivatives, SEK M	–313	237	162	95	–	–

Funding

EQUITY

Consolidated equity amounted to SEK 34,689 M (32,231) on 30 June 2023. Equity increased SEK 2,040 M during the period as a result of a directed issue of 10,000,000 Class B common shares, total comprehensive income of SEK 290 M and share dividends of SEK –1,111 M.

INTEREST-BEARING LIABILITIES

Sagax's interest-bearing liabilities at the end of the period amounted to SEK 30,934 M (30,967) corresponding to a nominal amount of SEK 31,023 M. An amount corresponding to SEK 29,282 M (28,999) of liabilities was recognised in EUR. Exchange rate fluctuations increased interest-bearing liabilities by SEK 1,790 M (1,117).

Listed bonds amounted to SEK 26,996 M (27,382). The remaining interest-bearing liabilities comprised commercial paper of SEK 1,683 M (2,561) and liabilities to banks of SEK 2,254 M (1,024).

Unsecured liabilities including commercial paper corresponded to 94% (94) of interest-bearing liabilities.

The interest coverage ratio amounted to 6.5 (8.3) times for the period and the debt ratio to 43% (45) at the end of the period. Net interest-bearing debt for the past 12 months was 6.8 (7.5) times EBITDA and 6.3 (6.8) times run rate EBITDA, see page 9 for more information.

Interest rate exposure and loan maturity 30 June 2023
-------------------------------------------------------	--	--	--	--	--	--	--

		Interest rate exposure1)	Loan maturity
Year of	Nominal		Nominal
expiry	amount, SEK M	Interest rate	Share	amount, SEK M	Share
2023	2,543	5.5%	8%	63	0%
2024	3,940	1.9%	13%	3,689	12%
2025	4,717	2.3%	15%	5,000	16%
2026	3,538	1.6%	11%	3,538	11%
2027	4,495	1.5%	14%	6,235	20%
> 2027	11,792	0.9%	38%	12,499	40%
Total/ average	31,023	1.8%	100%	31,023	100%

1) Including derivatives.

Debt ratio and interest coverage ratio

A total of SEK 3,444 M (5,262) was raised in loans during the period. Repayments during the period totalled SEK 6,635 M (1,790), of which SEK 2,315 M referred to early redemption of bonds. Net interest-bearing debt amounted to SEK 24,134 M (24,056).

The average remaining fixed interest rate period and loan maturity were 3.2 years (3.7) and 3.5 years (4.1), respectively, at the end of the period. The average interest rate on interest-bearing liabilities was 1.8% (1.5), including the effect of derivatives on the balance sheet date.

Of Sagax's interest-bearing liabilities, SEK 27,239 M (27,077), or 88% (87), bear fixed interest rates. The company has interest-rate caps and interest-rate swaps with a total nominal value of SEK 1,211 M (1,430), corresponding to 3.9% (4.6) of interest-bearing liabilities.

WORKING CAPITAL AND UNUTILISED CREDIT FACILITIES

Sagax's working capital amounted to SEK –5,439 M (359) on 30 June 2023. At the same date, unutilised credit facilities including back-up facilities for commercial paper programmes amounted to SEK 9,914 M (7,318). No additional collateral needs to be pledged to utilise these credit facilities.

Net debt

Amounts in SEK M	30 Jun 2023	30 Jun 2022
Interest-bearing liabilities	30,934	30,967
Interest-bearing assets	–821	–670
Listed instruments1)	–5,957	–6,137
Cash and cash equivalents	–22	–104
Net debt	24,134	24,056

1) Including associated companies whose shares are listed.

Listed bonds, 30 June 2023

		Nominal amount,	Liabilities,
Maturity	Interest base	EUR M	EUR M	Effective interest	Coupon rate	Maturity date	ISIN code
2018-2024	Fixed interest	294	294	2.10%	2.00%	17 Jan 2024	XS1877540465
2019-2025	Fixed interest	400	401	2.05%	2.25%	13 Mar 2025	XS1962543820
2022-2026	Fixed interest	300	299	1.78%	1.63%	24 Feb 2026	XS2447539060
2020-2027	Fixed interest	300	299	1.26%	1.13%	30 Jan 2027	XS2112816934
2021-2028	Fixed interest	500	497	0.88%	0.75%	26 Jan 2028	XS2291340433
2021-2029	Fixed interest	500	500	1.01%	1.00%	17 May 2029	XS2342227837
Total/average		2,294	2,289	1.44%	1.39%

Derivative contracts, 30 June 2023
Amounts in SEK M	Nominal amount	Years to maturity	Market value 30 Jun 2023	Market value 31 Dec 2022	Change for the period
Nominal interest-rate swaps	957	4.5	12	2	10
Interest-rate caps	254	1.0	9	12	–3
Total/average	1,211	3.7	21	14	7

Rating and key performance indicators according to EMTN programme
	Financial covenant in EMTN programme	30 Jun 2023	31 Dec 2022
Rating according to Moody's Investors Services		Baa3, Positive outlook	Baa3, Positive outlook
Net debt/Total assets	< 65%	36%	35%
Interest coverage ratio	>1.8x	10.7x	12.7x
Secured liabilities/total assets	< 45%	3%	3%

Sources of financing

Bonds 87% (SEK 26,996 M)

Bank loans 7% (SEK 2,254 M)

Commercial paper 6% (SEK 1,683 M)

Distribution between secured and unsecured liabilities

event of discrepancies, the Swedish original will supersede the translation.

FINANCIAL POLICY

Sagax's financial policy sets guidelines and rules for the financial operations to illustrate how financial risks are to be limited. Sagax has the following guidelines for its financial operations.

• A debt ratio of no more than 50%.
• An interest coverage ratio exceeding 3.0x.
• Net debt in relation to the Group's EBITDA not above 8x.

The following charts illustrate the outcome for the past five years in relation to the company's guidelines.

% 60 Debt ratio

43

Interest coverage ratio

The interest coverage ratio is to exceed 3.0x according to the financial policy

Other balance-sheet items

LEASES AND SITE LEASEHOLDS

Sagax reports leases and site leaseholds in accordance with IFRS 16. Right-of-use assets are recognised as an asset with a corresponding liability. Sagax's leases and site leaseholds at the end of the period amounted to SEK 448 M (387).

INTEREST-BEARING NON-CURRENT RECEIVABLES

Interest-bearing non-current receivables amounted to SEK 735 M (667) and comprised convertible debentures issued by the French company Groupe BMG valued at SEK 613 M (552) maturing on 31 December 2024 and promissory notes valued at SEK 123 M (114) issued in connection with a property divestment in 2021.

LISTED INSTRUMENTS

Listed instruments comprise listed shares that are not holdings in associated companies and bonds and amounted to a total of SEK 629 M (3,519). Listed shares are recognised at the closing price on the balance sheet date and amounted to SEK 33 M (3,475). The decline was due to the holdings in Nyfosa AB being reclassified to joint ventures and associated companies and the divestment of the holding in Cibus Nordic Real Estate AB. In addition, Sagax has invested in listed bonds that at the end of the period were recognised in the amount of SEK 597 M (44). For additional information, see page 13.

OTHER CURRENT ASSETS

Other current assets amounted to SEK 1,002 M (852) and primarily comprises prepaid costs and accrued income of SEK 426 M (339) and rent receivables of SEK 194 M (167).

Consolidated statement of comprehensive income

Amounts in SEK M	2023 Jan-Jun	2022 Jan-Jun	2023 Apr-Jun	2022 Apr-Jun	2022 Jan-Dec	Rolling 12 months
Rental revenue	2,048	1,787	1,040	902	3,696	3,956
Other revenue	9	12	5	6	31	28
Operating expenses	–183	–171	–79	–74	–346	–357
Maintenance costs	–49	–37	–24	–19	–84	–96
Property tax	–103	–89	–53	–46	–178	–192
Other property expenses	–42	–39	–19	–19	–87	–90
Net operating income	1,679	1,462	870	751	3,032	3,249
Central administration	–80	–77	–38	–42	–174	–176
Profit from joint ventures and associated companies	–90	1,530	58	843	1,375	–245
– of which, profit from property management	437	391	252	204	766	812
– of which, changes in value	–530	1,502	–189	823	852	–1,181
– of which, tax – of which, other	–11 15	–392 29	–20 15	–213 29	–351 108	30 94
Financial income	271	85	108	46	235	421
Financial expenses	–336	–229	–171	–119	–492	–599
Financial expense, interest component of leases	–15	–14	–8	–7	–28	–30
Profit including profit from joint ventures and associated companies	1,430	2,759	819	1,473	3,948	2,619
– of which, profit from property management	1,956	1,620	1,014	834	3,339	3,676
Changes in value of properties, realised	0	–8	0	–2	–12	–4
Changes in value of properties, unrealised	–842	1,866	–508	996	1,709	–999
Changes in value of financial instruments, realised	23	2	18	2	3	24
Changes in value of financial instruments, unrealised	–725	–2,444	–211	–2,073	–2,343	–624
Profit/loss before tax	–113	2,176	119	396	3,305	1,015
Deferred tax	–1	–392	–8	–213	–523	–133
Current tax	–100	–42	–57	–22	–63	–120
Profit/loss for the period	–214	1,742	53	161	2,718	762
Other comprehensive income – items that might be reclassified subsequently to the profit or loss
Translation differences for foreign operations	946	807	724	588	1,478	1,618
Share of other comprehensive income for joint ventures	15	21	13	14	27	20
Translation differences, hedge accounting	–466	–480	–346	–370	–878	–865
Tax on items that may be reclassified	9	–18	9	–24	–42	–16
Total other comprehensive income, net of tax	504	330	400	208	585	758
Total comprehensive income for the period	290	2,072	453	369	3,303	1,520
Earnings per Class A and B share, SEK	–1.07	5.09	–0.03	0.31	7.76	1.60
Earnings per Class A and B share after dilution, SEK	–1.07	5.08	–0.03	0.31	7.75	1.60
Earnings per Class D share, SEK	1.00	1.00	0.50	0.50	2.00	2.00
Average no. of Class A and B shares, millions	318.6	317.7	319.1	317.7	317.8	318.3
Average no. of Class A and B shares after dilution, millions	318.7	318.2	319.6	318.3	318.3	318.7
Average number of Class D shares, millions	126.3	126.3	126.3	126.3	126.3	126.3

Condensed consolidated statement of financial position

Amounts in SEK M	2023 30 Jun	2022 30 Jun	2022 31 Dec
Investment properties	55,445	52,004	52,655
Investment properties for sale	30	–	27
Leases, right-of-use assets	448	357	380
Joint ventures and associated companies	13,458	11,152	11,022
Derivatives	21	5	14
Interest-bearing non-current receivables	735	667	746
Other fixed assets	152	180	146
Total fixed assets	70,290	64,365	64,991
Listed instruments	629	3,519	3,891
Current finance lease asset	–	–	2,008
Other current assets	1,002	852	865
Cash and cash equivalents	22	104	76
Total current assets	1,653	4,474	6,840
Total assets	71,943	68,840	71,831
Equity	34,689	32,231	33,463
Non-current interest-bearing liabilities	25,499	28,329	29,820
Deferred tax liabilities	3,914	3,561	3,779
Derivatives	–	0	–
Non-current lease liabilities	448	387	380
Other non-current liabilities	301	250	299
Total non-current liabilities	30,162	32,526	34,278
Commercial paper	1,683	2,561	1,572
Other current interest-bearing liabilities	3,752	77	902
Other current liabilities	1,657	1,444	1,616
Total current liabilities	7,092	4,082	4,090
Total equity and liabilities	71,943	68,840	71,831

Consolidated statement of cash flows

Amounts in SEK M	2023 Jan-Jun	2022 Jan-Jun	2023 Apr-Jun	2022 Apr-Jun	2022 Jan-Dec	Rolling 12 months
Profit/loss before tax	–113	2,176	119	396	3,305	1,015
Changes in value of financial instruments	702	2,442	193	2,071	2,341	600
Change in value of properties	842	–1,858	510	–994	–1,697	1,004
Profit/loss from joint ventures and associated companies	90	–1,530	–58	–843	–1,375	245
Dividends from joint ventures and associated companies	405	531	291	396	577	452
Dissolution of allocated borrowing costs	23	25	12	14	44	42
Other items not included in cash flow	–55	–37	–42	–22	–31	–48
Tax paid	–111	–105	–80	–46	–149	–156
Cash flow from operating activities before changes in working capital	1,782	1,643	944	973	3,015	3,154
Cash flow from changes in current assets	115	–67	–82	–36	–159	22
Cash flow from changes in current liabilities	–292	–30	112	135	371	109
Cash flow from operating activities	1,605	1,546	974	1,072	3,227	3,285
Acquisition of properties	–1,096	–2,263	–1,078	–1,299	–3,202	–2,035
Property sales	21	–2	–	3	47	71
Investments in existing properties	–315	–321	–151	–168	–715	–708
Acquisition of listed shares	–285	–1,426	–260	–1,189	–1,617	–476
Sale of listed shares	512	–	443	–	–	512
Purchase of financial instruments	–460	–	–225	–	–106	–566
Sale of financial instruments	2,026	–	2,008	–	44	2,070
Acquisition of joint ventures and associated companies	–84	–11	–34	–11	–29	–102
Divestments of joint ventures and associated companies	–	3	–	3	3	–
Capital contribution to joint ventures and associated companies	–	–123	–	–83	–238	–115
Lending to joint ventures and associated companies	–10	–40	–10	–16	–64	–33
Increase in other fixed assets	–46	–36	–	–16	–58	–68
Decrease in other fixed assets	59	–	59	–	33	92
Cash flow from investing activities	322	–4,218	752	–2,776	–5,902	–1,362
Issue of Class B shares Dividends paid to shareholders	2,040 –985	39 –809	2,040 –922	39 –746	39 –935	2,040 –1,111
Incentive plan	8	–24	8	–24	–24	9
Proceeds from borrowings	3,444	5,262	230	2,112	7,631	5,813
Repayment of borrowings	–6,635	–1,790	–3,276	–3	–4,050	–8,894
Redemption of financial instruments	–	16	–	16	16	–
Decrease in other non-current liabilities	–14	–11	–	–	–23	–26
Increase in other non-current liabilities	160	11	160	12	11	160
Cash flow from financing activities	–1,982	2,694	–1,760	1,406	2,666	–2,010
Cash flow for the period	–55	22	–34	–298	–10	–87
Exchange rate differences in cash and cash equivalents	1	–2	–	–	2	5
Change in cash and cash equivalents	–54	20	–34	–298	–8	–82
Cash and cash equivalents at beginning of period	76	84	56	402	84	104
Cash and cash equivalents at end of period	22	104	22	104	76	22

Consolidated statement of changes in equity

				Profit earned
Amounts in SEK M	Share capital	Other contributed capital	Reserves, translation differences	incl. net profit for the period	Total equity1)
Equity 31 December 2021	780	3,578	493	26,228	31,079
Profit for the period, January-June 2022	–	–	–	1,742	1,742
Other comprehensive income, January-June 2022	–	–	330	–	330
Total comprehensive income for the period	–	–	330	1,742	2,072
Transactions with shareholders
Issue of Class B shares, incentive plan	1	38	–	–	39
Dividends	–	–	–	–935	–935
Transactions with shareholders	1	38	–	–935	–896
Other transactions
Redemption of incentive plan	–	–	–	–31	–31
Subscription of incentive plan	–	–	–	7	7
Other transactions	–	–	–	–24	–24
Equity, 30 June 2022	781	3,616	823	27,011	32,231
Profit for the period, July-December 2022	–	–	–	978	978
Other comprehensive income, July-December 2022	–	–	255	–	255
Total comprehensive income for the period	–	–	255	978	1,233
Equity, 31 December 2022	781	3,616	1,078	27,988	33,463
Profit for the period, January-June 2023	–	–	–	–214	–214
Other comprehensive income, January-June 2023	–	–	504	–	504
Total comprehensive income for the period	–	–	504	–214	290
Transactions with shareholders
Issue of Class B shares	18	2,022	–	–	2,040
Dividends	–	–	–	–1,111	–1,111
Transactions with shareholders	18	2,022	–	–1,111	928
Other transactions
Subscription of incentive plan	–	–	–	8	8
Other transactions	–	–	–	8	8
Equity, 30 June 2023	799	5,638	1,582	26,671	34,689

1) Equity is attributable in its entirety to the Parent Company's shareholders.

Parent Company income statement

	2023	2022	2022
Amounts in SEK M	Jan-Jun	Jan-Jun	Jan-Dec
Net sales	100	51	118
Administration costs	–62	–53	–125
Profit/loss before financial income and expenses	37	–3	–7
Profit from participations in Group companies	95	–	1,863
Profit from participations in joint ventures	161	–	109
Financial income	435	419	1,314
Financial expenses	–290	–214	–1,305
Profit before tax and appropriations	437	202	1,974
Appropriations	–	–	35
Tax	–3	–1	–7
Profit for the period	435	202	2,002

Condensed Parent Company balance sheet

	2023	2022	2022
Amounts in SEK M	30 Jun	30 Jun	31 Dec
Tangible fixed assets	1	1	1
Receivables from Group companies	1,769	1,614	1,714
Other financial fixed assets	14,535	13,164	13,378
Total fixed assets	16,306	14,779	15,093
Cash and bank balances	0	–69	–
Receivables from Group companies	24,727	22,039	25,044
Other current assets	28	75	29
Total current assets	24,755	22,045	25,073
Total assets	41,061	36,824	40,166
Equity	6,605	3,491	5,278
Untaxed reserves	22	30	22
Non-current interest-bearing liabilities	6,974	9,166	9,935
Liabilities to Group companies	18,374	18,365	18,111
Deferred tax liabilities	5	4	5
Total non-current liabilities	25,354	27,535	28,050
Current interest-bearing liabilities	1,716	2,535	1,670
Liabilities to Group companies	7,037	2,903	4,847
Other current liabilities	327	331	298
Total current liabilities	9,080	5,769	6,815
Total equity, untaxed reserves and liabilities	41,061	36,824	40,166

Segment information

			Changes in value, properties
Profit items per segment		Rental revenue1)	Net operating income		Unrealised		Realised		Total return
	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
Amounts in SEK M	Jan-Jun	Jan-Jun	Jan-Jun	Jan-Jun	Jan-Jun	Jan-Jun	Jan-Jun	Jan-Jun	Jan-Jun	Jan-Jun
Sweden	471	431	398	365	–437	722	–	0	–39	1,087
Finland	816	689	659	547	–130	223	–	–8	529	762
France	324	258	251	199	–76	193	0	–	176	392
Netherlands	270	217	242	193	–196	516	–	–	46	708
Spain	109	143	99	129	–3	246	–	–	96	375
Germany	51	45	49	44	7	–31	–	–	56	13
Rest of Europe	6	5	6	5	–7	–2	–	–	–2	3
Non-specified	–	–	–25	–19	–	–	–	–	–25	–19
Total	2,048	1,787	1,679	1,462	–842	1,866	0	–8	838	3,321

Asset items per segment	Market value properties			Investments properties		Acquisition properties	Divestment properties
Amounts in SEK M	2023 30 Jun	2022 30 Jun	2023 Jan-Jun	2022 Jan-Jun	2023 Jan-Jun	2022 Jan-Jun	2023 Jan-Jun	2022 Jan-Jun
Sweden	14,723	14,652	191	83	186	90	–	–
Finland	19,583	16,906	49	166	726	483	–	–6
France	8,438	6,977	46	16	46	1,140	–21	–
Netherlands	7,731	7,109	17	15	94	200	–	–
Spain	3,464	4,990	11	40	42	297	–	–
Germany	1,394	1,234	2	–	1	52	–	–
Rest of Europe	144	135	–	–	–	–	–	–
Total	55,476	52,004	315	321	1,096	2,263	–21	–6

1) All rental revenue pertains to external tenants.

Key performance indicators

	2023 Jan-Jun	2022 Jan-Jun	2022 Jan-Dec	2021 Jan-Dec	2020 Jan-Dec	2019 Jan-Dec	2018 Jan-Dec
Property-related key figures
Yield, %	6.2	5.7	5.8	6.0	6.3	6.4	6.8
Surplus ratio, %	82	82	82	83	83	83	83
Occupancy rate by area, %	95	97	95	96	95	95	95
Economic occupancy rate, %	96	96	96	96	95	95	95
Lettable area at the end of the period, 000 sqm	3,979	3,974	3,895	3,759	3,480	3,022	2,850
No. of properties at the end of the period	773	748	751	673	673	553	512
Financial key figures
Return on total capital, %	6.4	5.7	5.7	5.9	6.6	6.7	6.8
Return on equity, %	–1.3	11.0	8.4	36.6	17.8	23.7	23.7
Average interest rate, %	1.8	1.5	1.7	1.4	1.8	1.9	2.2
Fixed interest period incl. derivatives, years	3.2	3.7	3.2	4.0	3.4	3.5	3.0
Loan maturity, years	3.6	4.1	3.7	4.3	3.4	3.8	3.6
Equity/assets ratio, %	48	47	47	50	48	48	46
Debt ratio, %	43	45	45	42	43	44	47
Net debt/run rate EBITDA, multiple	6.3	6.8	6.5	5.4	6.4	6.6	7.1
Net debt/EBITDA, multiple	6.8	7.5	7.1	5.8	6.4	6.6	7.4
Interest coverage ratio, multiple	6.5	8.3	7.1	6.5	5.7	4.9	4.2
Interest coverage ratio, EMTN programme, multiple	10.7	11.4	12.7	9.4	6.4	5.3	4.3
Data per Class A and B share
Price of Class B share at the end of the period, SEK	213.00	188.70	236.50	305.00	169.60	136.20	65.70
Net asset value, SEK	108.07	102.50	106.61	97.92	66.38	56.77	44.22
Equity, SEK	92.28	87.45	91.33	83.93	55.19	46.86	35.70
Equity after dilution, SEK	92.14	87.36	91.20	83.84	55.09	46.78	35.67
Earnings, SEK	–1.07	5.09	7.76	30.09	10.80	12.15	9.24
Earnings after dilution, SEK	–1.07	5.08	7.75	30.04	10.78	12.13	9.24
Profit from property management, SEK	5.74	4.70	9.71	8.01	6.63	5.51	4.31
Profit from property management after dilution, SEK	5.74	4.69	9.70	7.99	6.62	5.51	4.31
Cash flow, SEK	5.20	4.78	8.69	6.59	6.10	4.86	3.95
Cash flow after dilution, SEK	5.19	4.77	8.68	6.58	6.09	4.86	3.95
Dividend per share, SEK	–	–	2.70	2.15	1.65	1.30	1.00
No. at end of period, millions	328.0	318.0	318.0	317.7	317.3	317.1	316.8
No. at end of period after dilution, millions	328.5	318.4	318.5	318.0	317.9	317.5	317.1
Average no., millions	318.6	317.7	317.8	317.5	317.1	316.9	316.7
Average no. after dilution, millions	318.7	318.2	318.3	318.0	317.7	317.3	316.9
Data per Class D share
Share price at the end of period, SEK	26.10	23.05	26.70	33.40	32.05	36.35	31.70
Equity, SEK	35.00	35.00	35.00	35.00	35.00	35.00	35.00
Earnings, SEK	1.00	1.00	2.00	2.00	2.00	2.00	2.00
Dividend per share, SEK	–	–	2.00	2.00	2.00	2.00	2.00
No. at end of period, millions	126.3	126.3	126.3	126.3	125.8	107.8	101.9
Average no., millions	126.3	126.3	126.3	126.2	118.4	105.7	83.0

Definitions of key performance indicators are provided on pages 32–33.

The Sagax share and shareholders

At the end of the period, Sagax had 23,732 (23,220) shareholders. Sagax's market capitalisation amounted to SEK 73,217 M (62,942).

Sagax has threes classes of shares: Class A, B and D common shares. The shares are listed on Nasdaq Stockholm, Large Cap.

A total of 456,281,346 shares were outstanding at the end of the period, of which 2,000,000 were Class B treasury shares. According to the Articles of Association, each Class D share is entitled to five times the total dividend on Class A and B shares, although not more than SEK 2.00 per share annually.

Sagax completed a directed issue of 10,000,000 Class B common shares on 21 June 2023. The issue raised equity of SEK 2,040 M for the company.

WARRANTS

Sagax has three warrant plans for the company's employees. In total, Sagax's employees hold warrants corresponding to 0.4% of the number of Class A and B shares outstanding. The company's CEO and Board Members do not participate in the plans. These plans are valid for three years, and encompass the periods 2021-2024, 2022-2025 and 2023- 2026. The subscription price corresponds to the price paid for the Class

B share at the start of each warrant plan, converted using the average share price performance in accordance with a real estate index comprising property companies listed on Nasdaq Stockholm's main list for a three-year period. Accordingly, the warrants will have a value on condition that the price performance of the Sagax share exceeds the average for the listed property companies during each three-year period.

PROFIT FROM PROPERTY MANAGEMENT PER CLASS A AND B SHARE

Profit from property management per Class A and B share after dilution on a rolling 12-month basis amounted to SEK 10.74 (8.82), which, compared with the share price of the Class B share at the end of the period, corresponded to a multiple of 19.8 (21.4).

EQUITY PER CLASS A AND B SHARE

Equity per Class A and B share after dilution amounted to SEK 92.14 (87.36). Net asset value per Class A and B share amounted to SEK 108.07 (102.50). The share price for the Class B share at the end of the period was 231% (216) of equity per Class A and B share and 197% (184) of NAV per Class A and B share.

Key performance indicators per Class B share

	2023 30 Jun	2022 30 Jun	2022 31 Dec	2021 31 Dec	2020 31 Dec	2019 31 Dec	2018 31 Dec
Share price at the end of period, SEK	213.00	188.70	236.50	305.00	169.60	136.20	64.70
Profit from property management after dilution, SEK1)	10.74	8.82	9.70	7.99	6.62	5.51	4.31
Cash flow after dilution, SEK1)2)	9.10	7.82	8.68	6.58	6.09	4.86	3.95
Equity after dilution, SEK	92.14	87.36	91.20	83.84	55.09	46.78	35.67
Net asset value, SEK	108.07	102.50	106.61	97.92	66.38	56.77	44.22
Share price/Profit from property management, multiple1)	19.8	21.4	24.4	38.2	25.6	24.7	15.0
Share price/Cash flow, multiple1)2)	23.4	24.1	27.3	46.4	27.9	28.0	16.4
Share price/Equity, %	231	216	259	364	308	292	182
Share price/Net asset value, %	197	184	222	311	255	240	147

1) Profit from property management and cash flow pertains to rolling 12 months. 2) Cash flow pertains to cash flow from operating activities before changes in working capital.

Share price in relation to equity and Net asset value

Trade in the shares on the Nasdaq Stockholm

	Price paid, SEK		Turnover rate on an annual basis, %		Average trading volume per trading day, SEK M
	30 Jun 2023	30 Jun 2022	30 Jun 2023	30 Jun 2022	30 Jun 2023	30 Jun 2022
Class A shares	215.00	189.50	1	12	0.3	2.7
Class B shares	213.00	188.70	26	34	75.4	102.5
Class D shares	26.10	23.05	56	71	7.6	10.9

Ownership structure 30 June 2023

	No. of			Share of voting			Share of
No. of shares	shareholders	Shareholder category	No.	power	Shareholders by country	No.	voting power
1–500	16,817	Private individuals			Sweden	22,388	84%
501–1 000	1,963	residing in Sweden	21,657	9%	USA	61	7%
1,001–2,000	1,542	Private individuals			UK	79	2%
2,001–5,000	1,459	residing abroad	116	0%
5,001–10,000	697	Companies/institutions in Sweden	731	75%	Ireland	10	2%
10,001–50,000	844				Luxembourg	46	1%
50,001–	410	Companies/institutions abroad	1,228	16%	Other	1,148	4%
Total	23,732	Total	23,732	100%	Total	23,732	100%

Largest shareholders, 30 June 20231)

		Percentage of
	Class A shares	Class B shares	Class D shares	Share capital	Votes2)
David Mindus and companies	14,000,000	63,713,912	900,000	17.2%	29.5%
Staffan Salén and companies	5,637,309	31,598,279	95,600	8.2%	12.7%
Fourth Swedish National Pension Fund	805,716	15,501,962	9,442,945	5.6%	4.8%
Third Swedish National Pension Fund	–	24,752,658	–	5.4%	3.6%
Avanza Pension	46,089	673,733	12,285,819	2.9%	1.9%
Vanguard	–	7,111,721	4,938,076	2.6%	1.7%
SEB Fonder	–	11,997,330	–	2.6%	1.7%
Länsförsäkringar Fonder	–	9,073,484	700,650	2.1%	1.4%
Handelsbanken Fonder	–	7,634,322	1,125,807	1.9%	1.3%
Rutger Arnhult and companies	–	306,824	7,535,303	1.7%	1.1%
BlackRock	–	7,465,101	6,739	1.6%	1.1%
Swedbank Robur Fonder	500,000	6,143,500	–	1.5%	1.6%
Filip Engelbert and companies	241,000	1,869,784	4,200,000	1.4%	1.2%
Norges Bank	–	3,279,679	2,972,130	1.4%	0.9%
Erik Selin and companies	1,174,959	1,620,049	2,025,448	1.1%	2.2%
Lannebo Fonder	–	4,788,126	–	1.0%	0.7%
Patrik Brummer	–	–	4,066,666	0.9%	0.6%
Second Swedish National Pension Fund	–	4,052,556	–	0.9%	0.6%
Folksam	–	3,569,091	–	0.8%	0.5%
ODIN Fonder	–	3,352,385	–	0.7%	0.5%
Total 20 largest shareholders	22,405,073	208,504,496	50,295,183	61.6%	69.6%
Other shareholders	4,160,685	92,949,763	75,966,146	37.9%	30.4%
Sub-total	26,565,758	301,454,259	126,261,329	99.6%	100.0%
Shares held by AB Sagax	–	2,000,000	–	0.4%	–
Total	26,565,758	303,454,259	126,261,329	100.0%	100.0%
– of which, Board and employees	20,253,565	105,016,513	5,370,920	28.6%	45.1%

1) Ownership structure at 30 June 2023 is based on information from Euroclear Sweden and Modular Finance.

2) Voting rights for treasury shares held by AB Sagax have been excluded.

Voting rights and proportion of share capital
		Voting rights		Proportion	Proportion
Class of share	No. of shares	per share	No. of votes	of votes	of share capital
Class A shares	26,565,758	1.0	26,565,758.00	38%	6%
Class B shares	303,454,259	0.1	30,345,425.90	44%	67%
Class D shares	126,261,329	0.1	12,626,132.90	18%	28%
Total	456,281,346		69,537,316.80	100%	100%

Risks and uncertainties

To prepare the accounts based on generally accepted accounting policies, company management must make judgements and assumptions that affect asset and liability items, revenue and expense items recognised in the accounts and other information provided. The actual outcome may differ from these judgements. Sagax is also exposed to various risks that may be of significance to the company's future business, earnings and financial position.

PROPERTY-RELATED RISKS

The valuation of investment properties is significantly affected by the judgments and assumptions made. To reduce the risk of incorrect assessments, properties corresponding to 97% of the property value on 30 June 2023 were valued by authorised property appraisers from independent valuation companies. By their very nature, properties valuations are always associated with a certain level of uncertainty.

Sagax prioritises leasing to tenants with a high credit rating and long-term leases, despite these entailing slightly lower immediate earnings. The intention is to reduce the risk of rent losses and the risk of vacancies.

Sagax mainly enters into net leases. This means the tenant accounts for the costs of such items as heating, electricity, property tax, water and sewage, in addition to the contractual rent. Accordingly, Sagax is only affected to a limited extent by changed costs due to changes in consumption or changed rates for such utilities as heating and electricity. More than 95% of Sagax's leases are indexed to CPI or the equivalent. Annual indexation may, in certain cases, be limited by a CPI ceiling or floor. Some leases have annual fixed rental adjustments.

The geographic distribution of Sagax's property portfolio and the industries of its tenants are highly diversified. Sagax's lease structure of many small leases help reduce the risks of vacancies and rent losses.

FINANCIAL RISKS

Sagax's financial expenses comprise the single largest expense for the Group. To reduce Sagax's exposure to a rise in interest rates, the Group has a significant portion of fixed-rate loans. To limit interest-rate risk for loans at floating interest rates, interest-rate swaps and interest-rate caps are used. Sagax's funding primarily comprises equity and interestbearing liabilities. Sagax endeavours to secure a long, average remaining term of interest-bearing liabilities to limit its refinancing risk, defined as the risk that refinancing existing debt cannot take place on reasonable terms. The company's long-term funding comprises listed bonds and bank loans. The complete terms and conditions for the bond loans are available at www.sagax.se.

CURRENCY RISKS

The amounts in the consolidated balance sheet are partly exposed to exchange rate fluctuations, particularly for the EUR. Net exposure on 30 June 2023, assets less liabilities in EUR, amounted to SEK 9,096 M (6,611). In total, net exposure in EUR amounted to 26% (23) of equity. In preparing the consolidated financial statements, the balance sheets of the Group's foreign operations are translated from their functional currencies into SEK based on the exchange rates applying on the balance sheet date: EUR 1 was equivalent to SEK 11.79 and DKK 1 was equivalent to SEK 1.58. Revenue and expense items are translated at the average exchange rate for the period: EUR 1 was equivalent to SEK 11.32 and DKK 1 was equivalent to SEK 1.52. In accordance with IAS 21, the currency effects for foreign operations and hedge accounting are recognised in Other comprehensive income. Other currency effects are recognised in profit or loss.

RISK OF CONFLICTS OF INTEREST

To limit the risk of potential conflicts of interest, the Group has policies that prohibit Sagax's employees and Board members from:

• i. Committing to Board assignments in property companies that primarily own warehouse and industrial premises except for those companies in which Sagax is a shareholder and when the Board assignment is performed within the framework of Sagax's operations.
• ii Investing in companies in which Sagax is a shareholder.
• iii. Investing in competitors for an amount exceeding 10% of the value of the employee's or Board member's holdings in Sagax.

The policies also specify that senior executives and Board members who borrow against more than 10% of the market value of their shares in Sagax shall notify the company. As per the publication of this report no such notification has been received.

OTHER RISKS

Russia's invasion of Ukraine, higher inflation and rising market interest rates had a negative effect on the financial markets, resulting in, for example, rising market interest rates and greater volatility. The property market has thus been negatively impacted by this. The company is monitoring developments to identify and, if possible, address any risks.

Sagax's other risks are described in the 2022 Annual Report, on pages 50-53.

Currency exposure

Amounts in EUR M	30 Jun 2023	30 Jun 2022
Investment properties	3,444	3,485
Other assets	127	123
Total assets	3,571	3,608
Interest-bearing liabilities	2,483	2,715
Other liabilities	317	204
Total liabilities	2,800	2,919
Net exposure	771	689

SENSITIVITY ANALYSIS

Sagax's exposure to material risks in the company's operations is presented below.

Sensitivity analysis for property values
	–20%	–10%	0%	+10%	+20%
Value change, SEK M	–11,095	–5,548	0	5,548	11,095
Debt ratio, %	51	47	43	40	37

Sensitivity analysis for changes in the occupancy rate
	–10%	–5%	0%	+5%	+10%
Occupancy rate, %	86	91	96	100	N/A
Interest coverage ratio, multiple	5.9	6.2	6.5	6.8	N/A

Sensitivity analysis for property values

	Change	Value change, SEK M
Capitalisation rate	+/–0.25% point	–1,734/+1,888
Discount rate	+/–0.25% point	–941/+967
Rental revenue	+/– 5%	+2,442/–2,477
Property expenses	+/–5%	–343/+338

Sensitivity analysis on 30 June 20231)

Amounts in SEK M	Change	Effect on profit from property management, annual basis	Effect on profit after tax, annual basis	Effect on equity
Economic occupancy rate	+/–1% point	+45/–45	+37/–37	+37/–37
Rental revenue	+/–1%	+43/–43	+35/–35	+35/–35
Property expenses	+/–1%	–7/+7	–6/+6	–6/+6
Interest expenses for liabilities in SEK including fixed income derivatives	+/–1% point	–8/+8	–7/+7	–7/+7
Interest expenses for liabilities in EUR including fixed income derivatives	+/–1% point	–28/+28	–22/+22	–22/+22
Change in SEK/EUR exchange rate2)	+/–10%	+222/–222	+178/–178	+910/–910
Changed rent level for contract maturity in 2023	+/–10%	+28/–28	+23/–23	+23/–23

1) Excluding shares in profit of joint ventures and associated companies.

2) Sagax's net exposure to the SEK/EUR exchange rate comprises assets and liabilities recognised in EUR, in addition to revenue and expenses in EUR.

Other disclosures

ACCOUNTING POLICIES

This condensed interim report has been prepared in accordance with International Accounting Standards (IAS) 34 Interim Financial Reporting. The term "IFRS" in this report means application of the International Financial Reporting Standards (IFRS), as adopted by the EU, and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC). The accounting policies and calculation methods are the same as those applied in the 2022 Annual Report and are to be read together with this Annual Report.

There are no amendments to accounting standards in 2023 that are deemed to have any material impact on the company's financial statements.

Rounding-off differences may occur.

TRANSACTIONS WITH RELATED PARTIES

Transactions with related parties are described in Note 27 of the 2022 Annual Report. No material changes regarding transactions with related parties have taken place in relation to the information presented in the 2022 Annual Report.

EVENTS AFTER THE REPORTING PERIOD

On July 24, 2023 it was announced that Sagax has through 8 separate transactions acquired 9 properties for the equivalent of SEK 380 M. The properties comprise a lettable area of 39,000 square metres, mainly consisting of premises for warehousing and light industrial purposes.

The annual rental income amounts to the equivalent of SEK 28 M. The occupancy rate is 98% and the average remaining lease term is 3.9 years. Closing for the equivalent of SEK 43 M has taken place during the second quarter of 2023. Closing for the remaining SEK 337 M is expected to take place during the third quarter of 2023. The acquisitions will be reported in Sagax's segments Spain (SEK 189 M), France (SEK 166 M) and Netherlands (SEK 25 M). For more information, see pressrelease.

On July 17 it was announces that Sagax has entered into an agreement with Hedin Mobility Group regarding a sale- and leaseback transaction concerning 16 properties located in the Netherlands, Belgium and Germany. In connection with the closing, Hedin Mobility Group will enter into long-term triple-net lease agreements for all properties. The acquisition concerns 16 properties comprising a total of 68,800 square metres of lettable area and 180,000 square metres of land. Sagax's investment amounts to the equivalent of SEK 1,110 M including transaction costs. The rental income amounts to the equivalent of SEK 77 M and is indexed to the CPI or equivalent index. The occupancy rate is 100%. The lease terms are 8-12 years with an average initial lease term of 10 years. The tenant has an unilateral right to extend the lease term by an additional 5 years. Closing is expected to take place during the third and fourth quarter of 2023. The acquisitions will be reported in Sagax's segments Netherlands (SEK 537 M), Other Europe (SEK 506 M) and Germany (SEK 67 M). For more information, see pressrelease.

The Board of Directors and CEO give their assurance that this interim report provides a fair overview of the company's and the Group's operations, financial position and earnings and describes significant risks and uncertainties faced by the company and the companies included in the Group.

Stockholm, 17 July 2023 AB SAGAX (publ) Corporate Registration Number 556520-0028

Chairman of the Board Board member Board member

Staffan Salén Johan Cederlund Filip Engelbert

David Mindus Johan Thorell Ulrika Werdelin CEO and Board member Board member Board member

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

This constitutes information that AB Sagax (publ) is legally obliged to publish under the EU's Market Abuse Regulation and the Swedish Securities Market Act. The information was released for publication on 17 July 2023 at 4:00 p.m. (CEST).

Calendar

The financial calendar is available at www.sagax.se.

Interim Report January-September 2023 27 October 2023 Year-end Report 2023 16 February 2024

SCHEDULE OF DIVIDEND PAYMENTS TO HOLDERS OF CLASS D SHARES

September 2023

• Final day for trading including dividend rights 27 September 2023
• First day for trading excluding dividend rights 28 September 2023
• Record date for dividend payment 29 September 2023

December 2023

• Final day for trading including dividend rights 27 December 2023
• First day for trading excluding dividend rights 28 December 2023
• Record date for dividend payment 29 December 2023

March 2024

• Final day for trading including dividend rights 26 March 2024
• First day for trading excluding dividend rights 27 March 2024
• Record date for dividend payment 28 March 2024

FOR FURTHER INFORMATION, PLEASE CONTACT:

David Mindus, CEO +46 8 545 83 540, david.mindus@sagax.se

Agneta Segerhammar, CFO +46 8 545 83 540, agneta.segerhammar@sagax.se

Visit us at www.sagax.se.

Definitions

Sagax applies the European Securities and Market Authority's (ESMA) Guidelines on the Alternative Performance Measures. Alternative performance measures refer to financial measures of historical or future earnings trends, financial position, financial results or cash flows that are not defined or stated in the applicable rules for financial reporting, which in Sagax's case is IFRS. The basis of the alternative performance measures provided is that they are used by company management to assess the financial performance and thus are considered to provide valuable information to shareholders and other stakeholders.

The table below presents definitions of Sagax's key performance indicators. The calculation of alternative performance measures is described separately on the following pages.

Key performance indicators	Description	Reason for alternative performance measure
Cash flow per Class A and B share	Profit before tax adjusted for items not included in cash flow less tax paid in relation to the average number of Class A and B shares. Divi dends on Class D shares for the period have also been deducted from profit before tax. Dividends received from joint ventures and associated companies have been added to profit before tax.	The KPI shows the amount of cash flow for the period that can be considered to be attributable to owners of Class A and Class B shares.
Debt ratio	Interest-bearing liabilities at the end of the period in relation to total assets at the end of the period.	The KPI shows financial risk.
Dilution	Dilution due to outstanding warrants has been calculated, in line with IAS 33, as the number of Class A and B shares to be issued to cover the difference between the strike price and market price for all potential Class A and B shares (warrants) outstanding, insofar as it is probable that they will be utilised.	Not an APM.
Earnings per Class A and B share	Profit in relation to the average number of Class A and B shares after taking into account the portion of profit for the period represented by dividends on Class D shares.	IFRS performance measure.
Earnings per Class D share	Class D shares are entitled to five times the total dividend on Class A and B shares, although not more than SEK 2.00 per share annually.	The KPI shows the shareholders' share of profit.
EBITDA	Net operating income less central administration costs plus dividends received from joint ventures and associated companies.	Sagax uses EBITDA so that the EBITDA/Net debt KPI shows financial risk.
Economic occupancy rate	Contractual annual rent directly after the end of the period as a percent age of rental value directly after the end of the period.	The KPI shows the economic degree of utilisation of the Group's properties.
Equity/assets ratio	Equity in relation to total assets.	The KPI shows financial risk.
Equity per Class A and B share	Equity at the end of the period in relation to the number of Class A and B shares at the end of the period after taking into account equity attributable to Class D shares.	The KPI shows the owner's share of equity.
Equity per Class D share	Equity at the end of the period as a percentage of the number of common shares at the end of the period. Equity is restricted to SEK 35.00 per Class D share.	The KPI shows the owner's share of equity.
EURIBOR	EURIBOR (Euro Interbank Offered Rate) is a daily reference rate calculated on the average interest rates that eurozone banks offer each other for lending in EUR.	Not an APM.
Fixed income derivatives	Agreements on lending rates that may include the factors of time, inflation and/or maximum interest rates. Usually signed to hedge interest rates for interest-bearing loans.	Not an APM.
Interest coverage ratio	Profit from property management, excluding profit from joint ventures and associated companies but including dividends from joint ventures and associated companies, after reversal of financial expenses in relation to financial expenses.	The KPI shows financial risk.
Interest coverage ratio, EMTN programme	Profit from property management after reversal of financial income and expenses as a percentage of net financial items.	The KPI shows financial risk.
Interest-rate swaps	An agreement between two parties to swap interest rate conditions in the same currency. The swap entails that one party exchanges its floating interest rate for a fixed rate, while the other party receives a fixed rate in exchange for a floating rate. The purpose of an interest-rate swap is to reduce interest-rate risk.	Not an APM.
Net asset value	Recognised equity according to the balance sheet with reversal of reserves for fixed income derivatives, deferred tax on temporary differ ences on property values and deferred tax on reserves for fixed income derivatives.	An established indicator of the Group's net asset value that facilitates analyses and comparisons with EPRA NAV.

Key performance indicators	Description	Reason for alternative performance measure
Net debt	Interest-bearing liabilities less interest-bearing assets, cash and cash equivalents, and listed instruments.	The KPI shows the Group's indebtedness.
Net debt according to EMTN programme	Financial indebtedness less listed shares and cash and cash equivalents.	The KPI shows the Group's indebtedness.
Net debt according to EMTN programme/Total assets	Financial indebtedness less listed shares and cash and cash equivalents in relation to total assets.	The KPI shows financial risk.
Net debt/Total assets	Interest-bearing liabilities less interest-bearing assets, cash and cash equivalents, and listed instruments as a percentage of total assets.	The KPI shows financial risk.
Net investments	The net of property acquisitions and investments in the existing property portfolio, as well as sales of properties.	The KPI shows the investment volume.
Occupancy rate by area	Contracted area directly after the end of the period as a percentage of total lettable area directly after the end of the period.	The KPI shows the occupancy situation.
Profit from property management	Profit excluding changes in value and tax.	An indicator of the earnings generation in the operations, excluding changes in value.
Profit from property management per Class A and B share after dilution	Profit from property management for the period reduced by dividends on Class D shares divided by the average number of Class A and B shares after dilution.	An indicator of the earnings generation of the assets, excluding the changes in value accruing to holders of Class A and B shares.
Property	Pertains to properties held under title or site leasehold.	Not an APM.
Rental revenue, comparable portfolios	Rental revenue from properties that were included in the portfolio for the entire reporting period and the entire comparative period. Project properties and properties that were acquired or sold are not included.	The KPI shows the trend in rental revenue excluding non-recurring effects, such as prematurely vacating premises, not impacted by acquired and sold properties.
Rental value	The contractual annual rent applicable directly after the end of the period, with supplements for estimated market rents for vacant premises.	The key performance indicator shows the Group's income potential.
Return on equity	Profit for the period, recalculated to 12 months, as a percentage of aver age equity (opening and closing balances) divided by 2 for the period.	The KPI shows how shareholders' capital yields interest during the period.
Return on total capital	Profit for the period, recalculated to 12 months, after net financial items after reversal of financial expenses as a percentage of average total assets for the period.	The KPI shows the ability to generate earnings on the Group's assets, excluding financing costs.
Run rate EBITDA	Net operating income according to current earnings capacity less central administration costs plus dividends received from joint ventures and associated companies rolling 12 months.	Sagax uses EBITDA so that the EBITDA/Net debt, run rate KPI shows financial risk.
Run rate yield	Net operating income (including property administration) according to current earnings capacity with add-back of site leasehold fees, as a per centage of the carrying amounts of the properties at the end of the period.	The KPI shows the earnings generation of the operations before financial expenses and central administration costs are taken into account.
Secured liabilities/total assets	Liabilities secured with pledged assets as a percentage of total assets.	The KPI shows financial risk for bond holders.
STIBOR	STIBOR (Stockholm Interbank Offered Rate) is a daily reference rate calculated on the average interest rates that banks offer each other for lending in SEK.	Not an APM.
Surplus ratio	Net operating income for the period as a percentage of rental revenue for the period.	The KPI shows the profitability of the properties.
	Total return on property portfolio Total of adjusted net operating income and unrealised changes in property value during the period as a percentage of the closing property value adjusted for unrealised changes in value for the period.	The KPI shows earnings generation and value growth for the properties for a period.
Total return on shares	Total of the change in the share price during the period and the dividend paid during the period as a percentage of the share price at the end of the preceding year.	The KPI shows the total return that accrues to shareholders.
Triple net lease	A type of lease whereby the tenant pays, in addition to the rent, all costs incurred on the property that would normally have been paid by the property owner. These include operating expenses, maintenance, property tax, site leasehold fees, insurance, property caretaking, etc.	Not an APM.
Yield	Net operating income for the period (including property administration) with add-back of site leasehold fees, recalculated to 12 months, adjusted for the holding periods of the properties during the period and recalculat ed to the current exchange rates on the balance sheet date as a percent age of the carrying amounts of the properties at the end of the period.	The KPI shows the earnings generation of the operations before financial expenses and central administration costs are taken into account.

The calculation of alternative performance measures is presented in the tables below.

Amounts in SEK M unless otherwise stated	2023 Jan-Jun	2022 Jan-Jun	2022 Jan-Dec
Cash flow per Class A and B share
Profit/loss before tax	–113	2,176	3,305
Items not affecting cash flow	2,006	–427	–141
Tax paid Dividends attributable to Class D	–111	–105	–149
shares	–126	–126	–253
Cash flow	1,656	1,518	2,762
Cash flow per Class A and B share after dilution, SEK	5.19	4.77	8.68
Debt ratio
Interest-bearing liabilities	30,934	30,967	32,294
Total assets	71,943	68,840	71,831
Debt ratio	43%	45%	45%
Earnings per Class A and B share1)
Profit after tax	–214	1,742	2,718
Dividends attributable to Class D
shares	–126	–126	–253
Adjusted profit/loss after tax	–340	1,616	2,465
Earnings per Class A and B share after dilution, SEK	–1.07	5.08	7.75
EBITDA rolling 12 months
Net operating income	3,249	2,783	3,032
Central administration	–176	–160	–174
Dividends from joint ventures and associated companies	452	594	577
EBITDA	3,525	3,217	3,435
Economic occupancy rate
Contractual annual rent	4,320	3,744	4,024
Rental value	4,517	3,891	4,195
Economic occupancy rate	96%	96%	96%
Equity/assets ratio
Equity	34,689	32,231	33,463
Total assets	71,943	68,840	71,831
Equity/assets ratio	48%	47%	47%
Equity per Class A and B share
Equity	34,689	32,231	33,463
Equity attributable to Class D shares	–4,419	–4,419	–4,419
Equity attributable to Class A and B
shares	30,270	27,812	29,044
No. of shares		328,020,017 318,020,017 318,020,017
No. of shares after dilution		328,514,217 318,360,134 318,459,519
Equity per Class A and B share, SEK	92.28	87.45	91.33
Equity per Class A and B share after dilution, SEK	92.14	87.36	91.20

Amounts in SEK M	2023	2022	2022
unless otherwise stated	Jan-Jun	Jan-Jun	Jan-Dec
Interest coverage ratio
Profit from property management Reversal of profit from property	1,956	1,620	3,339
management joint ventures and
associated companies Dividends from joint ventures and	–437	–391	–766
associated companies	405	531	577
Financial expenses	351	242	520
Adjusted profit from property man
agement before financial expenses	2,275	2,002	3,670
Interest coverage ratio	6.5x	8.3x	7.1x
Interest coverage ratio, EMTN programme
Profit from property management	1,956	1,620	3,339
Net financial items	201	156	285
Profit from property management
before net financial items	2,157	1,776	3,624
Interest coverage ratio	10.7x	11.4x	12.7x
Net debt
See page 15.
Net debt according to EMTN programme
Interest-bearing liabilities	30,934	30,967	32,294
Listed shares in fixed assets2)	–5,328	–2,574	–3,141
Listed shares in current assets	–33	–3,475	–3,786
Cash and cash equivalents	–22	–104	–76
Net debt according to EMTN programme	25,550	24,814	25,291
Net debt according to EMTN programme/Total assets
Net debt according to EMTN
programme	25,550	24,814	25,291
Total assets	71,943	68,840	71,831
Net debt according to EMTN programme/Total assets	36%	36%	35%
Net debt/EBITDA
Net debt	24,134	24,056	24,364
EBITDA rolling 12 months	3,525	3,217	3,435
Net debt/EBITDA	6.8x	7.5x	7.1x
Net debt/run rate EBITDA
Net debt	24,134	24,056	24,364
EBITDA, run rate	3,826	3,523	3,722
Net debt/EBITDA run rate	6.3x	6.8x	6.5x
Net debt/Total assets

24,134	24,056	24,364
71,943	68,840	71,831
34%	35%	34%

1) IFRS performance measure.

2) Pertains to listed shares in companies recognised as associated companies. Associated companies are recognised in the income statement pursuant to the equity method.

Calculation of alternative performance measures is presented in the tables below, cont'd.

Amounts in SEK M	2023	2022	2022
unless otherwise stated	Jan-Jun	Jan-Jun	Jan-Dec
Net asset value
Equity	34,689	32,231	33,463
Equity attributable to Class D shares	–4,419	–4,419	–4,419
Reversal of derivatives	–21	–5	–14
Reversal of deferred tax	4,035	3,834	3,990
Reversals due to joint ventures	1,219	990	930
Net asset value	35,503	32,631	33,950
NAV per Class A and B share after dilution, SEK	108.07	102.50	106.61
Occupancy rate by area
Contracted area, '000s sqm	3,798	3,836	3,719
Total lettable area, '000s sqm	3,979	3,974	3,895
Occupancy rate by area	95%	97%	95%
Profit from property management
Profit after tax	–214	1,742	2,718
Tax	112	826	937
Changes in value	2,059	–948	–316
Profit from property management	1,956	1,620	3,339
Profit from property management per Class A and B share after dilution
Profit from property management	1,956	1,620	3,339
Dividends attributable to Class D
shares	–126	–126	–253
Adjusted profit from property management	1,830	1,494	3,086
Average no. of Class A and B shares after dilution		318,725,515 318,194,884 318,301,177
Profit from property management per
Class A and B share after dilution, SEK	5.74	4.69	9.70
Profit from property management per Class A and B shares, rolling 12 months
Profit from property management	3,676	3,060	3,339
Dividends attributable to Class D

shares	–253	–253	–253
Adjusted profit from property management	3,423	2,807	3,086
Average no. of Class A and B shares after dilution		318,725,515 318,194,884 318,301,177
Profit from property management per Class A and B share after dilution, SEK	10.74	8.82	9.70
Profit from property management per Class A and B share, preceding period	8.82	7.31	7.99
Annual growth rate, %	22%	21%	21%
Rental revenue, comparable portfolios
Rental revenue	2,048	1,788	N/A
Acquired and sold properties	–163	–122	N/A
Currency adjustment1)	–	102	N/A

Other adjustment – – N/A Rental revenue, comparable portfolios excluding currency effects 1,885 1,767 N/A

1) The preceding period has been adjusted so that the exchange rate is the same as in the current period.

Amounts in SEK M unless otherwise stated	2023 Jan-Jun	2022 Jan-Jun	2022 Jan-Dec
Return on equity
Profit after tax	–214	1,742	2,718
Addition for translation to annual value	–214	1,742	–
Adjusted profit/loss after tax	–428	3,484	2,718
Average equity	34,076	31,655	32,272
Return on equity	–1.3%	11%	8.4%
Return on total capital
Profit from property management	1,956	1,620	3,339
Addition for translation to annual value	1,956	1,620	–
Financial expenses	351	242	520
Addition for translation to annual value	351	242	–
Profit before financial expenses	4,614	3,725	3,859
Average total capital	71,887	65,637	67,133
Return on total capital	6.4%	5.7%	5.7%
Run rate EBITDA
Net operating income according to current earnings capacity	3,550	3,089	3,319
Central administration	–176	–160	–174
Dividends from joint ventures and
associated companies	452	594	577
Run rate EBITDA	3,826	3,523	3,722
Run rate yield
Net operating income according to
current earnings capacity	3,550	3,089	3,319
Add-back of site leasehold fees	–28	–24	–25
Adjusted net operating income	3,522	3,065	3,294
Book value of properties	55,476	52,004	52,682
Run rate yield	6.3%	5.9%	6.3%
Secured liabilities/total assets
Secured liabilities	1,977	1,877	1,895
Total assets	71,943	68,840	71,831
Secured liabilities/Total assets	3%	3%	3%
Surplus ratio
Net operating income	1,679	1,462	3,032
Rental revenue	2,048	1,787	3,696
Surplus ratio	82%	82%	82%
Yield
Net operating income	1,679	1,462	3,032
Add-back of site leasehold fees	–14	–12	–25
Addition for translation to annual value	1,665	1,450	–
Holding adjustment,
acquisitions/divestments	23	33	–77
Currency translation to closing rate	110	53	112
Adjusted net operating income	3,463	2,987	3,042
Carrying amounts of properties	55,476	52,004	52,682
Yield	6.2%	5.7%	5.8%

AB Sagax is a property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industrial segment. Sagax's property holdings on 30 June 2023 amounted to 3,979,000 square metres, distributed between 773 properties. AB Sagax (publ) is listed on Nasdaq Stockholm, Large Cap.

More information is available at www.sagax.se.

AB Sagax (publ), Engelbrektsplan 1, SE-114 34 Stockholm, Sweden Corp. Reg. No. 556520-0028 Tel: +46 8 545 83 540 www.sagax.se