Hufvudstaden

Quarterly Report • Aug 23, 2021

Half-year Report January–June 2021

• Net revenue from property management was SEK 891 million (864), an increase of 3 per cent. Elimination of intra-Group rent revenue amounted to SEK 63 million (22), attributable primarily to NK Retail.
• Gross profit from property management increased by 2 per cent, totalling SEK 615 million (604), which is attributable primarily to higher rent revenue. Elimination of intra-Group rent revenue amounted to SEK 63 million (22).
• Net profit for the period was SEK 769 million (-1,082), equivalent to SEK 3.80 per share (-5.24). The increase is attributable to higher unrealised changes in value in the property holdings.
• The fair value of the property holdings was SEK 46.3 billion (45.6 at year-end), resulting in net tangible assets (EPRA NTA) of SEK 175 per share (173 at yearend). Unrealised changes in the value of the property holdings amounted to SEK 407 million (-1,915) for the period.
• The equity ratio was 60 per cent (62), the net loan-to-value ratio was 19 per cent (18), and the interest coverage ratio multiple was 9.4 (9.3).
• The rental vacancy level at the end of the period was 7.6 per cent (8.7). Excluding current development projects, the rental vacancy level was 6.5 per cent (4.1).

President Ivo Stopner is retiring at year-end 2021. Ivo Stopner has served as President of Hufvudstaden since 1999. The Board of Directors has appointed Vice President Anders Nygren as the new President of Hufvudstaden and he will take office as of 1 January 2022. In addition, the Board of Directors has appointed the company's CFO Åsa Roslund as Vice President and she will take office as of 1 January 2022. As previously, Bo Wikare, Head of NK Business Area, is also Vice President of Hufvudstaden.

Operating events during the second quarter

A partnership agreement was signed with NCC for the project Johanna in Inom Vallgraven 12 block in Gothenburg, to start in the beginning of 2022 with a total of approximately 32,000 square metres of rentable floor space.

In the Orgelpipan 7 property in Stockholm, our tenants Entercard and Planview have renegotiated their leases for a total of around 3,900 square metres of office space.

A number of leases have been signed with retail companies, including the health-conscious fast food concept Hawaii Poké for the Femman property in Gothenburg.

Performance measures
	Jan–Jun	Jan–Jun	Jan–Dec
SEK m	2021	2020	2020
Net revenue, property management1)	891	864	1,724
Gross profit, property management1)	615	604	1,194
Unrealised changes in property value, investment properties	407	-1,915	-2,930
Operating profit or loss	1,036	-1,269	-1,702
Net profit or loss for the period	769	-1,082	-1,462
Fair value, properties, SEK bn	46.3	46.2	45.6
Net loan-to-value ratio, properties, %	19.4	17.7	18.8
Interest coverage ratio, multiple	9.4	9.3	9.1
Rental vacancy level, excl. projects (EPRA vacancy rate), %	6.5	4.1	6.7
Earnings from property management after nominal tax
(EPRA EPS) per share, SEK	2.46	2.43	4.80
Net tangible assets (EPRA NTA) per share, SEK	175	175	173

1) After elimination of intra-Group rent revenue of SEK 63.0 million for January–June 2021, SEK 22.0 million for January–June 2020 and SEK 43.9 million for January–December 2020.

During the second quarter of the year, the third wave of contagion subsided and the burden on health care in Sweden decreased. Vaccinations have continued, and during the summer more than 50 per cent of the adult population had received two doses.

From late spring onward, government agencies have gradually begun easing restrictions. The recommendation to continue working from home remains in force until 30 September. Restrictions for retail and restaurants remained in effect for part of the quarter, but was gradually eased toward the summer. International tourism was extremely weak, but domestic tourism increased. Entertainment and cultural offerings began to open up again to a limited extent.

The effects of covid-19 continued to have an impact on Hufvudstaden's centrally located properties and marketplaces in the two largest cities in Sweden. However, the impact was less compared to the second quarter of 2020.

Several tenants, primarily stores and restaurants, have had their ability to pay impaired. Earnings in the accounts for the half-year period of 2021 were charged with rent reductions of approximately SEK 77 million (90) in connection with covid-19, before recognized compensation from the commercial rent support scheme. Compensation recognized from the state totalled SEK 37 million (39), which yielded a net effect of approximately SEK 40 million (51).

In many cases, Hufvudstaden has long-term relationships with its tenants, which is a core element in our business concept. We support tenants in all matters related to premises, in good times and bad. Discussions will continue in the third quarter of 2021 to find the best solutions in business terms to bridge this challenging period. The effect on operating results will therefore continue in upcoming quarters, as compared to the situation prior to the pandemic.

Hufvudstaden is following official recommendations and directives on how to manage transmission of the virus. Operations have been adapted with regard to stores, restaurants, and office premises. Current and planned development projects are proceeding as scheduled. Hufvudstaden's financial position remains strong and conditions are good for the continued development of our properties and marketplaces.

While the pandemic has in all likelihood accelerated social changes, we firmly believe that people will still want to meet in the future, both professionally and socially. Face-to-face encounters create opportunities for exchange of ideas, innovation and business, as well as culture and experiences. Offices, stores and restaurants are a prerequisite for this. The assessment is therefore that centrally located properties in the two largest cities in Sweden remain attractive and we are convinced that our business model will be the foundation of favourable profit growth upon return to more normal conditions going forward.

GROUP

RESULTS

Property management

Net revenue from property management after elimination of intra-Group rents of SEK 63.0 million (22.0) totalled SEK 890.7 million (864.0) for the period. Gross profit was SEK 614.6 million (604.1) after elimination of intra-Group rents. The increase was attributable primarily to decreased rent reductions and bad debt losses for stores and restaurants in conjunction with covid-19, as well as higher gross rents related to renegotiations, new leases and indexation.

Turnover-based rent supplements are recognised in the fourth quarter. Turnover-based rent supplements for the preceding year totalled SEK 4.6 million. Apart from this, there are no other material seasonal variations in rents.

The property management results for each business area are reported on page 9.

Other segments

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

NK Retail accessed the NK business on 3 February of this year. Net revenue amounted to SEK 222.8 million (-). Costs after elimination of intra-Group rents of SEK -36.3 million (-) was SEK -188.9 million (-). The profit for NK Retail excluding Intra-Group rental

costs was SEK 33.9 million (-).

Net revenue for other operations amounted to SEK 39.0 million (34.9). The increase is attributable primarily to the newly-started Cecil Coworking and NK e-commerce operations. Costs after elimination of intra-Group rents of SEK -26.7 million (-22.0) were SEK -34.0 million (-4.2). Cecil Coworking and NK e-commerce have mainly been charged with start-up costs. Gross profit excluding intra-Group rental costs was SEK 5.0 million (30.7). For further information, see page 9.

Other profit and loss items

Central administration totalled SEK -24.5 million (-23.4). Unrealised changes in the value of investment properties totalled SEK 406.8 million (-1,914.7). For further information, see pages 4–5.

Financial income and expense

Net financial income and expense amounted to SEK -66.8 million (-66.0), of which SEK -55.6 million (-54.8) refers to the cost of borrowing, and SEK -11.2 million (-11.2) to leasing costs, primarily ground rents. The increase in financial expense is due to increased borrowing. For further information, see page 6.

The Group's tax for the period was SEK -199.6 million (253.1), of which SEK -64.5 million (-64.8) in current tax and SEK -135.1 million (317.9) in deferred tax. The increase in deferred tax is attributable primarily to positive unrealised changes in value in property holdings.

Net profit/loss for the period

The consolidated net profit was SEK 769.4 million (-1,081.5). The increase is attributable to higher unrealised changes in value in the property holdings.

PROPERTY HOLDINGS

The fair value of the Hufvudstaden property holdings is based on an internal valuation, where classification takes place on level 3 according to IFRS 13. The assessed value as at 30 June 2021 was SEK 46,312 million (45,637 at year-end). The increase is attributable to higher unrealised changes in value and investments. Rentable floor space totalled approximately 386,700 square metres (386,800 at yearend).

The total rental vacancy level as at 30 June 2021 was 7.6 per cent (8.2 at year-end) and the total floor space vacancy level was 9.7 per cent (9.8 at yearend). The rental vacancy level, excluding current development projects (EPRA vacancy rate), totalled 6.5 per cent (6.7 at year-end).

Acquisitions and investments

Total investments were SEK 313.2 million (470.4), of which investments in properties and other non-current assets were SEK 273.4 million (470.4).

At present, current and planned projects are worth approximately SEK 3–4 billion. Major projects are presented in the table below.

Current and planned development projects are progressing as scheduled despite the covid-19 pandemic.

The work on developing the NK department stores continued during the second quarter of the year. A development project is in progress on the women's floor at NK Gothenburg, with changed customer flows and new department designs. In NK Stockholm, planning for a renovation and upgrade of the women's floor has begun. To respond to changes in consumer behavior, NK e-commerce was launched on a limited basis in the autumn of 2020. The process of connecting more departments continued during the quarter.

At the Vildmannen 7 property in Bibliotekstan, foundations are being laid for and planning is in progress ahead of rebuilding a new construction behind the original façades facing the street, which have been secured in preparation for the new construction. The new building will offer highly modern and efficient offices as well as attractive stores in a unique environment.

In Gothenburg, a new local plan was received at the end of 2019 for the Inom Vallgraven 12 block. Planning is in progress as part of an extensive redevelopment and expansion project. The new local plan allows for additional building permissions of around 15,000 square metres in gross area. A partnership agreement has been signed with NCC as the main contractor. Production will commence in early 2022 and will be completed in late 2025. Existing residential units in the block will be replaced by new ones in the Inom Vallgraven 3:2 property.

Property value and net asset value

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

In the light of the above, the assessed unrealised change in the value of the property holdings for the period was SEK 406.8 million (-1,914.7). The total value of the property holdings at 30 June 2021 was SEK 46.3 billion, including investments made during the period. The unrealised increase in value is due to the effect of higher rents for offices and slightly falling yield requirements for properties with a larger element of office premises in Bibliotekstan.

The average yield requirement fell 2 basis points compared to the first quarter and stood at 3.7 per cent at the above valuation (3.7 at year-end).

				Rentable floor	Of which added floor space	Estimated investment1)	Estimated completion
City	Property	Status	Type of premises	space (sq m)	(sq m)	(SEK m)	(year)
Stockholm	Vildmannen 7	Foundation work, planning	Office, retail & residential	4,800	4,800	800	2023
Stockholm	Orgelpipan 7	Local planning	Office	-	-	-	-
Gothenburg	Inom Vallgraven 3:2	Current	Residential	1,300	-	85	2021/2022
Gothenburg	NK Gothenburg	Current	Retail	2,900	-	85	2021/2022
Gothenburg	Inom Vallgraven 12 block	Planning	Office, retail & restaurant	31,600	11,600	2,200	2025/2026
Gothenburg	NK Gothenburg	Local planning	Office, retail & restaurant	-	-	-	-

Major current and planned projects in the second quarter 2021

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

Tax

Valuation method

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

The yield requirement is based on information compiled about the market's yield requirement for actual purchases and sales of comparable properties in similar locations. If there have been few or no transactions within the property's subarea, an analysis is made of transactions in neighbouring areas. Even transactions that have yet to be finalised provide guidance on market yield requirements.

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

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

Yield requirements, property valuation1)

Stockholm	3.2–3.7 per cent
Gothenburg	4.2–4.8 per cent
Property holdings, average	3.7 per cent
1) Valuation date: 30 June 2021

Sensitivity analysis

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

However, the price can only be set when a transaction has been completed. In the case of an external property valuation, a range is often given to indicate the degree of uncertainty surrounding the estimates of fair value. The range is usually +/- 5 per cent but can vary depending, in part, on the market situation, the technical standard of the property, and investment requirements. Hufvudstaden's property holdings are valued at SEK 46.3 billion, with a degree of uncertainty of +/- 5 per cent, which means that the estimated fair value varies by +/- SEK 2.3 billion. Below are the key factors that influence the valuation and the consequent impact on profit or loss before tax.

Sensitivity analysis, property valuation1)

	Impact on profit or
	Change, +/-	loss before tax, +/-
Rental revenue	SEK 100/sq m	SEK 1,060 m
Property costs	SEK 50/sq m	SEK 530 m
Rental vacancy level	1.0 percentage points	SEK 600 m
Yield requirement	0.25 percentage points SEK 3,150 m

1) Valuation date: 30 June 2021

External valuation

To assure the quality of the valuation, external estimates were obtained from three independent valuation companies: Cushman & Wakefield, Forum Fastighetsekonomi, and Newsec Advice. The external valuation

The external valuation companies set a fair value for these properties of SEK 24.1 billion. Hufvudstaden's internal valuation of the same properties was SEK 23.3 billion. The internal valuations thus concur well with the external valuations.

Net asset value

Based on the valuation of the property holdings, the current net reinstatement value (EPRA NRV) is SEK 37.6 billion or SEK 186 per share. Net tangible assets (EPRA NTA) amounted to SEK 35.4 billion or SEK 175 per share after a deduction for estimated deferred tax. This assessment is based on current tax legislation and market practice, which means that properties can be sold via a limited company without tax implications. The estimated deferred tax has been assumed at 5 per cent.

Net asset value, 30 June 2021

		SEK/
	SEK m	share
Equity according to the balance sheet	28,880.2	143
Reversal
Deferred tax1)	8,751.2	43
Long-term EPRA NRV	37,631.4	186
Deduction
Intangible assets	-101.8	-1
Estimated fair liability, deferred tax 5%	-2,124.1	-10
EPRA NTA	35,405.5	175
Reversal
Intangible assets as above	101.8	1
Deferred tax in its entirety	-6,627.1	-33
EPRA NDV	28,880.2	143

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

RENTAL MARKET

In Stockholm City, demand for modern, flexible office premises in the best locations remained stable or increased slightly. Vacancy levels rose somewhat within the normal interval, and in Stockholm's most attractive locations-Bibliotekstan, Norrmalmstorg/Hamngatan, and the Hötorget area-market rents for office premises were estimated at SEK 6,300-8,700 per square metre and year, excluding the property tax supplement. The market for retail premises during the quarter continued to be affected by the effects of the covid-19 pandemic. Market rent levels were difficult to assess, but are assumed to have declined somewhat, at least temporarily, compared to before the pandemic. Estimated market rents in prime retail locations were SEK 13,000-25,000 per square metre and year, excluding the property tax supplement.

In the central sub-markets of Gothenburg, the demand for modern and flexible office premises remained somewhat hesitant. Vacancies rose slightly and market rents in the most attractive locations were estimated at SEK 2,900-3,800 per square metre and year, excluding the property tax supplement. For retail premises in prime locations, market rents are slightly declining and amounted to SEK 5,000-14,000 per square metre per year, excluding the property tax supplement.

The outcome from Group renegotiations was negative for retail premises and positive for office premises. During the period, a total of 39,300 square metres were renegotiated at a rental value of SEK 209 million. On average, the renegotiations result in an increase in rent of approximately 5 per cent.

FINANCING

Hufvudstaden's financing requirements are met through a number of the major Nordic banks and the capital market. Total borrowings as at 30 June 2021 amounted to SEK 8,850 million (8,650 at year-end). Interest-bearing net debt was SEK 8,273 million (7,866 at year-end). In addition, leasing debt according to IFRS 16 amounted to SEK 720 million (720 at year-end), and total net debt was SEK 8,993 million (8,586 at year-end). In addition to outstanding loans, there are unutilised loan commitments amounting to SEK 3,500 million.

Hufvudstaden has an MTN programme totalling SEK 8,000 million, and a commercial paper programme amounting to SEK 3,000 million. The outstanding amount in bonds was SEK 7,200 million and there was SEK 650 million in commercial paper. Hufvudstaden ensures that at any point in time there are unutilised loan commitments to cover all outstanding commercial paper.

Financing facilities, SEK m, 30 June 2021

	Framework/
Loan/facility type	facility volume	Utilised
MTN programme	8,000	7,200
Comm. paper programme	3,000	650
Bank loans incl.
loan commitments	4,500	1,000

The average fixed interest period was 2.2 years (1.8 at year-end), the average capital tie-up period was 2.6 years (2.6 at year-end), and the average equivalent rate of interest was 1.3 per cent (1.3 at year-end) including, and 1.2 per cent (1.1 at year-end) excluding, costs for unutilised loan commitments. The capital tie-up period for commercial paper loans was calculated based on the underlying loan commitments. To achieve the desired interest payment structure, borrowing takes place at both a fixed and variable rate of interest. Of the long-term borrowings, SEK 6,300 million carries a fixed rate of interest. Financial assets and liabilities are recognised at amortised cost, which concurs in all essentials with the fair value.

Fixed interest structure, 30 June 2021

Maturity,	Credit amount,	AER, %1), 2)	Proportion,
year	SEK m		%
< 1	2,550	1.3	29
1-2	2,300	1.4	26
2-3	1,000	1.4	11
3-4	1,500	1.1	17
4-5	1,500	1.2	17
Total	8,850	1.3	100

1) The credit margins in the tables are allocated to the period in which the credit is reported.

2) The average effective rate excluding cost for unutilised loan commitments was 1.2 per cent.

Capital tie-up structure, SEK m, 30 June 2021

	Pro
	portion,
Total	%
2,050	23
2,300	26
1,500	17
1,500	17
1,500	17
8,850	100

SECOND QUARTER

Gross profit from property management after elimination of intra-Group rents of SEK 29.3 million (11.0) totalled SEK 330.8 million (265.0), an increase of 25 per cent. The increase was attributable primarily to decreased rent reductions and bad debt losses for stores and restaurants in conjunction with covid-19, as well as higher gross rents related to renegotiations, new leases and indexation. Net revenue after elimination of intra-Group rents of SEK 29.3 million (11.0) totalled SEK 465.4 million (392.8), an increase of 18 per cent. Operating costs amounted to SEK -134.6 million (-127.8).

Net revenue for NK Retail amounted to SEK 148.4 million (-). Costs after elimination of intra-Group rents of SEK -15.5 million (-) were SEK -129.2 million (-). Profit for NK Retail excluding intra-Group rental costs was SEK 19.2 million (-).

Net revenue for other operations amounted to SEK 21.1 million (15.7). Costs after elimination of intra-Group rents of SEK -13.8 million (-11.0) were SEK -17.3 million (-2.2). Profit excluding intra-Group rental costs was SEK 3.8 million (13.5).

Changes in value of investment properties amounted to SEK 642.4 million (-985.3). Items affecting comparability were SEK 0.0 million (34.7) and refer to insurance compensation in the preceding year for rent loss and emergency response costs after the fire in 2017 in the Vildmannen 7 property. Net financial income and expense totalled SEK -33.2 million (-34.0).

SHARES AND SHAREHOLDERS

Hufvudstaden's class A shares are listed on NASDAQ Stockholm. The company's class C shares were delisted from NASDAQ Stockholm in January 2020. The company had 42,961 shareholders at the end of the period. The proportion of foreign ownership as at 30 June 2021 was 25.6 per cent (28.0 at year-end) of the total number of outstanding shares. The class A share price as at 30 June 2021 was SEK 145.50, and total market capitalisation of all shares based on the class A share price was SEK 30.7 billion.

Conversion of Hufvudstaden's class C shares

At the 2001 Annual General Meeting, a conversion clause was added to Hufvudstaden's articles of association. Shareholders have the right at any time to request conversion of class C shares into class A shares. In the second quarter of 2021, 33 class C shares were converted into class A shares.

Share structure as at 30 June 2021

Share	Number of	Number	Equity,	Votes,
class	shares	of votes	%	%
A (1 vote)	203,000,080	203,000,080	96.1	19.7
C (100 votes)	8,271,853	827,185,300	3.9	80.3
Total	211,271,933	1,030,185,380	100.0	100.0

Shares bought back

Treasury shares held at 30 June 2021 totalled 8,965,000 class A shares, corresponding to 4.2 per cent of all shares issued and 0.9 per cent of the total number of votes. No buyback took place during the period or after the end of the reporting period. At the 2021 Annual General Meeting, the Board of Directors was granted renewed authorisation to acquire class A shares up to 10 per cent of all shares outstanding and to transfer treasury shares held by the company.

Share buybacks as at 30 June 2021

	Total no.	Treasury	Other share
Million shares	of shares	shares	holders
As at 1 January 2021	211.3	9.0	202.3
Buyback	-	-	-
As at 30 June 2021	211.3	9.0	202.3

EVENTS DURING THE PERIOD Acquisition of business

On 3 February 2021, the Group accessed the NK business within Departments & Stores Europe AB. The business encompasses the operation of approximately 40 departments within fashion, cosmetics and jewellery at NK Stockholm and NK Gothenburg, together comprising around 25 per cent of the total number of departments in the two department stores. Turnover for the business amounted to approximately SEK 770 million for the 2019/2020 financial year. The purchase price was SEK 58 million and corresponds to the value of the inventory. The acquisition has been financed with existing cash and cash equivalents.

MATERIAL RISKS AND UNCERTAINTIES

The Group is mainly exposed to financing, interest and credit risks and changes in the value of the property holdings. The Group has not identified any other material risks and uncertainties than those described in the 2020 Annual Report.

MATERIAL TRANSACTIONS WITH RELATED PARTIES

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

ACCOUNTING POLICIES

Hufvudstaden applies the EU-endorsed IFRS standards. This interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting, and applicable provisions of the Swedish Annual Accounts Act. Disclosures according to IAS 34.16A are presented in both the financial statements and in other parts of the interim report. In addition to the accounting policies and computation bases applied in the 2020 Annual Report, the accounting policies below were applied for the first time in this interim report.

Revenue, NK Retail

Revenue is primarily generated through the sale of clothing, accessories, beauty products and jewellery to consumers. The Group's performance commitment is thus to provide goods to customers, either to consumers in the Group's own stores or to e-commerce customers when goods are delivered to independent shippers. All revenue is recognized under the IFRS 15 category "at a point in time", meaning upon delivery. Revenue from the sale of goods at a fixed price is recognized when the company has transferred control of the good to the customer, which normally occurs at the time of sale when the customer takes the good with them out of the store, or upon delivery to an e-commerce customer under the terms and conditions of sale.

The main store sales take place with a 30 days open purchase (full right of return), which means that revenue from sales in stores is recognized less estimated returns. The estimated repayment for returned goods is recognized as a repayment liability (the amount the company is expected to owe the customer). The right to receive the goods being returned is recognized as inventory. Revenue also decreases with variable remuneration in the form of discounts and customer loyalty programmes. NK Retail has no discounts or bonus programmes that could comprise separate performance obligations, which is why the Group has only identified one performance obligation as described above. Sales revenue is recognized less VAT, returns and discounts as net revenue in the income statement under "Other segments".

Inventory

Inventory is measured at the lower of cost and net realizable value. The cost of inventory is calculated using the first-in, first-out (FIFO) method and includes fees that arose from acquiring inventory items and transporting them to their current location in their current condition.

New standards and interpretations

In addition to what is stated above, new and amended standards that took effect in 2021 have not had any significant effects on the Group's financial reporting.

FORTHCOMING INFORMATION

Interim report Jan–Sep 2021	11 November, 2021
Year-end report for 2021	17 February, 2022
Annual Report 2021	March, 2022
Annual General Meeting 2022	24 March, 2022

The information in this Interim Report is information that Hufvudstaden AB (publ) is obligated to publish under the EU Market Abuse Regulation and the Securities Market Act. The information was published through the auspices of the persons named below on 23 August 2021.

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

Questions can be answered by Ivo Stopner, President, or Åsa Roslund, CFO, on +46 (0)8 762 90 00.

INCOME STATEMENTS – SUMMARY

	April June	April June	January June	January June	January December
GROUP, SEK m	2021	2020	2021	2020	2020
Net revenue1)
Property management, gross	494.7	403.8	953.7	886.0	1,767.9
Rent revenue, intra-Group	-29.3	-11.0	-63.0	-22.0	-43.9
Property management, net	465.4	392.8	890.7	864.0	1,724.0
Other segments	169.5	15.7	261.8	34.9	71.7
	634.9	408.5	1,152.5	898.9	1,795.7
Property management expenses
Maintenance	-4.7	-6.2	-10.4	-12.6	-27.0
Operation and administration	-77.8	-70.2	-161.2	-144.5	-298.1
Property tax	-50.7	-50.1	-101.6	-100.3	-200.3
Depreciation	-1.4	-1.3	-2.9	-2.5	-5.1
Property management expenses	-134.6	-127.8	-276.1	-259.9	-530.5
Other segments, gross expenses	-175.8	-13.2	-285.9	-26.2	-69.2
Rental expenses, intra-Group	29.3	11.0	63.0	22.0	43.9
Other segments, net expenses	-146.5	-2.2	-222.9	-4.2	-25.3
Operating expenses	-281.1	-130.0	-499.0	-264.1	-555.8
Gross profit	353.8	278.5	653.5	634.8	1,239.9
- of which Property management	330.8	265.0	614.6	604.1	1,193.5
- of which Other segments	23.0	13.5	38.9	30.7	46.4
Central administration	-12.3	-11.9	-24.5	-23.4	-47.4
Operating profit before items affecting
comparability and changes in value	341.5	266.6	629.0	611.4	1,192.5
Items affecting comparability2)	-	34.7	-	34.7	35.9
Changes in value, investment properties	642.4	-985.3	406.8	-1,914.7	-2,929.9
Operating profit or loss	983.9	-684.0	1,035.8	-1,268.6	-1,701.5
Financial income or expense	-33.2	-34.0	-66.8	-66.0	-131.7
Profit or loss before tax	950.7	-718.0	969.0	-1,334.6	-1,833.2
Tax	-195.0	135.0	-199.6	253.1	371.5
Net profit or loss	755.7	-583.0	769.4	-1,081.5	-1,461.7
Other comprehensive income	-	-	-	-	-
Total comprehensive income or loss for the
period	755.7	-583.0	769.4	-1,081.5	-1,461.7
Average number of outstanding shares	202,306,933	206,265,933	202,306,933	206,265,933	205,130,742
Net earnings for the period, per share before and
after dilution, SEK	3.73	-2.83	3.80	-5.24	-7.13

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

2) Refers to insurance compensation for rent losses and emergency response costs after the fire in 2017 in the property Vildmannen 7.

BALANCE SHEETS – SUMMARY

	30 June,	30 June,	31 December,
GROUP SEK m	2021	2020	2020
Investment properties	46,312.1	46,214.1	45,636.5
Right of use assets	719.1	739.0	716.6
Other non-current assets	151.3	120.0	156.9
Total non-current assets	47,182.5	47,073.1	46,510.0
Current assets	953.4	634.7	887.1
Total assets	48,135.9	47,707.8	47,397.1
Equity	28,880.2	29,496.7	28,616.5
Non-current interest-bearing liabilities	6,800.0	6,200.0	6,200.0
Deferred tax liabilities	8,636.6	8,654.4	8,501.5
Non-current leasing liabilities	710.5	712.4	709.6
Other non-current liabilities	86.7	75.9	84.3
Other provisions	30.5	24.0	26.2
Total non-current liabilities	16,264.3	15,666.7	15,521.6
Current interest-bearing liabilities	2,050.0	1,700.0	2,450.0
Current leasing liabilities	9.3	27.1	10.2
Other liabilities	932.1	817.3	798.8
Total current liabilities	2,991.4	2,544.4	3,259.0
Total equity and liabilities	48,135.9	47,707.8	47,397.1

CHANGES IN EQUITY – SUMMARY

	January June	January June	January December
GROUP, SEK m	2021	2020	2020
Equity, opening balance Total comprehensive income or loss for the period	28,616.5 769.4	31,382.7 -1,081.5	31,382.7 -1,461.7
Dividend	-505.8	-804.4	-804.4
Share buyback	-	-	-500.0
Equity, closing balance	28,880.2	29,496.7	28,616.5

STATEMENTS OF CASH FLOWS – SUMMARY

	January June	January June	January December
GROUP, SEK m	2021	2020	2020
Income before tax	969.0	-1,334.6	-1,833.2
Depreciation/impairments	24.2	57.0	78.6
Changes in value, investment properties	-406.8	1,914.7	2,929.9
Other changes	4.3	-1.7	0.5
Income tax paid	-64.5	-78.9	-99.3
Cash flow from current operations
before changes in working capital	526.2	556.5	1,076.5
Increase/decrease in inventory	-58.2	-	-
Increase/decrease in operating receivables	-156.2	-119.9	-36.8
Increase/decrease in operating liabilities	108.1	56.7	32.5
Cash flow from current operations	419.9	493.3	1,072.2
Acquisition of business	-39.8	-	-
Investments in properties	-268.8	-448.2	-885.9
Investments in other non-current assets	-4.6	-22.2	-63.0
Cash flow from investments	-313.2	-470.4	-948.9
Loans raised	2,600.0	1,600.0	3,450.0
Amortization of loan debt	-2,400.0	-2,050.0	-3,150.0
Amortization of leasing debt	-7.2	-20.8	-41.4
Dividend paid	-505.8	-804.4	-804.4
Share buyback	-	-	-500.0
Cash flow from financing	-313.0	-1,275.2	-1,045.8
Cash flow for the period	-206.3	-1,252.3	-922.5
Cash and cash equivalents at the beginning of the period	783.6	1,706.1	1,706.1
Cash and cash equivalents at the period-end	577.3	453.8	783.6
Cash flow from current operations per share, SEK	2.08	2.39	5.23
Cash flow for the period per share, SEK	-1.02	-6.07	-4.50

SEGMENT REPORT – SUMMARY

The Group's operations are divided into three segments, property management, NK Retail and other operations. The segments are divided into the business areas, which are in line with the Company's operational control system.

		Business Area		Business Area		Business Area	Intra-Group
		Stockholm		NK		Gothenburg	elimination		Total
	Jan-Jun		Jan-Jun Jan-Jun	Jan-Jun	Jan-Jun		Jan-Jun Jan-Jun		Jan-Jun Jan-Jun	Jan-Jun
GROUP, SEK m	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020
Property management
Net revenue	577.3	520.6	215.9	189.7	160.5	175.7	-63.0	-22.0	890.7	864.0
Expenses	-121.9	-117.3	-104.7	-92.8	-49.5	-49.8			-276.1	-259.9
Gross profit
property management	455.4	403.3	111.2	96.9	111.0	125.9	-63.0	-22.0	614.6	604.1
NK Retail1)
Net revenue			222.8						222.8
Expenses			-225.2				36.3		-188.9
Gross profit NK Retail			-2.4				36.3		33.9
Other operations2)
Net revenue	3.6		35.4	34.9					39.0	34.9
Expenses	-11.3		-49.4	-26.2			26.7	22.0	-34.0	-4.2
Gross profit other operations	-7.7		-14.0	8.7			26.7	22.0	5.0	30.7
Central administration									-24.5	-23.4
Items affecting comparability3)									-	34.7
Changes in value,
investment properties									406.8	-1,914.7
Operating profit or loss									1,035.8	-1,268.6
Financial income and
expense									-66.8	-66.0
Profit or loss before tax									969.0	-1,334.6

1) NK Retail accessed the NK-operations on 3 February 2021.

2) Other operations comprise of Cecil Coworking, NK e-commerce and the parking business in Parkaden AB. Cecil Coworking opened on 1 February 2021 and is included in the business area Stockholm. NK e-commerce started in a limited extent in the autumn of 2020. NK e-commerce and the parking business in Parkaden AB are included in the business area NK. Cecil Coworking and NK e-commerce have mainly been charged with start-up costs.

3) Refers to insurance compensation for rent losses and emergency response costs after the fire in 2017 in the property Vildmannen 7 of SEK 34.7 million.

BREAKDOWN OF NET REVENUE

	Group			Parent Company
	Jan-Jun	Jan-Jun	Jan-Dec	Jan-Jun	Jan-Jun	Jan-Dec
SEK m	2021	2020	2020	2021	2020	2020
Rent revenue	880.2	852.0	1,712.9	654.4	611.4	1,224.1
Service revenue	49.5	46.9	82.8	21.8	22.7	43.8
Sale of goods	222.8	-	-	-	-	-
Total net revenue	1,152.5	898.9	1,795.7	676.2	634.1	1,267.9

PERFORMANCE MEASURES

GROUP	30 June, 2021	30 June, 2020	Full year 2020
Property-related
Rentable floor space, 1,000 m2	386.7	384.1	386.8
Rental vacancy level, %	7.6	8.7	8.2
Floor space vacancy level, %	9.7	9.2	9.8
Fair value, SEK bn	46.3	46.2	45.6
Surplus ratio, %	71.0	70.7	70.0
Operating surplus, SEK m	677.6	626.1	1,237.4
Financial
Return on equity, %	4.2	-2.2	-4.9
Return on capital employed, %	4.3	-1.7	-4.3
Equity ratio, %	60	62	60
Interest coverage ratio, multiple	9.4	9.3	9.1
Debt/equity ratio, multiple	0.3	0.3	0.3
Net loan-to-value ratio, properties, %	19.4	17.7	18.8
Gross margin, %	56.7	68.9	67.4
Data per share
Net earnings per share for the period, SEK	3.80	-5.24	-7.13
Equity, SEK	142.75	143.00	141.45
Properties, fair value, SEK	228.92	224.05	225.58
Number of outstanding shares, 1,000	202,307	206,266	202,307
Average number of outstanding shares, 1,000	202,307	206,266	205,131
Number of issued shares, 1,000	211,272	211,272	211,272
EPRA
Earnings from property management after nominal tax (EPRA Earnings), SEK m	497	500	984
Earnings per share from property management after nominal tax
(EPRA EPS), SEK	2.46	2.43	4.80
Net reinstatement value (EPRA NRV), SEK m	37,631.4	38,249.1	37,232.3
Net reinstatement value (EPRA NRV) per share, SEK	186	185	184
Net tangible assets (EPRA NTA), SEK m	35,405.5	36,033.2	35,014.4
Net tangible assets (EPRA NTA) per share, SEK	175	175	173
Net disposal value (EPRA NDV), SEK m	28,880.2	29,496.7	28,616.5
Net disposal value (EPRA NDV) per share, SEK	143	143	141
EPRA vacancy rate, %	6.5	4.1	6.7

PERFORMANCE MEASURES PER QUARTER

	Apr-Jun	Jan-Mar	Oct-Dec	Jul-Sept	Apr-Jun	Jan-Mar	Oct-Dec	Jul-Sept
GROUP	2021	2021	2020	2020	2020	2020	2019	2019
Share price, series A share, SEK	145.50	127.00	136.20	124.90	115.80	135.70	185.10	178.20
Net revenue, SEK m	635	518	463	434	409	490	501	479
Return on equity, %	4.5	2.1	-4.8	-2.8	-2.6	0.7	10.9	7.8
Return on equity, adjusted, %	3.4	2.8	3.0	2.7	2.6	3.1	3.8	3.2
Equity ratio, %	60	59	60	61	62	62	62	62
Gross margin, %	55.7	57.9	63.1	68.8	66.4	71.1	69.1	72.3
Surplus ratio, %	72.8	69.2	67.7	71.0	68.4	72.6	70.4	73.9
Operating surplus, SEK m	360.1	317.5	307.4	303.9	276.0	350.1	344.1	347.0
Net earnings per share for the
period, SEK	3.73	0.07	-2.27	0.38	-2.83	-2.42	5.34	2.73
Equity per share, SEK	142.75	139.02	141.45	143.72	143.00	145.83	152.15	146.81
Earnings per share from property management after nominal tax
(EPRA EPS), SEK	1.31	1.15	1.21	1.16	1.07	1.36	1.38	1.38
Net tangible assets (EPRA NTA)
per share, SEK	175	171	173	176	175	178	185	179
Cash flow per share from current
operations, SEK	1.15	0.93	1.37	1.46	1.42	0.98	1.98	2.23

ALTERNATIVE PERFORMANCE MEASURES

Hufvudstaden applies the European Securities and Markets Authority (ESMA) Guidelines on Alternative Performance Measures. A number of the performance measures above are alternative performance measures, i.e. a set of financial metrics not defined in IFRS or the Annual Accounts Act, and which are used to present the Company's development and improve comparability between periods. Definitions of performance measures are given in the glossary. Below is the derivation of alternative performance measures.

SEK m	30 June, 2021	30 June, 2020	Full year 2020
Net asset value, see page 5.
Net debt
Non-current interest-bearing liabilities	6,800	6,200	6,200
Non-current leasing liabilities	711	713	710
Current interest-bearing liabilities	2,050	1,700	2,450
Current lease liabilities	9	27	10
Cash and bank holdings	-577	-454	-784
Net debt	8,993	8,186	8,586
Equity ratio
Equity	28,880	29,497	28,617
Total assets	48,136	47,708	47,397
Equity ratio, %	60	62	60
Net loan-to-value ratio, properties
Interest-bearing liabilities	8,850	7,900	8,650
Leasing liabilities	720	740	720
Interest-bearing assets	-577	-454	-784
Total	8,993	8,186	8,586
Carrying amount, properties	46,312	46,214	45,637
Net loan-to-value ratio, properties, %	19.4	17.7	18.8
Interest coverage ratio
Income before tax	1,531	-789 1) 1)	-1,833
Reversal of items affecting comparability and changes in value	-407	1,880	2,894
Interest expense	134	132 1) 1)	132
Total	1,258	1,223	1,193
Interest expense	134	132 1) 1)	132
Interest coverage ratio, multiple	9.4	9.3	9.1
Earnings from property management after nominal tax (EPRA Earnings)
Operating profit or loss before items affecting comparability and
changes in value	629	611	1,193
Financial income and expense	-67	-66	-132
Earnings from property management	562	545	1,061
Current tax, earnings from property management	-65	-45	-77
Earnings from property management after nominal tax (EPRA Earnings)	497	500	984
Average number of outstanding shares, million	202.3	206.3	205.1
Earnings per share from property management after nominal
tax (EPRA EPS), SEK	2.46	2.43	4.80

1) Recalculated 12 months.

PARENT COMPANY

RESULTS AND FINANCIAL POSITION

Net revenue amounted to SEK 676.2 million (634.1). The increase was attributable primarily to higher gross rents in conjunction with renegotiations, new leases and indexation, as well as to decreases in rent reductions and bad debt losses for stores and restaurants in conjunction with covid-19.

Operating costs amounted to SEK -298.5 million (-436.2). The decrease is attributable to lower maintenance costs, mainly as a result of fewer major current development projects. Gross profit was SEK 377.7 million (197.9). Net financial income and expense was SEK -80.3 million (-54.8).

Cash and cash equivalents at the end of the period amounted to SEK 557.2 million (424.0). Investments in properties, intangible assets, equipment and shares in subsidiaries amounted to SEK 103.5 million (191.4).

MATERIAL RISKS AND UNCERTAINTIES

Hufvudstaden is mainly exposed to financing, interest and credit risks. The Company has not identified any other material risks and uncertainties than those described in the 2020 Annual Report.

MATERIAL TRANSACTIONS WITH RELATED PARTIES

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

ACCOUNTING POLICIES

The parent company applies RFR2 Accounting for Legal Entities and the Swedish Annual Accounts Act. This interim report for the parent company has been prepared in accordance with Section 9 of the Annual Accounts Act, Interim Financial Statements. The accounting policies and basis for calculations remain unchanged from the 2020 Annual Report.

INCOME STATEMENTS – SUMMARY

	April June	April June	January June	January June	January December
PARENT COMPANY, SEK m	2021	2020	2021	2020	2020
Net revenue1)	350.1	302.4	676.2	634.1	1,267.9
Operating expenses	-122.8	-233.4	-298.5	-436.2	-857.7
Gross profit	227.3	69.0	377.7	197.9	410.2
Central administration	-12.3	-11.9	-24.5	-23.4	-47.4
Items affecting comparability2)	-	34.7	-	34.7	35.9
Operating profit	215.0	91.8	353.2	209.2	398.7
Impairment of shares in Group companies	-9.7	-	-24.8	-	-10.8
Other financial income and expense	-27.5	-28.4	-55.5	-54.8	2,344.5
Profit after financial items	177.8	63.4	272.9	154.4	2,732.4
Appropriations	-	-	-	-	69.3
Profit before tax	177.8	63.4	272.9	154.4	2,801.7
Tax	-38.2	-21.2	-61.3	-48.1	-102.2
Profit for the period	139.6	42.2	211.6	106.3	2,699.5
Statement of comprehensive income, SEK m
Profit for the period	139.6	42.2	211.6	106.3	2,699.5
Other comprehensive income	-	-	-	-	-
Total comprehensive income for the period	139.6	42.2	211.6	106.3	2,699.5

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

2) Refers to insurance compensation for rent losses and emergency response costs after the fire in 2017 in the property Vildmannen 7.

BALANCE SHEETS – SUMMARY

PARENT COMPANY, SEK m	30 June, 2021	30 June, 2020	31 December, 2020
Investment properties	8,283.5	8,168.5	8,263.8
Other non-current assets	2,669.8	2,919.7	2,696.1
Total non-current assets	10,953.3	11,088.2	10,959.9
Current assets	4,000.5	1,265.4	4,037.3
Total assets	14,953.8	12,353.6	14,997.2
Restricted equity	1,978.7	1,978.7	1,978.7
Non-restricted equity	2,460.8	661.7	2,755.0
Total equity	4,439.5	2,640.4	4,733.7
Untaxed reserves	38.7	161.6	38.7
Provisions	905.4	897.0	900.2
Non-current liabilities	6,877.2	6,268.4	6,277.2
Current liabilities	2,693.0	2,386.2	3,047.4
Total equity and liabilities	14,953.8	12,353.6	14,997.2

BOARD CERTIFICATION

The Board of Directors and the President hereby certify that this Half-Year Report provides a true and fair view of the operations, financial position and results of operations of the Parent Company and the

Group, and presents material risks and uncertainties that are faced by the Parent Company and the companies included in the Group.

Stockholm, August 23, 2021

Fredrik Lundberg Chairman

Claes Boustedt Peter Egardt Liv Forhaug Louise Lindh Board Member Board Member Board Member Board Member

Fredrik Persson Sten Peterson Anna-Greta Sjöberg Ivo Stopner Board Member Board Member Board Member President and

Board Member

AUDITOR'S REVIEW REPORT

Hufvudstaden AB (publ), Corp. Reg. No. 556012-8240

Introduction

We have reviewed the condensed interim financial information (Half-Year Report) for Hufvudstaden AB (publ) as at 30 June 2021 and the six-month period then ended. The Board of Directors and the President are responsible for the preparation and fair presentation of this Half-Year Report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express an opinion on this Half-Year Report based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily involving persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different orientation and is substantially more limited in scope than an audit conducted in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards.

The procedures performed in a review do not enable use to obtain assurance that we would become aware of all significant matters that might be identified in an audit. An opinion based on a review therefore does not have the certainty of an opinion based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the Half-Year Report for the Group has not been prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, and for the Parent Company in accordance with the Swedish Annual Accounts Act.

Stockholm, 23 August, 2021 PricewaterhouseCoopers AB

Magnus Svensson Henryson Authorised Public Accountant

DEFINITIONS AND GLOSSARY

Finance

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

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

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

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

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

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

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

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

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

Gross margin. Gross profit in relation to net revenue.

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

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

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

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

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

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

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

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

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

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

Shares

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

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

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

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

Property

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

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

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

Fair value. The estimated market value of the properties.

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

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

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

Operating surplus. Rent revenue less costs for property management.

Property tax supplement. Property tax payments received from tenants.

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

Surplus ratio. Net operating income as a percentage of rent revenue.

In some cases, there has been rounding off, which means the tables and calculations do not always tally.

This document is in all respects a translation of the original Interim Report in Swedish. In the event of any differences between this translation and the Swedish original, the latter shall prevail.

Hufvudstaden

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

Vision

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

Business concept

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

Financial objectives

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

Operating objectives

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

Strategies to achieve the objectives

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

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

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

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

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

Telephone: +46 8-762 90 00 Email: info@hufvudstaden.se Website: www.hufvudstaden.se Company registration number: 556012-8240 Registered office: Stockholm