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Fast. Balder

Annual Report Feb 22, 2017

2887_10-k_2017-02-22_93174a77-3d76-48e8-942e-aa271356e3e3.pdf

Annual Report

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Fastighets AB Balder Year-end report

January-December 2016

  • Profit from property management before tax attributable to parent company shareholders amounted to SEK 2,265m (1,780), corresponding to an increase per ordinary share by 22 % to SEK 11.89 (9.71)
  • Rental income amounted to SEK 5,373m (2,711)
  • Profit after tax attributable to parent company shareholders amounted to SEK 5,474m (4,916) corresponding to SEK 30.38 per ordinary share (28.98)
  • Net asset value amounted to SEK 198.49 per ordinary share (159.14) and shareholders' equity (including listed associated companies at market value) amounted to SEK 157.63 per ordinary share (128.03)

Fastighets AB Balder is a listed property company which shall meet the needs of different customer groups for premises and housing based on local support. Balder's real estate portfolio had a value of SEK 86.2 billion (68.5) as of 31 December 2016. The Balder share is listed on Nasdaq Stockholm, Large Cap

The period in brief

Comparisons stated in parenthesis refer to the corresponding period of the previous year.

October-December 2016

  • • Rental income amounted to SEK 1,427m (680).
  • • Net operating income amounted to SEK 1,002m (508).
  • • Profit from property management attributable to parent company shareholders increased by 35 % to SEK 650m (482), which corresponds to an increase by 28 % per ordinary share to SEK 3.39 (2.64).
  • • Changes in value in respect of investment properties amounted to SEK 2,211m (2,017). The average yield requirement amounted to 5.3 % (5.4).
  • • Changes in value of interest rate derivatives have impacted the result before tax by SEK 312m (197).
  • • Net profit after tax for the period amounted to SEK 2,704m (2,506).
  • • Net profit after tax for the period attributable to parent company shareholders amounted to SEK 2,536m (2,506) which corresponds to SEK 14.05 per ordinary share (14.99).
  • • 51 properties (712 refers to Sato Oyj) has been acquired at a property value of SEK 4,632m (26,477).
  • • 22 properties (1) were divested at a property value of SEK 681m (3).
  • • A set off issue of 4,602,515 ordinary shares at a value of SEK 1,099m after issue costs has been conducted.
  • • Balder has taken possession of all properties in the group I.A. Hedin Fastighet AB from Anders Hedin Invest AB. The possession took place on 30 November 2016. The number of acquired properties amounts to 43.
  • • Balder has received an investment grade rating from Moody's of Baa3 with a stable outlook.

January-December 2016

  • • Sato Oyj's income statement is consolidated for the first time from 1 January 2016.
  • • Rental income amounted to SEK 5,373m (2,711).
  • • Net operating income amounted to SEK 3,679m (1,944).
  • • Profit from property management attributable to parent company shareholders increased by 27 % to SEK 2,265m (1,780), which corresponds to an increase per ordinary share by 22 % to SEK 11.89 (9.71).
  • • Changes in value in respect of investment properties amounted to SEK 4,932m (3,388). The average yield requirement amounted to 5.3 % (5.4).
  • • Changes in value of interest rate derivatives have impacted the result before tax by SEK –114m (227).
  • • Net profit after tax for the year amounted to SEK 6,093m (4,916).
  • • Net profit after tax for the year attributable to parent company shareholders amounted to SEK 5,474m (4,916) which corresponds to SEK 30.38 per ordinary share (28.98).
  • • 116 properties (723 including Sato Oyj) has been acquired at a property value of SEK 11,342m (28,660).
  • • 71 properties (23) were divested at a property value of SEK 1,990m (1,613).
  • • A directed new issue of 3,000,633 ordinary shares and a set off issue of 4,602,515 ordinary shares at a total value of SEK 1,780m after issue costs have been conducted.
  • • The associated company Brinova Fastigheter AB (publ) was listed on 30 September 2016.
2016
Oct-Dec
2015
Oct-Dec
2016
Jan-Dec
2015
Jan-Dec
2014
Jan-Dec
2013
Jan-Dec
2012
Jan-Dec
2011
Jan-Dec
2010
Jan-Dec
2009
Jan-Dec
Rental income, SEKm 1,427 680 5,373 2,711 2,525 1,884 1,701 1,466 1,333 854
Profit from property management before tax, SEKm 1) 650 482 2,265 1,780 1,275 854 691 516 417 315
Changes in value of properties, SEKm 2,211 2,017 4,932 3,388 3,050 854 812 990 1,047 4
Changes in value of derivatives, SEKm 312 197 –114 227 –624 433 –71 –520 148 –23
Profit after tax, SEKm 1) 2,536 2,506 5,474 4,916 3,128 1,738 1,162 812 1,338 248
Carrying amount of properties, SEKm 86,177 68,456 86,177 68,456 37,382 27,532 22,278 17,556 14,389 12,669

Data per ordinary share including listed associated companies at market value 2)

Average number of shares, thousands 176,965 163,825 173,598 162,753 161,786 159,537 159,537 158,656 149,487 112,902
Profit after tax, SEK 14.05 14.99 30.38 28.98 18.10 10.11 6.69 4.87 8.95 2.20
Profit from property management before tax, SEK 3.39 2.64 11.89 9.71 6.64 4.57 3.73 3.00 2.79 2.79
Outstanding number of shares, thousands 180,000 172,397 180,000 172,397 162,397 159,537 159,537 159,537 149,487 149,487
Shareholders' equity, SEK 157.63 128.03 157,63 128.03 70.10 52.14 42.15 35.57 31.13 22.19
Long-term net asset value (EPRA NAV), SEK 198.49 159.14 198.49 159.14 86.33 60.50 50.37 41.83 32.89 22.16
Share price on the closing date, SEK 184.10 208.70 184.10 208.70 110.25 66.00 37.30 25.30 29.40 12.50

1) Attributable to parent company shareholders.

2) Listed associated companies at market value refers to Collector AB (publ) och Brinova Fastigheter AB (publ).

Comments by the CEO

Dear shareholders

Profit from property management per ordinary share increased by 22 % during the year and amounted to SEK 11.89. The equivalent result for Q4 was SEK 3.39 per ordinary share, an increase of 28 % compared to the same period last year.

Net asset value per ordinary share increased by 25 % during the year and amounted to SEK 198.49.

Current earning capacity per ordinary share increased by 27 % from SEK 10.64 to SEK 13.52.

In Collector, our largest associated company in terms of value, earnings per share increased by 34 % and equity per share increased by 41 %.

We can thus state that 2016 was a year of great improvements in key ratios per share in both Balder and Collector.

For the long-term shareholder, it is most important to have a belief about how future earnings will develop over time (obvious don't you think?) and after that an opinion about the present value of future earnings (so-called discounting factor). However, small changes in these two key ratios, have a large effect on the value and both Balder and Collector were examples of this during 2016.

Balder's share price fell by 12 % during the year even though key ratios per share improved by about 25 %, in other words, the share price should have been about 40 % higher on 31 December 2016 if the estimates relating to earnings and present value were equivalent to 31 December 2015.

In Collector, the value of the share was 19 % lower despite an improvement of almost 40 % in key ratios per share. Using the same estimates as the previous year-end, the share price should thus have been about 70 % higher.

The fact that stock market expectations can vary so much creates opportunities for both the short-term and long-term investor and I personally think it is fascinating, interesting and fun to follow the changes over the years.

Operationally

Apart from financial key ratios, 2016 was a year when we performed positively on many fronts. Balder invests in many countries, property categories and projects and also through complete- and part-ownership. I personally believe that all parts of the company improved and this is also generating more business opportunities.

It is a privilege for me to work with all of you!

2017 and beyond

My guess is that 2017 will also be a year with strong demand for both commercial premises and residential properties in our markets.

The financing opportunities also seem favourable and our financing base has been broadened further as we now have an official rating.

We have now supplemented our financial goals as follows – an equity/assets ratio (min. 35 %) and a net debt to assets ratio (max. 55 %). These key ratios are obviously much alike, but the net debt to assets key ratio is increasingly used, which means that it is good for us to clarify our goal in relation to this.

The future is bright and despite intense competition among investors, I feel optimistic as usual regarding the potential to find reasonably good investments over time.

Erik Selin Chief Executive Officer

Current earning capacity

Balder presents its earning capacity on a twelve-month basis in the table below. It is important to note that the current earning capacity should not be placed on a par with a forecast for the coming 12 months. For instance, the earning capacity contains no estimate of rental, vacancy, currency or interest rate changes.

Balder's income statement is also impacted by the development in the value of the real estate portfolio as well as future property acquisitions and/or property divestments. Additional items affecting the operating result are changes in value of derivatives. None of the above has been considered in the current earning capacity.

The earning capacity is based on the real estate portfolio's contracted rental income, estimated property costs during a normal year as well as administrative costs. The costs of the interest-bearing liabilities are based on the group's average interest rate level including the effect of derivative instruments. The tax is calculated using the effective tax rate during each period.

Current earning capacity on a twelve-months basis

SEKm 2016
31 Dec
2016
30 Sep
2016
30 June
2016
31 Mar
2015
31 Dec
2015
30 Sep
2015
30 June
2015
31 Mar
2014
31 Dec
2014
30 Sep
2014
30 June
Rental income 5,800 5,470 5,325 5,135 5,045 2,725 2,650 2,745 2,730 2,650 2,600
Property costs –1,695 –1,690 –1,685 –1,670 –1,635 –775 –760 –800 –800 –795 –785
Net operating income 4,105 3,780 3,640 3,465 3,410 1,950 1,890 1,945 1,930 1,855 1,815
Management and
administrative costs –490 –490 –480 –440 –425 –175 –175 –170 –165 –165 –165
Profit from property
management from
associated companies 505 470 420 355 340 560 500 410 220 200 180
Operating profit 4,120 3,760 3,580 3,380 3,325 2,335 2,215 2,185 1,985 1,890 1,830
Net financial items –1,040 –1,025 –1,010 –930 –880 –530 –575 –575 –585 –580 –580
Of which non-controlling
interests –445 –445 –380 –400 –410
Profit from
property management 2,635 2,290 2,190 2,050 2,035 1,805 1,640 1,610 1,400 1,310 1,250
Taxes –570 –490 –470 –440 –439 –397 –361 –354 –308 –288 –275
Profit after tax 2,065 1,800 1,720 1,610 1,596 1,408 1,279 1,256 1,092 1,021 975
Profit after tax
attributable to
Ordinary shareholders 1,865 1,600 1,520 1,410 1,396 1,208 1,079 1,056 892 821 775
Preference shareholders 200 200 200 200 200 200 200 200 200 200 200
Profit from property
management before tax
according to current
earning capacity per
ordinary share, SEK 13.52 11.92 11.55 10.73 10.64 9.88 8.87 8.68 7.39 6.83 6.47

Consolidated statement of financial position including listed associated companies at market value

Under IFRS, Collector AB (publ) and Brinova Fastigheter AB (publ) should not be recognised at market value when Balder reports its participation in the profit from associated companies from these companies. In order to clarify the listed associated companies at market value, Collector and Brinova is reported below at the share price as of 31 December. Brinova Fastigheter AB (publ) is included from 30 September 2016, when the company was listed.

SEKm 2016
31 Dec
2015
31 Dec
Assets
Investment properties 86,177 68,456
Other fixed assets 136 122
Participations in associated companies 1,2) 6,673 6,549
Other receivables 1,357 1,497
Cash and cash equivalents and financial investments 1,592 1,025
Total assets 95,935 77,649
Shareholders' equity and liabilities
Shareholders' equity 3) 36,791 29,325
Deferred tax liability 5,808 4,071
Interest-bearing liabilities 49,580 41,063
Derivatives 1,547 1,294
Other liabilities 2,209 1,896
Total equity and liabilities 95,935 77,649
1) Including Balder's market value of Collector AB (publ)
Collector's share price (SEK)
4,661
103.00
5,224
127.00
2) Including Balder's market value of Brinova Fastigheter AB (publ)
Brinova's share price (SEK)
282
15.30

3) Of which non-controlling interests 5,540 4,377

Consolidated statement of changes in equity

SEKm 2016
31 Dec
2015
31 Dec
Opening equity 29,325 14,261
Total comprehensive income for the period/year 6,507 4,909
Dividend preference shares, approved and entered as a liability –200 –200
Share issue, after issue costs 1,780 1,705
Transactions with non-controlling interests –107
Dividend to non-controlling interests –107
Non-controlling interests, arising on the acquisitions of subsidiary 4,377
Non-controlling interests, arising on share issue in subsidiary 554
The change during the period of listed associated companies at market value –962 4,273
Closing equity 36,791 29,325

Results, income and costs

Profit from property management

Profit from property management for the year amounted to SEK 2,653m (1,780). Profit from property management attributable to parent company shareholders increased by 27 % and amounted to SEK 2,265m (1,780), which corresponds to an increase per ordinary share by 22 % to SEK 11.89 (9.71). Profit from property management includes SEK 419m (457) in respect of associated companies.

Net profit after tax

Net profit after tax for the year amounted to SEK 6,093m (4,916). Net profit after tax for the period attributable to parent company shareholders amounted to SEK 5,474m (4,916), corresponding to SEK 30.38 per ordinary share (28.98). Profit before tax was affected by changes in value in respect of properties of SEK 4,932m (3,388), changes in value of interest rate derivatives of SEK –114m (227) and profit from participations in associated companies of SEK 590m (831).

Rental income

Rental income increased by 98 % to SEK 5,373m (2,711). The increase was primarily due to Sato Oyj, whose income statement was consolidated for the first time from January 1, 2016. The leasing portfolio was estimated to have a rental value on 31 December of SEK 6,089m (5,257). The average rental level for the entire real estate portfolio amounted to SEK 1,583/sq.m. (1,508) excl. project properties.

Rental income shows a considerable diversification of risks as regards tenants, sectors and locations. The economic occupancy rate amounted to 95 % (96) on 31 December. The total rental value of unlet areas at the end of the year amounted to SEK 289m (182) on an annual basis.

Property costs

Property costs amounted to SEK 1,693m (767) during the year. The increase in property costs was mainly due to the consolidation of Sato Oyj.

Net operating income increased by 89 % to SEK 3,679m (1,944), which implies a surplus ratio of 68 % (72). Operating costs normally vary with the seasons. The first and fourth quarters have higher costs than the other quar-ters, while the third quarter usually has the lowest cost level.

Changes in value of investment properties

Balder carried out an individual valuation on 31 December of the entire real estate portfolio (see page 9). Unrealised changes in value during the year amounted to SEK 4,847m (3,323). Realised changes in value amounted to SEK 85m (65).

The average yield requirement as of 31 December amounted to 5.3 % (5.4). The change in value during the year was attributable to improved net operating income and a slightly reduced yield requirement.

Management and administrative costs

Management and administrative costs amounted to SEK 488m (185) during the year. The increase was mainly due to the consolidation of Sato Oyj.

Participations in the profits of associated companies

Balder owns property managing and project developing associated companies and 44.1 % in Collector AB (publ) which is listed. During September was Balders associated company Brinova Fastigheter AB (publ) listed, Balder's share amounts to 25.5 % as of 31 December.

In order to clarify these associated companies value in Balder, Balder also reports a consolidated statement of financial position including listed associated companies at market value (see page 5).

During the year 49 % of the shares in Sjaelsö Management ApS were acquired. Sjaelsö Management is one of the major actors in project development and construction management in Denmark.

Profit from participations in associated companies amounted to SEK 590m (831) and Balder's participation in the associated companies profit from property management amounted to SEK 419m (457).

Profit before tax was impacted by unrealised changes in value in respect of properties and interest rate derivatives of SEK 343m (410).

Net financial items and changes in value of derivatives

Net financial items amounted to SEK –973m (–437) and changes in value of interest rate derivatives amounted to SEK –114m (227). The negative change in value of derivatives during the year is due to the fact that the interest rates have fallen during the year. Unrealised changes in value do not affect the cash flow.

Net financial items are equivalent to borrowing at an average interest rate of 2.1 % (1.8) during the year, including the effect of accrued interest from interest rate derivatives.

Taxes

Balder's tax cost for the year amounted to SEK –1,550m (–862) of which SEK –226m (4) is current tax for the year, mainly attributable to the consolidation of Sato Oyj, and also a deferred tax expense of SEK –1,325m (–866). Current tax attributable to parent company shareholders amounted to SEK –135m (4).

The group's deferred tax liability has been calculated as the value of the net of fiscal deficits and the temporary differences between the carrying amounts and values for tax purposes of properties and interest rate derivatives. Deferred tax liabilities amounted to SEK 5,808m (4,071).

Fourth quarter 2016

Profit from property management for the fourth quarter of 2016 increased by 54 % and amounted to SEK 742m (482). Profit from property management attributable to parent company shareholders for the fourth quarter of 2016 increased by 35 % and amounted to SEK 650m (482) which corresponds to an increase per ordinary share of 28 % to SEK 3.39 (2.64).

Profit from property management included SEK 125m (128) in respect of associated companies. Rental income amounted to SEK 1,427m (680) and property costs amounted to SEK 425m (172), which meant that net operating income increased by 97 % to SEK 1,002m (508). The increase compared to the same period last year is mainly due to the consolidation of Sato Oyj from 1 January 2016. The surplus ratio amounted to 70 % (75). The decline in the surplus ratio is due to the consolidation of Sato Oyj, which primarily owns residential properties, with generally higher property costs compared to commercial properties.

Net profit after tax for the period amounted to SEK 2,704m (2,506). Profit after tax attributable to parent company shareholders amounted to SEK 2,536 (2,506) corresponding to SEK 14.05 per ordinary share (14.99). The result was affected by changes in value in respect of properties of SEK 2,211m (2,017), changes in value of interest rate derivatives of SEK 312m (197) and profit from participations in associated companies of SEK 236m (359). The average yield requirement on 31 December amounted to 5.3 % which is unchanged compared to September 2016.

Cash flow

Cash flow from operating activities before changes in working capital amounted to SEK 2,135m (1,193). Investing activities have burdened the cash flow by SEK 8,401m (5,635).

During the year, acquisition of properties of SEK 7,648m (2,097), investments in existing properties and projects of SEK 1,843m (791), investments in property, plant and equipment, financial investments and associated companies and transactions with non-controlling interests SEK 785m (4,857), dividends paid preference shares of SEK 200m (200) and dividends paid to non-controlling interests SEK 107m (–) adds up to SEK 10,583m (7,945).

These have been financed through cash flow from operating activities of SEK 2,891m (762), by property divestments of SEK 1,651m (1,606), financial investments of SEK 225m (504), new issue of SEK 1,780m (1,705), new issue in the subsidiary Sato Oyj of SEK 420m (–), and net borrowings of SEK 5,382m (3,788), which adds up to SEK 11,250m (8,365).

Total cash flow for the year amounted to SEK 667m (421). In addition to unutilised credit facilities of SEK 4,827m (4,545), the group's cash and cash equivalents, financial Investments and unutilised credit facilities amounted to SEK 1,942m (1,339) on 31 December.

Employees and organisation

The number of employees on 31 December amounted to 546 persons (522), of whom 255 were women (234). Balder is, after the acquisition of Sato Oyj, organised into six regions with 17 areas in total. The head office with groupwide functions is located in Gothenburg.

Parent Company

The parent company's operations mainly consist of performing group-wide services but an important part relates to sales of services, principally to associated companies. Sales in the parent company amounted to SEK 209m (147) during the year.

Net profit after tax amounted to SEK 1,311m (1,061). Dividend from subsidiary were included with SEK 1,430m (800), and unrealised changes in value of interest rate derivatives amounted to SEK –151m (199) and group contributions paid amounted to –568m (–340).

Proposed dividend

The board intends propose to the annual general meeting that no dividend shall be declared for ordinary shares (–) and that a dividend of SEK 20 per share (20) shall be paid for preference shares.

Annual Report and Annual General Meeting

The annual report for 2016 will be available on Balder's website, www.balder.se, from week 14, 2017.

Fastighets AB Balder's annual general meeting will take place on Thursday, 11 May 2017 at 4.00 p.m. at Radisson BLU Scandinavia Hotel, Södra Hamngatan 59, in Gothenburg.

Real estate holdings

On 31 December Balder owned 1,220 properties (1,177) with a lettable area of 3,806 sq.m. (3,430) and a value of SEK 86,177m (68,456), including project properties. Balder's total rental value excluding project properties amounted to SEK 6,025m (5,173). Balder's commercial properties are

mainly located in the central parts of large cities. Balder's residential properties are located in metropolitan areas and places that are growing and developing positively. Balder's ambition is to continue growing in selected markets.

Balder's real estate holdings on2016-12-31 1)

Number of
properties
Lettable area,
sq.m.
Rental value,
SEKm
Rental value,
SEK/sq.m.
Rental
income,
SEKm
Economic
occupancy
rate, %
Carrying
amount,
SEKm
Carrying
amount, %
Distributed by region
Helsinki 501 1,010,505 2,122 2,100 2,025 95 24,393 28
Stockholm 61 533,904 927 1,736 867 94 15,797 18
Gothenburg 194 903,206 1,150 1,274 1,108 96 17,053 20
Öresund 71 418,022 624 1,493 580 93 10,368 12
East 314 758,121 992 1,309 949 96 11,021 13
North 79 181,755 209 1,150 206 99 3,086 4
Total 1,220 3,805,512 6,025 1,583 5,736 95 81,718 95
Project 64 64 4,459 5
Total 1,220 3,805,512 6,089 1,583 5,800 95 86,177 100
Distributed by property category
Residential 1,020 2,531,547 3,973 1,569 3,819 96 48,775 57
Office 68 432,228 865 2,002 783 90 14,139 16
Retail 89 499,778 598 1,197 569 95 9,154 11
Other 43 341,960 588 1,718 565 96 9,650 11
Total 1,220 3,805,512 6,025 1,583 5,736 95 81,718 95
Project 64 64 4,459 5

1) The above table refers to the properties owned by Balder at the end of the period. Sold properties have been excluded and acquired properties have been estimated using full-year values. Other properties include hotel, educational, nursing, industrial and mixed-use properties.

Changes in real estate portfolio

The value of Balder's real estate portfolio is based on internal valuations. The properties in Sweden, Denmark and Norway have been valued using the cash flow based method. In Finland, in addition to the cash flow based method, the sales comparison method and valuation at acquisition cost are used. On 31 December, Balder's average yield requirement amounted to 5.3 % (5.4) excluding project and development properties.

In order to quality-assure its internal valuations, Balder regularly allows parts of its portfolio to be externally valued during the period or at each year-end. During the year, Balder has externally valued approximately 40 % of the properties, including Sato's property portfolio. The external valuation was less than 1 per cent higher than Balder's internal valuation at year-end. Historically, deviations between external and internal valuations have been insignificant.

Project real estate

On 31 December, Balder had ongoing residential projects with an expected total investment of SEK 8.0 billion, of which about SEK 4.0 billion was already invested. The most large scale investments are in Copenhagen and Helsinki and mainly relate to condominiums for rent. In Copenhagen, there are currently about 1,400 apartments under construction as well as about 1,300 apartments in Helsinki.

Unrealised changes in value

The overall carrying amount of Balder's properties amounted to SEK 86,177m (68,456) on 31 December. The unrealised change in value during the period amounted to SEK 4,847m (3,323) and was attributable to improved net operating income and slightly lower yield.

Investments, acquisitions and divestments

During the year, a total of SEK 13,185m (29,451) was invested, of which SEK 11,342m (28,660) related to acquisitions and SEK 1,843m (791) related to investments in existing properties and projects.

The majority of the acquisitions during the year refers to acquisitions in Sato Oyj and the acquired properties from the group I.A. Hedin Fastighet AB. Properties with a sales value of SEK 1,990m (1,613) were divested during the year. Profit from property sales amounted to SEK 85m (65). The change in the real estate portfolio during the period is presented in the table below.

Change in carrying amount of properties 2016 2015

SEKm Number 1) SEKm Number 1)
Real estate portfolio, 1 January 68,456 1,177 37,382 486
Investments in existing properties and projects 1,843 791
Acquisitions 11,342 116 28,660 714
Sales/Reclassifications –1,905 –73 –1,542 –23
Change in value of investment properties, unrealised 4,847 3,323
Currency changes 1,593 –158
Real estate portfolio, 31 December 86,177 1,220 68,456 1,177

1) Number of investment properties.

Property transactions 2016

Quarter Number Name of property Property category Lettable area, sq.m.
Acquisitions
One 1 Lorensberg 45:20 Gothenburg Hotel 3,662
One 1 Sato Oyj Finland Residential 1,652
Two 53 Sato Oyj Finland Residential 123,089
Two 1 Högskolan Hedmark, Elverum Norway Education 16,393
Two 1 Lindholmen 29:1 Gothenburg Office 12,223
Two 1 Heden 47:3 Gothenburg Office 7,541
Two 1 Hotel Österport, Köpenhamn Denmark Hotel 6,325
Three 6 Sato Oyj Finland Residential 27,257
Four 8 Sato Oyj Finland Residential 17,249
Four 1 Plutonen 1 Borås Retail 13,120
Four 1 Gothenburg Tuve 116:6 Gothenburg Retail 3,213
Four 1 Högsbo 36:8 Gothenburg Retail 2,448
Four 1 Visionen 4 Jönköping Retail 22,833
Four 1 Hede 4:14 Kungsbacka Retail 4,177
Four 1 Kärra 32:22 Gothenburg Retail 2,800
Four 1 Leoparden 2 Mölndal Retail 22,640
Four 1 Pianot 5 Mölndal Retail 2,329
Four 1 Högsbo 36:2 Gothenburg Retail 6,053
Four 1 Kardanen 4 Varberg Retail 3,847
Four 1 Gaslyktan 2 Mölndal Retail 3,564
Four 1 Frölandsgärdet 2 Uddevalla Retail 5,651
Four 1 Fullriggaren 1 Trollhättan Retail 2,200
Four 1 Smedjan 3 Alingsås Retail 3,222
Four 1 Presenten 1 Mölndal Retail 13,577
Four 1 Kärra 95:3 Gothenburg Retail 7,209
Four 1 Presenten 2 Mölndal Retail 2,325
Four 1 Kärra 73:1-2 Gothenburg Retail 4,372
Four 1 Varmvattnet 3 Stockholm Retail 33,009
Four 1 Fordonet 1 Karlskoga Retail 1,660
Four 1 Alptanäs 1 Stockholm Retail 9,794
Four 1 Paletten 2 Linköping Retail 5,757
Four 1 Papegojan 1 Linköping Retail 7,805
Four 1 Grävmaskinen 23 Södertälje Retail 2,391
Four 1 Denmarks-Säby 11:1 Uppsala Retail 21,439
Four 1 Stjärnregnet 1 Örebro Retail 4,341
Four 1 Stenalyckan 2 Halmstad Retail 3,750
Four 1 Eketånga 24:47 Halmstad Retail 3,220
Four 1 Eketånga 24:20 Halmstad Retail 5,836
Four 1 Hammar 9:184 Kristianstad Retail 5,135
Four 1 Topplocket 1 Kristianstad Retail 6,509
Four 1 Hästkälken 3 Malmö Retail 2,290
Four 1 Sjötungan 1 Värnamo Retail 5,349
Four 1 Linné 9 Ljungby Retail 1,975
Four 1 Anderstorp 8:16 Gislaved Retail 1,500
Four 1 Taktäckaren 6 Ängelholm Retail 6,760
Four 1 Automobilen 1 Malmö Retail 8,045

Cont. Property transactions 2016

Quarter Number Name of property Property category Lettable area, sq.m.
Four 1 Kopparkisen 13 Lund Retail 4,804
Four 1 Tågarp 16:12 Burlöv Retail 3,360
Four 1 Huggjärnet 10 Helsingborg Retail 11,110
Four 1 Skräddaren 5 Ängelholm Retail 1,172
Four 1 Zirkonen 3 Helsingborg Retail 5,500
Four 1 Verkstaden 11, Snickeriet 16-17 Trelleborg Retail 1,820
Total 116 505,302
Divestments
One 1 Miklaholt 2 Stockholm Office 1,916
One 1 Backa 170:1 Gothenburg Other 3,500
One 1 Advokaten 1 Töreboda Retail 2,128
One 1 Rönnen 11 Töreboda Residential 1,039
One 1 Sotaren 12 Töreboda Residential 976
One 1 Byggmästaren 5 Töreboda Residential 1,381
One 1 Plåtslagaren 9 Töreboda Residential 1,849
One 1 Rådhuset 40 Skara Residential 2,103
One 1 Tallen 7 Skara Residential 852
One 1 Frigga 4 Skara Residential 824
One 1 Frigga 5 Skara Residential 828
One 1 Fjärilen 6 Skara Residential 350
One 1 Svärdet 11 Skara Residential 412
One 1 Bromsen 5 Skara Residential 534
One 1 Bisittaren 6 Skara Residential 300
One 1 Bisittaren 2 Skara Residential 354
One 1 Smörberget 2 Skara Residential 410
One 1 Almen 4 Skara Residential 709
One 1 Sländan 1 Skara Residential 1,434
One 1 Plymen 4, 5 Skara Residential 705
One 1 Tor 6 Skara Residential 1,141
One 1 Heimdal 1 Skara Residential 682
One 1 Heimdal 4 Skara Residential 672
One 1 Tyr 1 Skara Residential 680
One 1 Boken 38 Skara Residential 967
One 1 Aspen 1 Skara Residential 1,465
One 1 Tor 10 Skara Residential 689
One 6 Sato Oyj Finland Residential 2,946
Two 4 Sato Oyj Finland Residential 2,169
Three 1 Mjälaryd 3:300 Jönköping Residential 2,948
Three 1 Hålan 6:2 Jönköping Residential 10,280
Three 1 Lejoninnan 10 Jönköping Residential 11,161
Three 1 Björnen 6 Jönköping Office 949
Three 1 Tigern 7 Jönköping Residential 6,001
Three 7 Sato Oyj Finland Residential 28,458
Four 1 Resedan 15 Vänersborg Residential 2,406
Four 21 Sato Oyj Finland Residential 36,004
Total 71 132,222

Associated companies

Balder owns 50 % of a number of companies where Balder handles the management and administration, for further information, see page 50-52 in Balder's Annual Report for 2015. In addition during the year, Trenum AB has become an associated company. In Trenum AB Balder is a 50 %-owner together with the Third Swedish National Pension Fund. Balder's 50 %-owned associated companies are shown in

the table below. Apart from the 50 %-owned associated companies, Balder owns 44.1 % (44.1) in Collector AB (publ), 31 % (31) of Tornet Bostadsproduktion AB, 25.5 % (35) of Brinova Fastigheter AB (publ) and 49 % (–) in Sjaelsö Management ApS. For more information about these associated companies, see each companys website: Collector.se, Tornet.se, Brinova.se and Sjaelsoemanagement.dk.

Balder's participation in the 50 %-owned associated companies' real estate holdings on 2016-12-31 1)

Number of
properties 2)
Lettable area,
sq.m.
Rental value,
SEKm
Rental value,
SEK/sq.m.
Rental income,
SEKm
Economic
occupancy rate,
%
Carrying
amount,
SEKm
Carrying
amount, %
Distributed by region
Stockholm 45 108,794 164 1,508 160 98 2,649 44
Gothenburg 11 47,506 58 1,213 54 93 892 15
Öresund 25 62,536 91 1,455 89 98 1,344 22
Total 81 218,836 313 1,429 303 97 4,885 82
Project 21 21 1,106 18
Total 81 218,836 333 1,429 324 97 5,991 100
Distributed by property category
Residential 27 45,453 69 1,524 68 98 1,329 22
Office 11 29,315 55 1,871 50 91 900 15
Retail 34 94,964 105 1,111 103 98 1,512 25
Other 9 49,104 83 1,692 83 99 1,145 19
Total 81 218,836 313 1,429 303 97 4,885 82
Project 21 21 1,106 18
Total 81 218,836 333 1,429 324 97 5,991 100

1) The above table refers to the properties owned by the associated companies at the end of the period. Sold properties have been excluded and acquired properties have been estimated using full-year values. Other properties include hotel, educational, nursing, industrial and mixed-use properties. 2) Refers to the entire portfolio of the associated companies.

Balders participation in the balance sheets of 50 %-owned associated companies

SEKm 2016
31 Dec
2015
31 Dec
Assets
Properties 5,991 4,414
Other assets 54 247
Cash and cash equivalents 203 61
Total assets 6,248 4,723
Shareholders' equity and liabilities
Equity/shareholder loan 2,549 1,726
Interest-bearing liabilities 3,319 2,501
Other liabilities 379 496
Total equity and liabilities 6,248 4,723

Distributed by region including projects, %

Distributed by property category including projects, %

Customers

In order to limit the risk of lower rental income and consequently a weakened occupancy rate, Balder strives to develop long-term relationships with the company's existing customers. Balder has a good diversification as regards the distribution between commercial properties and residential properties as well as the geographical distribution. The diversification strengthens the possibilities of maintaining a steady and satisfactory occupancy rate. Balder's commercial leases have an average lease term of 7.1 years (6.3). Balder's 10 largest leases represent 5.6 % (6.1) of total rental income and the average lease term amounts to 11.8 years (11.1). No individual lease accounts for more than 0.8 % (0.9) of Balder's total rental income and no individual customer accounts for more than 4.0 % (2.7) of total rental income.

Lease maturity structure 2016-12-31

Maturity date Number of
leases
Proportion, % Contracted
rent, SEKm
Proportion, %
2017 1,071 37 176 3
2018 694 24 237 4
2019 491 17 270 5
2020 329 11 222 4
2021– 329 11 1,095 19
Total 2,914 100 2,000 34
Residential 1) 38,000 3,740 64
Car park 1) 5,879 17 0
Garage 1) 4,529 43 1
Total 51,322 5,800 100

1) Normally runs subject to a period of notice of three months.

Balders 10 largest customers per 2016-12-31

• I. A. Hedin Bil AB

  • • ICA Sverige AB
  • • Kopparbergs Bryggerier
  • • Norwegian State
  • • Profilhotels
  • • Scandic Hotels AB
  • • SCA Hygiene Products AB
  • • City of Stockholm
  • • Stureplansgruppen
  • • Winn Hotel Group

Equity

Consolidated equity, including listed associated companies at market value, amounted to SEK 36,791m (29,325) on 31 December and the equity/assets ratio amounted to 38.3 % (37.8).

During the year, equity increased by comprehensive income for the period of SEK 6,507m (4,909), new issue after issue costs of SEK 1,780m (1,705) and the minoritys part of the new issue in Sato Oyj of SEK 554m (–). Equity decreased by SEK –200m (–200) regarding dividends approved and entered as a liability to the preference shareholders, decreased by SEK –107m (–) regarding dividends to non-controlling interests, the change in market value of the holding in Collector AB (publ) and Brinova Fastigheter AB (publ) SEK –962m (4,273) and decreased by SEK –107m (–) regarding transactions with non-controlling interests.

Interest-bearing liabilities

The majority of Balder's liabilities are revolving bilateral liabilities with eight different Nordic banks. Apart from bank financing, Balder has outstanding bonds totalling SEK 10,972m (7,865) and outstanding certificates of SEK 3,002m (2,680). The secured liabilities in relation to total assets amounted to 39.6 % (42.2) on 31 December.

Financial targets Target Outcome 1)
Equity/assets ratio, % min. 35.0 38.3
Net debt to assets, % max. 55.0 50.0
Interest coverage ratio, times min. 2.0 3.7

1) Key ratios including listed associated companies at market value.

Interest maturity structure on 2016-12-31

Fixed interest term
Year SEKm Interest, % Proportion, %
Within one year 25,975 1.0 52
1–2 years 4,742 4.6 10
2–3 years 1,959 3.3 4
3–4 years 4,416 2.7 9
4–5 years 7,736 3.0 16
> 5 years 4,752 3.0 10
Total 49,580 Q3
2.1
100

Fixed credit term on 2016-12-31

Fixed credit term
Year SEKm Proportion, %
Within one year 16,174 33
1–2 years 5,115 10
2–3 years 8,677 18
3–4 years 6,199 13
4–5 years 5,268 11
> 5 years 8,147 16
Total 49,580 100

On 31 December, Balder had credit facilities of SEK 4,827m (4,745) of which SEK 4,827m (4,545) were unutilised. Apart from these facilities, Balder had cash and cash equivalents, unutilised overdrafts and financial investments of SEK 1,942m (1,339). Balder aIso has credit facilities that fully covers future payments for ongoing construction projects. The interest rate refixing period and fixed credit term amounted to 2.4 years (2.9) and 4.2 years (4.4). During December Balder obtained a credit rating of 'Baa3' from Moody's with a stable outlook. The rating primarily reflects the Company's focus on stable rental housing properties in Sweden and Finland as well as the prime locations of its commercial properties in Sweden's largest cities and the company's conservative dividend policy.

Financial goals

Balder's financial goals are an equity/assets ratio not less than 35 %, an interest coverage ratio not less than 2.0 times and a net debt to assets ratio of not higher than 55 %. The net debt to assets ratio is calculated as net interest-bearing liabilities divided by total assets including listed associated companies at market value. As of 31 December, the equity/assets ratio was 38.3 % (37.8), the interest coverage ratio was 3.7 times (5.1) and the net debt to assets ratio was 50.0 % (51.6).

Fixed interest term

Other disclosures

Events after the end of the year

Fastighets AB Balder has, in two different transactions, sold all properties in Tranås, Falköping, Arboga and Köping. The lettable area amounts to 221,000 square meters and it has been assigned a property value of just over SEK 2 billion. Balder's sales exceed book values by approximately SEK 130 million, corresponding to 7% and will be recorded in the second quarter 2017. After the end of the reporting period no other significant events has occured.

Related party transactions

Balder receives fees from associated companies and Erik Selin Fastigheter AB for property and company management services. These fees amounted to SEK 34m (29) during the year and are reported in management and administrative costs. In addition, sevices are bought from Collector AB (publ).

Risks and uncertainties

Balder's operations, financial position and results may be affected by a number of risks and uncertainty factors. These are described in the Annual Report for 2015, on pages 53-55. Otherwise, no significant changes has been noterats.

Accounting policies

Balder applies IFRS (International Financial Reporting Standards) as adopted by the European Union in its consolidated accounts and the interpretations of these (IFRIC). This interim report is prepared in accordance with IAS 34, Interim Financial Reporting. In addition, relevant provisions of the Swedish Annual Accounts Act and the Swedish Securities Markets Act have also been applied. The parent company has prepared its financial statements in accordance with the Annual Accounts Act, the Securities Markets Act and RFR 2, Accounting for Legal Entities.

The accounting policies and calculation methods applied are unchanged compared with the Annual Report for 2015. The company has applied the new guidelines for alternative key ratios, "Alternative Performance Measures" (APMs) by ESMA. Definitions of the key ratios are found on page 25.

The Board's proposal to the Annual General Meeting 2017

Ahead of the annual general meeting on 11 May 2017, the board intends to propose that the meeting should pass resolutions regarding the following matters:

  • • That no dividend shall be declared for the ordinary share.
  • • Dividend of SEK 20.00 shall be declared per preference share.
  • • Authorise the board until the next annual general meeting, to repurchase and transfer B shares and preference shares in Balder equivalent to not more than 10 % of all shares in the company.
  • • Authorise the board until the next annual general meeting, on one or more occasions, to resolve on new issue of preference- and/or ordinary shares of Class B, corresponding to not more than 10 % of the existing share capitaI. It shall be possible to subscribe for the shares in cash, in kind or through right of set- off.

This interim report has been subject to review by the company's auditors.

Gothenburg 22 February 2017

Erik Selin Chief Executive Officer Review report of condensed interim financial information (interim report) prepared in accordance with IAS 34 and Chapter 9 of the Swedish Annual Accounts Act.

Introduction

We have reviewed the condensed interim financial information (interim report) for Fastighets AB Balder (publ), corp. id. no. 556525-6905 as of 31 December 2016 and for the twelve-month period that ended on this date. The Board of Directors and the President are responsible for the pre- paration and presentation of this interim financial informa- tion in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

The focus and scope of the 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 of the interim report consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially smaller in scope than an

audit conducted in accordance with International Standards on Auditing (ISA) and other generally accepted auditing practices. The procedures performed in a review do not ena- ble us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Accordingly, the conclusion expressed based on a review does not constitute the same level of assurance as a conclusion based on an audit.

Conclusion

Based on our review, nothing has come to our attention that give us reason to believe that the interim report, in all material respects, is not prepared for the Group in compliance with IAS 34 and the Swedish Annual Accounts Act and for the Parent Company in compliance with the Swedish Annual Accounts Act.

Gothenburg, 22 February 2017 Öhrlings PricewaterhouseCoopers AB

Helén Olsson Svärdström Authorised Public Accountant

SEKm 2016
Oct-Dec
2015
Oct-Dec
2016
Jan-Dec
2015
Jan-Dec
Rental income 1,427 680 5,373 2,711
Property costs –425 –172 –1,693 –767
Net operating income 1,002 508 3,679 1,944
Changes in value of properties, realised 23 1 85 65
Changes in value of properties, unrealised 2,188 2,016 4,847 3,323
Other income/costs 10 1 17 2
Non-recurring items 9 9
Management and administrative costs –130 –50 –488 –185
Participations in the profits of associated companies 236 359 590 831
Operating profit 3,328 2,844 8,730 5,988
Net financial items –264 –105 –973 –437
Changes in value of derivatives 312 197 –114 227
Profit before tax 3,376 2,936 7,643 5,778
Tax –672 –431 –1,550 –862
Net profit for the period/year 2,704 2,506 6,093 4,916
Net profit after tax for the period/year
attributable to:
Parent company shareholders 2,536 2,506 5,474 4,916
Non-controlling interests 168 619
2,704 2,506 6,093 4,916
Other comprehensive income - Items that may be subsequently reclassified
to profit or loss
Translation difference relating to foreign operations –75 –18 438 3
Cash flow hedges after tax 87 –26
Participation in other comprehensive income of associated companies 0 –7 2 –10
Total comprehensive income for the period/year 2,716 2,482 6,507 4,909
Total comprehensive income for the period/year
attributable to:
Parent company shareholders 2,549 2,482 5,685 4,909
Non-controlling interests 167 823
2,716 2,482 6,507 4,909
Profit from property management before tax, SEKm 1) 742 482 2,653 1,780
Profit from property management before tax,
attributable to parent company shareholders, SEKm 1) 650 482 2,265 1,780
Profit from property management before tax per ordinary share, SEK 2) 3.39 2.64 11.89 9.71
Profit after tax per ordinary share, SEK 2) 14.05 14.99 30.38 28.98
1) Including profit from property management from Balder's participation in associa
ted companies.
125 128 419 457

Consolidated statement of comprehensive income

2) Reduced by dividend for the preference share for the period.

There is no dilutive effect as no potential shares arise.

SEKm 2016
31 Dec
2015
31 Dec
Assets
Investment properties 86,177 68,456
Other fixed assets 136 122
Participations in associated companies 3,362 2,276
Other receivables 1,357 1,497
Cash and cash equivalents and financial investments 1,592 1,025
Total assets 92,623 73,376
Shareholders' equity and liabilities
Shareholders' equity 1)
33,479 25,052
Deferred tax liability 5,808 4,071
Interest-bearing liabilities 49,580 41,063
Derivatives 1,547 1,294
Other liabilities 2,209 1,896
Total equity and liabilities 92,623 73,376
1) Of which non-controlling interests. 5,540 4,377

Consolidated statement of financial position

Consolidated statement of changes in equity

SEKm 2016
31 Dec
2015
31 Dec
Opening equity 25,052 14,261
Total comprehensive income for the period/year 6,507 4,909
Dividend preference shares, approved and entered as a liability –200 –200
Share issue, after issue costs 1,780 1,705
Transactions with non-controlling interests –107
Dividend to non-controlling interests –107
Non-controlling interests arising on the acquisition of subsidiary 4,377
Non-controlling interests arising on share issue in subsidiary 554
Closing equity 33,479 25,052

Consolidated statement of cash flows

SEKm 2016
Oct-Dec
2015
Oct-Dec
2016
Jan-Dec
2015
Jan-Dec
Net operating income 1,002 508 3,679 1,944
Other income/costs 10 1 17 2
Management and administrative costs –130 –50 –488 –185
Reversal of depreciation 15 4 26 15
Adjustment item 4 0
Net financial items paid –258 –154 –939 –586
Taxes paid –21 6 –160 4
Cash flow from operating activities before change in working capital 618 319 2,135 1,193
Change in operating receivables 161 –126 176 –660
Change in operating liabilities 141 –87 580 228
Cash flow from operating activities 920 107 2,891 762
Acquisition of properties –3,233 –2 –7,648 –2,097
Acquisition/Divestment of property, plant and equipment –22 2 –41 –4
Purchase of financial investments –102 –19 –145 –542
Acquisition of shares in associated companies –51 –4 –493 –92
Investment in existing properties and projects –311 –191 –1,843 –791
Acquisition of subsidiary 1) –1,676 –4,219
Transactions with non-controlling interests –107
Sale of properties 650 3 1,651 1,606
Sale of financial investments 11 225 504
Cash flow from investing activities –3,069 –1,875 –8,401 –5,635
Share issue, after issue costs 1,705 682 1,705
Share issue in subsidiary, non-controlling interest's part of the share
issue in Sato Oyj 420
Dividend paid for preference shares –50 –50 –200 –200
Dividend paid to non-controlling interests –107
Loans raised 3,262 615 10,783 5,209
Amortisation/redemption of loans sold properties/changes in
overdraft facilities –1,403 –446 –5,401 –1,421
Cash flow from financing activities 1,808 1,824 6,177 5,293
Cash flow for the period/year –341 55 667 421
Cash and cash equivalents at the start of the period/year 1,628 565 620 199
Cash and cash equivalents at the end of the period/year 1,287 620 1,287 620
Unutilised credit facilities 350 314 350 314
Financial investments 305 405 305 405

1) The item in 2015 represents a net outflow of cash for the acquisition of Sato Oyj.

SEKm 2016
Oct-Dec
2015
Oct-Dec
2016
Jan-Dec
2015
Jan-Dec
Rental income
Helsinki 506 1,901
Stockholm 221 202 819 843
Gothenburg 280 241 1,030 938
Öresund 131 108 496 414
East 236 88 933 352
North 52 41 193 164
Total 1,427 680 5,373 2,711
Net operating income
Helsinki 302 1,224
Stockholm 167 157 610 643
Gothenburg 223 171 743 650
Öresund 105 88 405 315
East 167 64 566 233
North 37 28 130 103
Total 1,002 508 3,679 1,944

Segment information

The group's internal reporting of operations is divided into the above segments. Total net operating income corresponds with reported net operating income in the income statement. The difference between net operating income of SEK 3,679m (1,944) and profit before tax of SEK 7,643m (5,778) consists of changes in value of properties of SEK 4,932m (3,388), other income/costs SEK 17m (2), non-recurring items SEK 0m (9), management and administrative costs of SEK –488m (–185), participations in profits of associated companies of SEK 590m (831), net financial items of SEK –973m (–437) and changes in value of derivatives of SEK –114m (227).

SEKm 2016
31 Dec
2015
31 Dec
Investment properties
Helsinki 24,393 19,595
Stockholm 15,797 13,550
Gothenburg 17,053 12,887
Öresund 10,368 6,581
East 11,021 9,085
North 3,086 2,178
Total carrying amount excluding project 81,718 63,876
Project 4,459 4,581
Total carrying amount including project 86,177 68,456

The carrying amounts of properties has during the year changed by investments, aquisitions, divestments and unrealised changes in value, with SEK 4,798m in Helsinki region, SEK 2,247m in the Stockholm region, SEK 4,166m in the Gothenburg region, SEK 3,787m in the Öresund region, SEK 908m in the North region and by SEK 1,936m in the East region. The group's projects has decreased by SEK 122m. Sato's property portfolio is divided between the regions Helsinki and East. The real estate holdings in Norway is classified in the North region.

2016
Oct-Dec
2015
Oct-Dec
2016
Jan-Dec
2015
Jan-Dec
Share-related, ordinary shares 1
)
Average number of shares, thousands 176,965 163,825 173,598 162,753
Profit after tax, SEK 14.05 14.99 30.38 28.98
Profit after tax excluding unrealised changes in
value, SEK
2.68 3.01 9.37 10.00
Profit from property management before tax, SEK 3.39 2.64 11.89 9.71
Net operating income, SEK 4.62 3.10 17.02 11.94
Outstanding number of shares, thousands 180,000 172,397 180,000 172,397
Shareholders' equity, SEK 157.63 128.03 157.63 128.03
Long-term net asset value (EPRA NAV), SEK 198.49 159.14 198.49 159.14
Share price on the closing date, SEK 184.10 208.70 184.10 208.70
Property-related
Rental value full-year, SEK/sq.m. 1,583 1,508 1,583 1,508
Rental income full-year, SEK/sq.m. 1,507 1,455 1,507 1,455
Economic occupancy rate, % 95 96 95 96
Surplus ratio, % 70 75 68 72
Carrying amount, SEK/sq.m. 21,473 18,622 21,473 18,622
Number of properties 1,220 1,177 1,220 1,177
Lettable area, sq.m. thousands 3,806 3,430 3,806 3,430
Profit from property management before tax,
attributable to parent company shareholders, SEKm 650 482 2,265 1,780
Financial
Return on equity, ordinary share, % 14.4 20.8 20.9 28.2
Return on total assets, % 6.9 7.3 9.9 10.5
Interest coverage ratio, times 3.8 5.6 3.7 5.1
Equity/assets ratio, % 38.3 37.8 38.3 37.8
Debt/equity ratio, times 1.3 1.4 1.3 1.4
Net debt to assets, % 50.0 51.6 50.0 51.6

Key ratios including listed associated companies at market value

Key ratios excluding listed associated companies at market value

2016
Oct-Dec
2015
Oct-Dec
2016
Jan-Dec
2015
Jan-Dec
Share-related, ordinary shares 1)
Shareholders' equity, SEK
139.23 103.24 139.23 103.24
Financial
Return on equity, ordinary share, % 16.8 25.1 24.6 32.3
Return on total assets, % 7.2 7.7 10.4 10.9
Equity/assets ratio, % 36.1 34.1 36.1 34.1
Debt/equity ratio, times 1.5 1.6 1.5 1.6
Net debt to assets, % 51.8 54.6 51.8 54.6

1) There is no dilutive effect as no potential shares arise.

SEKm 2016
Oct-Dec
2015
Oct-Dec
2016
Jan-Dec
2015
Jan-Dec
Net sales 66 45 209 147
Administrative expenses –63 –51 –224 –167
Operating profit 3 –6 –14 –20
Profit from financial items
Dividends from subsidiaries 1,430 800
Other net financial items 135 136 579 492
Changes in value of derivatives 299 185 –151 199
Profit before appropriations and taxes 437 316 1,843 1,470
Appropriations
Group contributions paid –568 –340 –568 –340
Profit before tax –131 –24 1,275 1,130
Deferred tax 31 9 36 –69
Net profit for the period/year 1) –101 –16 1,311 1,061

Condensed parent company income statement

1) The parent company has no items reported in other comprehensive income and therefore total comprehensive income for the period/year is equal with net profit for the period/year.

Condensed parent company balance sheet

SEKm 2016
31 Dec
2015
31 Dec
Assets
Property, plant and equipment 25 20
Financial non-current assets 5,087 3,537
Receivables from group companies 24,629 21,676
Current receivables 15 10
Cash and cash equivalents and financial investments 1,144 394
Total assets 30,900 25,637
Shareholders' equity and liabilities
Shareholders' equity 11,953 9,063
Interest-bearing liabilities 13,170 10,968
Liabilities to group companies 4,440 4,507
Derivatives 888 737
Other liabilities 449 363
Total equity and liabilities 30,900 25,637

The share and owners

Balder's shares are listed on Nasdaq Stockholm, Large Cap segment. Balder has two listed classes of shares, an ordinary Class B share and a preference share, which pays a dividend of SEK 5 per quarter. The company's market capitalisation as of 31 December amounted to SEK 36,371m (39,099).

The principal owner in Fastighets AB Balder is Erik Selin Fastigheter AB, which owns 34.5 % (35.9) of the capital and 48.2 % (49.5) of the votes. Foreign ownership amounts to approximately 20 % (22) of outstanding ordinary shares.

Ordinary shares

At the end of the period, approximately 14,000 shareholders (9,300) held ordinary shares. During the period, 90.2 million shares were traded (67.7) which corresponds to an average of about 357,000 shares per trading day (270,000). The annual turnover rate amounted to 52 % (42). The price of the ordinary share was SEK 184.10 (208.70) on 31 December, corresponding to a decrease of 11.8 % since year-end.

Preference shares

At the end of the period, approximately 9,300 shareholders (8,700) held preference shares. During the year approximately 3.3 million shares were traded (3.3), which corresponds to an average of about 13,000 shares per trading day (13,000). The annual turnover rate amounted to 33 % (33). On 31 December, the share price of the preference share was SEK 323.30 (312.00), corresponding to a rise of 3.6 % since year-end and a total return of 10.0 % since year-end.

Share capital

During September, Balder carried out a directed new issue of 3,000,633 ordinary shares, which brought in SEK 681m after issue costs. For existing shareholders, the new issue meant a dilutive effect of 1.7 % of the capital. During December Balder carried out a set off issue of 4,602,515 ordinary shares, which brought in SEK 1,099m after issue costs. For existing shareholders, the new issue meant a dilutive effect of 2.6 % of the capital. After the issues and as of 31 December, the share capital in Balder amounted to SEK 190,000,000 distributed among 190,000,000 shares. Each share has a quota value of SEK 1.00, where of 11,229,432 shares are of Class A, 168,770,568 of Class B and 10,000,000 preference shares. The total number of outstanding shares amounts to 190,000,000. Each Class A share carries one vote and each Class B share and preference share carries one tenth of one vote.

EPRA key ratios 2016
Jan-Dec
2015
Jan-Dec
EPRA NAV (Long-term net asset value), SEKm 35,728 27,436
EPRA NAV, SEK per share 198.49 159.14
EPRA Vacancy rate 5 4

Share price

Share price/Net asset value

Share price/Net asset value (EPRA NAV) per ordinary share Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 2005 2006 2007 2008 2009 2010 20112012 20132014 Q3Q4Q1Q2Q3 20152016

Ownership list as of 2016-12-31

Total 11,229,432 168,770,568 10,000,000 190,000,000 100 100
Other 4,212 51,854,076 9,918,719 61,777,007 32.5 21.2
CBNY Norges Bank 2,614,143 2,614,143 1.4 0.9
Lannebo fonder 2,950,000 2,950,000 1.6 1.0
SEB Investment Management 3,304,313 3,304,313 1.7 1.1
Anders Hedin Invest AB 5,000,000 5,000,000 2.6 1.7
Handelsbanken Fonder AB 6,343,346 6,343,346 3.3 2.2
JPM Chase 6,671,346 80,781 6,752,127 3.6 2.3
Länsförsäkringar fondförvaltning AB 7,571,909 7,571,909 4.0 2.6
Swedbank Robur fonder 11,707,995 11,707,995 6.2 4.0
Arvid Svensson Invest AB 2,915,892 13,542,540 16,458,432 8.7 14.7
Erik Selin via company 8,309,328 57,210,900 500 65,520,728 34.5 48.2
Owner A ordinary shares B ordinary shares Preference shares Total number
of shares
Capital, % Votes, %

Preference share calendar

Final day of trading incl. right to payment of dividend 6 April 2017
Record day for payment of dividend 10 April 2017
Expected day of payment from Euroclear 13 April 2017
Final day of trading incl. right to payment of dividend 6 July 2017
Record day for payment of dividend 10 July 2017
Expected day of payment from Euroclear 13 July 2017
Final day of trading incl. right to payment of dividend 6 October 2017
Record day for payment of dividend 10 October 2017
Expected day of payment from Euroclear 13 October 2017

Definitions

The company presents a number of financial metrics in the interim report that are not defined according to IFRS (so-called Alternative Performance Measures according to ESMA's guidelines). These performance measures provide valuable supplementary information to investors, the company's management and other stakeholders since they facilitate effective evaluation and analysis of the company's financial position and performance. These alternative performance measures are not always comparable with measures used by other companies and shall therefore be considered as a complement to measures defined according to IFRS. Fastighets AB Balder will apply these alternative performance measures consistently over time. The key ratios are alternative performance measures according to ESMA's guidelines unless otherwise stated. A description follows below of how Fastighets AB Balder's key ratio's are defined and calculated.

Financial

Return on equity, ordinary share, %

Profit after tax reduced by preference share dividend for the period in relation to average equity after deduction of the preference capital. The values were converted to a full-year basis in the interim accounts without taking account of seasonal variations that normally arise in the operations with the exception of changes in value.

Return on total assets, %

Profit before tax with addition of net financial items in relation to average balance sheet total. The values were converted to a full-year basis in the interim accounts without taking account of seasonal variations that normally arise in the operations with the exception of changes in value.

Profit from property management before tax, SEKm 2)

Profit before tax with reversal of changes in value and other income/costs. Reversal of changes in value and tax as regards participation in profits of associated companies also takes place.

Net debt to assets, %

Interest-bearing liabilities less cash and cash equivalents and financial investments in relation to total assets.

Interest coverage ratio, times

Profit before tax with reversal of net financial items, changes in value and changes in value and tax as regards participation in profits of associated companies, in relation to net financial items.

Debt/equity ratio, times

Interest-bearing liabilities in relation to shareholders' equity.

Equity/assets ratio, %

Shareholders' equity including non-controlling interests in relation to the balance sheet total at the end of the year.

Share related

Equity per ordinary share, SEK

Shareholders' equity in relation to the number of outstanding ordinary shares at the end of the year after deduction of the preference capital.

Equity per preference share, SEK

Shareholders equity' per preference share is equivalent to the average subscription price of the preference share of SEK 287.70 per share.

Profit from property management per ordinary share, SEK

Profit from property management reduced by preference share dividend for the period divided by the average number of outstanding ordinary shares.

Average number of shares

The number of outstanding shares at the start of the period, adjusted by the number of shares issued during the period weighted by the number of days that the shares have been outstanding in relation to the total number of days during the year.

Long term net asset value per ordinary share (EPRA NAV), SEK

Equity per ordinary share with reversal of interest rate derivatives and deferred tax according to balance sheet.

Profit after tax per ordinary share, SEK

Profit attributable to the average number of ordinary shares after consideration of the preference share dividend for the period.

Property related

Yield, %

Estimated net operating income on an annual basis in relation to the fair value of the properties at the end of the year.

Net operating income, SEKm

Rental income less property costs.

Economic occupancy rate, % 1)

Contracted rent for leases which are running at the end of the period in relation to rental value.

Property category

Classified according to the principal use of the property. The break-down is made into office, retail, residential and other properties. Other properties include hotel, educational, care, industrial/warehouse and mixed-use properties. The property category is determined by what the largest part of the property is used for.

Property costs, SEKm

This item includes direct property costs, such as operating expenses, utility expenses, maintenance, ground rent and property tax.

Rental value, SEKm 1)

Contracted rent and estimated market rent for vacant premises.

Surplus ratio, %

Net operating income in relation to rental income.

1) The key ratio is operational and is not considered to be a alternative key ratio according to ESMA's guidelines.

2) When calculating profit from property management before tax attributable to parent company shareholders, the profit from property manage ment is also reduced with the non-controlling interests' share.

The information in this report is such that Fastighets AB Balder (publ) is obliged to disclose according to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. This information has been published at 2.00 p.m. on February 22, 2017.

Contact

For additional information, please contact CEO Erik Selin, telephone +46 706 074 790 or CFO Magnus Björndahl, telephone +46 735 582 929.

Financial information

Overall information about the company's operations, board of directors and management, financial reporting and press releases, may be found on Balder's website, www.balder.se.

Calendar

Annual report 2016 Week 14, 2017 Annual General meeting 11 May 2017 Interim report Jan-Mar 2017 11 May 2017 Interim report Jan-June 2017 22 August 2017 Interim report Jan-Sep 2017 2 November 2017 Year-end report 2017 22 February 2018

Fastighets AB Balder (publ) www.balder.se · [email protected] · Org.nr 556525-6905

Head office Parkgatan 49 · Box 53 121 · 411 39 Gothenburg · Tel +46 31-10 95 70 · Fax +46 31-10 95 99
Regional offices
Stockholm Drottninggatan 108 · 113 60 Stockholm · Tel +46 8-73 53 770
Vårby Allé 14 · 143 40 Vårby · Tel +46 8-73 53 770
Gothenburg Wetterlinsgatan 11G · 521 34 Falköping · Tel +46 515-72 14 80
Timmervägen 9A · 541 64 Skövde · Tel +46 500-47 88 50
Parkgatan 49 · Box 53 121 · 411 39 Gothenburg · Tel +46 31-10 95 70
Öresund Esplanaden 15 · 265 34 Åstorp · Tel +46 42-569 40
Gustav Adolfs Torg 8 · 252 25 Helsingborg · Tel +46 42-17 21 30
Kalendegatan 26 · 211 35 Malmö · Tel +46 40-600 96 50
East Hospitalsgatan 11 · 602 27 Norrköping · Tel +46 11-15 88 90
Kapellgatan 29 A · 732 45 Arboga · Tel +46 589-194 50
Rönnbergagatan 10 · 723 46 Västerås · Tel +46 21-14 90 98
Storgatan 51 · 573 32 Tranås · Tel +46 140-654 80
Tunadalsgatan 6 · 731 31 Köping · Tel +46 221-377 80
North Forskarvägen 27 · 804 23 Gävle · Tel +46 26-54 55 80
Sandbäcksgatan 5 · 653 40 Karlstad · Tel +46 54-14 81 80
Tallvägen 8 · 854 66 Sundsvall · Tel +46 60-55 47 10
Letting Tel +46 20-151 151
Customer service Tel +46 774-49 49 49

This report is a translation of the Swedish Interim Report January-December 2016. In the event of any disparities between this report and the Swedish version, the latter will have priority.

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