Hufvudstaden

Quarterly Report • Nov 4, 2015

HUFVUDSTADEN Interim Report January — September 2015

3

Interim Report January–September 2015

• Profit after tax for the period was SEK 1,862 million (996), equivalent to SEK 9.03 per share (4.83). The increase is due to a higher unrealized changes in the value of property holdings.
• Gross profit from property management amounted to SEK 842 million (857). The decrease can be attributed largely to the increased cost of vacant floor space and maintenance in development projects in the retail sector.
• The fair value of the property holdings was set at SEK 29.8 billion (27.8 at the turn of the year), resulting in a net asset value of SEK 108 per share (100 at the turn of the year).
• The equity ratio was 59 per cent (57), the net loan-to-value ratio was 18 per cent (20) and the interest coverage ratio multiple was 9.0 (8.4).
• Consolidated net revenue amounted to SEK 1,238 million (1,236).
• The rental vacancy level at the period-end was 5.2 per cent (5.5). Excluding projects in progress, the rental vacancy level was 4.1 per cent (5.2).

________________________

According to the Fastighetsbarometern Customer Satisfaction Survey, Hufvudstaden has the most satisfied office tenants in the industry.

GROUP

RESULTS

Property management

Net rents from property management during the period amounted to SEK 1,183.3 million (1,186.9). The gross profit amounted to SEK 841.5 million (857.1). The decrease in profit can be attributed mainly to costs associated with upgrading of the Femman shopping precinct and NK. This has led to higher maintenance costs in conjunction with evacuation of store tenants and vacant space as a result of projects. Gross rents have risen slightly due to higher rents in conjunction with renegotiations and new leases.

The turnover-based rent supplement is reported during the fourth quarter. The turnover-based rent supplement the previous year was SEK 10.9 million. Otherwise, there are no material seasonal variations in rents.

The property management results for each business area are reported on page 6.

Parking operations

Operations comprise parking operations at Parkaden AB in Stockholm. Net revenue was SEK 54.6 million (49.1). The rise can be attributed mainly to an increase in short-term income. Expenses totalled SEK 37.2 million (36.8) and gross profit SEK 17.4 million (12.3).

Other profit and loss items

Central administration totalled SEK -27.7 million (-26.9). Changes in the value of investment properties totalled SEK 1,671.8 million (693.9) and changes in interest derivatives totalled SEK -6.6 million (-148.7).

Financial income and expense

Net financial income and expense amounted to SEK -91.4 million (-97.9).

Tax

The Group's tax for the period was SEK -543.2 million (-294.1), of which SEK -80.0 million (-127.4) was actual tax and SEK -463.2 million (-166.7) was deferred tax. The increase in deferred tax can be attributed to higher unrealized changes in the value of the property holdings.

Profit for the period

The consolidated profit after tax amounted to SEK 1,861.8 million (995.7). The increase in profit is due to a higher unrealized change in value of the property holdings.

ACQUISITIONS AND INVESTMENTS

The total investment in properties and equipment during the period was SEK 334.1 million (158.6).

PROPERTY HOLDINGS

The fair value of the Hufvudstaden property holdings, based on an internal valuation and assessed as at September 30, 2015, was SEK 29,821 million (27,817 at the turn of the year). The increase can be attributed to unrealized changes in value and investments in the property holdings. Rentable floor space totalled approximately 388,000 square metres (387,000).

The rental vacancy level as at September 30, 2015 was 5.2 per cent (5.6 at the turn of the year) and the floor space vacancy level was 7.0 per cent (7.2 at the turn of the year). The decrease in vacant space is mainly related to office space in Stockholm. The level of vacant space, excluding projects in progress, totalled 4.1 per cent (5.2 at the turn of the year).

Property value and net asset value

At the end of each quarter, Hufvudstaden makes 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 valuation, external valuations of parts of the property holdings are obtained at least once a year.

A continuous update is made during the year of the internal valuation of the properties in order to take account of purchases, sales and investments. Hufvudstaden also examines on a continuous basis whether there are other indications of changes in the fair value of the properties. This could take the form, for example, of major lettings, terminations and material changes in yield requirements.

In the light of the above, the unrealized change in the value of the property holdings for the period was SEK 1,671.8 million (693.9). The total value of the property holdings as at September 30, 2015 was SEK 29.8 billion, including investments for the period. The unrealized increase in value can be attributed mainly to the effect of a lower yield requirement and a slight increase in rents in conjunction with renegotiated leases and new leases.

The average yield requirement at the above valuation point was 4.2 per cent (4.5 at the turn of the year).

Valuation method

Valuation of the property holdings is done by assessing each individual property's fair value. The valuation is made using a variation on the location price method, known as the net capitalization method. The method means that the market's yield requirement is set in relation to the net operating income of the properties.

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 sub-area, an analysis is made of transactions in neighbouring areas. Even transactions that have yet to be finalized provide guidance on market yield requirements. The yield requirement can vary between different regions and different sub-areas within the regions. Account is also taken of the type of property, the technical standard, the building construction and major investment needs. For leasehold properties, the calculation was based on a yield requirement that was 0.25 percentage points higher than for equivalent properties where the land is freehold. The net operating income of the properties is based on market rental income, the long-term rental

vacancy level and normalized operating and maintenance costs.

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

Yield requirements, property valuation

Stockholm	3.90-4.50 per cent
Gothenburg	4.25-5.00 per cent
Property holdings, average	4.2 per cent

Sensitivity analysis

Fair value is an assessment 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 conjunction with 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, among other things, on the market situation, the technical standard of the property and investment requirements. Hufvudstaden's property holdings are valued at SEK 29.8 billion with a degree of uncertainty of +/- 5 per cent, which means that the fair value varies by +/- SEK 1.5 billion. Below are the key factors that influence the valuation and the consequent impact on profit.

Sensitivity analysis, property valuation

	Change, +/-	Impact on profit before tax, +/-
Rental revenue	SEK 100/sqm	SEK 920 m
Property costs	SEK 50/sqm	SEK 460 m
Rental vacancy level	1.0 percentage points	SEK 400 m
Yield requirement	0.25 percentage points	SEK 1,750 m

Net asset value

Based on the valuation of the property holdings, the net asset value was SEK 22.3 billion or SEK 108 per share after tax. When calculating the net asset value, calculated deferred tax has been used. This has been set at 5 per cent of the difference between the fair value of the properties and the residual value for tax purposes. The assessment is made in the light of current tax legislation, which means that properties can be sold via a limited company without tax implications. The purchaser, however, loses the basis for depreciation, which could justify some compensation, which has been set at 5 per cent. The table below shows the net asset value with different assumptions regarding the rate of deferred tax.

Net asset value, September 30, 2015

Tax rate	0 %	5 %	22 %
SEK bn
Net asset value before tax	23.6	23.6	23.6
Calculated deferred tax	-	-1.3	-5.7
Net asset value after tax	23.6	22.3	17.9
Net asset value per share, SEK	114	108	87

HUFVUDSTADEN HAS THE MOST SATISFIED OFFICE TENANTS IN THE INDUSTRY

The most satisfied office tenants in the industry can be found at Hufvudstaden. Hufvudstaden once again came out top. Fastighetsbarometern¹ is the industry's Customer Satisfaction Survey.

_________________________ ¹ Behind Fastighetsbarometern are the Swedish Property Federation and the consulting company CFI Group.

This year Hufvudstaden scored 83 on a scale of 0-100 whilst the average for the industry was 75. Hufvudstaden was given the maximum score for location, fault reporting, service, adaptation, premises, indoor climate and image. Hufvudstaden has come top for six out of the past ten years.

RENTAL MARKET

The demand for modern, flexible office space in prime locations in central Stockholm continued to be high during the period. Vacant space in this category has remained at low levels and the rent trend has been somewhat positive. In conjunction with renegotiations and new leases for office space in Stockholm's most attractive locations in Bibliotekstan, at Norrmalmstorg/ Hamngatan and in the Hötorget area, rents were noted of between SEK 4,300 and SEK 5,300 per square metre per year, excluding the property tax supplement. Interest in prime-location retail premises in the same sub-markets continues to be strong. For retail premises in prime locations, the market rents were between SEK 14,000 and SEK 22,000 per square metre per year, excluding the property tax supplement.

Demand for modern office premises in central submarkets in Gothenburg remained high with a continued low level of vacant space. Market rents have risen slightly and in prime locations were between SEK 2,100 and SEK 3,000 per square metre per year, excluding the property tax supplement. For retail premises, the market rents were between SEK 6,000 and SEK 13,000 per square metre per year, excluding the property tax supplement.

The outcome from the Group's renegotiation of both retail and office premises has been positive. In total, 39,100 square metres were renegotiated during the period at a rental value of SEK 180 million. On average, these renegotiations resulted in an increase in rent of approximately 5 per cent.

FINANCING STRUCTURE

Hufvudstaden's borrowing as at September 30, 2015 amounted to SEK 5,750 million (5,650 at the turn of the year).

Hufvudstaden has an MTN programme totalling SEK 4 billion and the total outstanding amount is SEK 2,100 million. Outstanding commercial paper amounted to SEK 800 million. Hufvudstaden ensures that at any point in time there are unutilized loan assurances to cover all outstanding commercial paper. The average fixed interest period was 30 months (33 at the turn of the year), the average capital tie-up period was 29 months (32 at the turn of the year) and the average annual equivalent rate of interest was 2.1 per cent (2.2 at the turn of the year). The net interest-bearing debt was SEK 5,402 million (5,176 at the turn of the year). The fair value of all interest derivatives as at September 30, 2015 was SEK -155.7 million (-149.1 at the turn of the year). The negative figure can be attributed to a general downturn in market interest rates.

Capital tie-up structure, September 30, 2015

Volume,	Share,
	%
600	10
2,650	46
1,700	30
500	9
300	5
5,750	100
	SEK m1

¹ Capital tie-up for commercial paper loans has been calculated according to the underlying loan assurances.

Fixed interest structure, September 30, 2015

Maturity	Volume,	Share,	Average
Date	SEK m	%	AER, %
2015	400	7	0.4
2016	800	14	1.4
2017	1,500	26	1.8
2018	1,800	31	2.6
2019	950	17	2.9
2022	300	5	2.1
Total	5,750	100	2.1

THIRD QUARTER

The gross profit from property management amounted to SEK 288.2 million (285.1). Net rents amounted to SEK 397.5 million (394.8), which can be attributed mainly to slightly higher rents and lower levels of vacant space. Property management costs amounted to SEK 109.3 million (109.7).

The gross profit from parking operations was SEK 5.8 million (3.1). Net revenue was SEK 18.5 million (15.3) and costs SEK 12.7 million (12.2).

Changes in the value of investment properties amounted to SEK 574.4 million (54.5) and changes in the value of interest derivatives amounted to SEK -4.8 million (-34.4). Net financial income and expense totalled SEK -31.2 million (-32.9).

OTHER DEVELOPMENTS

Ingvor Sundbom has been appointed as CFO. It has yet to be decided when she will take up her position. Until such time, Åsa Roslund will be acting CFO.

SHARES AND SHAREHOLDERS

Hufvudstaden, whose shares are listed on NASDAQ Stockholm, had 20,292 shareholders at the end of the period. The proportion of foreign ownership as at September 30, 2015 was 33 per cent of the total number of outstanding shares (32 at the turn of the year). The series A share price as at September 30, 2015 was SEK 109.50 and market capitalization was SEK 23.9 billion.

Shares bought back

The total number of shares held by Hufvudstaden as at September 30, 2015 was 5,006,000 series A shares, equivalent to 2.4 per cent of the total number of issued shares. No buy-backs were made during or after the end of the reporting period. At the 2015 Annual General Meeting, the Board was granted renewed authorization to acquire Series A shares up to 10 per cent of all the issued shares and to assign company shares.

Buy-back of shares as at September 30, 2015, million shares

	Total	Company	Held by
	number	holdings	other
	of		share
	shares		holders
As of January 1, 2015	211.3	5.0	206.3
Buy-back	-	-	-
As of September 30, 2015	211.3	5.0	206.3

MATERIAL RISKS AND UNCERTAINTY FACTORS

The Group is mainly exposed to financing, interest and credit risks and changes in the value of the property holdings. The Company has not identified any material risks and uncertainties other than those described in the 2014 Annual Report.

MATERIAL TRANSACTIONS WITH ASSOCIATED PARTIES

There were no material transactions with associated parties during the period.

ACCOUNTING PRINCIPLES

Hufvudstaden applies the EU-endorsed IFRS standards and interpretations thereof (IFRIC). This Interim Report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable stipulations in the Annual Accounts Act. IFRIC 21, Levies, has been applied since January 1, 2015. The interpretation includes rules that state that government levies should be entered as a liability in total when the obligation arises, which affects the property tax for Hufvudstaden. Expensing remains unchanged, i.e. allocated to different periods throughout the year.

Otherwise the accounting principles and computation base are the same as those applied in the most recent Annual Report. Derivatives are valued at fair value in the Balance Sheet. All derivatives are classified as Level 2 according to IFRS 13. There is no set-off of financial assets and liabilities and there are no agreements that permit netting. Other financial assets and liabilities are reported at the accrued acquisition value, which in all material respects concurs with the fair value.

FORTHCOMING INFORMATION

Year-End Report 2015 February 11, 2016 Annual Report 2015 March 2016 Annual General Meeting in Stockholm 2016 March 17, 2016

The information in this Interim Report is information that Hufvudstaden AB (publ) is obliged to publish according to the Securities Market Act and/or the Financial Instruments Trading Act. The information was published on November 4, 2015.

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

Questions can be answered by Ivo Stopner, President, or Åsa Roslund, Acting CFO, telephone +46 8-762 90 00.

INCOME STATEMENTS – SUMMARY

	July	July	January	January	January
GROUP, SEK m	September, 2015	September, 2014	September, 2015	September, 2014	December, 2014
Net revenue
Property management	397.5	394.8	1,183.3	1,186.9	1,596.4
Parking operations	18.5	15.3	54.6	49.1	68.9
	416.0	410.1	1,237.9	1,236.0	1,665.3
Property management expenses
Maintenance	-7.3	-6.1	-24.0	-20.5	-31.9
Operation and administration	-58.1	-60.4	-186.1	-181.4	-248.6
Ground rents	-5.3	-4.0	-16.1	-12.2	-17.0
Property tax	-38.6	-39.2	-115.6	-115.7	-154.2
Property management expenses	-109.3	-109.7	-341.8	-329.8	-451.7
Parking operations, expenses	-12.7	-12.2	-37.2	-36.8	-49.8
Operating expenses	-122.0	-121.9	-379.0	-366.6	-501.5
Gross profit	294.0	288.2	858.9	869.4	1,163.8
- of which Property management	288.2	285.1	841.5	857.1	1,144.7
- of which Parking operations	5.8	3.1	17.4	12.3	19.1
Central administration	-9.3	-9.0	-27.7	-26.9	-36.2
Operating profit before changes in value	284.7	279.2	831.2	842.5	1,127.6
Changes in value
Properties	574.4	54.5	1,671.8	693.9	1,708.6
Interest derivatives	-4.8	-34.4	-6.6	-148.7	-185.8
Operating profit	854.3	299.3	2,496.4	1,387.7	2,650.4
Financial income/expense	-31.2	-32.9	-91.4	-97.9	-129.9
Profit before tax	823.1	266.4	2,405.0	1,289.8	2,520.5
Tax	-182.1	-59.9	-543.2	-294.1	-519.2
Profit after tax	641.0	206.5	1,861.8	995.7	2,001.3
Other comprehensive income	-	-	-	-	-
Total comprehensive income for the
period	641.0	206.5	1,861.8	995.7	2,001.3
Average number of outstanding shares
following buy-backs during the period	206,265,933	206,265,933	206,265,933	206,265,933	206,265,933
Profit for the period after tax per share
before and after dilution, SEK	3.11	1.00	9.03	4.83	9.70

BALANCE SHEETS – SUMMARY

	September 30,	September 30,	December 31,
GROUP, SEK m	2015	2014	2014
Properties	29,821.0	26,717.8	27,817.4
Other non-current assets	16.6	14.2	15.4
Total non-current assets	29,837.6	26,732.0	27,832.8
Current assets	449.9	641.5	582.5
Total assets	30,287.5	27,373.5	28,415.3
Equity	17,958.4	15,689.2	16,694.8
Non-current interest-bearing liabilities	4,650.0	4,650.0	4,650.0
Deferred tax liabilities	5,819.3	5,097.5	5,356.2
Other non-current liabilities	181.7	130.3	168.7
Pension provisions	12.3	9.1	10.6
Total non-current liabilities	10,663.3	9,886.9	10,185.5
Current interest-bearing liabilities	1,100.0	1,200.0	1,000.0
Other liabilities	565.8	597.4	535.0
Total current liabilities	1,665.8	1,797.4	1,535.0
Total equity and liabilities	30,287.5	27,373.5	28,415.3

CHANGES IN EQUITY – SUMMARY

	January-	January-	January
	September,	September,	December,
GROUP, SEK m	2015	2014	2014
Equity, opening balance	16,694.8	15,260.7	15,260.7
Total comprehensive income for the period	1,861.8	995.7	2,001.3
Dividend	-598.2	-567.2	-567.2
Equity, closing balance	17,958.4	15,689.2	16,694.8

STATEMENTS OF CASH FLOWS – SUMMARY

	January-	January-	January
GROUP, SEK m	September, 2015	September, 2014	December, 2014
Result before tax	2,405.0	1,289.8	2,520.5
Depreciation/impairments	9.0	4.9	7.2
Unrealized change in value, properties	-1,671.8	-693.9	-1,708.6
Unrealized change in value, interest derivatives	6.6	148.7	185.8
Other changes	1.6	0.3	1.8
Tax paid	-53.3	-91.7	-140.0
Cash flow from current operations
before changes in working capital	697.1	658.1	866.7
Increase/decrease in operating receivables	-28.1	-18.0	-14.9
Increase/decrease in operating liabilities	37.2	65.1	29.2
Cash flow from current operations	706.2	705.2	881.0
Investments in properties	-331.9	-154.8	-239.6
Investments in equipment	-2.2	-3.8	-4.6
Cash flow from investments	-334.1	-158.6	-244.2
Loans raised	2,000.0	1,200.0	1,600.0
Amortization of loan debt	-1,900.0	-1,100.0	-1,700.0
Dividend paid	-598.2	-567.2	-567.2
Cash flow from financing	-498.2	-467.2	-667.2
Cash flow for the period	-126.1	79.4	-30.4
Cash and cash equivalents at the beginning of the period	474.2	504.6	504.6
Cash and cash equivalents at the period-end	348.1	584.0	474.2
Cash flow for the period per share, SEK	-0.61	0.38	-0.15

SEGMENT REPORT – SUMMARY

	Stockholm City			Stockholm City		Gothenburg		Total
		East Business Area		West Business Area		Business Area
GROUP, SEK m	Jan-Sep 2015	Jan-Sep 2014	Jan-Sep 2015	Jan-Sep 2014	Jan-Sep 2015	Jan-Sep 2014	Jan-Sep 2015	Jan-Sep 2014
Net revenue	521.8	520.4	460.3	461.0	201.2	205.5	1,183.3	1,186.9
Property costs	-129.7	-123.1	-153.4	-146.1	-58.7	-60.6	-341.8	-329.8
Gross profit, property	392.1	397.3	306.9	314.9	142.5	144.9	841.5	857.1
management
Parking operations			17.4	12.3			17.4	12.3
Central administration							-27.7	-26.9
Changes in value
Properties							1,671.8	693.9
Interest derivatives							-6.6	-148.7
Operating profit							2,496.4	1,387.7
Financial income and
expense							-91.4	-97.9
Profit before tax							2,405.0	1,289.8

PLEDGED ASSETS AND CONTINGENT LIABILITIES

	September 30,	September 30,	December 31,
GROUP, SEK m	2015	2014	2014
Pledged assets
Mortgages	1,653.1	1,653.1	1,653.1
Endowment insurance	9.7	7.2	8.4
Total pledged assets	1,662.8	1,660.3	1,661.5
Contingent liabilities	None	None	None

KEY RATIOS

	September 30,	September 30,	Full year	Full year	Full year	Full year
GROUP	2015	2014	2014	2013	2012	2011
Property-related
Rentable floor space, 1,000 m2	388	387	387	387	367	365
Rental vacancy level, %	5.2	5.5	5.6	4.0	3.7	3.9
Floor space vacancy level, %	7.0	7.3	7.2	5.7	5.4	5.9
Fair value, SEK bn	29.8	26.7	27.8	25.9	23.1	22.3
Surplus ratio, %	69.4	70.3	69.9	70.3	70.4	67.1
Financial
Return on equity, %	11.8	7.6	12.5	12.9	14.7	12.0
Return on capital employed, %	12.0	7.8	12.2	12.8	9.3	13.1
Equity ratio, %	59.3	57.3	58.8	57.6	58.9	55.0
Interest coverage ratio, multiple	9.0	8.4	8.5	8.3	6.4	7.0
Debt/equity ratio, multiple	0.3	0.3	0.3	0.3	0.3	0.3
Net loan-to-value ratio, properties, %	18.1	19.7	18.6	20.3	18.2	18.1
Data per share
Profit/loss for the period, SEK	9.03	4.83	9.70	9.10	9.40	6.96
Equity, SEK	87.06	76.06	80.94	73.99	67.49	60.54
Properties, fair value, SEK	144.58	129.53	134.86	125.42	111.79	107.88
Net asset value, SEK	108.00	95.00	100.00	92.00	84.00	76.00
Number of outstanding shares, 1,000	206,266	206,266	206,266	206,266	206,266	206,266
Number of issued shares, 1,000	211,272	211,272	211,272	211,272	211,272	211,272

KEY RATIOS PER QUARTER

	Jul-Sep	Apr-Jun	Jan-Mar	Okt-Dec	Jul-Sep	Apr-Jun	Jan-Mar	Okt-Dec
GROUP	2015	2015	2015	2014	2014	2014	2014	2013
Net revenue, SEK m	416	409	413	429	410	412	414	439
Return on equity, %	12.0	9.3	5.8	13.5	7.6	7.5	5.0	12.9
Return on equity, adjusted, %	4.5	4.4	4.2	6.1	4.9	4.9	4.9	5.3
Equity ratio, %	59.3	58.5	56.9	58.8	57.3	57.0	56.2	57.6
Profit per share for the period, SEK	3.11	3.75	2.17	4.88	1.00	2.88	0.94	3.88
Equity per share, SEK	87.06	83.96	80.20	80.94	76.06	75.06	72.18	73.99
Net asset value per share, SEK	108.00	105.00	100.00	100.00	95.00	93.00	90.00	92.00
Cash flow per share from
current operations, SEK	1.01	1.22	1.20	0.85	1.24	0.87	1.31	0.99

PARENT COMPANY

RESULT AND POSITION

Net revenue amounted to SEK 771.0 million (770.3). The gross profit was SEK 214.3 million (423.9). The costs for property management have increased mainly as a result of higher project costs in the Femman shopping precinct in Gothenburg and higher depreciation. Net financial income and expense was SEK -91.4 million (-97.4).

Cash and cash equivalents at the period-end amounted to SEK 347.7 million (583.9). Investments in properties and equipment during the period totalled SEK 94.3 million (58.2).

MATERIAL RISKS AND UNCERTAINTY FACTORS

The Group is mainly exposed to financing, interest and credit risks. The Company has not identified any material risks and uncertainties other than those described in the 2014 Annual Report.

MATERIAL TRANSACTIONS WITH ASSOCIATED PARTIES

Apart from the dividend paid to shareholders, no material transactions with associated parties took place during the period.

ACCOUNTING PRINCIPLES

The Interim Report for the Parent Company has been prepared in accordance with Section 9 of the Annual Accounts Act, Interim Financial Statements. IFRIC 21, Levies, has been applied since January 1, 2015. The interpretation includes rules that state that government levies should be entered as a liability in total when the obligation arises, which affects the property tax for Hufvudstaden. Expensing remains unchanged, i.e. allocated to different periods throughout the year. Otherwise the accounting principles are the same as those applied in the most recent Annual Report.

INCOME STATEMENTS – SUMMARY

	July	July	January	January	January
	September,	September,	September,	September,	December,
PARENT COMPANY, SEK m	2015	2014	2015	2014	2014
Net revenue	259.5	256.0	771.0	770.3	1,031.3
Operating expenses	-162.8	-118.3	-556.7	-346.4	-500.7
Gross profit	96.7	137.7	214.3	423.9	530.6
Central administration	-9.2	-9.0	-27.7	-26.9	-36.2
Changes in value, interest derivatives	-4.8	-34.3	-6.6	-148.6	-185.8
Operating profit	82.7	94.4	180.0	248.4	308.6
Group contribution	-	-	-	-	348.8
Other financial income and expense	-31.2	-32.9	-91.4	-97.4	-129.4
Profit after financial items	51.5	61.5	88.6	151.0	528.0
Appropriations	-	-	-	-	-108.6
Profit before tax	51.5	61.5	88.6	151.0	419.4
Tax	-12.3	-15.2	-33.6	-43.3	-56.3
Profit for the period	39.2	46.3	55.0	107.7	363.1
Statement of comprehensive income, SEK m
Profit for the period	39.2	46.3	55.0	107.7	363.1
Other comprehensive income	-	-	-	-	-
Comprehensive income for the period	39.2	46.3	55.0	107.7	363.1

BALANCE SHEETS – SUMMARY

	September 30,	September 30,	December 31,
PARENT COMPANY, SEK m	2015	2014	2014
Properties	8,011.8	8,112.2	8,096.7
Other non-current assets	2,839.3	2,836.6	2,838.0
Total non-current assets	10,851.1	10,948.8	10,934.7
Current assets	707.6	826.6	949.3
Total assets	11,558.7	11,775.4	11,884.0
Restricted equity	1,978.7	1,978.7	1,978.7
Non-restricted equity	1,480.3	1,768.1	2,023.5
Total equity	3,459.0	3,746.8	4,002.2
Untaxed reserves	823.3	714.6	823.2
Appropriations	895.3	898.9	892.8
Non-current liabilities	4,823.8	4,779.9	4,818.2
Current liabilities	1,557.3	1,635.2	1,347.6
Total liabilities	8,099.7	8,028.6	7,881.8
Total equity and liabilities	11,558.7	11,775.4	11,884.0

Stockholm, November 4, 2015

Ivo Stopner President

This Interim Report has not been the subject of examination by the Company's auditors.

DEFINITIONS AND GLOSSARY

Annual rent. Gross rent at the period-end, including supplements, calculated on an annual basis. Vacant premises are reported at the market rent.

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

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.

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

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

Fair value. The estimated market value of the properties.

Floor space vacancy level. Vacant floor space in square metres in relation to the total lettable floor space.

Interest coverage ratio. Profit after financial items, excluding unrealized changes in value plus interest expense in relation to interest expense.

Investments. Expenses related to value-enhancing improvements that entail future financial benefits are capitalized. Rebuilding costs of an ongoing maintenance nature are charged to profit.

Fair value, properties. The amount at which the properties could be transferred on condition that the transaction takes place between parties that are independent of each other and which have an interest in the transaction being completed. In accounting terms, this is known as fair value.

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

Net liabilities. Interest-bearing liabilities, including the decided dividend less current investments and cash and bank holdings.

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

Profit per share. Profit for the period after tax in relation to the average number of outstanding shares during the period.

Property tax supplement. Property tax payments received from tenants.

Rental losses. Loss of revenue as a result of unlet space.

Rental vacancy level. Vacant floor space at an estimated market rent in relation to the total annual rent.

Return on capital employed. Profit before tax plus interest expense in relation to the average capital employed. In the interim accounts, the return has been recalculated on a fullyear basis without account being taken of seasonal variations that normally arise in operations and with the exception of changes in value.

Return on equity. Profit after tax in relation to average equity. In the interim accounts, the return has been recalculated on a full-year basis without account being taken of seasonal variations that normally arise in operations and with the exception of changes in value.

Return on equity, adjusted. Profit after tax, excluding changes in value, in relation to average equity. In the interim accounts, the return has been recalculated on a full-year basis without taking account of seasonal variations that normally arise in operations.

Surplus ratio. Gross profit in relation to net revenue.

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

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.

2015 is a major anniversary year for Hufvudstaden. On September 20 it will be 100 years since the Company was founded. Hufvudstaden rapidly became one of the leading property companies in Sweden and today it is one of the strongest property industry brands in the country. The brand is well known and represents high quality, good service and long-term thinking in the management and development of its own commercial properties in prime business locations in Stockholm and Gothenburg.

Vision

Hufvudstaden shall 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 shall offer successful companies high-quality office and retailing premises in attractive marketplaces.

Financial objectives

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

Hufvudstaden 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 personnel 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 continuously to improving their business potential and competitiveness.

Quality. Quality and environmental systems will ensure the highest possible level of quality in all the Company's products and services.

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

Business development. Active business development will create added value in the property holdings.

Registered office: Stockholm