Castellum — Annual Report 2009

Jan 20, 2010

Year-end Report 2009

Year-end Report 2009

Castellum is one of the major listed real estate companies in Sweden. The fair value of the real estate portfolio amounts to approx. SEK 29 billion, and comprises commercial properties.

The real estate portfolio is owned and managed by six completely owned subsidiaries with strong local roots in five growth regions: Greater Gothenburg (incl. Borås, Halmstad and Alingsås), the Öresund Region (Malmö, Lund and Helsingborg), Greater Stockholm, Mälardalen (Örebro, Västerås and Uppsala) and Eastern Götaland (Jönköping, Linköping, Värnamo and Växjö).

Castellum is listed on NASDAQ OMX Stockholm AB Large Cap.

• Rental income for 2009 amounted to SEKm 2,694 (SEKm 2,501 previous year).
• Income from property management improved by 16% to SEKm 1,130 (973), equivalent to SEK 6.89 (5.93) per share.
• Changes in value on properties amounted to SEKm –1,027 (–1,262) and on interest rate derivatives to SEKm 102 (– 1,010).
• Net income after tax amounted to SEKm 160 (–663), equivalent to SEK 0.98 (– 4.04) per share.
• The Board proposes a dividend of SEK 3.50 (3.15) per share, corresponding to an increase of 11%.

	2009	2008	2007	2006	2005	2004	2003	2002	2001	2000
Income from property management, SEK/share	6.89	5.93	5.63	5.38	5.00	4.52	4.07	3.77	3.30	2.65
Change previous year	+16%	+5%	+5%	+8%	+11%	+11%	+8%	+14%	+24%	+23%
Net income after tax, SEK/share	0.98	– 4.04	9.07	10.21	7.89	5.59	2.68	4.00	5.68	4.07
Change previous year	pos.	neg.	–11%	+29%		+41% +108%	–33%	–30%	+39%	+57%
Dividend, SEK/share (for 2009 proposed)	3.50	3.15	3.00	2.85	2.62	2.38	2.13	1.88	1.63	1.38
Change previous year	+ 11%	+5%	+5%	+9%	+11%	+12%	+13%	+15%	+18%	+22%
Properties fair value, SEKm					29,267 29,165 27,717 24,238 21,270 19,449 18,015 17,348 16,551 14,759
Investments, SEKm	1,165	2,738	2,598	2,283	1,357	1,268	1,108	1,050	1,741	1,352
Loan to value	52%	50%	45%	45%	45%	45%	48%	48%	50%	49%

CEO's Comments

The fi rst part of 2009 was unique; the global fi nance crisis had just burst with a non-functioning credit market as a result. Central banks around the world, reduced their key interest rates to levels not seen before, in order to prevent a fi nancial meltdown and to stop the dramatic recession. Sweden with its high export dependency, more or less came to a halt, order intakes were at a low and notices of redundancy at a high, with a decline in the GNP as a consequence. Worst affected was the manufacturing industry, while the infl uence on the service sector was more limited. Towards late spring and above all the summer, the fi rst signs of a change were seen, signs which became more evident during the last part of 2009.

Paradoxically, cash fl ow in the real estate business has been strong, mainly thanks to interest rate reductions and index adjustments for 2008 year's infl ation. Notices of redundancy and bankruptcies have been less than feared, keeping rental levels stable. The problem for the business has rather been capital structure and fi nancing.

For Castellum, from an income from property management and a cash fl ow point of view, 2009 turned out to be a fantastic year. The targeted 10% growth was reached with abundance – SEKm 1,130 in income from property management and 16% growth. Net operating income, i.e. rental income minus property costs increased by SEKm 80 and interest costs decreased by the same amount. 2009 was also the year when Castellum's income from property management for the fi rst time passed the SEKm 1,000 mark and the company could release its 50th consecutive report (interim reports included) with uninterrupted growth in income from property management since it was listed on the stock exchange,.

The growth has also made possible a proposed dividend of SEK 3.50 per share, an increase by 11% .

The evident lack of capital and fear for risk during above all the fi rst six months led to low liquidity on the real estate market with decreasing property prices as a result. Even though liquidity increased during the latter part of the year, with a stabilization of price levels, the depreciation in value of Castellum's real estate portfolio amounted to SEKm 1,000, or -3%. Result after changes in value and tax totalled SEKm 160.

In spite of a turbulent environment and decreasing real estate values, Castellum's position is very strong. We maintain our good relations with our fi nanciers and have not experienced any diffi culties to obtain new credits. Despite the last years' extensive investments, depreciations and dividends, the loan to value ratio is 52%, a low value.

The total share yield reached 25% in the year, an excellent result, but still only half of the total yield at the Stockholm stock exchange. One could notice that Castellum's total yield for 2008 was -5%, compared to -39% for the Stockholm stock exchange. An interesting comparison is the total share yield over 10 years; this shows an annual average of 16% for Castellum as opposed to 2% for the Stockholm stock exchange.

So, what to expect of 2010?

Even if a rebound cannot be ruled out, the most plausible scenario seems to be a slow recovery of the Swedish economy. In an international perspective Sweden has strong Government fi nances, high private consumption and an effective and fl exible industry and commerce.

In this scenario the rental income will decrease marginally. Based on the year's net lease, we can already now see that the vacancies will increase slightly, mainly towards the end of the year. Limited new construction and relatively low vacancy rates make me conclude that I don't foresee a signifi cant pressure on rental levels in Castellums submarkets.

In contrast to the real estate costs, which I believe will only vary marginally, interest costs will increase considerably. Short fi xed interests are at the moment at "crisis level" and will with high probability be raised to "recession level". The big question is when and by how much. Over time I am not afraid of higher nominal interest rates, such interest rates are rather a sign of infl ation and economic growth in the industry, which in no way is negative for a real estate company.

Regarding real estate values of commercial properties, I believe that most of the value depreciations already lie behind us. A slight improvement of the credit market, in combination with a good return on an infl ation proof asset at a price below new construction cost, should improve the asset, properties.

The risk involved in dealing with properties, that is, not being able to meet the customer's expectations and to attract new customers. With fantastic employees, knowledgeable and dedicated, that risk in Castellum is limited. To all our staff I would like to express my gratitude for a very good work during the past year.

Håkan Hellström CEO

Business Concept

Castellum's business concept is to develop and add value to its real estate portfolio, focusing on the best possible earnings and asset growth, by offering customised commercial properties, through a strong and clear presence in fi ve Swedish growth regions.

Objective

Castellum's operations are focused on cash fl ow growth, which along with a stable capital structure provide the preconditions for good growth in the company, while at the same time offering shareholders a competitive dividend.

The objective is an annual growth in cash fl ow, i.e. income from property management per share, of at least 10%. In order to achieve this objective, investments of at least SEKm 1,000 per year will be made. All investments will contribute to the objective of growth in income from property management within 1-2 years and have a potential asset growth of at least 10%. Sales of properties will take place when justifi ed from a business standpoint and when an alternative investment with a higher return can be found.

Strategy for Funding

Capital structure

Castellum will have a stable capital structure, meaning a loan to value ratio not permanently exceeding 55% and an interest coverage ratio of at least 200%.

Purchase or transfer of own shares shall be available as a method to use for adjusting the company's capital structure to the company's capital needs. Own shares may not be traded for the sole purpose of capital gain.

Dividend

At least 60% of income from property management after full tax deduction will be distributed, however investment plans, consolidation needs, liquidity and fi nancial position in general will be taken into account.

The stock and credit markets

Castellum will work for a competitive total return in the company's share in relation to the risk and for a high liquidity.

However, all actions will be made from a long term perspective and the company will have a frequent, open and fair reporting to shareholders, the capital and credit markets as well as media, yet without disclosing any individual business relation.

In the long term Castellum will be one of the largest listed real estate companies in Sweden.

Customers

Being close to the customers

Castellum's organization with local subsidiaries provides a close relation to the customer and short decision making process. The employees of Castellum are working near the market which gives a natural possibility to receive information about the customers' current and future operations. Thereby the customers can be offered premises suited to their needs, good personal service and quick answers.

As one of the largest real estate owners on each of the local markets Castellum co-operate with municipalities and are active in local networks, such as company associations.

The customers - a reflection of Swedish domestic economy

Castellum has approx. 4,400 commercial contracts, with good risk exposure regarding both geography, type of premises, length of contracts and fields of industry of the customer. The single largest contract corresponds to approx. 1% of Castellum's total rental income.

Commercial leases

Commercial leases are signed for a certain period of time, generally 3-5 years, where the period of notice is 9 months. The leases normally include a base-rent and an index clause, which provides for an adjustment of the rent corresponding to a certain percentage or connected to the infl ation, and also additions for the tenant's share of the property's total costs for heating, cooling and property tax.

Satisfied customers

It is important that Castellum meets the customers' expectations. To follow up and evaluate efforts made, an external customer survey is carried out annually, Satisfi ed Customer Index. The survey shows both the customers' general opinion about Castellum and how Castellum performs in the areas service, business relation, premises, the property, environment and information.

The survey which was carried out 2009 and included warehouses, industry- and retail properties, continues to show consistently high marks for Castellum, with a weighted index of 75. A large portion of the surveyed customers replies willing to lease from Castellum again and gladly recommends Castellum as a landlord to others.

Leasing activity

Castellum has a high lease activity. During 2009 the organization signed 640 new contracts with a total annual value of SEKm 251. The leasing activity shows the importance of taking care of the customers and the networks. Of the new signed contracts 85% came from own networks, recommendations or existing customer expansions, while 9% came from web pages, and the remainder came through agents.

Distribution of leases by industry

Lease maturity structure

Lease size structure

Leasing activity

Organization

Decentralized and small-scale organization

Castellum's operations are run in a small-scale organization consisting of six subsidiaries which own and manage the properties under their own brands. By having local roots the subsidiaries make close relations with the customers, and good knowledge of the market situation and rental development within each market area. Property management is mainly carried out by own personnel.

Subsidiaries with strong brands

Castellum has six wholly owned subsidiaries which each have about 35 employees. The subsidiaries organizations are not identical but are in principal made up of a Managing Director, 3-5 market areas, business developers and 3-5 employees within fi nance and administration. Each market area employs one property manager with one assistant, one person working with leasing and 2-4 facility managers, where everyone has customer contact. The fl at organization gives a short decision making process and creates a customer oriented and active organization. Castellum's subsidiaries operate under their own names which are strong brands on each local market.

Measuring, comparing and controlling

Castellum measures and compares the subsidiaries' management effi ciency and asset value growth in the real estate portfolio. Within the group experiences are shared between the companies and specialist expertise can therefore be made available to the whole organization.

Castellum's operations are controlled by rules for decision making and work allocation, policies and instructions. Policies are in place for among others fi nance and fi nancial work, information, information safety, environment, insurance, electricity and personnel.

Parent company

The parent company Castellum AB is responsible for matters concerning the stock market (such as consolidated reports and stock market information) and the credit market (such as funding and fi nancial risk management) as well as overall IT/IS strategies and personnel matters. Castellum AB has 14 employees.

The parent company takes part in operations by involvement in the Board of the subsidiaries.

Employees

Castellum is working actively in order to hire and keeping good employees by offering a stimulating work environment, competence development and sharing of experiences both internally and externally

The employees' view on Castellum is regularly measured and the survey shows that the employees are pleased and have a great faith in the company and its management.

The group had 227 employees (226) at the year end.

Responsible business

Since 1995 Castellum has been working with sustainable issues such as developing the properties in those cities were the subsidiaries are present, a common set of values for actions towards employees, customers and vendors as well as active work on environmental issues.

The environmental work is focused on effi cient energy consumption and improving the properties' environmental status. Two of Castellum's subsidiaries, Fastighets AB Brostaden and Harry Sjögren AB, have been assigned Green Building Corporate Partner by the EU, which can be seen as a receipt for long-term effi cient work in decreasing the energy consumption. Eklandia Fastighets AB has during 2009 received the fi rst BREEAM-certifi cate for Sweden in a new property in Gothenburg.

Jönköping, Linköping, Värnamo and Växjö

Centrala, Northern and Eastern Greater Gothenburg

Southern Greater Gothenburg, Borås, Alingsås and Halmstad

Income, Costs and Results

Comparisons, shown in brackets, are made with the corresponding amounts previous year. For definitions see Castellum's website, www.castellum.se

Income from property management during the year, i.e. net income excluding changes in value and tax, amounted to SEKm 1,130 (973), equivalent to SEK 6.89 (5.93) per share. The improvement is 16% and above all an effect of lower interest rates, but also higher rental incomes and investments made have had a positive effect.

Income from Property Management per share

During the year, changes in value on properties amounted to SEKm –1,027 (-1,262) and on interest rate derivatives to SEKm 102 (-1,010). Net income for the year was SEKm 160 (-663), equivalent to SEK 0.98 (-4.04) per share.

Rental income

Group rental income amounted to SEKm 2,694 (2,501). The improvement is chiefl y an effect of investments made but also higher rental levels.

For offi ce and retail properties, the average contracted rental level, including charged heating, cooling and property tax, amounted to SEK 1,210 per sq.m., whereas it for warehouse and industrial properties amounted to SEK 699 per sq.m. Rental levels, which are considered to be in line with the market, have increased by approx. 4% in comparable portfolio compared with previous year and is mainly an effect of index clause adjustments.

Rental value and occupancy rate

The average economic occupancy rate was 89.8%, which in principle is in line with previous year. The total annual rental value for vacant premises during the year amounted to approx. SEKm 323.

The gross leasing (i.e. the annual value of total leasing) during the year was SEKm 251 (305), of which SEKm 31 (48) were leasing on new construction, extensions and refurbishments. Notices of termination amounted to SEKm 288 (221), of which bankruptcies were SEKm 31 (20), hence net leasing for the year were SEKm –37 (84). The net leasing for the fourth quarter amounted to SEKm –10 (14). The time difference between reported net leasing and the effect in income thereof is estimated to between 9-18 months.

Net leasing

The fourth quarter confi rms the trends from the third quarter that the demand for premises is still on relatively good levels and both notices of termination and bankruptcies were less than expected. The customers solvency remains good.

The situation is the same also in terms of rental levels. There is no currently pressure on the rental levels in Castellums' markets at the moment due to the generally high occupancy rates together with limited production of new properties has led to that The negative inflation during the year will lead to a downward index adjustment on the rental levels with 0,5% for 2010.

Property costs

Property costs amounted to SEKm 942 (831) corresponding to SEK 300 per sq.m. (268). The increase is chiefl y an effect of a colder year compared to last year and a higher number of started maintenance measures. Energy consumption for heating during the period has been calculated to 93% (85%) of a normal year according to the degree day statistics. The rental losses, i.e. charged not paid rents with the risk of loss, amounted to SEKm 10 (12) corresponding to 0.4% of rental income.

Property costs, SEK/sq.m.

	Offi ce/	Warehouse/
	Retail	Industrial	Total
Operating expenses	204	117	163
Maintenance	52	27	40
Ground rent	8	5	7
Real estate tax	61	17	40
Direct property costs	325	166	250
Leasing and property administration (indirect)	–	–	50
Total	325	166	300
Previous year	292	142	268

Central administrative expenses

Central administrative expenses were SEKm 81 (71). This includes costs for a profi t and share price related incentive plan for 10 persons in executive management of SEKm 14 (8).

Net financial items

Net fi nancial items were SEKm –541 (–626). The net fi nancial items have been affected positively with SEKm 140 due to that the average interest rate level has decreased 1.0% units to 3.7% (4.7%).

Changes in value

As a result of the turbulence in the international credit market, the transaction volume with reference to larger sales decreased, from SEKm 133,000 previous year to SEKm 30,000 in 2009. Signifi cant for the market during the year was that sales of rental housing and smaller transactions increased and that there mainly were national buyers.

Half of the year's transactions volyme were carried out during the last three months, indicating a gradually normalized market, with a stabilization of the required yield as a consequence.

The total change in value of Castellum's portfolio during the year amounted to SEKm –1,027 (–1,262) corresponding to 3% of the property value. The change in value consists of SEKm approx. –600 referring to an generally increased estimated market yield during the fi rst six months, approx. SEKm –500 referring to changed future cashfl ow, just over SEKm 100 referring to profi ts in projects. The change in value has been affected of SEKm 2 due to a result of properties sold.

Castellum uses interest rate derivatives in order to achieve the desired interest rate maturity structure. If the agreed interest rate deviates from the market interest rate there is a theoretical surplus or sub value in the interest rate derivatives, where the non cash fl ow effecting changes in value are reported in the income statement. The value has changed, due to changes in long term market interest rates and the time factor, with SEKm 102 (–1 010) and the value was SEKm –865 (–966) at the end of the year.

Tax

The nominal corporate tax rate in Sweden is 26.3%. Due to the possibility to make depreciations for tax purposes, reconstructions deductible for tax purposes, and to use tax loss carry forwards there are in principle no paid tax costs. Paid tax occur because a few subsidiaries are not allowed to make fi scal group contributions.

Remaining tax loss carry forwards can be calculated to SEKm 1,885 (1,830), while the properties' fair value exceed their fi scal value by SEKm 12,624 (12,419). As deferred tax liability a full nominal 26.3% tax of the net difference is reported, SEKm 2,824 (2,785).

During the year there have been both new legislation and legal practice which inter alia affects the real estate business. However, these changes have no signifi cant impact on Castellum.

During the year, The National Tax Board authorities have carried out a tax audit in Castellum, which has been completed without comments.

Tax Calculation 2009-12-31	Basis	Basis
	current tax	deferred
SEKm		tax
Income from property management	1,130
Deductions for tax purposes
depreciations	– 628	628
reconstructions	– 338	338
reconstructions, adjustement previous years	– 189	189
Other tax allowances	– 2	58
Taxable income from property management	– 27	1,213
Properties sold	0	3
Changes in value on properties	–	– 1,029
Changes in value on interest rate derivatives	102	–
Write downs on shares in subsidiaries	– 91	–
Taxable income before tax loss carry forwards	– 16	187
Tax loss carry forwards, opening balance	–1,830	1,830
Tax loss carry forwards, closing balance	1,885	– 1,885
Taxable income	39	132
Of which 26.3% current/deferred tax	– 10	– 35

Real Estate Portfolio

The real estate portfolio, which consists entirely of Swedish properties, is found in Greater Gothenburg, the Öresund Region, Greater Stockholm, Mälardalen and Eastern Götaland. The main focus with approx. 75% of the portfolio is in the three major urban regions.

The commercial portfolio consists of 65% offi ce and retail properties as well as 31% warehouse and industrial properties. The properties are located from inner city sites (except in Greater Stockholm from inner suburbs) to wellsituated working-areas with good means of communication and services.

Castellum owns 838,000 sq.m. unutilized building rights.

Investments

During the year the real estate portfolio has changed according to the table below.

Changes in the real estate portfolio Value, SEKm		Number
Real estate portfolio on 1 January, 2009	29,165	587
+ Acquisitions	126	6
+ New constructions, extensions and refurbishments	1,039	–
– Sales	– 34	– 3
+/– Unrealized changes in value	– 1,029	–
Real estate portfolio on 31 December, 2009	29,267	590

During the year investments totalling SEKm 1,165 (2,738) were made, of which SEKm 126 (1,212) were acquisitions and SEKm 1,039 (1,526) new construction, extensions and refurbishment. Of the total investments SEKm 308 related to Greater Gothenburg, SEKm 278 to Greater Stockholm, SEKm 259 to Mälardalen, SEKm 219 to Eastern Götaland and SEKm 101 to the Öresund Region.

Acquisitions during 2009 consisted of the properties Olskroken 35:7, 35:9 and 35:14 in Gothenburg for SEKm 96 and 3 properties consisting of undeveloped land for a total of SEKm 30.

Larger completed projects	Area, thous sq.m.	Total inv., SEKm	of which 2009 SEKm
Varpen 8, Huddinge	5,300	119	89
Visiret 2, Huddinge	4,800	89	32
Dragarbrunn 20:2, Uppsala	3,300	66	48
Ekenäs 1, Stockholm	8,300	40	18
Inköparen 1, Örebro	3,600	34	1
Verkstaden 13, Västerås	2,000	32	19

Larger ongoing development projects	Area thous sq.m.	Total inv. SEKm	Remain to inv. SEKm	Completed
Visionen 3, Jönköping	7,700	115	18	Q 2/10
Betongblandaren 10, Stockholm 14,900		115	45	Q 3/10
Varuhuset 1, Jönköping	11,000	105	79	Q 4/10
Boländerna 28:3, 30:2, Uppsala	11,900	96	57	Q 2/10
Vägmästaren 4, Kungsbacka	3,000	49	35	Q 4/10

Castellum has ongoing projects with remaining investments of approx. SEKm 550.

Property value

Internal valuations

Castellum assesses the value of the properties through internal valuations. These are based on a 10-year cash fl ow-based model with an individual valuation for each property of both its future earnings capacity and the required market yield. In the valuation a property's future earnings capacity has, besides an assumed level of infl ation of 1.5%, consideration been taken to potential changes in rental levels.

Projects in progress have been valued using the same principle, but with deductions for remaining investments. Sites with building rights have been valued on the basis of an estimated market value per square metre, on average approx. SEK 1,000 per sq.m. (950).

The required market yield can be calculated according to the following.

Required yield	Offi ce/ Retail	Warehouse/ Industrial
Real interest rate	3.0%	3.0%
Infl ation	1.5%	1.5%
Risk	6.0% - 13.2%	8.0% - 14.5%
Return on equity	10.5% - 17.7%	12.5% - 19.0%
Interest rate	5.5%	5.5%
Loan to value ratio	65%	55%
Return on total capital	7.2% - 9.8%	8.6% - 11.6%
Required yield minus growth equal to infl ation	5.7% - 8.3%	7.1% - 10.1%

Based on these internal valuations the value of the properties at the year-end were assessed to SEKm 29,267 (29,165), corresponding to over SEK 9,000 per sq.m.

Normalized yield

The normalized yield for Castellum's real estate portfolio, excluding development projects and undeveloped land, can be calculated to 7.3% (7.4%).

Normalized yield SEKm	2009	2008
Net operating income properties	1,935	1,870
Adjusted for:
Index adjustment following year	– 15	82
Real occupancy rate, 94% at the lowest	197	190
Property costs to a normal year	–	– 21
Property administration, 30 SEK/sq.m.	– 94	– 92
Normalized net operating income	2,023	2,029
Valuation excl. building rights of SEKm 436	27,742	27,343
Normalized yield	7.3%	7.4%

Normalized yield over time

External valuation

In order to provide further assurance and validation of the valuation, 129 properties representing 51% of the value of the portfolio has been valued externally by NAI Svefa. The properties were selected on the basis of the largest properties in terms of value, but also in order to refl ect the composition of the portfolio as a whole in terms of category and geographical location of the properties. NAI Svefa's valuation of the selected properties amounted to SEKm 14,981, within an uncertainty range of +/- 5-10% on property level, depending on each property's category and location. Castellum's valuation of the same properties amounted to SEKm 14,990 i. e. a net change of SEKm 9 corresponding to 0.1%. Gross deviation was SEKm +495 respectively SEKm –504 with an average deviation of 7%.

Uncertainty range

A property's market value can only be confi rmed when it is sold. The value range of +/– 5-10% often used in property valuations in a normal market should be seen as an indication of the uncertainty that exists in assumptions and calculations. In a market with lower liquidity the range may be wider. For Castellum, an uncertainty range of +/– 5%, means a range in value of +/– SEKm 1,463 corresponding to SEKm 27,804 - 30,730.

Castellum's real estate portfolio 31-12-2009

			31-12-2009		January-December 2009
							Economic				Net opera
		Area	Property	Property	Rental	Rental	oc	Rental	Property	Property	ting
	No. of	thous.	value	value	value	value	cupancy	income	costs	costs	income
	properties	sq.m.	SEKm	SEK/sq.m.	SEKm	SEK/sq.m.	rate	SEKm	SEKm	SEK/sq.m.	SEKm
Offi ce/retail
Greater Gothenburg	78	400	5,186	12,965	498	1,245	94.6%	471	122	305	349
Öresund Region	52	324	4,696	14,491	457	1,412	86.6%	396	114	353	282
Greater Stockholm	47	313	3,800	12,131	421	1,345	83.4%	351	103	328	248
Mälardalen	70	325	3,168	9,746	341	1,048	93.0%	317	104	320	213
Eastern Götaland	48	283	2,331	8,223	275	969	91.3%	251	92	323	159
Total offi ce/retail	295	1,645	19,181	11,654	1,992	1,210	89.6%	1,786	535	325	1,251
Warehouse/industrial
Greater Gothenburg	99	628	4,305	6,856	446	711	93.3%	417	101	161	316
Öresund Region	42	296	1,593	5,391	201	681	86.4%	174	47	158	127
Greater Stockholm	36	193	1,455	7,531	174	899	88.3%	153	42	221	111
Mälardalen	40	170	929	5,475	119	699	90.5%	107	30	181	77
Eastern Götaland	35	186	715	3,840	89	480	86.0%	77	24	126	53
Total warehouse/industrial	252	1,473	8,997	6,110	1,029	699	90.2%	928	244	166	684
Total	547	3,118	28,178	9,036	3,021	969	89.8%	2,714	779	250	1,935
Leasing and property administration									155	50	– 155
Total after leasing and property administration									934	300	1,780
Development projects	11	81	700	–	33	–	–	17	13	–	4
Undeveloped land	32	–	389	–	–	–	–	–	–	–	–
Total	590	3,199	29,267	–	3,054	–	–	2,731	947	–	1,784

The table above relates to the properties owned by Castellum at the end of the year and refl ects the income and costs of the properties as if they had been owned during the whole year. The discrepancy between the net operating income of SEKm 1,784 accounted for above and the net operating income of SEKm 1,752 in the income statement is explained by the deduction of the net operating income of SEKm 1 on properties sold during the year, as well as the adjustment of the net operating income of SEKm 33 on properties acquired/completed during the year, which are recalculated as if they had been owned or completed during the whole year.

Property value by property type Property value by region

Office/retail 65%	Warehouse/industrial 31%
	Projects and
	undeveloped land 4%

Property related key ratios Segment information

	2009 Jan-Dec	2008 Jan-Dec
Rental value, SEK/sq.m.	969	921
Economic occupancy rate	89.8%	89.7%
Property costs, SEK/sq.m.	300	268
Net operating income, SEK/sq.m.	571	559
Property value, SEK/sq.m.	9,036	8,984
Number of properties	590	587
Lettable area, thousand sq.m.	3,199	3,172

	Rental income		Income from property management
	2009	2008	2009	2008
SEKm	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec
Greater Gothenburg	876	806	421	358
Öresund Region	570	539	255	227
Greater Stockholm	488	478	210	184
Mälardalen	428	367	153	126
Eastern Götaland	332	311	127	111
Total	2,694	2,501	1,166	1,006

The discrepancy between the income from property management of SEKm 1,166 (1,006) accounted for and the groups accounted income before tax of SEKm 205 (–1,299) above consists of unallocated income from property management of SEKm –36 (–33), changes in property value of SEKm –1,027 (–1,262) and changes in values of interest rate derivatives of SEKm 102 (–1,010).

Financing

Shareholders' equity and net asset value

Shareholders' equity was SEKm 9,692 (10,049).

The net asset value, using an estimated discounted real deferred tax liability of 5%, can be calculated as follows.

Net asset value
		SEKm SEK/share
Equity according to the balance sheet	9,692	59
Reversed
Interest rate derivatives acc to balance sheet	865	6
Deferred tax acc to balance sheet 26,3%	2,824	17
Long term net asset value (EPRA NAV*)	13,381	82
Deduction
Interest rate derivatives as above	– 865	– 6
Estimated real liability, deferred tax 5%	– 537	– 3
Net asset value (EPRA NNNAV*)	11,979	73
Uncertainty range valutation of properties
+/– 5% after tax	+/– 1,390	+/– 8

*EPRA, European Pubilc Real Estate Association, is an association for listed real estate owners and invstors in Europe, which among other things, sets standards for financial reporting. A part of that is key ratios EPRA EPS (Earnings Per Share), EPRA NAV (Net Asset Value) and EPRA NNNAV (Triple Net Asset Value).

Interest-bearing liabilities

The beginning of the year was characterized by turbulence on the credit market followed by scarceness of capital and ascending margins. After the summer stabilization has occurred both regarding access to credits and lower margins.

Castellum's prospect to obtain long term credits is continuously good and has not really been infl uenced by the situation on the credit market.

Loan maturity structure

During the year Castellum has signed new agreements of SEK 1.3 billion. As of 31 December, 2009 Castellum had long term binding credit agreements totalling SEKm 16,262 (15,800), long term bonds totalling SEKm 500 (650), short term binding credit agreements totalling SEKm 1,220 (770). After deduction of liquid assets of SEKm 8 (9), net interest bearing liabilities were SEKm 15,286 (14,598). Loans in banks are secured by pledged mortgages and/ or fi nancial covenants. Bonds and in cases when there are outstanding commercial papers theese are unsecured. The fi nancial covenants state a loan to value ratio not exceeding 65% and an interest coverage ratio of at least 150% which Castellum fulfi l with good margin, 52% respectively 309%.

The average duration of Castellum's long term credit agreements was 5.5 years (5.5). Margins and fees on long term credit agreements had an average duration on 3.2 years (3.2).

Loan maturity structure 31-12-2009

Long term, SEKm	Credit agreements	Utilized
1 - 2 years	400	200
2 - 3 years	500	–
3 - 4 years	5,000	4,990
4 - 5 years	–	–
> 5 years	10,562	8,862
Total long term credit agreements	16,462	14,052
Total short term credit agreements (0-1 year)	1,520	1,234
Total credit agreements	17,982	15,286
Unutilized credit in long term credit agreements		1,176

Interest rate maturity structure

The average effective interest rate as of 31 December, 2009 was 3.8% (4.8%). The market interest rate for an equal portfolio, regarding both current market rate and credit margin, can be assessed to 3.1%. The average fi xed interest term on the same date was 2.8 years (2.9).

In order to secure a stable and low net cash fl ow of interest income/costs over time, Castellum has chosen a relatively long fi xed interest term. Castellum has also chosen to work with interest rate derivatives, which is a cost effective and fl exible way of extending loans with short term interest rates to achieve the desired fi xed interest term.

Interest rate maturity structure 31-12-2009
SEKm	Amount, SEKm	Average interest rate
0 - 1 year	6,236	2.4%
1 - 2 years	600	4.3%
2 - 3 years	600	4.6%
3 - 4 years	3,550	4.7%
4 - 5 years	1,000	4.7%
5 - 10 years	3,300	4.8%
Total	15,286	3.8%

Interest rate derivatives

According to the accounting standard IAS 39 interest rate derivatives are subject to market valuation, which means that there is a theoretical surplus / sub value if the stipulated interest rate varies from the current market rate, where the change in value, for Castellum, should be accounted for in the income statement.

As of 31 December, 2009, the market value of the interest rate derivative portfolio amounted to SEKm –865 (–966).

Consolidated Income Statement
	2009	2008	2009	2008
SEKm	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Rental income	672	652	2,694	2,501
Operating expenses	– 142	– 125	– 512	– 455
Maintenance	– 48	– 23	– 127	– 96
Ground rent	– 5	– 6	– 21	– 21
Real estate tax	– 32	– 25	– 127	– 115
Leasing and property administration	– 34	– 44	– 155	– 144
Net operating income	411	429	1,752	1,670
Central administrative expenses	– 22	– 19	– 81	– 71
Net fi nancial items	– 141	– 176	– 541	– 626
Income from property management	248	234	1,130	973
Changes in value
Properties	– 74	– 471	– 1,027	– 1,262
Interest rate derivatives	0	– 815	102	– 1,010
Income before tax	174	– 1,052	205	– 1,299
Current tax	– 1	– 3	– 10	– 14
Deferred tax	– 30	564	– 35	650
Net income for the period/year	143	– 491	160	– 663

Since there are no minority interests the entire net income is attributable to the shareholders of the parent company.

Data per Share
	2009 Oct-Dec	2008 Oct-Dec	2009 Jan-Dec	2008 Jan-Dec
Average number of shares, thousand	164,000	164,000	164,000	164,000
Income from property management, SEK	1.51	1.43	6.89	5.93
Income from property management after tax (EPRA EPS), SEK	1.77	1.57	6.93	5.85
Earnings after tax, SEK	0.87	– 2.99	0.98	– 4.04
Outstanding number of shares, thousand	164,000	164,000	164,000	164,000
Property value of properties, SEK	178	178	178	178
Long term net asset value (EPRA NAV), SEK	82	84	82	84
Net asset value (EPRA NNNAV), SEK	73	75	73	75
Shareholders' equity, SEK	59	61	59	61

Since there is no potential common stock (e.g. convertibles), there is no effect of dilution.

Financial Key Ratios
	2009	2008	2009	2008
	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Net operating income margin	61%	66%	65%	67%
Interest coverage ratio	276%	233%	309%	255%
Return on equity	6.0%	– 18.6%	1.6%	– 6.1%
Return on net asset value	5.7%	– 29.6%	1.6%	– 8.3%
Return on total capital	4.3%	– 0.8%	2.1%	1.2%
Investments, SEKm	316	517	1,165	2,738
Loan to value ratio	52%	50%	52%	50%

Consolidated Balance Sheet

SEKm	31 Dec 2009	31 Dec 2008
Assets
Investment properties	29,267	29,165
Other fi xed assets	13	15
Current receivables	188	215
Cash and bank	8	9
Total assets	29,476	29,404
Shareholders' equity and liabilities
Shareholders' equity	9,692	10,049
Deferred tax liability	2,824	2,785
Interest rate derivatives	865	966
Long term interest-bearing liabilities	15,294	14,607
Non interest-bearing liabilities	801	997
Total shareholders' equity and liabilities	29,476	29,404
Pledged assets (property mortgages)	18,281	14,839
Contingent liabilities	–	–

Changes in Equity

	Number of outstanding shares,			Retained
SEKm	thousand	Share capital	Reserves	earnings	Total equity
Shareholders' equity 31-12-2007	164,000	86	20	10,098	11,204
Dividend, March 2008	–	–	–	– 492	– 492
Net income January-December 2008	–	–	–	– 663	– 663
Shareholders' equity 31-12-2008	164,000	86	20	9,943	10,049
Dividend, March 2009	–	–	–	– 517	– 517
Net income January-December 2009	–	–	–	160	160
Shareholders' equity 31-12-2009	164,000	86	20	9,586	9,692

Cash Flow Statement

SEKm	Jan-Dec 2009	Jan-Dec 2008
Net operating income	1,752	1,670
Central administrative expenses	– 81	– 71
Reversed depreciations	7	6
Net fi nancial items paid	– 611	– 499
Tax paid	– 10	– 26
Cash fl ow from operating activities before change in working capital	1,057	1,080
Change in current receivables	62	– 108
Change in current liabilities	– 129	106
Cash fl ow from operating activities	990	1,078
Investments in new construction, refurbishments and extensions	– 1,039	– 1,526
Property acquisitions	– 118	– 1,096
Change in liabilities at acquisitions of property	3	– 7
Property sales	36	25
Change in receivables at sales of property	– 35	3
Other net investments	– 8	– 8
Cash fl ow from investment activities	– 1,161	– 2,609
Change in long term liabilities	687	2,025
Dividend paid	– 517	– 492
Cash fl ow from investment activities	170	1,533
Cash fl ow for the year	– 1	2
Cash and bank, opening balance	9	7
Cash and bank closing balance	8	9

Multi year Summary
	2009	2008	2007	2006	2005	2004	2003	2002	2001	2000
Income Statement, SEKm
Rental income	2,694	2,501	2,259	2,014	1,907	1,856	1,758	1,684	1,571	1,435
Property costs	– 942	–831	–771	–700	–637	–628	–595	–560	–549	–518
Net operating income	1,752	1,670	1,488	1,314	1,270	1,228	1,163	1,124	1,022	917
Central administrative expenses	– 81	– 71	–69	–67	–68	–69	–67	–63	–67	–62
Net fi nancial items	– 541	–626	–495	–364	–382	–418	–428	–442	–414	–360
Income from property management	1,130	973	924	883	820	741	668	619	541	495
Changes in value, properties	– 1,027	–1,262	920	1,145	932	660	–43	251	686	668
Changes in value, interest rate derivatives	102	–1,010	99	178	–40	–146	–13	–168	42	–114
Items affecting comparability	–	–	–	–	–	–	–	–	–	–12
Current tax	– 10	–14	– 22	–10	–1	–5	–1	–2	–	–1
Deferred tax	– 35	650	– 434	–522	–417	–334	–171	–44	–338	–276
Net income for the year	160	–663	1,487	1,674	1,294	916	440	656	931	760
Balance Sheet, SEKm
Investment properties	29,267	29,165	27,717	24,238	21,270	19,449	18,015	17,348	16,551	14,759
Other fi xed assets	201	230	123	200	103	94	167	172	394	118
Interest rate derivatives	–	–	44	–	–	–	–	–	–	–
Cash and bank	8	9	7	8	5	7	33	20	20	11
Total assets	29,476	29,404	27,891	24,446	21,378	19,550	18,215	17,540	16,965	14,888
Shareholders' equity	9,692	10,049	11,204	10,184	8,940	8,035	7,467	7,334	6,946	6,240
Deferred tax liability	2,824	2,785	3,322	2,723	2,126	1,659	1,294	1,124	1,081	743
Interest rate derivatives	865	966	–	55	233	391	245	232	64	106
Interest-bearing liabilities	15,294	14,607	12,582	10,837	9,396	8,834	8,598	8,264	8,254	7,245
Non-interest-bearing liabilities	801	997	783	647	683	631	611	586	620	554
Total shareholders' equity and liabilities	29,476	29,404	27,891	24,446	21,378	19,550	18,215	17,540	16,965	14,888

Data per share (since there are no potential common stock, there is no effect of dilution)

Average number of shares, thousand	164,000	164,000	164,000	164,000	164,000	164,000	164,000	164,000	164,000	186,512
Income from property management, SEK	6.89	5.93	5.63	5.38	5.00	4.52	4.07	3.77	3.30	2.65
Income prop mgmt after tax (EPRA EPS), SEK	6.93	5.85	5.50	5.09	4.49	4.15	3.82	3.52	3.16	2.36
Earnings after tax, SEK	0.98	–4.04	9.07	10.21	7.89	5.59	2.68	4.00	5.68	4.07
Number of outstanding shares, thousand	164,000	164,000	164,000	164,000	164,000	164,000	164,000	164,000	164,000	164,000
Fair value of properties, SEK	178	178	169	148	130	119	110	106	101	90
Long term net asset value (EPRA NAV), SEK	82	84	88	79	69	61	55	53	49	43
Net asset value (EPRA NNNAV), SEK	73	75	85	76	65	57	52	50	48	42
Shareholders' equity, SEK	59	61	68	62	55	49	46	45	42	38
Dividend, SEK (2009 proposed)	3.50	3.15	3.00	2.85	2.62	2.38	2.13	1.88	1.63	1.38
Dividend ratio	69%	74%	74%	73%	73%	73%	72%	69%	68%	72%
Financial key ratios
Net operating income margin	65%	67%	66%	65%	67%	66%	66%	67%	65%	64%
Average interest rate	3.7%	4.7%	4.2%	3.7%	4.3%	4.9%	5.4%	5.7%	5.8%	5.9%
Interest coverage ratio	309%	255%	287%	343%	315%	277%	256%	240%	231%	238%
Return on net asset value	1.6%	–8.3%	16.2%	20.7%	18.2%	14.6%	7.2%	9.0%	17.9%	12.6%
Return on total capital	2.1%	1.2%	9.1%	10.4%	10.4%	9.6%	5.9%	7.6%	10.3%	10.6%
Investments in properties, SEKm	1,165	2,738	2,598	2,283	1,357	1,268	1,108	1,050	1,741	1,352
Sales, SEKm	36	28	39	460	468	494	397	503	635	598
Equity/assets ratio	33%	34%	40%	42%	42%	41%	41%	42%	41%	42%
Loan to value ratio	52%	50%	45%	45%	45%	45%	48%	48%	50%	49%

Opportunities and Risks

Opportunities and risks in the cash flow

Increasing market interest rates is normally over time an effect of economic growth and increasing infl ation, which is thought to give higher rental income. This is in part due to that the demand for premises is thought to increase, leading to reduced vacancies and hence the potential for increasing market rents and in part due to that the index clause in the commercial contracts is compensating the increasing infl ation.

An economic boom therefore means higher interest costs but also higher rental income, while the opposite relationship is true during a recession. The change in rental income and interest costs does not take place at the exact same time, why the effect on income in the short term may occur at different points in time.

Sensitivity analysis - cash fl ow

	Effect on income, SEKm		Probable scenario
	+/- 1% (units)	Boom	Recession
Rental level	+27/–27	+	–
Vacancies	+31/–31	+	–
Property costs	–9/+9	–	0
Interest costs	–53/+10*	–	+

* with the assumption that the interest rate levels never goes below 0%

Opportunities and risks in property values

Castellum reports its properties at fair value with changes in value in the income statement. This means that the result in particular but also the fi nancial position may be more volatile. The values of the properties are determined by supply and demand, where the prices are mainly depending on the properties' expected net operating income and the buyer's required yield. An increasing demand gives lower required yields and hence an upward adjustment in prices, while a weaker demand has the opposite effect. In the same way, a positive real development in net operating income gives an upward adjustment in prices, while a low real growth has the opposite effect.

In property valuations consideration should be taken to an uncertainty range of +/– 5-10%, in order to refl ect the uncertainty that exist in the assumptions and calculations made.

Sensitivity analysis - change in value
Properties	–20%	–10%	0	+10%	+20%
Changes in value, SEKm	–5,853	–2,927	–	+2,927	+5,853
Loan to value ratio	65%	58%	52%	48%	44%

Financial risk

Ownership of properties presumes a working credit market. Castellum's greatest fi nancial risk is to lack access to funding. The risk is reduced by low loan to value ratio and long term credit agreements.

The Parent Company

The parent company Castellum AB is responsible for matters concerning the stock market such as consolidated reports and stock market information and the credit market such as funding and fi nancial risk management.

The parent company takes part in property related operations through involvement in the Board of the subsidiaries.

	2009	2008	2009	2008
INCOME STATEMENT, SEKm	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Income	5	5	14	12
Operating expenses	–17	–15	–63	–52
Net fi nancial items	1	–5	13	7
Dividend	563	410	563	410
Changes in value, interest
rate derivatives	0	–815	102	–1,010
Income before tax	552	–420	629	–633
Tax	3	217	–18	276
Net income for the period	555	–203	611	–357
BALANCE SHEET, SEKm		31 Dec 2009		31 Dec 2008
Participations in group companies		4,087	4,087
Receivables, group companies		16,608	15,555
Other assets		230	244
Cash and bank		0		0
Total		20,925		19,886
Shareholders' equity		3,691		3,601
Interest bearing liabilities		14,082		14,304
Interest bearing liabilities,
group companies		2,109		775
Interest rate derivatives		865		966
Other liabilities		178		240
Total		20,925		19,886
Pledged assets (receivables
group companies)		15,214		13,680
Contingent liabilities (guaranteed
commitments for subsidiaries)		1,362		300

Accounting Principles

Castellum follows the by the EU adopted IFRS standards and the interpretations of them (IFRIC). This year-end report has been prepared according to IAS 34 Interim Financial Reporting. Accounting principles and methods for calculations have remained unchanged compared to the Annual Report previous year. However, the accounted income measure for segment has changed to income from property management, which is also the line of income which each segment, as well as the group, is managed by.

Annual General Meeting

For the AGM on March 25, 2010 the Board of Directors proposes:

• a dividend of SEK 3.50 per share and March 30, 2010 as record day. The proposal is an increase of 11% compared to previous year.
• guidelines for remuneration to members of the executive management,
• a new incentive plan for members of the exective management which in principle is an extension of the existing program,
• a renewed mandate for the Board to decide on purchase or transfer of the company's own shares.

The election committee, which consists of Maj-Charlotte Wallin representing AFA Försäkring, Lars-Åke Bokenberger representing AMF Pension, Paul Frentrop representing Stichting Pensioenfonds ABP and Castellum's Chairman of the board Jan Kvarnström, proposes for the AGM;

• that the number of board members shall be seven,
• that remuneration to the Board of Directors should be SEK 1,825,000 out of which SEK 475,000 should be allocated to the Chairman of the Board and SEK 225,000 to each one of the remaining members of the Board of Directors. The remuneration include work on the committees,
• re-election of the board members Jan Kvarnström, Per Berggren, Marianne Dicander Alexandersson, Ulla-Britt Fräjdin-Hellqvist, Christer Jacobson and Göran Lindén and new-election of Johan Skoglund and, that Jan Kvarnström shall be re-elected as Chairman of the Board of Directors,
• for AGM to decide on appointing an election committee for the AGM 2011 and for the Chairman to contact the three largest registered or in an other way known shareholders at the end of the third quarter 2010 and invite them to each appoint one member to the election committee, and that the three appointed members together with the Chairman of the Board of Directors shall constitute the election committee. The election committee will appoint a chairman amongst its members.

Gothenburg 20 January 2010

Håkan Hellström Chief Executive Offi cer

Board of Directors

Jan Kvarnström Chairman of the Board Per Berggren Board member

Ulla-Britt Fräjdin-Hellqvist Board member

Christer Jacobson Göran Lindén Board member

Board member

Dicander Alexandersson Board member

Johan Ljungberg Secretary to the Board

Executive Group Management

Håkan Hellström Chief Executive Offi cer

MD Eklandia Fastighets AB

Anette Asklin Financial Director

Ulrika Danielsson Finance Director

Claes Junefelt MD Fastighets AB Corallen

MD Fastighets AB Brostaden Claes Larsson MD Aspholmen Fastigheter AB

Christer Sundberg MD Harry Sjögren AB

Gunnar Östenson MD Fastighets AB Briggen

The Castellum Share

The Castellum share is listed on NASDAQ OMX Stockholm AB Large Cap. At the end of the year the company had about 8,900 shareholders. Shareholders registered abroad cannot be broken down in terms of directly held and nominee registered shares except for two foreign shareholders who have fl agged for holding over 5%, Stichting Pensioensfonds ABP and BlackRock Inc. Castellum has no direct registered shareholders with holdings exceeding 10%. The ten single largest Swedish shareholders can be seen in the table below.

	Number of	Percentage of
Shareholders on 31-12-2009	shares	voting rights
	thousand	and capital
AMF Pensionsförsäkrings AB	10,000	6.1%
AFA Sjukförsäkrings AB	8,670	5.3%
László Szombatfalvy	5,000	3.1%
Magdalena Szombatfalvy	5,000	3.1%
Andra AP-fonden	3,095	1.9%
Fjärde AP-fonden	2,147	1.3%
Lannebo Småbolag	1,994	1.2%
AFA Trygghetsförsäkring AB	1,871	1.1%
Kas Depositary Trust Company	1,561	1.0%
Swedbank Robur Småbolagsfond Sverige	1,460	0.8%
Other shareholders registered in Sweden	47,085	28.7%
Shareholders registered abroad	76,117	46.4%
Total outstanding shares	164,000	100.0%
Repurchased shares	8,007
Total registered shares	172,007

Distribution of shareholders by country 31-12-2009

The Castellum share price as at 31 December, 2009 was SEK 72.50 (60.75) equivalent to a market capitalization of SEK 11,9 billion (10,0), calculated on the number of outstanding shares.

During the year a total of 191 million (218) shares were traded, equivalent to an average of 761,000 shares (866,000) per day, corresponding on an annual basis to a turnover rate of 117% (133%).

Growth, yield and financial risk

During the last 12-month period the total yield of the Castellum share has been 25% (–5%), including dividend of SEK 3.15.

There is no potential common stock (eg. convertibles.)

The Castellum share's price trend and turnover since IPO may 23, 1997 until January 15, 2010

	2009	3 years	10 years
		average/	average/
		year	year
Total yield of the share (incl. dividend)
Castellum	25%	– 4%	16%
NASDAQ OMX Stockholm (SIX Return)	53%	– 3%	2%
Real Estate Index Sweden (EPRA)	24%	– 7%	16%
Real Estate Index Europe (EPRA)	34%	– 23%	6%
Growth
Income from property management SEK/share	16%	9%	12%
Net income for the year after tax
SEK/share	pos.	– 54%	– 9%
Long term net asset value SEK/share	– 3%	1%	9%
Net asset value SEK/share	– 3%	– 1%	8%
Dividend SEK/share	11%	7%	12%
Real estate portfolio SEK/share	0%	6%	10%
Yield
Return on net asset value	1.6%	3.2%	13.0%
Return on total capital	2.1%	4.1%	8.2%
Financial risk
Interest coverage ratio	309%	299%	273%
Loan to value ratio	52%	48%	46%

Valuation - share price related key figures Earnings Capacity

Income from property management before tax for 2009 amounted to SEK 6.89 per share (5.93), which compared to the share price at the year-end gives a multiple of 11 (10).

Income from property management after tax relating to income from property management (EPRA EPS) amounted 2009 to SEK 6.93 (5.85) which gives a multiple of 10 (10).

Net income for 2009 amounted to SEK 0.98 per share (–4.04), which gives a multiple of 74 (negativ).

Net asset value

The long term net asset value (EPRA NAV) can be calculated to SEKm 13,381 (13,800) corresponding to 82 SEK per share (84). The share price at the year-end was thus 88% (72%) of the net asset value.

The net asset value (EPRA NNNAV), using an estimated discounted real deferred tax liability of 5%, can be calculated to SEKm 11,979 (12,305), corresponding to 73 SEK/share (75). The share price at the year-end was thus 99% (81%) of the net asset value.

Dividend Yield

The proposed dividend of SEK 3.50 (3.15) corresponds to a yield of 4.8% (5.2%) based on the share price at the yearend.

The share's earnings multiple

Share price/net asset value

The share's dividend yield

Calendar

Annual Report 2009 Turn of January/February 2010 Annual General Meeting 25 March, 2010 Interim Report January-March 2010 20 April, 2010 Half-year Report January-June 2010 13 July, 2010 Interim Report January-September 2010 19 October 2010 Year-end Report 2010 25 January, 2011

For further information please contact Håkan Hellström, CEO, or Ulrika Danielsson, Finance Director, telephone +46 31-60 74 00 or visit Castellum's website.

www.castellum.se

On Castellum's website it is possible to download as well as subscribe to Castellum's Pressreleases and Interim Reports.

Invitation to Annual General Meeting 2010

The annual general meeting of shareholders will be held on Thursday 25 March 2010, at 5 pm at Chalmers Kårhus, RunAn, at Chalmersplatsen 1 in Gothenburg. The entrance opens at 4 pm. Shareholders wishing to attend the annual general meeting must be registered as shareholders in the share register kept by Euroclear Sweden AB (former VPC AB) by Friday 19 March 2010 and must also have notifi ed their attendance to the company no later than 4 pm on Friday 19 March 2010.

Summons to the annual general meeting will be around 22 February and the summons will be available at www.castellum.se. Also Castellum's annual report and other documents which will be presented at the AGM will be available on the website by then. The summons will include the items to be addressed at the AGM. Shareholders who wish to attend the AGM are already welcome to notify their attendance as described below.

Notifi cation of attendance at the annual general meeting can be made by post to Castellum AB (publ), Box 2269, 403 14, Gothenburg, by phone +46 (0)31-60 74 00, by fax +46 (0)31-13 17 55, by e-mail info@castellum.se, or by fi lling out a notifi cation form on www.castellum.se. The notifi cation must state name/business name, personal identifi cation number/ company registration number, address and telephone number. For those shareholders, who wish to be represented by proxy, the company provides a proxy form on www.castellum.se.

Shareholders with nominee registered shares must temporarily register such nominee shares in their own name in order to have the right to participate at the annual general meeting. Such registration must have been carried out at Euroclear Sweden AB no later than Friday 19 March 2010. Shareholders must, in good time before this date, instruct their nominees to effect such registration.

A shareholder have the right to have a matter addressed at the coming Annual General Meeting on 25 March, 2010. For practical reasons the request should be received by the company no later than 5 February, 2010. The request should be addressed to Castellum AB, Att: Håkan Hellström, Box 2269, 403 14 Göteborg.

Subsidiaries

Aspholmen Fastigheter AB

Nastagatan 2, 702 27 Örebro Telephone +46 19-27 65 00 Telefax +46 19-27 65 19 orebro@aspholmenfastigheter.se www.aspholmenfastigheter.se

Fastighets AB Corallen

Lasarettsgatan 3, Box 148, 331 21 Värnamo Telephone +46 370-69 49 00 Telefax +46370-475 90 info@corallen.se www.corallen.se

Fastighets AB Brostaden

Bolidenvägen 14, Box 5013, 121 05 Johanneshov Telephone +46 8-602 33 00 Telefax +46 8-602 33 30 info@brostaden.se www.brostaden.se

Eklandia Fastighets AB

Theres Svenssons gata 9, Box 8725, 402 75 Göteborg Telephone +46 31-744 09 00 Telefax +46 31-744 09 50 info@eklandia.se www.eklandia.se

Fastighets AB Briggen

Fredriksbergsgatan 1, Box 3158, 200 22 Malmö Telephone +46 040-38 37 20 Telefax +46 40-38 37 37 fastighets.ab@briggen.se www.briggen.se

Harry Sjögren AB

Kråketorpsgatan 20, 431 53 Mölndal Telephone +46 31-706 65 00 Telefax +46 31-706 65 29 info@harrysjogren.se www.harrysjogren.se

In the event of confl ict in interpretation or differences between this report and the Swedish version, the latter will have priority.

CASTELLUM YEAR-END REPORT 2009 Castellum AB (publ) • Box 2269, SE-403 14 Gothenburg, Sweden • Visiting address Kaserntorget 5 Telephone +46 31-60 74 00 • Fax +46 31-13 17 55 • E-mail info@castellum.se • www.castellum.se Org nr 556475-5550