Castellum — Annual Report 2010

Jan 25, 2011

Year-end Report 2010

Year-end Report 2010

Castellum is one of the major listed real estate companies in Sweden. The fair value of the real estate portfolio amounts to approx. SEK 32 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 2010 amounted to SEKm 2,759 (SEKm 2,694 previous year).

Income from property management improved by 1% to SEKm 1,141 (1,130), equivalent to SEK 6.96 (6.89) per share.

• Changes in value on properties amounted to SEKm 1,222 (–1,027) and on interest rate derivatives to SEKm 291 (102).
• Net income after tax amounted to SEKm 1,964 (160), equivalent to SEK 11.98 (0.98) per share.

The investments amounted to SEKm 1,506 (1,165) of which SEKm 881 (1,039) were new constructions, extensions and reconstructions and SEKm 625 (126) were acquisition.

The Board proposes a dividend of SEK 3.60 (3.50) per share, equivalent to an increase of 3%.

	2010	2009	2008	2007	2006	2005	2004	2003	2002	2001
Income from property management, SEK/share	6.96	6.89	5.93	5.63	5.38	5.00	4.52	4.07	3.77	3.30
Change previous year	+1%	+16%	+5%	+5%	+8%	+11%	+11%	+8%	+14%	+24%
Net income after tax, SEK/share	11.98	0.98	– 4.04	9.07	10.21	7.89	5.59	2.68	4.00	5.68
Change previous year	+1,122%	pos.	neg.	–11%	+29%		+41% +108%	–33%	–30%	+39%
Dividend, SEK/share (for 2010 proposed)	3.60	3.50	3.15	3.00	2.85	2.62	2.38	2.13	1.88	1.63
Change previous year		+3% + 11%	+5%	+5%	+9%	+11%	+12%	+13%	+15%	+18%
Properties fair value, SEKm						31,768 29,267 29,165 27,717 24,238 21,270 19,449 18,015 17,348 16,551
Investments, SEKm	1,506	1,165	2,738	2,598	2,283	1,357	1,268	1,108	1,050	1,741
Loan to value	50%	52%	50%	45%	45%	45%	45%	48%	48%	50%

CEO's Comments

Both rental as well as the real estate market has strengthened, which enable Castellum to continued growth. The result has improved, the balance sheet has strengthened and the customer's view on Castellum has improved further.

In 2010 the income from property management increased by 1%, to SEKm1,141. It is the best income from property management ever, but the growth is moderate compared with the 10% target. The main reasons for the low growth were a low momentum from 2009 with negative net leasing, limited investments and negative infl ation, but also a cold and snowy 2010.

Even this year's result reached an all time high, SEKm 1,964 compared with SEKm 160 previous year. The improvement in result is largely a result of an improved real estate market and rising property prices, which for Castellum can be estimated to SEKm 1,222, equivalent to 4 percent.

In light of the result, a dividend of SEK 3.60 per share is proposed, an increase of 3% against previous year.

The balance sheet has strengthened further during the year and the investment rate increased to SEKm 1,500 while the loan to value ratio has decreased to 50% and unutilized long-term credit facilities have increased to SEKm 2,800.

It is not just fi nancial measures which strengthened. In a service-oriented organization it is important to satisfy both customers and employees. Surveys during the year have shown that we from already high levels have been able to further improve. Continued environmental work has resulted in both lower energy consumption and better carbon dioxide emissions than targets set.

Total yield per share was in 2010 31%, slightly better than the Stockholm Stock Exchange and the majority of foreign real estate indexes, but slightly worse than the Swedish real estate index.

With the results from 2010 in view, in my opinion the global fi nance crisis which accelerated during 2008 hardly affected Castellum at all. During the last three years, income from property management increased by 24%. Despite investments of SEKm 5,000, depreciations of SEKm 1,000 and the dividend increased by 20%, the loan to value ratio is 50 %, a low value.

But 2010 is already history, and what expectations can you have for 2011?

In an international perspective Sweden has strong state fi nances and a high growth in GDP. We have not yet seen the full impact of employment growth in the Labor market, which is the most important factor for the real estate sector. Most seems to agree about that the Swedish economy will further strengthen during the next few years, with growth in GDP and employment and increased infl ation and interest rates as a result.

With this growth, the Rental Market will be strengthened – by increased demand and decreased vacancies.

In Castellum we can already see improvement in net lease and more submitted tenders, which means that existing vacancies represents the greatest potential. My assessment is that property costs are stable and the net operating income, therefore, will improve.

On the Interest Rate Market short-term interest rates have increased in line with the Riksbank's repo rate, while longterm interest rates are at roughly the same level as one year ago. It is obvious that short-term interest rates will continue upward, but we are gladly paying the price for economic growth and infl ation, which over time favors the asset class properties.

An increased interest in property investments and a clear improvement to borrow money in the Credit Market have meant that liquidity in the Property Market is back to normal levels. My assessment is that real estate prices will continue upward, perhaps more as a result of improved net operating income and less of reduced yield.

With good earnings and a strong balance sheet follows high investment capacity – in Castellum about SEKm 2,000 net per year. We will, like previous years, mainly focus more on better yielding new constructions, extensions and reconstructions for existing and new customers, but of course also on the acquisition of properties, with development potential.

If the momentum was low at the turn of 2009/2010, I believe it will be built up gradually in 2011 to reach full effect in 2012.

Finally, I want to extend a big 'thank you' to everyone employed at Castellum. In a service-oriented organization with a focus on the customer, you are the most important resource, which you manage in an absolutely excellent manner.

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 need and as payment or funding of real estate investments. 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. 4,500 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, Customer Satisfaction 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 in 2010 and included offi ce, warehouses, industry- and retail properties, continues to show consistently high marks for Castellum, with a weighted index of 76, which is higher than the benchmark in the industry. A large portion, 89%, 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 2010 the organization signed 682 new contracts with a total annual value of SEKm 257. The leasing activity shows the importance of taking care of the customers and the networks. Of the new signed contracts 74% came from own networks, recommendations or existing customer expansions, while 19% came from web pages, and the remainder came through agents.

Distribution of leases by industry

Lease size structure

Lease maturity 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 have 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 3-4 employees within fi nance and administration. Each market area employs one property manager with one assistant, one person working with leasing and 3-5 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.

Castellum has a competence development program which includes a leadership program and shorter courses for development for the rest of the employees.

The employees' view on Castellum is regularly measured and the survey carried out in 2010 continues to show a very high index, 86 on a scale of 100 which shows that the employees enjoy their working situation and have a high confi dence towards the company and its management.

The group had 229 employees (227) 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. During 2010 both energy consumption and carbon dioxide emission was reduced with 3% per sq.m.

Within Castellum there are a total of 86 Green Building classifi ed buildings, which is an external proof of a longterm effective work to reduce the energy consumption.

Castellum owns the fi rst BREEAM-certifi ed property in Sweden, which was completed in 2008 and certifi ed in 2009.

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 www.castellum.se

Income from property management during the year, i.e. net income excluding changes in value and tax, amounted to SEKm 1,141 (1,130), equivalent to SEK 6.96 (6.89) per share - an increase with 1%.

Income from Property Management per share

During the year, changes in value on properties amounted to SEKm 1,222 (-1,027) and on interest rate derivatives to SEKm 291 (102). Net income for the year was SEKm 1,964 (160), equivalent to SEK 11.98 (0.98) per share.

Rental income

Group rental income amounted to SEKm 2,759 (2,694). For offi ce and retail properties, the average contracted rental level, including charged heating, cooling and property tax, amounted to SEK 1,201 per sq.m., whereas it for warehouse and industrial properties amounted to SEK 711 per sq.m. Rental levels, which are considered to be in line with the market, have increased by approx. 1% in comparable portfolio compared with previous year.

The average economic occupancy rate was 89%, which is lower than corresponding period previous year, but slightly higher compared with previous quarter. The total annual rental value for vacant premises during the year amounted to approx. SEKm 374.

The gross leasing (i.e. the annual value of total leasing) during the year was SEKm 257 (251), of which SEKm

46 (31) were leasing on new construction, extensions and refurbishments. Notices of termination amounted to SEKm 221 (288), of which bankruptcies were SEKm 12 (31), hence net leasing for the year were SEKm 36 (–37). The net leasing for the fourth quarter amounted to SEKm 23 (–10). The time difference between reported net leasing and the effect in income thereof is estimated to between 9-18 months.

Net leasing

With the growth in the Swedish economy and improved employment, the demand continues to improve on all Castellum's property markets. Improved net leasing and more submitted tenders will result in lower vacancies. Rental levels are assessed to remain stable or, on some submarkets, increase slightly.

Property costs

Property costs amounted to SEKm 960 (942) corresponding to SEK 298 per sq.m. (300). During the year the costs related to snow removal has been approx. SEKm 25 higher then 2009. Costs for heating have increased due to the energy consumption for heating which during the period has been calculated to 116% (93%) of a normal year according to the degree day statistics.

Property costs, SEK/sq.m. Offi ce/		Warehouse/	2010	2009
	Retail	Industrial	Total	Total
Operating expenses	205	127	169	163
Maintenance	44	21	34	40
Ground rent	7	6	6	7
Real estate tax	66	17	43	40
Direct property costs	322	171	252	250
Leasing and property				50
administration (indirect)	–	–	46
Total	322	171	298	300
Previous year	325	166	300

Central administrative expenses

Central administrative expenses were SEKm 84 (81). This includes costs for a profi t and share price related incentive plan for 10 persons in executive management of SEKm 16 (14).

Net financial items

Net fi nancial items were SEKm –574 (–541). The average interest rate level was 3.7% (3.7%).

Changes in value

The Swedish property market has recovered and the transaction volume in 2010, on business over 100 mSEK, amounted to approx. SEK 100 billion, which is three times as much as during 2009.

Signifi cantly for the property market in 2010 was that business was made throughout the hole country and that national actors, as in previous year, accounted for most of the transactions. In Stockholm the pension funds dominated as purchaser of large offi ce buildings, while the property market in the rest of the country was more widespread on both buyers and property types.

Castellum assesses that the gradual increase in demand during the period has led to increasing property prices, where the main change relates to central properties and properties with long term leases. In view of this, the required yield in the internal valuation has been reduced with an average of 0.2%-units. The change in value during the year has been estimated to 4% corresponding to SEKm 1,222 (– 1,027) of which approx. two-thirds refers to reduced required yields and the rest to slightly improved cashfl ows. The changes in value includes SEKm 23 due to sales of six properties where the sale price of SEKm 227 exceeded the valuations with 11%.

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 291 (102) and the value was SEKm –574 (–865) 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 1,406 (1,885), while the properties' fair value exceed their fi scal value by SEKm 14,829 (12,624) of which SEKm 109 relates to properties acquired during the year accounted for as asset acquisitions. As deferred tax liability a full nominal 26.3% tax of the net difference is reported, reduced with the deferred tax relating to asset acquisitions, i. e. SEKm 3,502 (2,824).

Castellum has no ongoingh formal tax disputes.

Tax Calculation 2010-12-31	Basis	Basis
	current tax	deferred
SEKm		tax
Income from property management	1,141
Deductions for tax purposes
depreciations	– 629	629
reconstructions	– 277	277
reconstructions, adjustement previous year	– 18	18
Other tax allowances	– 9	31
Taxable income from property management	208	955
Properties sold	0	– 30
Changes in value on properties	–	1,199
Changes in value on interest rate derivatives	291	–
Taxable income before tax loss carry forwards	499	2,124
Tax loss carry forwards, opening balance	– 1,885	1,885
Tax loss carry forwards, closing balance	1,406	– 1,406
Taxable income	20	2,603
Of which 26.3% current/deferred tax	– 5	– 685

Income over time

Income from property management past 10 years has had a stable development and has grown by an average of 10% per year. Profi t from the past 10 years has had a steady development and has grown by an average of 10% per year. Changes in value of properties has been volatile and on average had a growth the past 10 years about 2% per year.

Income over time

Real Estate Portfolio

The real estate portfolio 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 66% 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. The remaining 3% consist of project and undeveloped land.

Castellum owns 820,000 sq.m. unutilized building rights and ongoing projects with remaining investments of approx. SEKm 700.

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, 2010	29,267	590
+ Acquisitions	625	14
+ New constructions, extensions and reconstructions	881	–
– Sales	– 204	– 6
+/– Unrealized changes in value	1,199	–
Real estate portfolio on 31 December, 2010	31,768	598

Investments During the year investments totalling SEKm 1,506 (1,165) were made, of which SEKm 881 (1,039) where new constructions, extensions and reconstructions and SEKm 625 (126) were acquisitions. Of the total investments SEKm 464 related to Mälardalen, SEKm 374 to Greater Stockholm, SEKm 315 to Greater Gothenburg, SEKm 187 to the Öresund Region and SEKm 166 to Eastern Götaland.

Investments and sales over SEKm 30

sq.m.	rate, Jan 2011	SEKm	SEKm	Completed	Comment
7,900	10%	150	148	Q 2 2012	New construction offi ce premises
14,000	55%	64	39	Q 4 2011	Reconstruction and new construction retail
5,300	0%	45	44	Q 3 2011	New construction warehouse premises
6,450	100%	39	28	Q 3 2011	New construction warehouse/logistic
14,900	50%	130	0	Q 4 2010	Reconstruction retail premises
7,700	85%	115	3	Q 4 2010	New construction offi ce premises
11,000	100%	105	7	Q 4 2010	New construction retail premises
11,900	100%	96	9	Q 4 2010	Reconstruction and extension retail
3,000	100%	49	0	Q 4 2010	New construction offi ce premises
6,300	100%	35	0	Q 3 2010	Extension warehouse premises
Area
sq.m.	rate, Jan 2011	SEKm		Access	Category
16,500	75%	190		Nov 2010	Offi ce and retail
19,120		137		Jan 2011	Warehouse, industrial and offi ce
22,700	100%	82		April 2010	Industrial
9,500	100%	70		Dec 2010	Offi ce and retail
Area, sq.m		SEKm		Access	Category
6,900		102		Sept 2010	Hotel
4,200		63		Oct 2010	Offi ce and residential
5,000		33		March 2010	Warehouse
	Area	Econ. occup. 90%	Econ. occup. Acquisitions Sales price	Total inv., Remain. inv

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, occupancy rates and property costs.

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 970 per sq.m. (1,000).

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	5.0% - 12.5%	6.5% - 13.9%
Return on equity	9.5% - 17.0%	11.0% - 18.4%
Interest rate	5.5%	5.5%
Loan to value ratio	65%	55%
Return on total capital	6.9% - 9.5%	8.0% - 11.3%
Weighted d:o, disc. factor year 1-9	8.0%	9.2%
Weighted disc. factor residual value *	6.5%	7.7%
*Required yield on total capital minus growth equal to infl ation

Based on these internal valuations the value of the properties at the year-end were assessed to SEKm 31,768 (29,267), corresponding to slightly more then SEK 9,500 per sq.m.

Average valuation yield

The average valuation yield for Castellum's real estate portfolio, excluding development projects and undeveloped land, can be calculated to 7.2%% (7.3%).

Average valuation yield (excl. project/land and building rights)
SEKm	2010	2009
Net operating income properties	1,987	1,935
+ Estimated index adjustment 2011, 1.5%	45	– 15
+ Real occupancy rate, 94% at the lowest	225	197
+/- Property costs to a normal year	25	–
– Property administration, 30 SEK/sq.m.	– 98	– 94
Normalized net operating income	2,184	2,023
Valuation (excl. building rights of SEKm 496)	30,213	27,742
Average valuation yield	7.2%	7.3%

External valuation

In order to provide further assurance and validation of the valuation, 130 properties representing 50% 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 15,614, 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 15,982 i. e. a net change of SEKm 368 corresponding to 2%. Gross deviation was SEKm +291 respectively SEKm –659 with an average deviation of 6%.

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 1,588 corresponding to SEKm 30,180 - 33,356.

Castellum's real estate portfolio 31-12-2010

			31-12-2010		January-December 2010
	No. of properties	Area thous. sq.m.	Property value SEKm	Property value SEK/sq.m.	Rental value SEKm	Rental value SEK/sq.m.	Economic occupancy rate	Rental income SEKm	Property costs SEKm	Property costs SEK/sq.m.	Net operating income SEKm
Offi ce/retail
Greater Gothenburg	76	399	5,502	13,804	508	1,275	95.1%	483	128	321	355
Öresund Region	52	323	4,907	15,185	455	1,408	87.6%	398	113	351	285
Greater Stockholm	49	332	4,039	12,175	434	1,307	79.2%	343	105	318	238
Mälardalen	74	361	3,609	10,007	375	1,041	90.2%	339	112	311	227
Eastern Götaland	52	319	2,883	9,026	310	970	88.3%	274	100	312	174
Total offi ce/retail	303	1,734	20,940	12,079	2,082	1,201	88.3%	1,837	558	322	1,279
Warehouse/industrial
Greater Gothenburg	100	647	4 570	7,069	469	726	93.1%	437	106	164	331
Öresund Region	41	298	1,717	5,765	204	684	84.5%	172	49	163	123
Greater Stockholm	42	210	1,837	8,727	192	912	91.0%	175	50	238	125
Mälardalen	38	158	906	5,720	109	690	91.8%	100	28	178	72
Eastern Götaland	35	186	739	3,970	92	495	86.6%	80	23	123	57
Total warehouse/industrial	256	1,499	9 769	6,515	1,066	711	90.4%	964	256	171	708
Total	559	3,233	30,709	9,499	3,148	974	89.0%	2,801	814	252	1,987
Leasing and property administration									149	46	– 149
Total after leasing and property administration									963	298	1,838
Development projects	9	78	732	–	42	–	–	15	13	–	2
Undeveloped land	30	–	327	–	–	–	–	–	–	–	–
Total	598	3,311	31,768	–	3,190	–	–	2,816	976	–	1,840

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 1,840 accounted for above and the net operating income of SEKm 1,799 in the income statement is explained by the deduction of the net operating income of SEKm 8 on properties sold during the year, as well as the adjustment of the net operating income of SEKm 49 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

Property related key ratios Segment information

	2010	2009
Rental value, SEK/sq.m.	974	969
Economic occupancy rate	89.0%	89.8%
Property costs, SEK/sq.m.	298	300
Net operating income, SEK/sq.m.	569	571
Property value, SEK/sq.m.	9,499	9,036
Number of properties	598	590
Lettable area, thousand sq.m.	3,311	3,199

	Rental income		Income from property management
SEKm	2010 Jan-Dec	2009 Jan-Dec	2010 Jan-Dec	2009 Jan-Dec
Greater Gothenburg	913	876	438	421
Öresund Region	572	570	255	255
Greater Stockholm	500	488	202	210
Mälardalen	433	428	152	153
Eastern Götaland	341	332	126	127
Total	2,759	2,694	1,173	1,166

The discrepancy between the income from property management of SEKm 1,173 (1,166) above and the groups accounted income before tax of SEKm 2,654 (205) consists of unallocated income from property management of SEKm –32 (–36), changes in property value of SEKm 1,222 (–1,027) and changes in values of interest rate derivatives of SEKm 291 (102).

Financing

Financing 31-12-2010

Shareholders' equity and net asset value

Shareholders' equity was SEKm 11,082 (9,692). The net asset value can be calculated as follows.

Net asset value		SEKm SEK/share
Equity according to the balance sheet	11,082	68
Reversed
Interest rate derivatives acc to balance sheet	574	3
Deferred tax acc to balance sheet	3,502	21
Long term net asset value (EPRA NAV*)	15,158	92
Deduction
Interest rate derivatives as above	– 574	– 3
Estimated real liability, deferred tax 5%	– 671	– 4
Actual net asset value (EPRA NNNAV*)	13,913	85

*EPRA, European Public Real Estate Association, is an association for listed real estate owners and investors 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 year has been characterized by a more optimistic view on the strength of the Swedish economy, which meant that the Swedish "Riksbank" during 2010 increased the repo rate from 0.25% to 1.25%. The long-term interest rates fell sharply during the summer but was at the year-end marginally higher than at the beginning of 2010.

The availability of long-term funding has improved during 2010 and can for Castellum's part be considered good. The price of credits could be described as stable.

Loan maturity structure

During the year Castellum has signed new agreements of SEKm 1,600 and prolonged agreements of SEKm 9,800. Castellum has, after the period, signed further new agreements of SEKm 500. As of 31 December, 2010 Castellum had long term binding credit agreements totalling SEKm 18,062 (16,262), long term bonds totalling SEKm 200 (500), short term binding credit agreements totalling SEKm 520 (1,220) and a commerial paper program of SEKm 4,000 (4,000). After deduction of liquid assets of SEKm 12 (8), net interest bearing liabilities were SEKm 15,769 (15,286), of which SEKm 1,377 (0) refers to outstanding commercial papers.

Most of Castellum's loans are revolving loans, utilized during long-term credit agreements which means that the loans have short-term maturity both in terms of interest rates and as capital tied up. This means great fl exibility in the interest rate base, interest rate period and capital tied up. Short-term loans allow repayment without marginal breaking costs or other compensation to the lender.

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, 50% respectively 299%.

The average duration of Castellum's long term credit agreements was 5.0 years (5.5). Margins and fees on long term credit agreements had an average duration on 2.6 years (3.2).

Loan maturity structure 31-12-2010

Long term, SEKm	Credit agreements		Utilized
1 - 2 years		200	–
2 - 3 years		5,500	4,930
3 - 4 years		500	–
4 - 5 years		4,800	2,500
> 5 years		7,062	6,562
Total long term credit agreements		18,062	13,992
Total short term credit agreements (0-1 year)		2,097	1,777
Total credit agreements		20,159	15,769
Unutilized credit in long term credit agreements			2,293

Interest rate maturity structure

The average effective interest rate as of 31 December, 2010 was 3.9% (3.8%). The market interest rate for an equal portfolio, regarding both current market rate and credit margin, can be assessed to 4.0% (3.1). The average fi xed interest term on the same date was 2.6 years (2.8).

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 by working with interest rate derivatives. Interest rate derivatives is a cost effective and fl exible way of extending loans with short term interest rates to achieve the desired fi xed interest term.

In the segment 0-1 years below are all loans, all loan margins and where appropriate, interest rate derivatives maturing within 12 months. A change in the market rate in accordance with the Riksbank's in December published repo rate path would for 2011 have an effect on Castellum's interest rate costs of approx. SEK –30.

Interest rate maturity structure 31-12-2010
SEKm	Amount, SEKm	Average interest rate
0 - 1 year	6,619	3.1%
1 - 2 years	600	4.3%
2 - 3 years	3,000	4.5%
3 - 4 years	1,000	4.6%
4 - 5 years	1,450	4.6%
5 - 10 years	3,100	4.6%
Total	15,769	3.9%

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, 2010, the market value of the interest rate derivative portfolio amounted to SEKm –574 (–865).

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 next 12 months
Effect on income, SEKm	Probable scenario
	+/- 1% (units)	Boom	Recession
Rental level / Index	+28/–28	+	–
Vacancies	+31/–31	+	–
Property costs	–10/+10	–	0
Interest costs	–57/+57	–	+

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 – 6,354		– 3,177	0	3,177	6,354
Loan to value ratio	62%	55%	50%	45%	41%

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.

	2010	2009	2010	2009
INCOME STATEMENT, SEKm	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Income	4	5	15	14
Operating expenses	– 18	–17	– 59	–63
Net fi nancial items	– 2	1	12	13
Dividend	658	563	658	563
Changes in value, interest
rate derivatives	322	0	291	102
Income before tax	964	552	917	629
Tax	– 81	3	– 69	–18
Net income for the period	883	555	848	611
BALANCE SHEET, SEKm		31 Dec 2010		31 Dec 2009
Participations in group companies		4,087		4,087
Receivables, group companies		17,033		16,608
Other assets		179		230
Cash and bank		0		0
Total		21,299		20,925
Shareholders' equity		3,928		3,691
Interest rate derivatives		574		865
Interest bearing liabilities		14,949		14,082
Interest bearing liabilities,
group companies		1,691		2,109
Other liabilities		157		178
Total		21,299		20,925
Pledged assets (receivables
group companies)		14,721		15,214
Contingent liabilities (guaranteed
commitments for subsidiaries)		1,062		1,362

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 for the group compared to the Annual Report previous year.

Consolidated Income Statement
	2010	2009	2010	2009
SEKm	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Rental income	701	672	2,759	2,694
Operating expenses	– 144	– 142	– 547	– 512
Maintenance	– 24	– 48	– 105	– 127
Ground rent	– 5	– 5	– 19	– 21
Real estate tax	– 35	– 32	– 140	– 127
Leasing and property administration	– 39	– 34	– 149	– 155
Net operating income	454	411	1,799	1,752
Central administrative expenses	– 26	– 22	– 84	– 81
Net fi nancial items	– 148	– 141	– 574	– 541
Income from property management	280	248	1,141	1,130
Changes in value
Properties	659	– 74	1,222	– 1,027
Interest rate derivatives	322	0	291	102
Income before tax	1,261	174	2,654	205
Current tax	0	– 1	– 5	– 10
Deferred tax	– 335	– 30	– 685	– 35
Net income for the period/year	926	143	1,964	160

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

Data per Share
	2010	2009	2010	2009
	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Average number of shares, thousand	164,000	164,000	164,000	164,000
Income from property management, SEK	1.71	1.51	6.96	6.89
Income from property management after tax (EPRA EPS), SEK	1.75	1.77	6.62	6.93
Earnings after tax, SEK	5.65	0.87	11.98	0.98
Outstanding number of shares, thousand	164,000	164,000	164,000	164,000
Property value of properties, SEK	194	178	194	178
Long term net asset value (EPRA NAV), SEK	92	82	92	82
Actual net asset value (EPRA NNNAV), SEK	85	73	85	73

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

Financial Key Ratios
	2010	2009	2010	2009
	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Net operating income margin	65%	61%	65%	65%
Interest coverage ratio	289%	276%	299%	309%
Return on actual net asset value	37,5%	5.7%	21,5%	1.6%
Return on total capital	14,1%	4.3%	9,8%	2.1%
Investments, SEKm	823	316	1,506	1,165
Loan to value ratio	50%	52%	50%	52%

Consolidated Balance Sheet

SEKm	31 Dec 2010	31 Dec 2009
Assets
Investment properties	31,768	29,267
Other fi xed assets	15	13
Current receivables	141	188
Cash and bank	12	8
Total assets	31,936	29,476
Shareholders' equity and liabilities
Shareholders' equity	11,082	9,692
Deferred tax liability	3,502	2,824
Interest rate derivatives	574	865
Long term interest-bearing liabilities	15,781	15,294
Non interest-bearing liabilities	997	801
Total shareholders' equity and liabilities	31,936	29,476
Pledged assets (property mortgages)	17,421	18,281
Contingent liabilities	–	–

Changes in Equity

	Number of outstanding shares,		Other capital	Retained
SEKm	thousand	Share capital	contribution	earnings	Total equity
Shareholders' equity 31-12-2008	164,000	86	4,096	5,867	10,049
Dividend, March 2009	–	–	–	– 517	– 517
Net income January-December 2009	–	–	–	160	160
Shareholders' equity 31-12-2009	164,000	86	4,096	5,510	9,692
Dividend, March 2010	–	–	–	– 574	– 574
Net income January-December 2010	–	–	–	1,964	1,964
Shareholders' equity 31-12-2010	164,000	86	4,096	6,900	11,082

Cash Flow Statement

	2010	2009	2010	2009
SEKm	Oct-Dec	Oct -Dec	Jan-Dec	Jan-Dec
Net operating income	454	411	1,799	1,752
Central administrative expenses	– 26	– 22	– 84	– 81
Reversed depreciations	1	2	6	7
Net fi nancial items paid	– 167	– 152	– 595	– 611
Tax paid	– 5	7	– 9	– 10
Cash fl ow from operating activities before change in working capital	257	246	1,117	1,057
Change in current receivables	3	27	12	62
Change in current liabilities	20	– 40	84	– 129
Cash fl ow from operating activities	280	233	1,213	990
Investments in new construction, refurbishments and extensions	– 288	– 219	– 881	– 1,039
Property acquisitions	– 535	– 89	– 625	– 118
Change in liabilities at acquisitions of property	146	8	137	3
Property sales	0	36	219	36
Change in receivables at sales of property	4	– 35	32	– 35
Other net investments	1	– 7	– 4	– 8
Cash fl ow from investment activities	– 672	– 306	– 1,122	– 1,161
Change in long term liabilities	369	69	487	687
Dividend paid	–	–	– 574	– 517
Cash fl ow from investment activities	369	69	– 87	170
Cash fl ow for the period/year	– 23	– 4	4	– 1
Cash and bank, opening balance	35	12	8	9
Cash and bank closing balance	12	8	12	8

Multi year Summary
	2010	2009	2008	2007	2006	2005	2004	2003	2002	2001
Income Statement, SEKm
Rental income	2,759	2,694	2,501	2,259	2,014	1,907	1,856	1,758	1,684	1,571
Property costs	– 960	– 942	–831	–771	–700	–637	–628	–595	–560	–549
Net operating income	1,799	1,752	1,670	1,488	1,314	1,270	1,228	1,163	1,124	1,022
Central administrative expenses	– 84	– 81	– 71	–69	–67	–68	–69	–67	–63	–67
Net fi nancial items	– 574	– 541	–626	–495	–364	–382	–418	–428	–442	–414
Income from property management	1 141	1,130	973	924	883	820	741	668	619	541
Changes in value, properties	1,222	– 1,027	–1,262	920	1,145	932	660	–43	251	686
Changes in value, interest rate derivatives	291	102	–1,010	99	178	–40	–146	–13	–168	42
Items affecting comparability	–	–	–	–	–	–	–	–	–	–
Current tax	– 5	– 10	–14	– 22	–10	–1	–5	–1	–2	–
Deferred tax	– 685	– 35	650	– 434	–522	–417	–334	–171	–44	–338
Net income for the year	1,964	160	–663	1,487	1,674	1,294	916	440	656	931
Balance Sheet, SEKm
Investment properties	31,768	29,267	29,165	27,717	24,238	21,270	19,449	18,015	17,348	16,551
Other fi xed assets	156	201	230	123	200	103	94	167	172	394
Interest rate derivatives	–	–	–	44	–	–	–	–	–	–
Cash and bank	12	8	9	7	8	5	7	33	20	20
Total assets	31,936	29,476	29,404	27,891	24,446	21,378	19,550	18,215	17,540	16,965
Shareholders' equity	11,082	9,692	10,049	11,204	10,184	8,940	8,035	7,467	7,334	6,946
Deferred tax liability	3,502	2,824	2,785	3,322	2,723	2,126	1,659	1,294	1,124	1,081
Interest rate derivatives	574	865	966	–	55	233	391	245	232	64
Interest-bearing liabilities	15,781	15,294	14,607	12,582	10,837	9,396	8,834	8,598	8,264	8,254
Non-interest-bearing liabilities	997	801	997	783	647	683	631	611	586	620
Total shareholders' equity and liabilities	31,936	29,476	29,404	27,891	24,446	21,378	19,550	18,215	17,540	16,965

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	164,000
Income from property management, SEK	6.96	6.89	5.93	5.63	5.38	5.00	4.52	4.07	3.77	3.30
Income prop mgmt after tax (EPRA EPS), SEK	6.62	6.93	5.85	5.50	5.09	4.49	4.15	3.82	3.52	3.16
Earnings after tax, SEK	11.98	0.98	–4.04	9.07	10.21	7.89	5.59	2.68	4.00	5.68
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	194	178	178	169	148	130	119	110	106	101
Long term net asset value (EPRA NAV), SEK	92	82	84	88	79	69	61	55	53	49
Actual net asset value (EPRA NNNAV), SEK	85	73	75	85	76	65	57	52	50	48
Dividend, SEK (2010 proposed)	3.60	3.50	3.15	3.00	2.85	2.62	2.38	2.13	1.88	1.63
Dividend ratio	70%	69%	74%	74%	74%	73%	73%	72%	69%	68%
Financial key ratios
Net operating income margin	65%	65%	67%	66%	65%	67%	66%	66%	67%	65%
Average interest rate	3.7%	3.7%	4.7%	4.2%	3.7%	4.3%	4.9%	5.4%	5.7%	5.8%
Interest coverage ratio	299%	309%	255%	287%	343%	315%	277%	256%	240%	231%
Return on actual net asset value	21,5%	1.6%	–8.3%	16.2%	20.7%	18.2%	14.6%	7.2%	9.0%	17.9%
Return on total capital	9,8%	2.1%	1.2%	9.1%	10.4%	10.4%	9.6%	5.9%	7.6%	10.3%
Investments in properties, SEKm	1,506	1,165	2,738	2,598	2,283	1,357	1,268	1,108	1,050	1,741
Sales, SEKm	227	36	28	39	460	468	494	397	503	635
Equity/assets ratio	35%	33%	34%	40%	42%	42%	41%	41%	42%	41%
Loan to value ratio	50%	52%	50%	45%	45%	45%	45%	48%	48%	50%

Annual General Meeting

For the AGM on March 24, 2011 the Board of Directors proposes:

• a dividend of SEK 3.60 per share and March 29, 2011 as record day. The proposal is an increase of 3% compared to previous year,
• to amend the Articles of Association regarding notice procedures and auditors' term of offi ce in accordance with amended legislation,
• guidelines for remuneration to members of the executive management,
• 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, Rutger van der Lubbe representing Stichting Pensioenfonds ABP and Castellum's Chairman of the board Jan Kvarnström, proposes for the AGM;

• re-election of the present board members Mr. Jan Kvarnström, Mr. Per Berggren, Mrs. Marianne Dicander Alexandersson, Mrs. Ulla-Britt Fräjdin-Hellqvist, Mr. Christer Jacobson and Mr. Johan Skoglund, as members of the board of directors. Mr. Göran Lindén, who has been a member of the board since 1999, has declined re-election. Mr. Jan Kvarnström is proposed re-elected as chairman of the board of directors.
• re-election of auditor Carl Lindgren, new election of auditor Magnus Fredmer and re-election of deputy auditor Conny Lysér. Present auditor Ingemar Rindstig, who has been auditor of the company for two terms, is as result of current regulations prevented for re-election,
• that remuneration to the Board of Directors should be SEK 1,700,000 out of which SEK 500,000 should be allocated to the Chairman of the Board and SEK 240,000 to each one of the remaining members of the Board of Directors. The remuneration include work on the committees. Compared with last year, the proposal entails an increase of the remuneration with SEK 25,000 to the chairman and with SEK 15,000 to each of the other members of the board of directors. However, the total remuneration is reduced with SEK 125,000 since the board of directors is proposed to be reduced by one member. The election committee proposes further that fee to the auditors shall, during the term of offi ce, be based on approved accounts.
• for AGM to decide on appointing an election committee for the AGM 2012 and for the Chairman to contact the three largest registered or in an other way known shareholders at the end of the third quarter 2011 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.

Chief Executive Offi cer

Board of Directors

Board

Jan Kvarnström Chairman of the Per Berggren Board member

Marianne Dicander Alexandersson Board member Ulla-Britt Fräjdin-Hellqvist Board member

Göran Lindén Board member

Johan Skoglund

Secretary to the Board

Christer Jacobson

Board member

Board member

Håkan Hellström Chief Executive Offi cer

Henrik Saxborn Deputy Chief Executive Offi cer

Anette Asklin Financial Director

Claes Larsson MD Aspholmen Fastigheter AB

Anders Nilsson MD Fastighets AB Brostaden

Claes Junefelt MD Fastighets AB Corallen

Christer Sundberg MD Harry Sjögren AB

CASTELLUM YEAR-END REPORT 2010

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 10,000 shareholders. Shareholders registered abroad cannot be broken down in terms of directly held and nominee registered shares except for one foreign shareholder who has fl agged for holding over 5%, Stichting Pensioensfonds ABP. 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
	shares	voting rights
Shareholders on 31-12-2010	thousand	and capital
AFA Sjukförsäkrings AB	8,670	5.3%
AMF Pensionsförsäkrings AB	5,390	3.3%
László Szombatfalvy	5,000	3.0%
Magdalena Szombatfalvy	4,935	3.0%
Andra AP-fonden	3,719	2.3%
Länsförsäkringar Fastighetsfond	2,844	1.7%
Lannebo Småbolag	2,452	1.5%
Nordea Funds Sweden	2,173	1.3%
AMF Aktiefond Sverige	1,800	1.1%
AFA Trygghetsförsäkring AB	1,653	1.0%
Other shareholders registered in Sweden	50,478	30.8%
Shareholders registered abroad	74,886	45.7%
Total outstanding shares	164,000	100.0%
Repurchased shares	8,007
Total registered shares	172,007

Distribution of shareholders by country 31-12-2010

The Castellum share price as at 31 December, 2010 was SEK 91.55 (72.50) equivalent to a market capitalization of SEK 15,0 billion (11,9), calculated on the number of outstanding shares.

During the year a total of 152 million (191) shares were traded, equivalent to an average of 602,000 shares (761,000) per day, corresponding on an annual basis to a turnover rate of 93% (117%).

Growth, yield and financial risk

During the last 12-month period the total yield of the Castellum share has been 31% (25%), including dividend of SEK 3.50.

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

The Castellum share's price trend and turnover since IPO may 23, 1997 until January 20, 2011

	2010	3 years	10 years
		average/	average/
		year	year
Total yield of the share (incl. dividend)
Castellum	31%	15%	16%
NASDAQ OMX Stockholm (SIX Return)	27%	6%	6%
Real Estate Index Sweden (EPRA)	49%	13%	16%
Real Estate Index Europe (EPRA)	20%	–6%	6%
Growth
Income from prop. management SEK/share	1%	7%	10%
Net income for the year after tax SEK/share	1,122%	10%	11%
Long term net asset value SEK/share	12%	1%	8%
Actual net asset value SEK/share	16%	0%	7%
Dividend SEK/share	3%	6%	10%
Real estate portfolio SEK/share	9%	5%	8%
Change in property value, unweighted	4%	–1%	2%
Yield
Return on actual net asset value	21,5%	4,9%	14,1%
Return on total capital	9,8%	4,4%	8,5%
Financial risk
Interest coverage ratio	299%	288%	282%
Loan to value ratio	51%	50%	48%

Valuation - share price related key figures Earnings Capacity

Income from property management before tax for 2010 amounted to SEK 6.96 per share (6.89), which compared to the share price at the year-end gives a multiple of 13 (11).

Income from property management after tax relating to income from property management (EPRA EPS) amounted 2010 to SEK 6.62 (6.93) which gives a multiple of 14 (10).

Net income for 2010 amounted to SEK 11.98 per share (0.98), which gives a multiple of 8 (74).

Net asset value

The long term net asset value (EPRA NAV) can be calculated to SEKm 15,158 (13,381) corresponding to 92 SEK per share (82). The share price at the year-end was thus 99% (88%) of the long term net asset value.

The actual net asset value (EPRA NNNAV) can be calculated to SEKm 13,913 (11,979), corresponding to 85 SEK/share (73). The share price at the year-end was thus 108% (99%) of the actual net asset value.

Dividend Yield

The proposed dividend of SEK 3.60 (3.50) corresponds to a yield of 3.9% (4.8%) based on the share price at the year-end.

The share's earnings multiple

Share price/net asset value

The share's dividend yield

Calendar

Annual Report 2010 mid-February 2011 Annual General Meeting 24 March, 2011 Interim Report January-March 2011 19 April, 2011, around 11 am Half-year Report January-June 2011 12 July, 2011 Interim Report January-September 2011 18 October, 2011 Year-end Report 2011 24 January, 2012

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 2011

The annual general meeting of shareholders will be held on Thursday 24 March 2011, 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 by Friday 18 March 2011 and must also have notifi ed their attendance to the company no later than 4 pm on Friday 18 March 2011.

Summons to the annual general meeting will be around 21 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 Annual General Meeting will be available on the website by then. The summons will include the items to be addressed at the Annual General Meeting. Shareholders who wish to attend the Annual General Meeting 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 18 March 2011. 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 24 March, 2011. For practical reasons the request should be received by the company no later than 4 February, 2011. The request should be addressed to Castellum AB, Att: Håkan Hellström, Box 2269, 403 14 Göteborg.

Subsidiaries

Aspholmen Fastigheter AB

Elementvägen 14, 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 2010 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