Castellum — Interim / Quarterly Report 2009

Oct 15, 2009

Interim Report January-September 2009

Interim Report January-September 2009

Castellum is one of the major listed real estate companies in Sweden. The fair value of the real estate portfolio amounts to SEK 29 billion, and comprises premises for offi ce, retail, warehouse and industrial purposes.

The real estate portfolio is owned and managed by six wholly owned subsidiaries with strong local roots in fi ve growth regions: Greater Gothenburg (incl. Borås, Halmstad, 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 the period January-September 2009 amounted to SEKm 2,022 (SEKm 1,849 corresponding period previous year).
• Income from property management improved by 19% to SEKm 882 (739), equivalent to SEK 5.38 (4.51) per share.
• Changes in value on properties amounted to SEKm 953 (– 791) and on interest rate derivatives to SEKm 102 (– 195).
• Net income after tax amounted to SEKm 17 (– 172), equivalent to SEK 0.10 (– 1.05) per share.
• The investments amounted to SEKm 849 (2,221).
• The total value of the properties amounted to SEKm 29,061 (29,165 at the end of previous year) with a loan to value ratio of 52% (50%).

SEK	2009 Jan-Sept	2008 Jan-Sept	2008		2007		2006		2005		2004		2003		2002
Income property management	5.38	4.51	5.93		5.63		5.38		5.00		4.52		4.07		3.77
Change		+19%		+5%		+5%		+8%		+11%		+11%		+8%
Net income after tax	0.10	–1.05	– 4.04		9.07		10.21		7.89		5.59		2.68		4.00
Change		pos		neg		–11%		+29%		+41%		+108%		–33%
Dividend			3.15		3.00		2.85		2.62		2.38		2.13		1.88
Change				+5%		+5%		+9%		+11%		+12%		+13%

Data per share

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 flow 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 flow, 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 justified from a business standpoint and when an alternative investment with a higher yield can be found.

Strategy

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%.

Repurchase of own shares shall be available as a method to use for adjusting the company's capital structure to the company's capital needs. Transfer of 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 financial 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. Lybeck 10 in Malmö

Customers

Being close to the customers

Castellum's operations are run in a small-scale organization comprising six subsidiaries which own and manage the properties under their own brands. By having local roots the subsidiaries get close relations with the customers, and good knowledge of the market situation and rental development within each market area.

Castellum works with facility management services that can improve and facilitate the customer's day-to-day operations and improve the attractiveness of the area where the customer is operating.

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.

Castellum's customers refl ect Swedish economy

Castellum has just over 4,000 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 makes up for approx. 1% of Castellum's total rental income and the proportion of customers dependent on export is low.

Satisfi ed customers

In order to measure how well Castellum meets the customers' expectations and to follow up and evaluate efforts made, an external customer survey is carried out annually.

The latest survey from 2008 which included offi ce, warehouses, industry- and retail properties, continues to show consistently high marks for Castellum. A large portion of the surveyed customers replies willing to lease from Castellum again and gladly recommends Castellum as a landlord to others.

Commercial leases

The most common terms for a new lease is 3-5 years with a nine months notice and rents are paid quarterly in advance. The rental level can be changed when the lease in question is due for renegotiation. Lease contracts usually contain a so called base-rent, i.e. the rental level at the time of signing, and an index clause which provides for a yearly upward adjustment by a certain percentage of the infl ation previous year or a minimum upward adjustment.

Jönköping, Linköping, Värnamo and Växjö

Centrala, Northern and Eastern Greater Gothenburg

Lease contracts usually contain an additional charge for the tenant's share of the property's total cost for heating, cooling and property tax.

Decentralized organization

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 short decision making processes and creates a customer oriented and active organization. Property management is mainly carried out by own personnel.

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 has approx. 225 employees.

Responsible business

Castellum is working towards a sustainable development by 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 to be Green Building Corporate Partner by EU, which can be seen as a receipt of long-term effi cient work in decreasing the energy use.

Southern Greater Gothenburg, Borås, Alingsås and Halmstad

Income, Costs and Results

All amounts correspond to the whole period or the position at the end of the period. Comparisons, shown in brackets, are made with the corresponding period previous year except in parts describing assets and fi nancing, where comparison are made with the end of previous year. For defi nitions see Castellum's website, www.castellum.se

Income from property management, i.e. net income excluding changes in value and tax, amounted to SEKm 882 (739), equivalent to SEK 5.38 (4.51) per share. The improvement is 19% and above all an effect of lower interest rates, but also higher rental incomes and investments made have had a positive effect. The interim report is Castellum's 50th report since the introduction on the stock exchange in May 1997 with continuous increase in income from property management.

During the period, changes in value on properties amounted

to SEKm –953 (–791) and on interest rate derivatives to SEKm 102 (–195). Net income for the period was SEKm 17 (–172), equivalent to SEK 0.10 (–1.05) per share.

Rental income

Group rental income amounted to SEKm 2,022 (1,849). The improvement is chiefl y an effect of higher rental levels and investments made.

For offi ce and retail properties, the average contracted rental level, including charged heating, cooling and property tax, amounted to SEK 1,206 per sq.m., whereas it for warehouse and industrial properties amounted to SEK 695 per sq.m.

Rental levels, which are considered to be in line with the market, have increased by approx. 4% compared with previous year and is mainly an effect of index clause adjustments.

Lease maturity structure

The average economic occupancy rate was 89,9%. The total annual rental value for vacant premises amounted to SEKm 324.

The gross leasing (i.e. the annual value of total leasing) during the period was SEKm 173 (210), of which SEKm 22 (33) were leases based on new constructions, extensions and refurbishments. Notices of termination amounted to SEKm 200 (140), of which bankruptcies were SEKm 27 (10), hence net leasing for the period were SEKm –27 (70). The net leasing for the third quarter amounted to SEKm 0 (8). The time difference between reported net leasing and the effect in income thereof is estimated to between 9-18 months.

Net leasing

Despite the strong recession since last fall the demand for premises is still on relatively good levels and both notices of termination and bankruptcies were less than expected. Neither are there any impairs in the customers solvency compared to earlier.

At the moment there is no pressure on the rental levels in Castellums' local markets, due to generally high occupancy rates together with limited production of new properties. The negative inflation during the year will lead to a downward index adjustment on the rentals with 1% next year.

Property costs

Property costs amounted to SEKm 681 (608) corresponding to SEK 288 per sq.m. (267). The increase is chiefl y an effect of a colder year compared to last year. Energy consumption for heating during the period has been calculated to 87% (81%) 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 7 (7) corresponding to 0.3% of rental income.

Property costs, SEK/sq.m.	Offi ce/	Warehouse/
	Retail	Industrial	Total
Operating expenses	204	114	161
Maintenance	37	18	28
Ground rent	8	5	7
Real estate tax	62	17	40
Direct property costs	311	154	236
Leasing and property adm. (indirect)	–	–	52
Total	311	154	288
Previous year	296	142	267

Central administrative expenses

Central administrative expenses were SEKm 59 (52). This includes costs for a profi t and share price related incentive plan for 10 persons in executive management of SEKm 11 (4).

Net financial items

Net fi nancial items were SEKm –400 (–450). The net fi nancial items have been affected positively with SEKm 110 due to that the average interest rate level has decreased 1.1%-units to 3.6% (4.7%)

Changes in value

The transaction volume of commercial properties in Sweden during the third quarter has continued to be on low levels, despite the improvement of the possibilities of fi nancing. The low turnover rate results in continued diffi culties to assess a fair value based on made transactions. However, it is Castellum's apprehension that the sellers and buyers expected view on prices has stabilized during the third quarter, wherefore the assessed market yield is unchanged.

The total change in value of Castellum's portfolio during the period amounted to SEKm –953 (–791) corresponding to 3% of the property value. The change in value consists of SEKm –635 referred an increased estimated market yield during the fi rst half-year, SEKm –360 referred to changed future cash-fl ow and just over SEKm 40 referred to profi ts in the projects.

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, above all due to the falling long term interest rates, with SEKm 102 (–195) and the value was SEKm –865 (–966) at the end of the period.

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 is 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 1,639 (1,830), while the properties' fair value exceed their fi scal value by SEKm 12,252 (12,419). As deferred tax liability a full nominal 26.3% tax of the net difference is reported, SEKm 2,791 (2,785).

Referring to the legal cases from May which inter alia affects the real estate business and mainly concerns selling partnership shares, it can be established that Castellum have not carried out the kind of transaction that has been tried by the Supreme Administrative Court.

Thereafter both a anti-abuse provision and a preliminary bill has come. The anti-abuse provision announces a restriction in the right to deduction for capital losses on partnerships shares, which among others results in that the deferred tax asset on surplus values on such shares not can be accounted for any more. Castellum has no deferred tax asset regarding such surplus values in the accounts.

The proposal in the preliminary bill of tax-free capital gains on some partnership shares also includes a proposal that negative adjusted acquisition values on such shares shall be reversed to taxation. If the proposed laws in the preliminary bill will be carried out, it will result in a deferred tax cost of SEKm 10 for Castellum, which has been reserved in this interim account.

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

Tax Calculation	Basis	Basis
	current tax	deferred
SEKm		tax
Income from property management	882
Deductions for tax purposes
depreciations	– 408	408
reconstructions	– 173	173
reconstructions, adjustement previous years	– 182	182
Other tax allowances	5	18
Taxable income from property management	124	781
Changes in value on properties	–	– 953
Changes in value on interest rate derivatives	102	–
Taxable income for the period	226	– 172
Tax loss carry forwards, opening balance	– 1,830	1,830
Tax loss carry forwards, closing balance	1,639	– 1,639
Taxable income	35	19
Of which 26.3% current/deferred tax	– 9	– 5

Accounting Principles

Castellum follows the by the EU adopted IFRS standards and the interpretations of them (IFRIC). This interim 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, as well as the segment classifi cation. 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

Akvamarinen 1 in Helsingborg which was completed during 2009

Ongoing project Vägmästaren in Kungsbacka

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 75% of the portfolio is in the three major urban regions.

The commercial portfolio consists of 64% 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 876,000 sq.m. unutilized building rights. Castellum has ongoing projects with remaining investments of approx. SEKm 600.

Investments

During the period the real estate portfolio has changed as below.

Changes in the real estate portfolio	Value, SEKm	Number
Real estate portfolio on 1 January, 2009	29,165	587
+ Acquisitions	29	3
+ New constructions, extensions and reconstructions	820	–
– Sales	–	–
+/– Unrealized changes in value	– 953	–
Real estate portfolio on 30 September, 2009	29,061	590

During the period investments totalling SEKm 849 (2,221) were made, of which SEKm 29 (1,174) were acquisitions and SEKm 820 (1,047) new constructions, extensions and reconstructions. Of the total investments SEKm 247 relates to Greater Stockholm, SEKm 193 to Mälardalen, SEKm 170 to Eastern Götaland, SEKm 154 to Greater Gothenburg and SEKm 85 to the Öresund Region.

Investments

Property value

Castellum assesses the value of the properties through internal valuations. These are based on a 10-year cash fl owbased model with an individual assessment for each property of both its future earnings capacity and the required market yield.

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. In order to ensure and validate the quality of the internal valuations, an external valuation representing over 50% of the portfolio is made every year-end. The difference between the internal and external values has historically been insignificant.

Based on these internal valuations the value of the properties was assessed to SEKm 29,061 (29,165), corresponding to almost SEK 9,000 per sq.m. The normalized yield can be calculated to 7.4%.

Normalized yield (exkl. projects/land and building rights)	SEKm
Net operating income properties	1,457
Adjusted for:
Index adjustment following year	– 21
Real occupancy rate, 94% at the lowest	146
Property costs to a normal year	5
Property administration, 30 SEK/sq.m.	– 70
Normalized net operating income for the period	1,517
Valuation (excl. building rights of SEKm 405)	27,285
Normalized yield annual basis	7.4%

Castellum's real estate portfolio

	30-09-2009				January-September 2009
		Area	Fair	Fair	Rental	Rental	Economic	Rental	Property	Property	Net opera
	No. of	thous.	value	value	value	value	occupancy	income	costs	costs	ting 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	5,137	12,840	374	1,246	94.5%	353	90	300	263
Öresund Region	52	324	4,683	14,446	341	1,404	86.9%	297	81	333	216
Greater Stockholm	45	304	3,624	11,919	302	1,326	82.8%	250	74	325	176
Mälardalen	68	309	2,970	9,606	242	1,043	92.5%	224	69	299	155
Eastern Götaland	48	282	2,332	8,265	206	973	91.9%	189	63	298	126
Total offi ce/retail	291	1,619	18,746	11,574	1,465	1,206	89.6%	1 313	377	311	936
Warehouse/industrial
Greater Gothenburg	96	611	4,181	6,846	324	707	93.9%	304	68	149	236
Öresund Region	42	296	1,644	5,563	149	673	86.6%	129	31	140	98
Greater Stockholm	36	193	1,421	7,348	130	898	88.0%	115	32	218	83
Mälardalen	42	177	971	5,494	93	698	91.0%	84	21	162	63
Eastern Götaland	35	186	727	3,901	67	477	86.7%	58	17	121	41
Total warehouse/industrial	251	1 463	8,944	6,115	763	695	90.5%	690	169	154	521
Total	542	3,082	27,960	8,984	2,228	964	89.9%	2,003	546	236	1,457
Leasing and property administration									121	52	– 121
Total after leasing and property administration									667	288	1,336
Development projects	16	104	982	–	36	–	–	19	14	–	5
Undeveloped land	32	–	389	–	–	–	–	–	–	–	–
Total	590	3,186	29,061	–	2,264	–	–	2,022	681	–	1,341

The table above relates to the properties owned by Castellum at the end of the period and refl ects the income and costs of the properties as if they had been owned during the whole period.

Fair value by property type Fair value by region

Greater Gothenburg 33%	Greater Stockholm 19%
	Mälardalen 15%
Öresund Region 22%	Eastern Götaland 11%

Property related key ratios	2009 Jan-Sept	2008 Jan-Sept	2008 Jan-Dec
Rental value, SEK/sq.m.	964	921	921
Economic occupancy rate	89,9%	89.5%	89.7%
Property costs, SEK/sq.m.	288	267	268
Net operating income, SEK/sq.m.	578	558	559
Fair value, SEK/sq.m.	8,984	9,020	8,984
Interest-bearing liabilities, SEK/sq.m.	4,779	4,601	4,605
Number of properties	590	580	587
Lettable area, thousand sq.m.	3,186	3,138	3,172

Segment information	Income from property management
SEKm	2009 Jan-Sept	2008 Jan-Sept	2009 Jan-Sept	2008 Jan-Sept
Greater Gothenburg	657	598	324	269
Öresund Region	426	399	196	173
Greater Stockholm	366	355	161	137
Mälardalen	323	266	123	95
Eastern Götaland	250	231	103	83
Total	2,022	1,849	907	757

The discrepancy between the income from property management of SEKm 907 (757) accounted for and the groups accounted income before tax of SEKm 31 (–247) above consists of unallocated income from property management of SEKm –25 (–18), changes in property value of SEKm –953 (–791) and changes in values of interest rate derivatives of SEKm 102 (–195).

Financing

Financing

Shareholders' equity and net asset value

Shareholders' equity was SEKm 9,549 (10,049). The Board has mandate to decide on repurchase and transfer of own shares.

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	9,549	58
Reversed 26.3% deferred tax	2,791	17
Net asset value excluding tax	12,340	75
Estimated real liability, deferred tax 5%	– 531	– 3
Net asset value	11,809	72
Uncertainty range valutation of properties
+/– 5% after tax	+/– 1,380	+/– 8

Interest-bearing liabilities

During the latest months some stabilization has been seen on the credit market concerning both the access to funding and lower credit margins.

Castellum's access to long-term funding is still good and has not been directly affected by the situation on the credit market.

Loan maturity structure

During the period Castellum has signed new agreements of 1,3 billion SEK. As of 30 September, 2009 Castellum had long term binding credit agreements totalling SEKm 16,562 (15,800), long term bonds totalling SEKm 500 (650), short term binding credit agreements totalling SEKm 920 (770). After deduction of liquid assets of SEKm 12 (9), net interest bearing liabilities were SEKm 15,213 (14,598).

Loans in banks are secured by pledged mortgages and/or fi nancial covenants. 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 320%.

The average duration of Castellum's long term credit agreements was 5.3 years (5.5). Margins and fees on long term credit agreements had an average duration on 3.0 years (3.2).

Loan maturity structure

Long term, SEKm	Credit agreements	Utilized
1 - 2 years	1,200	500
2 - 3 years	–	–
3 - 4 years	5,000	4,992
4 - 5 years	5,700	5,700
> 5 years	4,862	3,200
Total long term credit agreements	16,762	14,392
Total short term credit agreements (0-1 year)	1,220	821
Total credit agreements	17,982	15,213
Unutilized credit in long term credit agreements		1,549

Interest rate maturity structure

The average effective interest rate as of 30 September, 2009 was 3.6% (4.8%). The market interest rate for an equal portfolio, regarding both current market rate and credit margin, can be assesed to 3.0%. The average fi xed interest term on the same date was 2.4 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

	Amount, SEKm	Average interest rate
0 - 1 year	7,061	2.4%
1 - 2 years	702	4.2%
2 - 3 years	800	4.6%
3 - 4 years	2,050	5.0%
4 - 5 years	2,200	4.5%
5 - 10 years	2,400	4.8%
Total	15,213	3.6%

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 30 September, 2009, the market value of the interest rate derivative portfolio amounted to SEKm –865.

Consolidated Income Statement
	2009	2008	2009	2008	Rolling 12 months	2008
SEKm	July - Sept	July - Sept	Jan - Sept	Jan - Sept	Oct 08 - Sept 09	Jan - Dec
Rental income	676	631	2,022	1,849	2,674	2,501
Operating expenses	– 101	– 92	– 370	– 330	– 495	– 455
Maintenance	– 23	– 21	– 79	– 73	– 102	– 96
Ground rent	– 6	– 5	– 16	– 15	– 22	– 21
Real estate tax	– 33	– 30	– 95	– 90	– 120	– 115
Leasing and property administration	– 36	– 32	– 121	– 100	– 165	– 144
Net operating income	477	451	1,341	1,241	1,770	1,670
Central administrative expenses	– 20	– 18	– 59	– 52	– 78	– 71
Net fi nancial items	– 132	– 167	– 400	– 450	– 576	– 626
Income from property management	325	266	882	739	1,116	973
Changes in value
Properties	– 139	– 324	– 953	– 791	– 1,424	– 1,262
Interest rate derivatives	34	– 255	102	– 195	– 713	– 1,010
Income before tax	220	– 313	31	– 247	– 1,021	– 1,299
Current tax	– 4	– 5	– 9	– 11	– 12	– 14
Deferred tax	– 66	97	– 5	86	559	650
Net income for the period/year	150	– 221	17	– 172	– 474	– 663

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

Data per Share
	2009 July - Sept	2008 July - Sept	2009 Jan - Sept	2008 Jan - Sept	Rolling 12 months Oct 08 - Sept 09	2008 Jan - Dec
Average number of shares, thousand	164,000	164,000	164,000	164,000	164,000	164,000
Earnings after tax, SEK	0.91	– 1.35	0.10	– 1.05	– 2.89	– 4.04
Income from property management, SEK	1.98	1.62	5.38	4.51	6.80	5.93
Outstanding number of shares, thousand	164,000	164,000	164,000	164,000	164,000	164,000
Fair value of properties, SEK	177	178	177	178	177	178
Net asset value (5% deferred tax), SEK	72	81	72	81	72	75
Shareholders' equity, SEK	58	64	58	64	58	61

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

Financial Key Ratios
	2009	2008	2009	2008	Rolling 12 months	2008
	July - Sept	July - Sept	Jan - Sept	Jan - Sept	Oct 08 - Sept 09	Jan - Dec
Net operating income margin	71%	71%	66%	67%	66%	67%
Interest coverage ratio	346%	259%	320%	264%	294%	255%
Return on equity	6.4%	– 8.2%	0.2%	– 2.1%	– 4.6%	– 6.1%
Return on net asset value	7.0%	– 8.5%	0.2%	– 1.5%	– 7.4%	– 8.3%
Return on total capital	4.3%	1.5%	1.5%	1.8%	0.9%	1.2%
Investments, SEKm	283	639	849	2,221	1,366	2,738
Loan to value ratio	52%	50%	52%	50%	52%	50%

Consolidated Balance Sheet

SEKm	30 Sept 2009	30 Sept 2008	31 Dec 2008
Assets
Investment properties	29,061	29,119	29,165
Other fi xed assets	13	15	15
Current receivables	180	139	215
Cash and bank	12	10	9
Total assets	29,266	29,283	29,404
Shareholders' equity and liabilities
Shareholders' equity	9,549	10,540	10,049
Deferred tax liability	2,791	3,346	2,785
Long term interest-bearing liabilities	15,225	14,437	14,607
Interest rate derivatives	865	151	966
Non interest-bearing liabilities	836	809	997
Total shareholders' equity and liabilities	29,266	29,283	29,404

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	11,098	11,204
Dividend, March 2008	–	–	–	– 492	– 492
Net income January-September 2008	–	–	–	– 172	– 172
Shareholders' equity 30-09-2008	164,000	86	20	10,434	10,540
Net income October-December 2008	–	–	–	– 491	– 491
Shareholders' equity 31-12-2008	164,000	86	20	9,943	10,049
Dividend, March 2009	–	–	–	– 517	– 517
Net income January-September 2009	–	–	–	17	17
Shareholders' equity 30-09-2009	164,000	86	20	9,443	9,549

Cash Flow Statement

	2009	2008	2008
SEKm	Jan - Sept	Jan - Sept	Jan - Dec
Net operating income	1,341	1,241	1,670
Central administrative expenses	– 59	– 52	– 71
Reversed depreciations	5	4	6
Net fi nancial items paid	– 459	– 399	– 499
Tax paid	– 17	– 26	– 26
Cash fl ow from operating activities before change in working capital	811	768	1,080
Change in current receivables	35	– 32	– 108
Change in current liabilities	– 89	– 4	106
Cash fl ow from operating activities	757	732	1,078
Investments in new constructions, extensions and reconstructions	– 820	– 1,047	– 1,526
Property acquisitions	– 29	– 1,061	–1,096
Change in liabilities at acquisitions of property	– 5	– 6	– 7
Property sales	0	28	25
Change in receivables at sales of property	0	3	3
Other net investments	– 1	– 9	– 8
Cash fl ow from investment activities	– 855	– 2,092	– 2,609
Change in long term liabilities	618	1,855	2,025
Dividend paid	– 517	– 492	– 492
Cash fl ow from investment activities	101	1,363	1,533
Cash fl ow for the year	3	3	2
Cash and bank, opening balance	9	7	7
Cash and bank closing balance	12	10	9

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	+30/–30	+	–
Property costs	–9/+9	–	0
Interest costs	–55/0*	–	+

* 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 volatile. Assuming a normal capital market, the value of the properties is 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, lower required yields and positive real development in net operating income lead to an upward adjustment in prices, while a weaker demand, higher required yields and negative 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 –5,812		–2,906	–	+2,906	+5,812
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	July-Sept	July-Sept	Jan-Sept	Jan-Sept
Income	2	2	9	7
Operating expenses	– 15	– 13	– 46	– 37
Net fi nancial items	0	0	12	12
Changes in value, interest
rate derivatives	34	– 255	102	– 195
Income before tax	21	– 266	77	– 213
Tax	– 6	74	– 21	59
Net income for the period	15	– 192	56	– 154
		30 Sept	30 Sept	31 Dec
BALANCE SHEET, SEKm		2009	2008	2008
Participations in group companies		4,087	4,087	4,087
Receivables, group companies			15,951 14,759 15,555
Other assets		224	59	244
Cash and bank		0	0	0
Total			20,262 18,905 19,886
Shareholders' equity		3,141	3,722	3,601
Interest bearing liabilities			14,923 14,137 14,304
Interest bearing liabilities,
group companies		1,146	735	775
Interest rate derivatives		865	151	966
Other liabilities		187	160	240
Total			20,262 18,905 19,886
Pledged assets			15,239 13,008 13,680
Contingent liabilities		300	300	300

Election Committee

According to the 2009 Annual General Meeting's decision an election committee shall be appointed to make proposals to the Annual General Meeting 2010 regarding the number of Board members, election of members of the Board of Directors, including chairman and fees for the Board of Directors.

The election committee will be established by the Chairman of the Board of Directors contacting the three largest registrered or otherwise known shareholders at the end of the third quarter in order for them to each appoint one member. The appointed members, together with the Chairman of the Board of Directors as convener, form the election committee. The election committee will itself appoint its chairman among its members.

The election committee is formed by: Maj-Charlotte Wallin representing AFA Försäkring, Paul Frentrop representing Stichting Pensioenfonds ABP, Lars-Åke Bokenberger representing AMF Pension and the Chairman of the Board Jan Kvarnström.

Gothenburg 15 October, 2009

Håkan Hellström Chief Executive Offi cer This Interim Report has not been examined by the company's auditors.

The Castellum Share

The Castellum share is listed on NASDAQ OMX Stockholm AB Large Cap. At the end of the period the company had about 8,400 shareholders. Shareholders registered abroad cannot be broken down in terms of directly held and nominee registered shares. The ten single largest Swedish shareholders can be seen in the table below.

Shareholders	Number of shares thousand	Percentage of voting rights and capital
László Szombatfalvy	10,000	6.1%
AFA Sjukförsäkrings AB	8,670	5.3%
AMF Pensionsförsäkrings AB	7,700	4.7%
Andra AP-fonden	3,439	2.1%
Fjärde AP-fonden	3,239	2.0%
AFA Trygghetsförsäkring AB	1,945	1.2%
Lannebo Småbolag	1,900	1.2%
Kas Depositary Trust Company	1,897	1.2%
Första AP-fonden	1,705	1.0%
Swedbank Robur Småbolagsfond Sverige	1,320	0.8%
Övriga aktieägare registrerade i Sverige	48,288	29.4%
Aktieägare registrerade i utlandet	73,897	45.0%
Totalt utestående aktier	164,000	100.0%
Återköpta egna aktier	8,007
Totalt registrerade aktier	172,007

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

Distribution of shareholders by country

The Castellum share price as at 30 September, 2009 was SEK 67.50 equivalent to a market capitalization of SEK 11.1 billion, calculated on the number of outstanding shares.

During the period a total of 154 million shares were traded, equivalent to an average of 820,000 shares per day, corresponding on an annual basis to a turnover rate of 126%.

Growth, yield and fi nancial risk

During the last 12-month period the total yield of the Castellum share has been 19%, including dividend of SEK 3.15.

Total yield of the share (incl. dividend)

	Oct 08 -	3 years	10 years
	Sept 09 average/year average/year
Castellum	+ 19%	+ 1%	+ 16%
NASDAQ OMX Stockholm (SIX Return)	+ 19%	+ 1%	+ 5%
Real Estate Index Sweden (EPRA)	+ 20%	– 1%	+ 16%
Real Estate Index Europe (EPRA)	– 14%	– 15%	+ 6%

The Castellum share's price trend and turnover since IPO may 23, 1997 until October 13, 2009

Valuation - share price related key figures

Earnings capacity

Income from property management before tax amounted on rolling annual basis to SEK 6.80 per share, which compared to the share price at the end of the period gives a multiple of 10.

Net income on rolling annual basis amounted to SEK –2.89 per share, which gives a negative multiple.

The share's earnings multiple

Net asset value

The net asset value, using an estimated discounted real deferred tax liability of 5%, can be calculated to SEKm 11,809, corresponding to 72 SEK/share. The share price at the end of the period was thus 94% of the net asset value.

Share price/net asset value

Dividend yield

The latest dividend of SEK 3.15 corresponds to a yield of 4.7% based on the share price at the end of the period.

The share's dividend yield

Calendar

Year-end Report 2009 20 January, 2010 Annual Report 2009 During 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, Chief Executive Offi cer, or Ulrika Danielsson, Finance Director, telephone +46 31-60 74 00.

Annual General Meeting

Castellum AB's Annual General Meeting is planned to be held on Thursday March 25, 2010 at 5 pm in RunAn, Chalmers kårhus, Chalmersplatsen 1, Gothenburg.

A matter adressed to the election committee from a shareholder should be sent to Castellum AB, Att: Election committee, Box 2269, 403 14 Göteborg, no later than December 11, 2009.

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.

www.castellum.se

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

Subsidiaries

Aspholmen Fastigheter AB

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

Fastighets AB Briggen

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

Fastighets AB Brostaden

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

Fastighets AB Corallen

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

Eklandia Fastighets AB

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

Harry Sjögren AB

Kråketorpsgatan 20, SE-431 53 Mölndal Telephone +46 31-706 65 00 Fax +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 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