Interim Report January-September 2011

Castellum is one of the major listed real estate companies in Sweden. The fair value of the real estate portfolio amounts to SEK 33 billion, and comprises commercial properties.

The real estate portfolio is owned and managed by six wholly owned subsidiaries with strong local roots in five growth regions: Greater Gothenburg (incl. Borås, Halmstad and Alingsås), the Öresund Region (Malmö, Lund, Helsingborg and Copenhagen), 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 2011 amounted to SEKm 2,181 (SEKm 2,058 corresponding period previous year).
Income from property management amounted to SEKm 889 (861), corresponding to SEK 5.42 (5.25) per share, an increase of 3%.
Changes in value on properties amounted to SEKm 436 (563) and on interest rate derivatives to SEKm –365 (–31).
Net income after tax for the period amounted to SEKm 719 (1,038), corresponding to SEK 4.38 (6.33) per share.
Net investments amounted to SEKm 1,066 (456) of which SEKm 775 (593) were new constructions, extensions and reconstructions.

	2011 Jan-Sept	2010 Jan-Sept	2010	2009	2008	2007	2006	2005	2004	2003	2002
Income from property management, SEK/share	5.42	5.25	6.96	6.89	5.93	5.63	5.38	5.00	4.52	4.07	3.77
Change previous year	+3%	–2%	+1%	+16%	+5%	+5%	+8%	+11%	+11%	+8%	+14%
Net income after tax, SEK/share	4.38	6.33	11.98	0.98	– 4.04	9.07	10.21	7.89	5.59	2.68	4.00
Change previous year	–31%		pos. +1,122%	pos.	neg.	–11%	+29%	+41%	+108%	–33%	–30%
Dividend, SEK/share			3.60	3.50	3.15	3.00	2.85	2.62	2.38	2.13	1.88
Change previous year			+3%	+ 11%	+5%	+5%	+9%	+11%	+12%	+13%	+15%

Property value, SEKm	33,273	30,286		31,768 29,267	29,165	27,717	24,238	21,270	19,449	18,015 17,348
Netinvestments, SEKm	1,066	456	1,279	1,129	2,710	2,559	1,823	889	774	711	547
Loan to value	50%	51%	50%	52%	50%	45%	45%	45%	45%	48%	48%

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 provides the preconditions for robust growth in the company, and offers 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, net investments of at least 5% of the property value will be made yearly. At the moment, this is equivalent to approx. SEKm 1,600. The previous ambition to invest at least SEKm 1,000 per year has thus been adjusted since the real estate portfolio and investment capacity were lower when it was adopted. 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 for adjusting the company's capital structure to the company's capital need and as payment or funding of real estate investments. Company-owned shares may not be traded for the sole purpose of capital gain.

Dividend

At least 50% of pre-tax property management income will be distributed. However, investment plans, consolidation needs, liquidity and fi nancial position in general will be taken into account. Since the base changed on income from property management before tax, 50% of the new base is a higher level than 60% of income from property management after nominal tax as well as closer to the actual dividend in recent years.

The stock and credit markets

Castellum will work for a competitive total return on the company's share relative to risk and also strive for high liquidity. However, all actions will be made from a long-term perspective and the company will hold frequent, open and fair reports to shareholders, the capital and credit markets and the media, without disclosing any individual business relationship.

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

Customers and organization

The customers - a reflection of Swedish domestic economy

Castellum has approx. 4,600 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.

Satisfied customers

It is important that Castellum meets customers expectations. To follow up and evaluate efforts, an external customer survey is carried out annually, Satisfi ed Customer Index.

The latest survey, which was carried out 2010 and included offi ces, warehouses, industry and retail, continues to show consistently high marks for Castellum. Most customers surveyed reply that they are willing to lease from Castellum again and gladly recommend Castellum as a landlord to others.

Commercial leases

Commercial leases are signed for a specifi ed 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. Leases may also contain additions for the tenant's share of the property's total heating, cooling and property-tax costs.

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 forge close relationships with customers and develop thorough knowledge of the market situation and rental development within each market area. Property management is mainly carried out by Castellum personnel.

Subsidiaries with strong brands

Castellum has six wholly owned subsidiaries which each engage about 35 employees. The subsidiary organizations are not identical but are in principle made up of a Managing Director, 3-4 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 3-5 facility managers. Everyone has customer contact. The fl at organization provides a short decision-making process and creates a customer oriented and active organization. Castellum subsidiaries operate under their own names, which are strong brands on each local market.

Employees

Castellum works actively to hire and retain top-notch employees by offering a stimulating work environment, competence development and sharing of experiences both internally and externally.

Employee viewpoints on Castellum are monitored regularly and surveys show that employees enjoy their working situation and have high confi dence in the company and its management.

The group has approx. 230 employees.

Measuring, comparing and controlling

Castellum measures and compares subsidiary management effi ciency and asset value growth in the real estate portfolio. Within the Group, experiences are shared among 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 fi nance and fi nancial work, information, information safety, environment, insurance, electricity and personnel, etc.

Responsible business

Since 1995, Castellum has been consciously working with sustainability, i.e., developing the properties in those cities where the subsidiaries are present, creating a common set of values for actions towards employees, customers and vendors as well as actively working with environmental issues.

The environmental work is focused on effi cient energyconsumption and improving the environmental status of each property. Two of Castellum's subsidiaries, Fastighets AB Brostaden and Harry Sjögren AB, have been designated Green Building Corporate Partner by the EU. This can be seen as acknowledgement of effi cient long-term efforts to decrease energy consumption. The group has approx. 85 Green Building classifi ed properties and one property with BREEAM-certifi cate.

and Västerås

Malmö, Lund, Helsingborg and Copenhagen

Jönköping, Linköping, Värnamo and Växjö

Central, Northern and Eastern Gothenburg

Southern Greater Gothenburg, Borås, Halmstad and Alingsås

Income, Costs and Results

Comparisons, shown in brackets, are made with the corresponding period previous year except in parts describing assets and fi nancing, where comparisons 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 for the period January-September 2011 to SEKm 889 (861), equivalent to SEK 5.42 (5.25) per share - an increase of 3%. Income from property management rolling four quarters amounted to SEKm 1,169 (1,109) equivalent to SEK 7.13 per share (6.76) - an increase of 5%.

Income from Property Management per share

During the period, changes in value on properties amounted to SEKm 436 (563) and on interest rate derivatives to SEKm –365 (–31). Net income for the period was SEKm 719 (1,038), equivalent to SEK 4.38 (6.33) per share.

Rental income

Group rental income amounted to SEKm 2,181 (2,058). For offi ce and retail properties, the average contracted rental level, including charged heating, cooling and property tax, amounted to SEK 1,220 per sq.m., whereas for warehouse and industrial properties, it amounted to SEK 723 per sq.m. Rental levels, which are considered to be in line with the market, have increased by 1.6% in comparable portfolio compared with previous year.

The average economic occupancy rate was 89.4%.

Rental value and economic occupancy rate

The total annual rental value for vacant premises on yearly basis amounted to approx. SEKm 373.

Gross leasing (i.e. the annual value of total leasing) during the period was SEKm 246 (177), of which SEKm 41 (27) was leasing of new constructions, extensions and reconstructions. Notices of termination amounted to SEKm 177 (164), of which bankruptcies were SEKm 15 (5), hence net leasing for the year was SEKm 69 (13). The time difference between reported net leasing and the effect in income thereof is estimated to between 9-18 months.

Net leasing

The positive trend of the net leasing has continued during the third quarter. The demand for premises is good at the moment, but will probably not be unaffected by a continued decline in Swedish economy. All of Castellum's submarkets and property types show similar development.

Rental levels are considered to remain stable. Current inflation rate indicates an index adjustment for 2012 slightly more than 2%.

Property costs

Property costs amounted to SEKm 738 (713) corresponding to SEK 297 per sq.m. (296). Costs for heating during the period has been calculated to 89% (111%) of a normal year according to the degree day statistics.

Property costs, SEK/sq.m.

	Offi ce/ Retail	Warehouse/ Industrial	Total
Operating expenses	203	125	167
Maintenance	40	20	31
Ground rent	7	7	7
Real estate tax	67	17	44
Direct property costs	317	169	249
Leasing and property administration (indirect)	–	–	48
Total	317	169	297
Previous year	324	169	296

Central administrative expenses

Central administrative expenses totalled SEKm 63 (58). This includes costs for a profi t-and-share-price related incentive plan for 10 persons in executive management of SEKm 11 (10).

Net interest rate

Net interest items were SEKm –491 (–426). The average interest rate level was 4.1% (3.7%).

Changes in value

On the Swedish property market, the number of completed transactions continued to increase during the period compared to previous year. The transaction volume amounted to approx. SEK 75 billion, which exceeded the corresponding period previous year by 22%. Half of the transactions were carried out in the major urban regions and the commercial properties accounted for 54% of the total volume. Despite a strong demand and a small supply of all types of properties in all of Castellum's markets, the prices of completed transactions show unchanged yields since the beginning of the year.

The change in value in Castellum's portfolio during the period amounted to SEKm 436 (563), corresponding to approx. 1%. The change in value consists of SEKm 303, which mainly relates to changed future cash fl ows due to future index increases and SEKm 106 due to acquisitions and project gains. It also covers SEKm 27 due to sales of 3 properties where the sale price of SEKm 103 exceeded the valuations by 36%. Castellum has not changed the required yield in the internal valuations during the period.

Castellum utilizes interest rate derivatives 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 affecting changes in value are reported in the income statement. Castellum also has a few derivatives in order to hedge currency fl uctuation in the investment in Denmark. The value in the interest rate derivatives portfolio has changed by SEKm –367 (–31), mainly due to changes in long-term market interest rates and the time factor. The value was SEKm –941 (–574) at the end of the period. During the third quarter isolated the value of the interest rate derivatives decreased SEKm –432 as a result of sharply dropped long term interest rates.

Tax

The nominal corporate tax rate in Sweden is 26.3%. Due to the possibility to deduct depreciation and reconstructions for tax purposes, and to utilize tax loss carryforwards, there are in principle no paid tax costs. Paid tax occurs because a few subsidiaries are not allowed to make fi scal group contributions.

Remaining tax loss carryforwards can be calculated to SEKm 1,590 (1,406). Fair values for the properties exceed their fi scal value by SEKm 15,946 (14,829) of which SEKm 169 relates to properties acquired and accounted for as asset acquisitions. As deferred tax liability, a full nominal 26.3% tax of the net difference is reported, reduced by the deferred tax relating to asset acquisitions, i.e., SEKm 3,731 (3,502).

Castellum has no ongoing formal tax disputes.

Tax Calculation 30-09-2011
	Basis	Basis
SEKm	current tax	deferred tax
Income from property management	889
Deductions for tax purposes
depreciations	– 465	465
reconstructions	– 213	213
Other tax allowances	– 12	4
Taxable income from property management	199	682

Properties sold	5	– 15
Changes in value on properties	–	409
Changes in value on interest rate derivatives	– 365	–
Taxable income before tax loss carry forwards	– 161	1,076
Tax loss carry forwards, opening balance	– 1,406	1,406
Tax loss carry forwards, closing balance	1,590	– 1,590
Taxable income	23	892
Of which 26.3% current/deferred tax	– 6	– 235

Accounting Principles

Castellum follows the EU-adopted IFRS standards and interpretations (IFRIC). This interim report has been prepared according to IAS 34 Interim Financial Reporting. Castellum has invested in Denmark during the period, which implies that exchange-rate effects are accounted for in other total income in the Group accounts. For the parent company they are reported directly in shareholder equity. Castellum also has a few derivatives in order to hedge currency fl uctuation in the Danish investment. The effective portions of unrealized changes in value are accounted for in other total income in the Group accounts, while they are reported directly in shareholder equity for the parent company. Accounting principles and methods for calculations have otherwise remained unchanged compared with the Annual Report of the previous year.

Real Estate Portfolio

The real estate portfolio is found in Greater Gothenburg, the Öresund Region, Greater Stockholm, Mälardalen and Eastern Götaland. The main focus, which represents 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 adequate means of communication and services. The remaining 3% consist of projects and undeveloped land.

Castellum owns approx. 750,000 sq.m. of unutilized building rights and ongoing projects with remaining investments of approx. SEKm 1,000.

Investments

During the period 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, 2011	31,768	598
+ Acquisitions	394	9
+ New constructions, extensions and reconstructions	775	–
– Sales	– 76	– 3
+/– Unrealized changes in value	409	–
+/– Currency translation	3	–
Real estate portfolio on 30 September, 2011	33,273	604

During the period, investments totalling SEKm 1,169 (683) were made, of which SEKm 775 (593) were new constructions, extensions and reconstructions and SEKm 394 (90) were acquisitions. Of the total investments SEKm 535 related to Greater Gothenburg, SEKm 233 to the Öresund Region, SEKm 171 to Mälardalen, SEKm 155 to the Greater Stockholm and SEKm 75 to Eastern Götaland.

Following sales of SEKm 103 (227) the net investments totalled SEKm 1,066 (456).

Net property investments

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. 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 950 per sq.m. 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 small.

Based on these internal valuations the value of the properties at the end of the period were assessed to SEKm 33,273 (31,768), corresponding to SEK 9,845 per sq.m.

Average valuation yield
(excl. project/land and building rights) SEKm
Net operating income properties	1,567
+ Estimated index adjustment 2012, 2%	47
+ Real occupancy rate, 94% at the lowest	166
+/- Property costs to a normal year	0
– Property administration, 30 SEK/sq.m.	– 74
Normalized net operating income (9 months)	1,706
Valuation (excl. building rights of SEKm 496) 31,802
Average valuation yield	7.1%

Larger investments and sales

Larger projects
		Econ. occup.-		Total inv., Remain. inv
Property		Area sq.m. rate, Sept 2011	SEKm		SEKm Completed Comment
Ongoing projects
Forskaren 2, Lund	7,600	10%	150	70	Q4 2012	New construction offi ce premises
Fullriggaren 4, Malmö	5,470	0%	149	92	Q4 2012	New construction offi ce premises
Gården 15, Linköping	10,000	35%	106	84	Q1 2013	New construction offi ce/retail/warehouse premises
Inköparen 1, Örebro	4,300	60%	68	62	Q4 2012	New construction offi ce premises
Elementet 4, Sollentuna	3,350	0%	31	24	Q3 2012	New construction warehouse/logistic premises
Projects completely / partly moved in
Boländerna 30:2, Uppsala	14,000	85%	64	0	Q3 2011	Reconstruction and new construction retail premises
Saltmossen 3, Botkyrka	5,500	100%	45	0	Q3 2011	New construction warehouse/logistic premises
Kärra 72:36, Gothenburg	6,450	100%	39	0	Q3 2011	New construction warehouse/logistic premises


Larger acquisitions during 2011 Property		Econ. occup.- Acquisition Area sq.m. rate, Sept 2011	SEKm		Access	Comment

Lundbyvassen 3:1, Gothenburg	10,800	100%	183		April 2011	Offi ce
Sannegården 52:1, Gothenburg	6,230	100%	73		Sept 2011	Offi ce/retail, warehouse/production
Roskildevej 22, Copenhagen, Denmark	8,500	100%	51		April 2011	Offi ce
Part of Lindholmen 735:491, Gothenburg	–	–	33		June 2011	Land acquisition, building right 11,500 sq.m.
Abildager 26-28, Copenhagen, Denmark	3,470	100%	24		July 2011	Offi ce
Larger sales during 2011			Sales price
Property	Area sq.m.		SEKm		Access	Comment
Haifa 1, Stockholm	3,750		76		March 2011 Offi ce

Castellum's real estate portfolio 30-09-2011

			30-09-2011					January-September 2011
	No. of	Area thous.	Property value	Property value	Rental value	Rental value	Economic occupancy	Rental income	Property costs	Property costs	Net operating income
	properties	sq.m.	SEKm	SEK/sq.m.	SEKm	SEK/sq.m.	rate	SEKm	SEKm	SEK/sq.m.	SEKm
Offi ce/retail
Greater Gothenburg	77	413	5,968	14,437	402	1,295	94.5%	380	97	312	283
Öresund Region	54	335	5,119	15,274	345	1,374	85.6%	296	80	318	216
Greater Stockholm	51	343	4,372	12,753	343	1,333	78.4%	269	87	338	182
Mälardalen	74	361	3,717	10,309	291	1,074	92.0%	267	85	316	182
Eastern Götaland	52	320	2,951	9,229	240	1,002	89.4%	214	72	302	142
Total offi ce/retail	308	1,772	22,127	12,489	1,621	1,220	88.0%	1,426	421	317	1,005
Warehouse/industrial
Greater Gothenburg	101	653	4,795	7,343	357	729	97.4%	348	80	163	268
Öresund Region	41	298	1,749	5,873	156	697	82.4%	128	33	150	95
Greater Stockholm	42	215	1,941	9,014	150	932	92.6%	139	41	252	98
Mälardalen	38	158	940	5,936	85	717	93.0%	79	21	177	58
Eastern Götaland	34	185	746	4,044	70	506	83.6%	59	16	114	43
Total warehouse/industrial	256	1,509	10,171	6,741	818	723	92.0%	753	191	169	562
Total	564	3,281	32,298	9,845	2,439	991	89.4%	2,179	612	249	1,567
Leasing and property administration									119	48	– 119
Total after leasing and property administration									731	297	1,448
Development projects	9	50	651	–	41	–	–	21	10	–	11
Undeveloped land	31	–	324	–	–	–	–	–	–	–	–
Total	604	3,331	33,273	–	2,480	–	–	2,200	741	–	1,459

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. The discrepancy between the net operating income of SEKm 1,459 accounted for above and the net operating income of SEKm 1,443 in the income statement is explained by the deduction of the net operating income of SEKm 1 on properties sold during the period, as well as the adjustment of the net operating income of SEKm 17 on properties acquired/completed during the period, which are recalculated as if they had been owned or completed during the whole period.

Property value by property type Property value by region

Property related key ratios Segment information

	2011 Jan-Sept	2010 Jan-Sept	2010 Jan-Dec
Rental value, SEK/sq.m.	991	973	974
Economic occupancy rate	89.4%	88.9%	89.0%
Property costs, SEK/sq.m.	297	296	298
Net operating income, SEK/sq.m.	588	568	569
Property value, SEK/sq.m.	9,845	9,205	9,499
Number of properties	604	585	598
Lettable area, thousand sq.m.	3,331	3,215	3,311

		Rental income	Income from property management
	2011	2010	2011	2010
SEKm	Jan-Sept	Jan-Sept	Jan-Sept	Jan-Sept
Greater Gothenburg	715	680	341	327
Öresund Region	421	429	181	192
Greater Stockholm	410	373	156	151
Mälardalen	361	324	127	113
Eastern Götaland	274	252	107	94
Total	2,181	2,058	912	877

The discrepancy between the income from property management of SEKm 912 (877) above and the groups accounted income before tax of SEKm 960 (1,393) consists of unallocated income from property management of SEKm –23 (–16), changes in property value of SEKm 436 (563) and changes in values of interest rate derivatives of SEKm –365 (–31).

Financing

Financing 30-09-2011

Shareholder equity and net asset value

The net asset value can be calculated as follows.

Net asset value 30-09-2011		SEKm SEK/share
Equity according to the balance sheet	11,211	68
Reversed Derivatives according to balance sheet	941	6
Deferred tax according to balance sheet	3,731	23
Long term net asset value (EPRA NAV)	15,883	97
Deduction
Derivatives as above	– 941	– 6
Estimated real liability, deferred tax 5%	– 718	– 4
Actual net asset value (EPRA NNNAV)	14,224	87

Interest-bearing liabilities

The fi rst half-year was characterized by a stable outlook for the Swedish economy and market expectations of continued increases of the repo rate. During the third quarter the concern for the fi nancial markets, caused by the debt problems in both the euro area and the USA, instead led to market expectations of a decreased repo rate. The concern about the development of the national fi nances reduced the outlook for global economic growth which has a negative effect on the Swedish economy. However, the growth in Sweden is expected to be higher than for the economies in the euro area.

Castellums access to funding be described as stable while the credit margins are assessed to have been increased after the summer.

Loan maturity structure

During the period, Castellum has signed new agreements of SEKm 500 and renegotiated agreements of SEKm 5,500. As of 30 September, 2011 Castellum had long term binding credit agreements totalling SEKm 18,562 (18,062), short term binding credit agreements totalling SEKm 420 (520) and a commerial paper program of SEKm 4,000 (4,000). After deduction of liquid assets of SEKm 146 (12), net interest bearing liabilities were SEKm 16,593 (15,769), of which SEKm 2,277 (1,377) refers to outstanding commercial papers.

Most of Castellum's loans are short-term revolving loans, utilized in long-term binding credit agreements. This means great fl exibility in the interest rate base, interest rate period and tied up capital.

Long-term loan commitments in banks are secured by pledged mortgages and/or fi nancial covenants. Outstanding commercial papers 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 ls with comfortable margins, 50% and 281% respectively.

The average duration of Castellum's long-term credit agreements was 5.1 years (5.0). Margins and fees on long-term credit agreements had an average duration of 3.1 years (2.6).

Loan maturity structure 30-09-2011

Long term, SEKm	Credit agreements	Utilized

1 - 2 years	200	–
2 - 3 years	–	–
3 - 4 years	2,500	800
4 - 5 years	8,800	7,100
> 5 years	7,062	6,562
Total long term credit agreements	18,562	14,462
Total short term credit agreements (0-1 year)	2,697	2,131
Total credit agreements	21,259	16,593
Unutilized credit in long term credit agreements		1,969

Interest rate maturity structure

The average effective interest rate as of 30 September, 2011 was 4.1% (3.9%). The market interest rate for an equal portfolio, regarding both current market rate and credit margin, can be assessed to 4.4% (4.0%). The average fi xed interest term on the same date was 2.8 years (2.6). Credit margins are allocated in the same interval as the underlying loan.

In order to achieve a desired interest rate maturity structure Castellum is working with interest rate derivatives which are both fl exible and cost effective.

Interest rate maturity structure 30-09-2011

Total	16,593	–	16,593	4.1%
5 - 10 years	–	3,700	3,700	4.3%
4 - 5 years	–	2,200	2,200	4.4%
3 - 4 years	–	1,100	1,100	4.4%
2 - 3 years	–	1,400	1,400	4.1%
1 - 2 years	–	800	800	4.5%
0 - 1 year	16,593	– 9,200	7,393	3.9%
	Loan SEKm	Interest rate derivatives SEKm	Net, SEKm	Average interest rate

Interest rate and currency derivatives

According to the accounting standard IAS 39, derivatives are subject to market valuation. Regarding interest rate derivatives, this 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, is accounted for in the income statement. Note that interest rate derivatives used to achieve an interest rate maturity structure are subject to market valuation, which is normally not the case for credit margins or loans with fi xed interest rates. As for currency derivatives, a theoretical surplus / sub value occurs if the agreed exchange rate deviates from the current exchange rate, where the effective portion of value changes is accounted for in other total income.

As of 30 September, 2011, the market value of the interest rate and the currency derivative portfolio amounted to SEKm –941 (–574).

Consolidated statement of Comprehensive Income
	2011	2010	2011	2010	Rolling 4 quarters	2010
SEKm	July-Sept	July-Sept	Jan-Sept	Jan-Sept	Oct 10-Sept 11	Jan-Dec
Rental income	734	691	2,181	2,058	2,882	2,759
Operating expenses	– 106	– 100	– 416	– 403	– 560	– 547
Maintenance	– 25	– 28	– 77	– 81	– 101	– 105
Ground rent	– 6	– 6	– 18	– 14	– 23	– 19
Real estate tax	– 37	– 36	– 108	– 105	– 143	– 140
Leasing and property administration	– 38	– 36	– 119	– 110	– 158	– 149
Net operating income	522	485	1,443	1,345	1,897	1,799
Central administrative expenses	– 18	– 19	– 63	– 58	– 89	– 84
Net interest rates	– 170	– 142	– 491	– 426	– 639	– 574
Income from property management	334	324	889	861	1,169	1,141
Changes in value
Properties	48	197	436	563	1,095	1,222
Derivatives	– 432	58	– 365	– 31	– 43	291
Income before tax	– 50	579	960	1,393	2,221	2,654
Current tax	– 4	0	– 6	– 5	– 6	– 5
Deferred tax	16	– 144	– 235	– 350	– 570	– 685
Net income for the period/year	– 38	435	719	1,038	1,645	1,964
Other total net income
Translation of currencies	1	–	2	–	2	–
Unrealized change in value, derivatives	– 1	–	– 2	–	– 2	–
Total net income for the period/year	– 38	435	719	1,038	1,645	1,964

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

Data per Share
	2011 July-Sept	2010 July-Sept	2011 Jan-Sept	2010 Jan-Sept	Rolling 4 quarters Oct 10-Sept 11	2010 Jan-Dec
Average number of shares, thousand	164,000	164,000	164,000	164,000	164,000	164,000
Income from property management, SEK	2.04	1.98	5.42	5.25	7.13	6.96
Income from property management after tax (EPRA EPS*), SEK	1.88	1.81	5.10	4.87	6.85	6.62
Earnings after tax, SEK	– 0.23	2.65	4.38	6.33	10.03	11.98
Outstanding number of shares, thousand	164,000	164,000	164,000	164,000	164,000	164,000
Property value of properties, SEK	203	185	203	185	203	194
Long term net asset value (EPRA NAV*), SEK	97	87	97	87	97	92
Actual net asset value (EPRA NNNAV*), SEK	87	78	87	78	87	85

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

Financial Key Ratios
	2011	2010	2011	2010	Rolling 4 quarters	2010
	July-Sept	July-Sept	Jan-Sept	Jan-Sept	Oct 10-Sept 11	Jan-Dec
Net operating income margin	71%	70%	66%	65%	66%	65%
Interest coverage ratio	296%	328%	281%	302%	283%	299%
Return on actual net asset value	– 1.4%	17.9%	8.8%	15.0%	16.9%	21.5%
Return on total capital	6.6%	8.8%	7.4%	8.3%	9.2%	9.8%
Net investments, SEKm	328	57	1,066	456	1,889	1,279
Loan to value ratio	50%	51%	50%	51%	50%	50%

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

Consolidated Balance Sheet

SEKm	30 September 2011	30 September 2010	31 December 2010
Assets
Investment properties	33,273	30,286	31,768
Other fi xed assets	13	15	15
Current receivables	179	149	141
Cash and bank	146	35	12
Total assets	33,611	30,485	31,936
Shareholders' equity and liabilities
Shareholders' equity	11,211	10,156	11,082
Deferred tax liability	3,731	3,166	3,502
Derivatives	941	896	574
Long term interest-bearing liabilities	16,739	15,412	15,781
Non interest-bearing liabilities	989	855	997
Total shareholders' equity and liabilities	33,611	30,485	31,936
Pledged assets (property mortgages)	18,873	17,775	17,421
Contingent liabilities	–	–	–

Changes in Equity

	Number of outstanding		Other capital	Retained
SEKm	shares, thousand Share capital		contribution		earnings Total equity
Shareholders' equity 31-12-2009	164,000	86	4,096	5,510	9,692
Dividend, March 2010	–	–	–	– 574	– 574
Total net income January-September 2010	–	–	–	1,038	1,038
Shareholders' equity 30-09-2010	164,000	86	4,096	5,974	10,156
Total net income October-December 2010	–	–	–	926	926
Shareholders' equity 31-12-2010	164,000	86	4,096	6,900	11,082
Dividend, March 2011	–	–	–	– 590	– 590
Total net income January-September 2011	–	–	–	719	719
Shareholders' equity 30-09-2011	164,000	86	4,096	7,029	11,211

Cash Flow Statement

	2011	2010	2011	2010	Rolling 4 quarters	2010
SEKm	July-Sept	July-Sept	Jan-Sept	Jan-Sept	Oct 10-Sept 11	Jan-Dec
Net operating income	522	485	1,443	1,345	1,897	1,799
Central administrative expenses	– 18	– 19	– 63	– 58	– 89	– 84
Reversed depreciations	1	2	4	5	5	6
Net interest rates paid	– 174	– 159	– 466	– 428	– 633	– 595
Tax paid	– 4	0	– 10	– 4	– 15	– 9
Cash fl ow from operating activities before
change in working capital	327	309	908	860	1,165	1,117
Change in current receivables	– 16	4	– 38	9	– 35	12
Change in current liabilities	35	44	119	64	139	84
Cash fl ow from operating activities	346	357	989	933	1,269	1,213
Investments in new constructions, refurbishments and extensions	– 247	– 220	– 775	– 593	– 1,063	– 881
Property acquisitions	– 81	– 7	– 394	– 90	– 929	– 625
Change in liabilities at acquisitions of property	– 43	– 1	– 148	– 9	– 2	137
Property sales	–	165	98	219	98	219
Change in receivables at sales of property	6	– 5	3	28	7	32
Other net investments	– 1	– 3	– 7	– 5	– 6	– 4
Cash fl ow from investment activities	– 366	– 71	– 1,223	– 450	– 1,895	– 1,122
Change in long term liabilities	62	– 263	958	118	1,327	487
Dividend paid	–	–	– 590	– 574	– 590	– 574
Cash fl ow from investment activities	62	– 263	368	– 456	737	– 87
Cash fl ow for the period/year	42	23	134	27	111	4
Cash and bank, opening balance	104	12	12	8	35	8
Cash and bank closing balance	146	35	146	35	146	12

Opportunities and Risks for Group and Parent Company

Opportunities and risks in the cash flow

Over time, increasing market interest rates normally constitute an effect of economic growth and increasing infl ation, which is thought to result in higher rental income. This is partly due to the fact that the demand for premises is thought to increase. This leads in turn to reduced vacancies and hence to the potential for increasing market rents. It is also partly due to the fact that the index clause in commercial contracts compensates for 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 changes in rental income and interest cost do not take place at the exact same time, which is why the effect on income in the short run 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	+29/–29	+	–
Vacancies	+33/–33	+	–
Property costs	–10/+10	–	0
Interest costs	–56/+50	–	+

Opportunities and risks in property values

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

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

Sensitivity analysis - change in value
Properties	–20%	–10%	0	+10%	+20%
Changes in value, SEKm – 6,655		– 3,327	0	3,327	6,655
Loan to value ratio	63%	56%	50%	46%	42%

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, as well as the credit market, such as funding and fi nancial risk management.

The parent company takes part in property-related operations through involvement in subsidiary Boards.

Income statement	2011	2010	2011	2010
SEKm	July-Sept	July-Sept	Jan-Sept	Jan-Dec
Income	3	4	11	15
Operating expenses	– 13	– 13	– 44	– 59
Net fi nancial items	2	6	10	12
Dividend	–	–	–	658
Changes in value, interest
rate derivatives	– 432	58	– 365	291
Income before tax	– 440	55	– 388	917
Tax	116	– 14	102	– 69
Net income for the period/year	– 324	41	– 286	848
Balance sheet
SEKm		30 Sept 2011	30 Sept 2010	31 Dec 2010
Participations in group companies		4,087	4,087	4,087
Receivables, group companies		17,021	15,909	17,033
Other assets		279	239	179
Cash and bank		0	0	0
Total			21,387 20,235 21,299
Shareholders' equity		3,052	3,082	3,928
Derivatives		941	896	574
Interest bearing liabilities		15,551	14,026	14,719
Interest bearing liabilities,
group companies		1,675	2,059	1,921
Other liabilities		167	172	157
Total			21,387 20,235 21,299
Pledged assets (receivables
group companies)		16,103	14,721	14,721
Contingent liabilities (guaranteed
commitments for subsidiaries)		1,062	1,362	1,062

Election Committee

According to the 2011 Annual General Meeting's decision an election committee shall be appointed to make proposals to the Annual General Meeting 2012 regarding inter alia 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, Rutger van der Lubbe representing Stichting Pensioenfonds ABP, Lars-Åke Bokenberger representing AMF Pension and the Chairman of the Board Jan Kvarnström. Gothenburg October 18, 2011

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 year the company had about 9,300 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 Pensioenfonds ABP. Castellum has no direct registered shareholders with holdings exceeding 10%. The ten single largest Swedish shareholders can be seen in the table below.

Shareholders on 30-09-2011	Number of shares thousand	Percentage of voting rights and capital
AFA Sjukförsäkrings AB	6,869	4.2%
László Szombatfalvy	5,000	3.0%
Magdalena Szombatfalvy	4,935	3.0%
AMF Pensionsförsäkrings AB	4,460	2.7%
Lannebo Småbolag	2,700	1.7%
Fjärde AP-fonden	2,167	1.3%
Andra AP-fonden	2,074	1.3%
KAS Depositary Trust Company	1,733	1.1%
Tredje AP-fonden	1,542	0.9%
AMF Aktiefond Sverige	1,400	0.9%
Other shareholders registered in Sweden	46,608	28.4%
Shareholders registered abroad	84,512	51.5%
Total outstanding shares	164,000	100%
Repurchased shares	8,007
Total registered shares	172,007

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

Distribution of shareholders by country 30-09-2011

The Castellum share price as at 30 September, 2011 was SEK 84.35 (89.65) equivalent to a market capitalization of SEK 13.8 billion (14.7), calculated on the number of outstanding shares.

During the period, a total of 114 million (116) shares were traded, equivalent to an average of 603,000 shares (613,000) per day, corresponding on an annual basis to a turnover rate of 93% (96%).

Growth, yield and financial risk

During the last 12-month period the total yield of the Castellum share has been –2% (38%), including dividend of SEK 3.60 (3.50).

	1 year	3 years	10 years
		average/	average/
		year	year
Total yield of the share (incl. dividend)
Castellum	– 2%	17%	16%
NASDAQ OMX Stockholm (SIX Return)	– 14%	9%	7%
Real Estate Index Sweden (EPRA)	– 9%	17%	16%
Real Estate Index Europe (EPRA)	– 6%	– 2%	6%
Growth
Income from prop. management SEK/share	5%	7%	9%
Net income for the year after tax SEK/share	39%	52%	8%
Long term net asset value SEK/share	11%	4%	8%
Actual net asset value SEK/share	12%	2%	7%
Dividend SEK/share	3%	6%	10%
Real estate portfolio SEK/share	10%	4%	8%
Change in property value, unweighted	4%	0%	2%
Yield
Return on actual net asset value	16.9%	7.5%	10.7%
Return on total capital	9.2%	5.8%	7.8%
Financial risk
Interest coverage ratio	283%	292%	285%
Loan to value ratio	50%	51%	57%

Valuation - share price related key figures

Earnings Capacity

Post-tax inome from property management relating to income from property management (EPRA EPS) amounted to SEK 6.85 (6.63) on rolling annual basis. This results in a share price yield of 8.1% (7.4%).

Net income after tax amounted on rolling annual basis to SEK 10.03 per share (7.20), which from the share price gives a yield of 11.9% (8.0%).

Yield earnings per share

Net asset value

The long term net asset value (EPRA NAV) can be calculated to SEK 97 per share (87). The share price at the end of the period was thus 87% (103%) of the long term net asset value.

Share price/net asset value

Dividend Yield

The latest carried out dividend of SEK 3.60 (3.50) corresponds to a yield of 4.3% (3.9%) based on the share price at the end of the period.

The Castellum share's price trend and turnover since IPO May 23, 1997 until September 30, 2011

Calendar

Year-end Report 2011	24 January, 2012, around 11 a m
Annual General Meeting 2012	22 March, 2012
Interim Report January-March 2012	17 April, 2012
Half-year Report January-June 2012	12 July, 2012
Interim Report January-September 2012	16 October, 2012
Year-end Report 2012	22 January, 2013
Annual General Meeting 2013	21 March, 2013

www.castellum.se

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

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

Annual General Meeting

Castellum AB's Annual General Meeting is planned to be held on Thursday March 22, 2012 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 Gothenburg, no later than December 7, 2011.

A shareholder have the right to have a matter addressed at the coming Annual General Meeting on 22 March, 2012. For practical reasons the request should be received by the company no later than 3 February, 2012. 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 [email protected] www.aspholmenfastigheter.se

Fastighets AB Corallen

Lasarettsgatan 3, Box 148, 331 21 Värnamo Telephone +46 370-69 49 00 Telefax +46370-475 90 [email protected] 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 [email protected] 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 [email protected] 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 [email protected] www.briggen.se

Harry Sjögren AB

Kråketorpsgatan 20, 431 53 Mölndal Telephone +46 31-706 65 00 Telefax +46 31-706 65 29 [email protected] 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 [email protected] • www.castellum.se Org nr 556475-5550

CASTELLUM INTERIM REPORT JANUARY-SEPTEMBER 2011