YEAR-END REPORT

Castellum Year-end Report 2015

Year-end report 2015

Castellum is one of the major listed real estate companies in Sweden. The fair value of the real estate portfolio amounts to SEK 42 billion, and comprises of commercial properties.

The real estate portfolio is owned and managed by six wholly owned subsidiaries with strong local presence in fi ve growth regions: Eklandia Fastighets AB and Harry Sjögren AB in Greater Gothenburg (incl. Borås and Halmstad), Fastighets AB Briggen in the Öresund Region (Malmö, Lund, Helsingborg and Copenhagen), Fastighets AB Brostaden in Greater Stockholm, Aspholmen Fastigheter AB in Mälardalen (Örebro, Västerås and Uppsala) and Fastighets AB Corallen in Eastern Götaland (Jönköping, Linköping and Norrköping).

Castellum is listed on Nasdaq Stockholm Large Cap.

Rental income for the 2015 amounted to SEKm 3,299 (SEKm 3,318 previous year).
Income from property management amounted to SEKm 1,533 (1,450), corresponding to SEK 9.35 (8.84) per share, an increase of 6%.
Changes in value on properties amounted to SEKm 1,837 (344) and on derivatives to SEKm 216 (–660).
Net income after tax for the year amounted to SEKm 2,881 (1,211), corresponding to SEK 17.57 (7.38) per share.
Net investments amounted to SEKm 2,413 (–529) of which SEKm 1,232 (1,378) were new constructions, extensions and reconstructions, SEKm 2,321 (1,147) acquisitions and SEKm 1,140 (3,054) sales. Futhermore, 50% of the shares in CORHEI Fastighets AB (former Ståhls), were acquired, with an underlying property value of SEK 2 billion, for SEKm 505.
The Board proposes a dividend of SEK 4.90 (4.60) per share, equivalent to an increase of 7%.

	Oct-Dec 2015	Oct-Dec 2014	Jan-Dec 2015	Jan-Dec 2014
Rental income, SEKm	850	822	3,299	3,318
Net operating income, SEKm	550	524	2,225	2,222
Income of property management, SEKm	381	338	1,533	1,450
D:o SEK/share	2.32	2.06	9.35	8.84
D:o growth	+13%	+2%	+6%	+8%
Net income after tax, SEKm	1,260	438	2,881	1,211
Net investments SEKm	1	– 2,141	2,413	– 529
Dividend SEK/share (2015 proposed)	–	–	4.90	4.60
D:o growth	–	–	+7%	+8%
Net leasing, SEKm	11	– 17	18	58
Loan to value	49%	49%	49%	49%
Interest coverage ratio	353%	315%	351%	318%
Long term net asset value (EPRA NAV) SEK/share	129	114	129	114
Actual net asset value (EPRA NNNAV) SEK/share	116	100	116	100

KEY RATIOS

For more detailed information about Castellum see www.castellum.se.

Castellum - on the off ense in 2015!

2015 was a particularly proactive year for Castellum. The process of change comprised several parallel processes:

Geographic concentration of the real estate portfolio
Several properties with higher development potential
The initiation of a cost effi ciency program
Stronger-than-ever sustainability focus
A reinforced and more effi cient organization

High investment rate

Rather many real estate transactions were completed, and it can be complex to overview them as a whole. Let me therefore briefl y summarize the signifi cance of the strategic shifts implemented over the last fi fteen months. Sales amounted to SEK 4 billion and acquisitions – our own important projects excluded – totalled SEK 4.6 billion.

Properties with weaker development potential were replaced by properties in strong growth areas: Hornsberg, Kungsholmen and Hagastaden in Stockholm; city-centre dominance in Norrköping and Linköping; a bridgehead location in the fast-growing Hyllie district of Malmö and property increases in Copenhagen, as well as a more consolidated presence in Gothenburg's Lindholmen.

A number of the transactions were complex, and some will be determined in several stages. For example, the acquisition of 50% of the shares in Ståhls in Norrköping and Linköping includes an option to acquire the remaining portion in 2016.

Strong fi nances

In 2015, total net investments amounted to SEKm 2,413 – including our own projects – and properties totalling SEKm 1,140 were sold. We managed this large-scale shift with only a slight decline in growth during the fi rst three quarters, due to the large sales toward the end of 2014. However, strong growth resumed (+13%) in the last quarter. Moreover, the loan-to-value ratio remained at an unchanged low level, 49%. Great demand in the real estate market facilitated Castellum's portfolio restructuring and led to value adjustments during the year, totalling SEKm 1,837. Of this, SEKm 1,019 referred to the fourth quarter, and contributed to an increase in the long-term net asset value of 13% – to SEK 129, over the year.

During the past year, we've extended existing loan commitments, including securing interest margins, for a total SEK 18 billion. On the bond market SEK 3.5 billion were issued, and the outstanding total volume at year end was SEK 6.5 billion.

Increased cost effi ciency

The effi ciency program initiated in 2015 gives results. In its fi rst year, the program has already reduced costs by SEKm 10, primarily through increased coordination of purchases, a changed billing basis and common followup procedures. This ongoing program will continue through 2016 and is estimated to save approx. SEKm 30,

thanks to measures already taken, as well as further cost savings and effi ciency improvements.

Sustainability eff orts rewarded

During the past year, Castellum was awarded the World Green Building Council's top distinction European Leadership award. The Business Leadership prize is awarded annually to the construction and real estate company that leads sustainable development in Europe. In 2015, Castellum was also presented with GRESB's highest Green Star rating and ranks among the best real estate companies in the world for the CDP's (Carbon Disclosure Program) annual rankings.

These are important international recognitions of Castellum's long-term sustainability eff orts. The path taken toward ambitious sustainability goals will continue to include a strong commitment to everyday quality-oflife issues. During the year for example, 75 adolescents and young adults – from diverse cultural backgrounds – worked as apprentices or held other trainee positions at Castellum, for an introduction to working life.

A changed world – changed approaches and processes

The world has changed. Previous self-evident "truths" about business processes, or the infrastructure and design of premises have had to be reassessed. It's a challenge for a real estate company that every building has to be designed for long-term existence. In order for Castellum to continue to be an up-to-date and agile corporation, continuous adaptation to new internal and external conditions is required. Together we will seize opportunities to work even more effi ciently, fl exibly and locally through shared resources.

Castellum looks ahead: Tomorrow's challenges and opportunities will be met through effi ciency programs, changed work procedures, organizational adjustments and new support processes. After all of the major transactions, I anticipate that Castellum's real estate projects will increase and net investments will remain high. It's my personal belief and expectation that propertymanagement income growth in 2016 will be in line with our objective of 10% – with a continued focus on cash fl ow, at low fi nancial risk. Thus, the prospects for continued competitive dividend growth are favourable.

Henrik Saxborn CEO

Mission and vision

One of the largest real estate companies, while remaining equipped to act as close to the market as the smallest.

Business concept

To develop and add value to the real estate portfolio, focusing on the best possible earnings and asset growth, by off ering customized commercial properties, through a strong and clear presence in fi ve growth regions.

Business model

Investments and developmen of commercial premises managed in a decentrilized and customerfocused organization. Castellum focus on cash-fl ow and operates with low fi nancial risk.

Sustainable business

STRATEGY

Castellum has a dedicated focus on long-term eff orts and strategies, and this goes hand-in-hand with all sustainability perspectives. Business operations are to contribute to sustainable development taking ecological, social and economic aspects into account. It's crucial for the long-term success of the company that operations are conducted in a responsible manner, wherein all actions should be characterized by high skills levels, high ethical standards and a high, hands-on sense of responsibility.

By being locally present and engaged in the cities where the company operates, prosperous developed and managed. Castellum is to be fi nancially strong, as this enables us to act wisely, with a long-term perspective.

Sustainability eff orts are focused on:

taking responsibility for, and contributing to, the dev lopment of the communities
wherein we operate - utilizing resources effi ciently
and eff ectively - maintaining a sustainable real estate portfolio
cooperating with other stake holders to promote develop-

Development of commercial properties in growth regions

Castellum's real estate portfolio is located in the fi ve growth regions Greater Gothenburg, Öresund Region, Greater Stockholm, Mälardalen and Eastern Götaland. This, together with rational property management and a strong presence in the market, provides for good business opportunities.

The real estate portfolio will consist of commercial properties with general and fl exible premises for offi ce, retail, warehouse, logistics and industry purposes.

The real estate portfolio will be continuously enhanced and developed in order to improve cash fl ow. Castellum will continue to grow with customer demand, mainly through new constructions, extensions and reconstructions but also through acquisitions.

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.

Customer focus through local organizations

Castellum will be perceived as a customer focused company. This is achieved by developing long-term relations and supplying premises and services meeting customer demands.

Service and property management will be delivered by a decentralized organization with wholly owned subsidiaries with strong local presence. Property management will be carried out mainly by our own employed personnel.

Castellum shall have skilled and committed employees, which is achieved by being an attractive workplace with good development possibilities.

Strong balance sheet with low fi nancial risk

Castellum will have low fi nancial risk. The chosen risk key ratios are loan to value and interest coverage ratio.

Castellum will work for a competitive total return on the company's share relative to risk and also strive for high liquidity. 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.

Purchase or transfer of own shares will 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 short term purpose of capital gain.

Castellum's real estate portfolio has a geographical distribution covering fi ve growth regions and will consist of various types of commercial premises. The risk within in the customer portfolio will be kept low.

STRATEGIC TOOLS

OUTCOME

In order to achieve the overall objective of 10% cash-fl ow growth, i. e. income from property management per share, annual net investments of at least 5% of the property value will be made. This is currently equivalent to approx. SEK 2 billion.
One of the three largest real estate owners in each local market.
In order to develop the Group as well as customer relations, the customers' and employees' level of satisfaction will be measured regularly and be on a high level.

• Loan to value ratio not permanently exceeding 55%. Interest coverage

ratio of at least 200%.

At least 50% of pre-tax property management income will be distributed. Investment plans, consolidation needs, liquidity and fi nancial position in general will be taken into account.
Castellum will be one of the largest listed real estate companies in Sweden.
Risk within the customer portfolio will be kept low using diversifi cation over many fi elds of business, length and size of contracts.

Loan to value ratio

Interest coverage ratio

Dividend ratio 2015 (proposed)

largest contract accounts for approx 2%

Objective 10%

Castellum's overall objective is an annual growth in cash-fl ow, i.e. income from property management per share, of at least 10%

Customers and Organization

Customers - a refl ection of the diverse Swedish economy

Castellum holds approx. 4,500 commercial contracts, with good risk diversifi cation regarding size of contracts, geography, type of premises, length of contracts and various customer industries. The single largest contract corresponds to approx. 2% of Castellum's total rental income.

Nine out of ten customers recommend Castellum

It is important that Castellum meets customer expectations: we deliver what we promise. An external customer survey is therefore carried out annually, the Satisfi ed Customer Index. The latest survey, conducted in 2015, showed continued and consistent high marks for Castellum, with a weighted index of 80. This is higher than the industry benchmark of 75.

Nine out of ten customers surveyed, 88%, replied that they want to lease from Castellum again and gladly recommend Castellum as a landlord to others.

High leasing activity

Castellum's leasing activity is high. During 2015 to date, the organization has signed 668 new leases with a total annual value of SEKm 316. Robust leasing activities indicate the importance of taking care of customers and networks.

A decentralized and small-scale organization infers deep local knowledge and interaction

Castellum is the parent company and owns six local operating subsidiaries who owns and manage the Group properties, and this results in close relationships with customers and short decision-making processes.

Each subsidiary is involved in the local business community through business associations where important contacts are forged with both current and prospective customers. Castellum, as one of the largest real estate owners on each local market, also contributes to regional development. Local subsidiaries operate through cooperation with municipalities and universities/colleges.

Satisfi ed employees

Castellum works actively to recruit and retain top-notch employees by off ering a stimulating work environment, competence development and experience sharing.

Employee viewpoints about Castellum are regularly measured and the latest survey, conducted in 2014, shows a continued high index, 85 on a 100-point scale. This indicates that employees are satisfi ed with their work situation and have high confi dence in the company and management.

Castellum has about 299 employees.

Sustainable business

Castellum's sustainability eff orts is based on continuous improvements with focus on the effi cient use of resources, a sustainable real estate portfolio and sustainable collaborations, as well as on social commitment and responsibility.

The Code of Conduct is the foundation of that Castellum's operations are conducted in a responsible way and the objective is to make sound and proper business decisions in all respects, high business morality, good business ethics, responsibility awareness and impartiality.

Our contribution to positive development in the communities where Castellum is active involves various forms of ongoing collaborations. These include joint projects with customers, business colleagues, municipalities and educational institutions. During 2015, 75 young people received their introduction to working life through our apprenticeship program, as holiday workers, interns or trainees.

The energy consumption use in Castellum is approx. 43% lower than the sector average . 20% of the propertyportfolio is environmental classifi ed according til Green Building, Miljöbyggnad or BREEAM.

In September 2015, Castellum was awarded "Green Star 2015" by GRESB (Global Real Estate Sustainability Benchmark). "Green Star 2015" means that Castellum was awarded the highest rating in the global rating for industry-leading sustainability eff orts in the category of offi ce and industrial properties. GRESB is an international industry-driven organization committed to enhancing and protecting shareholder value through annual assessment of sustainability activities in real estate sectors around the world. Over 700 real estate companies and funds participated in the 2015 assessment.

Castellum has also been awarded the World Green Building Council's top distinction, Business Leadership in Sustainability during 2015. The award promotes leading sustainable businesses and inspires best practice in sustainable construction, corporate engagement and sustainable projects.

Market comments

Swedish economy

The Swedish economy continued to perform well with a strong GDP growth that is expected to continue in 2016. Growth is mainly driven by investments and domestic private consumption. Higher public spending, as a result of the increase in asylum seekers, is also expected to contribute to GDP growth. The export of services has developed rapidly, while the recovery for the export of goods continues to go slowly. Geopolitical turmoil continues to dampen the growth rate – especially for industry. However, levels for construction and infrastructure investments in Sweden demonstrate high activity, whereas investments in the industrial sector have dampened.

The labour market has been positively aff ected by the stronger economy. Labour shortages are expected for several groups, primarily within the construction and public sectors. However, despite the increase in employment, the unemployment rate is expected to be only marginally aff ected. Infl ation is expected to remain low due to lower commodity prices and low infl ation in the outside world, coupled with limited wage growth. Development of the krona exchange rate plays a key role for infl ation in Sweden, where a stronger krona will dampen infl ation.

Macro indicators

Unemployment 6.2% (November 2015) Infl ation 0.1% (December 2015 compared to December 2014) GDP growth 0.8% (Q3 2015 compared to Q2 2015) Source: SCB

Rental market

During the year, the rental market continued to strengthen, due to high demand and low new construction volumes. The strongest offi ce markets are in central locations, showing low volumes of new construction and low vacancy rates – thus creating conditions for rent increases. The Öresund region continued to have a higher proportion of newly built offi ce space than the rest of Sweden, and this aff ected both rental development and vacancies. The logistics market was distinctly variable, and demand depended on location as well as design. The strongest logistics locations became stronger, and customer requirements changed, based on technological development and increasing e-commerce. Properly designed buildings in sought-after locations became very attractive.

Property market

The Swedish property market continued to be attractive all over the country and for all segments – both for domestic and international players. During the year, the strong demand resulted in lower required yield – with higher property prices as a consequence. Transaction volumes for 2015 amounted to SEK 145 billion – a historically high level – even if turnover for 2014 reached SEK 160 billion. There was a strong interest for offi ce and retail properties as well as for warehouse and logistics properties, and commercial properties accounted for approx. 77% (76%) of the total transaction volume.

Foreign buyers accounted for 27% (17%) of the purchase volume, which could be observed in several major transactions regarding offi ce, commercial and logistics facilities.

Interest and credit market

In 2015, the Riksbank focused on an infl ation target of 2%, pursued an expansionary monetary policy and made historic decisions. The repo rate has remained unchanged since July, when it was lowered to -0.35%, even if the repo-rate path has been revised downwards. During the year, the Riksbank purchased government bonds and announced further purchases during the fi rst half of 2016. The repo-rate path indicates that a slight lowering of the repo rate is possible in the near future, and the tone hardened somewhat concerning whether or not to take other measures in December (when the repo rate was left unchanged). The repo rate is not expected to begin rising slowly until 2017.

Of particular signifi cance to Castellum, the 3-month STIBOR rate moved quickly downward in the spring, but proceeded more stably, albeit slightly downward, for the rest of the year. This lasted until year-end, when the STIBOR rate rapidly returned to summer levels.

The spread between short- and long-term interest rates increased during the year, but long-term interest rates remained historically low. Development was primarily driven by falling short-term interest rates, but also by slightly higher long-term interest rates.

Availability of bank fi nancing and fi nancing in the capital market is considered favourable. During early 2015, credit margins dropped in the capital market but turned upward considerably in the second half of the year. Credit margins for bank fi nancing are also considered to have increased during the autumn, albeit to a lesser extent.

Income, Costs and Results

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

Income from property management during the year, i.e. net income excluding changes in value and tax, amounted to SEKm 1,533 (1,450), equivalent to SEK 9.35 (8.84) per share - an increase with 6%.

During the year changes in value on properties amounted to SEKm 1,837 (344) and on derivatives to SEKm 216 (–660). Net income after tax for the year was SEKm 2,881 (1,211), equivalent to SEK 17.57 (7.38) per share.

Rental income

Group's rental income amounted to SEKm 3,299 (3,318). For offi ce and retail properties, the average contracted rental level, including charged heating, cooling and property tax, amounted to SEK 1,332 per sq.m., whereas for warehouse and industrial properties, it amounted to SEK 804 per sq.m. Rental levels, which are considered to be in line with the market, have in comparable portfolio increased by 1% compared with previous year, which mainly is an eff ect from indexation and can be compared with the usual industry index clause (October to October), which was –0.1% in 2015. Castellum's higher indexation is due to the Groups focus on index clauses with minimum upward adjustment in the contract portfolio, which off ers protection against defl ation / infl ation.

The average economic occupancy rate was 90.3% (88.7%). The total rental value for vacant premises on yearly basis amounted to approx. SEKm 392 (417).

The rental income for the year includes a lump sum of SEKm 8 (10) as a result of early termination of leases.

Gross leasing (i.e. the annual value of total leasing) during the year was SEKm 316 (304), of which SEKm 55 (55) were leasing of new constructions, extensions and reconstructions. Notices of termination amounted to SEKm 298 (246), of which bankruptcies were SEKm 11

Castellum Year-end Report 2015 a s t e l l u m Y e a r - e n d R e p o r t 2 0 1 5 8

(12) and SEKm 18 (36) were notices of termination with more than 18 months remaining length of contract. Net lease for the year was hence SEKm 18 (58) and for the fourth quarter isolated SEKm 11 (–17).

The time diff erence between reported net leasing and the eff ect in income thereof is estimated to be between 9-18 months.

Property costs

Property costs amounted to SEKm 1,074 (1,096) corresponding to SEK 316 per sq.m. (307). The costs includes SEKm 5 in transaction cost related to the acquisition of 50% of the shares of CORHEI Fastighets AB (former Ståhls). Consumption for heating during the year has been calculated to 88% (86%) of a normal year according to the degree day statistics.

Property costs SEK/sq.m	Offi ce/ Retail	Warehouse/ Industrial	2015 Total	2014 Total
Operating expenses	181	109	149	146
Maintenance	49	27	39	37
Ground rent	5	7	6	8
Real estate tax	72	23	50	48
Direct property costs	307	166	244	239
Leasing and property administration	–	–	72	68
Total	307	166	316	307
Previous year	299	167	307

Central administrative expenses

Central administrative expenses totalled SEKm 113 (108). This includes costs for a profi t-and-share-price related incentive plan for 10 persons in executive management of SEKm 11 (15).

Income from joint ventures

Income from joint ventures amounted to SEKm 21 (–) and refers to Castellum's 50% share of the income in CORHEI Fastighets AB (former Ståhls). For more information, see the section Joint venture on page 16.

Of this income, SEKm 23 refers to income from property management, SEK 3 to unrealized changes in property value and SEKm –5 to tax.

Net interest

Net interest items were SEKm –602 (–664). The average interest rate level was 3.0% (3.3%). Net fi nancial income was positively aff ected by approx. SEKm 70 due to the average interest rate level decrease by 0.3%-units.

Changes in value

As for earlier years, the real estate market in 2015 was characterized by high activity and strong demand, resulting in lower required property yield and, as a consequence, higher property prices. Thus, the average valuation yield has been reduced by 0.25 points since year-end, in order to refl ect price increases seen in the Swedish real estate market. The change in value during the year amounted to SEKm 1,837 (344), corresponding to 4.6%. The increase in value consisted mainly of SEKm 255 attributable to acquisitions, SEKm 203 attributable to project profi ts and SEKm 1,331 primarily due to reduced yield requirements. In addition, property sales resulted in a value change of SEKm 48. Net sales price amounted to SEKm 1,140 after deduction for assessed deferred tax and transaction costs totalling SEKm 57. Hence the underlying property value, which amounted to SEKm 1,197, exceeded the last valuation of SEKm 1,092 by SEKm 105. As each property is valued individually, the portfolio premium that can be noted in the real estate market was not taken into account.

The value in the interest derivatives portfolio has changed by SEKm 220 (–657), mainly due to changes in long-term market interest rates. Castellum's currency derivatives has during the year changed SEKm 20 (–17) where the eff ective part of the value change of SEKm 24 (–14) is accounted for in other total net income.

Income from Property Management per share

Tax

The nominal corporate tax rate in Sweden is 22%. Due to the possibility to deduct depreciation and reconstructions for tax purposes, and to utilize tax loss carry forwards, the paid tax is low. Paid tax occurs since a few subsidiaries have no possibilities to group contributions for tax purpose.

Remaining tax loss carryforwards can be calculated to SEKm 809 (1,193). Fair values for the properties exceed their fi scal value by SEKm 22,239 (18,602) of which SEKm 1,893 (991) relates to the acquisition of properties accounted for as asset acquisitions. As deferred tax liability, a full nominal 22% tax of the net diff erence is reported, reduced by the deferred tax relating to asset acquisitions, i.e., SEKm 4,299 (3,612).

Castellum has no current tax disputes.

Tax calculation 2015

SEKm	Basis current tax	Basis deferred tax
Income from property management	1,533
D:o attributable to joint venture	– 23
Deductions for tax purposes
depreciations	– 741	741
reconstructions	– 494	494
Other tax allowances	– 39	6
Taxable income from property management	236	1,241
Properties sold	3	– 293
Changes in value on properties	–	1,789
Changes in value on derivatives	216	–
Taxable income before tax loss carry forwards	455	2,737
Tax loss carry forwards, opening balance	– 1,193	1,193
Tax loss carry forwards, closing balance	809	– 809
Taxable income	71	3,121
Tax according to the income statement for the year	– 16	– 687

Income over time

Real Estate Portfolio

The real estate portfolio is located 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 67% offi ce and retail properties as well as 29% warehouse and industrial properties. The properties are located from inner city sites to well-situated working-areas with good means of communication and services. The remaining 4% consist of projects and undeveloped land.

Castellum owns approx. 788,000 sq.m. of unutilized building rights and furthermore ongoing projects with remaining investments of approx. SEKm 1,300.

Investments

During the year, investments totalling SEKm 3,553 (2,525) were carried out, of which SEKm 1,232 (1,378) were new constructions, extensions and reconstructions and SEKm 2,321 (1,147) were acquisitions. Of the total investments SEKm 1,077 refer to Greater Stockholm, SEKm 847 to Greater Gothenburg, SEKm 811 to Mälardalen, SEKm 533 to the Öresund Region and SEKm 285 to Eastern Götaland. After sales of SEKm 1,140 (3,054) net investments amounted to SEKm 2,413 (–529).

During year Castellum acquired 50% of the shares in CORHEI Fastighets AB (former Ståhls) for SEKm 505. The company owns and manage properties in Norrköping and Linköping totalling approx. SEK 2 billion. See page 16 for more information. Agreements have also been concluded for the acquisition of two offi ce properties under construction, one in Hyllie in Malmö for SEK 327 with

change of possession scheduled to April 2016, and one in Hagastaden, Stockholm for SEK 1.6 billion with change of possession scheduled to February 2017. The properties will be accounted for when the change of possession has taken place due to the agreements which is conditional upon i.e. completion.

During 2015 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, 2015	37,599	583
+ Acquisitions	2,321	23
+ New constructions, extensions and reconstructions	1,232	8*
– Sales	– 1,092	– 17
+/– Unrealized changes in value	1,789	–
+/– Currency translation	– 31	–
Real estate portfolio on 31 December 2015	41,818	597

* Parcelling / regulation

Investments

Castellums' real estate portfolio 31-12-2015

			2015-12-31			JANUARY - DECEMBER 2015
	No. of proper ties	Area thous. sq.m	Property value SEKm	Property value SEK/sq.m	Rental value SEKm	Rental value SEK/ sq.m	Econom ic occu pancy rate	Rental income SEKm	Property costs SEKm	Property costs SEK/sq.m	Net operating income SEKm
Offi ce/retail
Greater Gothenburg	85	476	8,624	18,102	662	1,388	93.1%	616	138	289	478
Öresund Region	65	412	5,899	14,313	542	1,316	84.3%	457	129	314	328
Greater Stockholm	43	284	4,833	17,034	412	1,453	89.7%	370	84	296	286
Mälardalen	78	437	5,975	13,685	533	1,220	90.8%	484	138	316	346
Eastern Götaland	27	198	2,803	14,124	258	1,302	94.6%	244	66	333	178
Total offi ce/retail	298	1,807	28,134	15,566	2,407	1,332	90.2%	2,171	555	307	1,616
Warehouse/industrial
Greater Gothenburg	105	667	5,580	8,363	506	759	91.5%	463	95	143	368
Öresund Region	42	282	1,863	6,614	213	757	88.3%	188	47	168	141
Greater Stockholm	51	287	3,187	11,129	295	1,029	91.7%	270	60	208	210
Mälardalen	39	188	1,319	7,032	144	767	88.7%	128	36	193	92
Eastern Götaland	9	50	210	4,166	27	528	85.1%	22	6	111	16
Total warehouse/industrial	246	1,474	12,159	8,253	1,185	804	90.5%	1,071	244	166	827
Total	544	3,281	40,293	12,282	3,592	1,095	90.3%	3,242	799	244	2,443
Leasing and property administration									235	72	– 235
Total after leasing and property administration									1,034	316	2,208
Development projects	23	111	1,105	–	98	–	–	56	24	–	32
Undeveloped land	30	–	420	–	–	–	–	–	–	–	–
Total	597	3,392	41,818	–	3,690	–	–	3,298	1,058	–	2,240

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 period. The discrepancy between the net operating income of SEKm 2,240 accounted for above and the net operating income of SEKm 2,225 in the income statement is explained by the deduction of the net operating income of SEKm 55 on properties sold during the year, as well as the adjustment of the net operating income of SEKm 70 on properties acquired/completed during the year, which are recalculated as if they had been owned or completed during the whole period.

Property related key ratios

	2015	2014
Rental value, SEK/sq.m.	1,095	1,064
Economic occupancy rate	90.3%	88.7%
Property costs, SEK/sq.m.	316	307
Net operating income, SEK/sq.m.	673	637
Property value, SEK/sq.m.	12,282	11,118
Number of properties	597	583
Lettable area, thousand sq.m.	3,392	3,329

Segment information		Rental income	Income from property management
SEKm	2015 Jan-Dec	2014 Jan-Dec	2015 Jan-Dec	2014 Jan-Dec
Greater Gothenburg	1,091	1,050	557	524
Öresund Region	651	673	300	278
Greater Stockholm	703	637	343	299
Mälardalen	603	556	260	235
Eastern Götaland	251	402	133	166
Totalt	3,299	3,318	1,593	1,502

The diff erence between the income from property management of SEKm 1,593 (1,502) above and the groups accounted income before tax of SEKm 3,584 (1,134) consists of unallocated income from property management of SEKm –60 (–52), changes in property value of SEKm 1,837 (344) and changes in values of interest rate derivatives of SEKm 216 (–660) and tax in joint venture of SEKm 3 (–) respectively SEK –5 (–).

Property value by property type Property value by region

Property value

Internal valuations

Castellum assesses the value of the properties through internal valuations, as at the year-end, corresponding to level 3 in IFRS 13. The valuations 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 of a property's future earnings capacity, consideration has been taken of potential changes in rental levels, occupancy rates and property costs - as well as an assumed infl ation level of 1.5%.

Projects in progress have been valued using the same principle, but with deductions for remaining investments. Properties with building rights have been valued on the basis of an estimated market value per square metre, on average approx. SEK 1,700 (1,500) per sq.m. The required market yield can be calculated according to the following chart.

Required yield		Warehouse/
	Offi ce/Retail	industrial
Real interest rate	1.5%	1.5%
Infl ation	1.5%	1.5%
Risk	5.8 - 12.9%	8.4% - 13.2%
Return on equity	8.8 - 15.9%	11.4% - 16.2%
Interest rate	5.0%	5.0%
Loan to value ratio	65%	55%
Return on total capital	6.3% - 8.8%	7.9% - 10.0%
Weighted d:o, disc. factor year 1-9	7.4%	8.6%
Weighted disc. factor residual value*	5.9%	7.1%
*(Required yield on total capital minus growth equal to inflation)

Based on these internal valuations, the value of the properties at year-end were assessed to SEKm 41,818 (37,599), corresponding to SEK 12,282 per sq.m. (11,118).

Average valuation yield

The average valuation yield for Castellum's real estate portfolio, excluding development projects and undeveloped land, can be calculated to 6.5% (6.9%). The lower valuation yield can partly be explained by major reallocations in the property portfolio.

Average valuation yield, Mkr

(excl. project/land and building rights)	2015	2014
Net operating income properties	2,443	2,286
+ Estimated index adjustment 2016, 1% (1%)	35	25
+ Real occupancy rate, 94% at the lowest	216	251
– Property administration, 30 SEK/sq.m.	– 100	– 99
Normalized net operating income	2,594	2,463
Valuation (excl. building rights of SEKm 469)	39,824	35,506
Average valuation yield	6.5%	6.9%

Average valuation yield over time

Uncertainity range

A property's market value can only be confi rmed when sold. The value range of +/– 5-10%, often used in property valuations in a normal market, should therefore 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 the property portfolio of +/– SEKm 2,091, corresponding to SEKm 39,727 - 43,909.

External valuation

In order to provide further assurance and validation of the valuation, 161 properties - representing 56% of the value of the portfolio - have been valued externally by Forum Fastighetsekonomi AB. The properties were selected on the basis of the largest properties in terms of value, but they also refl ect the composition of the portfolio as a whole in terms of category and geographical location of the properties. Forum's valuation of the selected properties amounted to SEKm 23,581, 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 totalled SEKm 23,539, i. e., a net deviation of SEKm +42, corresponding to 0%. The gross deviation was SEKm +696 and SEKm –654 respectively, with an average deviation of 6%.

In addition, NAI Svefa made a desk-top valuation of 41 properties corresponding in value to 23% of the portfolio. NAI Svefa's valuation of the selected properties amounted to SEKm 9,324. Castellum's valuation of the same properties amounted to SEKm 9,742, i.e. a net deviation of SEKm –418 corresponding to –4%. Forum's valuation of the same properties amounted to SEKm 9,774, i.e. en net deviation of SEKm +32 corresponding to 0% compared to Castellum's valuation.

It can be noted that Castellum's deviation from the two external valuers accommodated well within the uncertainty range of +/–5-10%.

Acquisitions and sales

Since the end of 2014, Castellum has had a higher portfolio turnover than usual in order to increase the quality and density of the portfolio.

Castellum's new portfolio disposition, which has taken place over slightly more than a year, can be summarized in numbers as follows:

Castellum sold properties for SEK 4 billion
Castellum acquired properties for SEK 4.6 billion, excluding CORHEI Fastighets AB (previously Ståhls).

In October 2014, the Hansa mall in central Malmö was sold for just over SEKm 600. This was the fi rst of several major transactions that took place in the following 15 months. A month later, the entire real estate portfolio in Värnamo and Växjö was sold in a transaction of over SEK 1.9 billion.

In late January, Castellum's real estate portfolio in Copenhagen was doubled in a transaction totalling SEKm 700, which also included a property in Marievik near downtown Stockholm.

In mid-April, Castellum announced entry into a new market, Norrköping, through the acquisition of 50% of the shares in CORHEI Fastighets AB, with an underlying property value of approx. SEK 2 billion. The transaction included both an establishment in central Linköping and four centrally located corner properties in Örebro.

Moreover, Castellum's fi rst establishment in the Hyllie city district of southern Malmö in the autumn of 2015 means that the company will come into possession of an upscale offi ce building in April, 2016. The investment amounted to just over SEKm 300.

In Stockholm, there is ongoing concentration on selected market segments. In late September, Castellum acquired a property on Kungsholmen for just over SEKm 400, and in November, the entire portfolio in Kista and Akalla was sold for more than SEKm 800. On December 10, Castellum acquired an offi ce property in Hagastaden – the emerging area around the Nya Karolinska university hospital in Solna, where research and business meet. The purchase price amounts to SEK 1.6 billion, with access in the fi rst quarter of 2017 – and virtually all units are already leased. In connection with this acquisition, an offi ce property in Solna was sold for SEKm 280.

Castellum Year-end Report 2015 ¹³

Castellum Year-end Repor t 2015 13

Larger investments and sales

Larger projects			Rental value
Property	Area, sq.m	SEKm	SEK/ sq.m	Econ. occup. Jan 2016	Total inv., land incl. SEKm	Remain. inv.	SEKm Completed Comment
Lindholmen 30:5, Gothenburg	9,243	23	2,500	22%	265		170 Q1 2017	New construction offi ce
Drottningparken, Örebro	4,280	9	2,050	100%	100		40 Q3 2016	New construction offi ce
Majorna 163:1, Gothenburg	5,867	9	1,500	75%	88		77 Q4 2016	Reconstruction offi ce and warehouse
Verkstaden 14, Västerås	6,100	9	1,400	100%	84		17 Q1 2016	Extension and reconstruction educations facilities
Varpen 10, Huddinge	2,520	5	2,050	100%	66		55 Q4 2016	New construction car retail
Tjurhornet 15, Stockholm	5,786	1	250	–	56		53 Q3 2016	Parking facilities
Ringspännet 5, Malmö	3,333	5	1,350	100%	52		44 Q4 2016	New construction car retail/garage
Verkstaden 14, Västerås	1,844	4	2,000	46%	45		42 Q2 2017	New construction offi ce
Sändaren 1, Malmö	2,771	4	1,550	100%	44		41 Q2 2017	Reconstruction offi ce
Projects completed/partly moved in
Lundbyvassen 8:3, Gothenburg	8,990	18	2,000	100%	217		11 Q1 2015	New construction offi ce
Algen 1, Jönköping	4,398	11	2,550	83%	140		8 Q3 2015	New construction retail/offi ce/ restaurant
Jägmästaren 1, Linköping	8,774	10	1,100	97%	109		6 Q1 2015	New construction retail
Visionen 3, Jönköping	2,472	6	2,400	100%	60		6 Q3 2015	New construction offi ce
Varla 3:22, Kungsbacka	5,000	4	700	100%	42		0 Q1 2015	Extension and reconstruction warehouse
Boländerna 35:1, Uppsala	8,716	2	1,350	98%	38		0 Q1 2015	Reconstruction retail
Godståget 1, Stockholm	6,568	4	1,450	100%	31		0 Q2 2015	Extension and reconstruction warehouse

Larger acquisitions during 2015			Rental value
	Area,		SEK/	Econ. occup.	Acquisition
Property	sq.m	SEKm	sq.m	Jan 2016	SEKm	Access	Category
Hornsberg 10, Stockholm	14,952	31	2,050	100%	421	Sept 2015	Offi ce
Park Allé 373, Roholmsvej 19-21 and Generatorvej 6-8, Köpenhamn	51,525	53	1,050	82%	377	Jan 2015	Offi ce/warehouse
Bromsgården 1, Gillet 22, Hållstugan 28 and Prästgården 12, Örebro	22,887	31	1,350	92%	343	May 2015	Offi ce/retail
Marievik 27 and 30, Stockholm	13,087	31	2,350	73%	319	Jan 2015	Offi ce, retail and parking facilities
Bolsheden 1:4, Kungsbacka	17,804	19	1,100	91%	153	Oct 2015	Offi ce and retail
Vakten 11, Jönköping	6,933	10	1,500	100%	128	Oct 2015	Offi ce
Kärra 75:2 and 75:4, Gothenburg	15,943	12	700	98%	127	June 2015	Warehouse, offi ce and retail
Lindholmen 28:1, Gothenburg	3,898	9	2,450	90%	115	Feb 2015	Offi ce
Gasklockan 2, Mölndal	4,876	7	1,350	100%	64	Dec 2015	Workshop space and offi ce
Bangården 4, Solna	5,765	8	1,350	24%	63	May 2015	Project
Bleckslagaren 7, Örebro	5,810	4	650	55%	38	Dec 2015	Project
Rosersberg 11:130, Sigtuna	–	–	–	–	34	Dec 2015	Land

Sales during 2015			Rental value
Property	Area, sq.m	SEKm	SEK/ sq.m	Underlying prop. price, SEKm	Trans. costs and deferred tax SEKm	Net sales price, SEKm	Access	Category
Ekenäs 1-4, Karis 3 and 4 and Sätes dalen 2 in Stockholm; Hammarby Smedby 1:454 and 1:461 in Upplands Väsby and Ringpärmen 4 and
Sjöstugan 1 in Sollentuna	88,563	127	1,450	836	– 36		800 Dec 2015	Offi ce
Rankan 3 & 4, Sollentuna	–	–	–	198	– 15		183 Juli 2015	Land
Inom Vallgraven 22:3, Gothenburg	1,568	5	3,100	69	– 4		65 Feb 2015	Offi ce/retail

Joint venture

In the second quarter of 2015, Castellum AB (publ) closed a deal with Heimstaden AB (publ) which meant that Castellum, through the subsidiary Corallen, acquired 50% of the shares in CORHEI Fastighets AB (former Ståhls), corresponding to an investment of SEKm 505. Access was gained at month-end, May/June 2015. The agreement gives Castellum an option to purchase the remaining 50% to market value, no earlier than 18 months after the access.

The investment has contributed SEKm 21 to Castellum's results during this period. The carrying value of this investment thus totalled SEKm 526 as of December 31, 2015 and is accounted for according to the equity method.

The real estate portfolio amounted to SEKm 2,030 as

of December 31 and the loan-to-value ratio at that date was 46%. The interest-bearing fi nancing consists of loans in some of the largest Nordic banks of which 60% has fl oating interest rate and the remaining part fi xed interest rate of approx 1%. Furthermore, the Group has tax loss carryforwards and is not expected to pay income tax next year.

Heimstaden owns the remaining 50% and has assigned property management as well as fi nancial management of CORHEI Fastighets AB to Castellum. To elucidate on Castellum holdings, the Group's real estate portfolio, consolidated balance sheet and income statement as of December, 2015, will be accounted for below.

Property portfolio per 31-12-2015 31-12-2015					January - December 2015
	Property type	No. of proper ties	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
Distributed by city
Norrköping	Offi ce/retail	12	92	1,228	13,346	115	1,247	87.3%	103	38	406	65
Norrköping	Warehouse/industrial	1	19	51	2,642	7	382	18.,8%	1	1	67	0
Linköping	Offi ce/retail	9	51	751	14,717	68	1,332	86.5%	60	25	495	35
Total		22	162	2,030	12,496	190	1,170	84.3%	164	64	394	100
	Leasing and property administration									8	53	– 8
	Total after leasing and property administration									72	447	92

Property value by property type Property value by city

Balance sheet per 31-12-2015

SEKm	31 Dec 2015
Assets
Investment properties	2,030
Other fi xed assets	5
Current receivables	10
Liquid assets	137
Total assets	2,182
Shareholders' equity and liabilities
Shareholders' equity	933
Deferred tax liability	129
Interest-bearing liabilities	1,069
Non interest-bearing liabilities	51
Total shareholders' equity and liabilities	2,182

Income statement 2015

SEKm	June - Dec 2015

Rental income	96
Property costs	– 42
Central administrative expenses	– 1
Net interest income/expense	– 7
Income from property management	46
Change in value properties	6
Current tax	–
Deferred tax	– 10
Net income	42
- of which Castellum's part of the joint venture (50%)	21

Value of the part of the joint venture accounted for 31-12-2015

SEKm	Castellum's part 50%
Shareholders' equity accounted for	467
Net adjustment for goodwill and deferred tax consolidation	59
Part of the joint venture	526

Financing

Castellum shall have a low fi nancial risk, meaning a loan to value ratio not permanently exceeding 55% and an interest coverage ratio of at least 200%. Castellum's assets had on December 31, 2015, a value of SEKm 42,652 (38,088) and are fi nanced by shareholders´s equity of SEKm 15,768 (13,649), deferred tax liabilities of SEKm 4,299 (3,612), interest bearing liabilities of SEKm 20,396 (18,446) and non interest bearing liabilities of SEKm 2,189 (2,381).

Interest bearing liabilities

At the end of the year Castellum had binding credit agreements totalling SEKm 30,325 (26,065) of which SEKm 25,141 (22,357) was long term and SEKm 5,184 (3,708) short term.

During the year MTN of nominally SEKm 3,500 were issued and SEKm 1,200 matured. Credit agreement of SEKm 18,000 were repurchased and/or extended and an existing bank credit facility has been increased with SEKm 100. During December the limit of the commercial papers has been increased to SEKm 5,000.

After deduction of cash of SEKm 39 (47), net interest bearing liabilities were SEKm 20,357 (18,399), of which SEKm 6,499 (4,200) were MTN and SEKm 3,157 (1,280) outstanding commercial papers. (Nominal SEKm 6,500 respectively SEKm 3,161.)

Most of Castellum's loans are short-term revolving loans, utilized in long-term binding credit agreements in Nordic banks. This means great fl exibility. Bonds issued under the MTN program and the commercial papers are a complement to the existing funding in banks and broaden the funding base. At the end of the period the fair value of the liabilities is in principle in line with the value accounted for.

Long-term loan commitments in banks are secured by pledged mortgages in properties and/or fi nancial covenants. Outstanding commercial papers and bonds under the MTN-program are unsecured.

Net interest bearing liabilities amounted to SEKm 20,357 (18,399) of which SEKm 10,460 (12,919) were

Distribution of interest bearing fi nancing 31-12-2015

secured by the company's properties and SEKm 9,897 (5,480) unsecured. The proportion of used secured fi nancing was thus 25% of the property value.

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, 49% and 351% respectively. The average duration of Castellum's long-term credit agreements was 3.1 years (3.0). Margins and fees on long-term credit agreements had an average duration of 3.1 years (2.6).

Credit maturity structure 31-12-2015

	Credit		Utilized in
SEKm	agreements	Bank	MTN/Cert	Total
0-1 year	5,184	1,209	3,657	4,866
1-2 years	1,608	8	1,600	1,608
2-3 years	12,558	4,908	1,550	6,458
3-4 years	8,166	3,516	1,100	4,616
4-5 years	1,507	8	1,499	1,507
> 5 years	1,302	1,052	250	1,302
Total	30,325	10,701	9,656	20,357

Unutilized credit in long term credit agreements (more than 1 year) 4,784

Interest rate maturity structure

In order to secure a stable and low net interest cash fl ow the interest rate maturity structure is distributed over time. The average fi xed interest term on the same date was 2.5 years (2.8). The average effective interest rate as per December 31, 2015 was 2.9% (3.4%).

Castellum utilizes interest rate derivatives to achieve the desired interest rate maturity structure. Interest rate derivatives is a cost eff ective and fl exible way to achieve the desired fi xed interest term. In the interest rate maturity structure, interest rate derivatives are accounted for in the earliest time segment in which they can mature.

Credit margins and fees are distributed in the table by reported underlying loans.

Secured credit facilities 31-12-2015

Interest rate maturity structure 31-12-2015

	Credit, SEKm	Interest rate derivates SEKm	Net. SEKm	Closing interest rate	Average fi xed interest rate term
0-1 year	18,958	– 9,500	9,458	2.9%	0.2 year
1-2 years	350	900	1,250	2.2%	1.4 years
2-3 years	–	1,400	1,400	3.3%	2.4 years
3-4 years	300	1,300	1,600	3.0%	3.7 years
4-5 years	749	2,050	2,799	2.6%	4.5 years
5-10 years	–	3,850	3,850	3.4%	6.7 years
Total	20,357	–	20,357	2.9%	2.5 years

Currency

Castellum owns properties in Denmark with a value of SEKm 954 (530), which means that the Group is exposed to currency risk. The currency risk is primarily related to when income statement and balance sheet in foreign currencies are translated into Swedish kronor.

Interest rate and currency derivatives

Castellum utilizes interest rate derivatives to achieve the desired interest rate maturity structure. According to the accounting standard IAS 39, derivatives are subject to market valuation. If the agreed interest rate deviates from the market interest rate, notwithstanding credit margins, there is a theoretical surplus or sub value in the interest rate derivatives where the non-cash-fl ow

aff ecting changes in value are reported in the income statement. At maturity, a derivative's market value is dissolved in its entirety and the change in value over time has thus not aff ected equity. Castellum also has derivatives in order to hedge currency fl uctuation in its investment in Denmark. As for currency derivatives, a theoretical surplus/sub value occurs if the agreed exchange rate deviates from the current exchange rate, where the eff ective portion of value changes is accounted for in other total income.

To calculate the market value of derivatives, market rates for each term and, where appropriate, exchange rates, as quoted on the market at the closing date are used. Interest rate swaps are valued by discounting future cash fl ows to present value while instruments containing options are valued at current repurchase price.

As of December 31, 2015, the market value of the interest rate derivatives portfolio amounted to SEKm –1,124 (–1,344) and the currency derivative portfolio to SEKm 7 (–13). All derivatives are, as at the year end, classifi ed in level 2 according to IFRS 13.

Castellum's financial policy and commitments in credit agreements

	Policy	Committment	Outcome
Loan to value ratio	Not in the long run exceeding 55%	No more than 65%	49%*
Interest coverage ratio	At least 200%	At least 150%	351%
Funding risk
– average capital tied up	At least 2 years		3.1 years
– proportion maturing within 1 year	No more than 30% of outstanding loans and unutilized credit agreements		7%
– average maturing credit price	At least 1.5 years		3.1 years
– propotion capital market financing	No more than 50% of outstanding interest bearing liabilities		47%
– liquidity reserve	Secured credit agreements corresponding to SEKm 750 and 90 days upcoming loan maturities		Need: SEKm 4,274 Available: SEKm 7,479
Interest rate risk
– average interest duration	1.0-3.5 years	–	2.5 years
– proportion maturing within 6 months	At least 20%, no more than 55%	–	44%
Credit and counterparty risk
– rating restrictions	Credit institutions with high ratings, at least S&P BBB+		Satisfi ed
Currency risk
– translation exposure	Shareholders equity is not secured	–	Not secured
– transaction exposure	Handled if exceeding SEKm 25	–	Under SEKm 25

During the year Castellum's financial policy have been reviewed and revised.

* Castellum's definition of loan to value ratio has been changed and now includes liquid assets. The new definition is: "The Group's interest-bearing liabilities with liquid assets deducted, i.e., as a percentage of total fair value for the properties. In turn, fair-value considerations include a deduction for acquired properties not taken into possession, as well as value added for divested properties, still in Castellum possession, at the end of the period."

Condensed Consolidated statement of Comprehensive Income

SEKm	2015 OCT-DEC	2014 OCT-DEC	2015 JAN-DEC	2014 JAN–DEC
Rental income	850	822	3,299	3,318
Operating expenses	– 137	– 139	– 507	– 542
Maintenance	– 48	– 44	– 133	– 136
Ground rent	– 7	– 7	– 27	– 27
Property tax	– 43	– 41	– 172	– 170
Leasing and property administration	– 65	– 67	– 235	– 221
Net operating income	550	524	2,225	2,222
Central administrative expenses	– 31	– 29	– 113	– 108
Results from joint venture	10	–	21	–
– of which income from property management	9	–	23	–
– of which changes in property values	3	–	3	–
– of which tax	– 2	–	– 5	–
Net interest costs	– 147	– 157	– 602	– 664
Income from property management incl. results joint ven ture	382	338	1,531	1,450
– of which income from property management	381	338	1,533	1,450
Changes in value
Properties	1,019	– 10	1,837	344
Derivatives	163	– 162	216	– 660
Income before tax	1,564	166	3,584	1,134
Current tax	– 3	– 1	– 16	– 11
Deferred tax	– 301	273	– 687	88
Net income for the period/year	1,260	438	2,881	1,211
Other total net income
Items that will be reclassified into net income
Translation difference of currencies	– 25	11	– 32	22
Change in value derivatives, currency hedge	19	– 7	24	– 14
Total net income for the period/year	1,254	442	2,873	1,219

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

Development of the net operating income 2015

						of which
SEKm	Outcome 2015	Outcome 2014	Change	Comparable portfolio	Completed projects	Acquisitions	Sales	Project and land
Rental income	3,299	3,318	– 19	65	63	144	– 289	– 2
Operating expenses	– 507	– 542	35	– 1	– 5	– 21	63	– 1
Maintenance	– 133	– 136	3	– 7	– 2	– 5	14	3
Ground rent	– 27	– 27	0	– 1	0	0	0	1
Property tax	– 172	– 170	– 2	– 1	– 2	– 11	11	1
Net operation income, excl admin 2,460		2,443	17	55	54	107	– 201	2

Condensed Consolidated Balance Sheet

SEKm	31 DEC 2015	31 DEC 2014
Assets
Investment properties	41,818	37,599
Share in joint venture	526	–
Other fixed assets	27	28
Current receivables	242	414
Liquid assets	39	47
Total assets	42,652	38,088
Shareholders' equity and liabilities
Shareholders' equity	15,768	13,649
Deferred tax liability	4,299	3,612
Other provisions	14	23
Derivatives	1,117	1,357
Interest-bearing liabilities	20,396	18,446
Non interest-bearing liabilities	1,058	1,001
Total shareholders' equity and liabilities	42,652	38,088
Pledged assets (property mortgages)	18,164	18,222
Contingent liabilities	–	–

Data per Share

	2015 OCT-DEC	2014 OCT-DEC	2015 JAN-DEC	2014 JAN–DEC
Average number of shares, thousand	164,000	164,000	164,000	164,000
Income from property management, SEK	2.32	2.06	9.35	8.84
Income from prop. management after tax (EPRA EPS*), SEK	2.43	1.99	9.03	8.26
Earnings after tax, SEK	7.68	2.67	17.57	7.38
Outstanding number of shares, thousand	164,000	164,000	164,000	164,000
Property value, SEK	255	229	255	229
Long term net asset value (EPRA NAV*), SEK	129	114	129	114
Actual net asset value (EPRA NNNAV*), SEK	116	100	116	100
Divided, SEK (2015 proposed)	–	–	4.90	4.60
Dividend ratio	–	–	52%	52%

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

Financial Key Ratios

	2015 OKT-DEC	2014 OKT-DEC	2015 JAN-DEC	2014 JAN–DEC
Net operating income margin	65%	64%	67%	67%
Interest coverage ratio	353%	315%	351%	318%
Return on actual net asset value	33.2%	6.3%	20.4%	7.6%
Return on total capital	14.6%	4.9%	10.0%	6.5%
Return on equity	34.7%	13.3%	21.7%	9.5%
Net investments, SEKm	1	– 2,141	2,413	– 529
Loan to value ratio	49%	49%	49%	49%

*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, e.g. the key ratios EPRA EPS (Earnings Per Share), EPRA NAV (Net Asset Value) and EPRA NNNAV (Triple Net Asset Value).

Condensed Changes in Equity

SEKm	Number of outstanding shares, thousand	Share capital	Other capital contribution	Currency transl. reserve	Currency hedge reserve	Retained earnings	Total equity
Shareholders equity 31-12-2013	164,000	86	4 096	– 2	1	8,946	13,127
Dividend, March 2014 (4.25 SEK/share)	–	–	–	–	–	– 697	– 697
Net income 2014	–	–	–	–	–	1,211	1,211
Other total net income 2014	–	–	–	22	– 14	–	8
Shareholders equity 31-12- 2014	164,000	86	4,096	20	– 13	9,460	13,649
Dividend, March 2015 (4.60 SEK/share)	–	–	–	–	–	– 754	– 754
Net income 2015	–	–	–	–	–	2,881	2,881
Other total net income 2015	–	–	–	– 32	24	–	– 8
Shareholders equity 31-12-2015	164,000	86	4,096	– 12	11	11,587	15,768

Condensed Cash Flow Statement

SEKm	2015 OCT-DEC	2014 OCT–DEC	2015 JAN-DEC	2014 JAN–DEC
Net operating income	550	524	2,225	2,222
Central administrative expenses	– 31	– 29	– 113	– 108
Reversed depreciations	3	3	12	12
Net interest rates paid	– 153	– 161	– 605	– 689
Tax paid	– 1	2	– 8	– 7
Translation difference of currencies	– 3	– 6	– 7	– 10
Cash flow from operating activities before change in working capital	365	333	1,504	1,420
Change in current receivables	7	47	– 66	88
Change in current liabilities	– 132	– 225	69	– 118
Cash flow from operating activities	240	155	1,507	1,390
Investments in new constructions, refurbishments and extensions	– 385	– 380	– 1,232	– 1,378
Property acquisitions	– 477	– 293	– 2,321	– 1,147
Change in liabilities at acquisitions of property	– 3	11	– 17	18
Property sales	856	2,837	1,135	3,077
Change in receivables at sales of property	– 3	– 141	238	– 242
Investment joint venture	– 6	–	– 505	–
Other investments	– 4	– 1	– 9	– 9
Cash flow from investment activities	– 22	2,033	– 2,711	319
Change in long term liabilities	– 284	– 2,315	1,950	– 1,035
Dividend paid	–	–	– 754	– 697
Cash flow from financing activities	– 284	– 2,315	1,196	– 1,732
Cash flow for the period/year	– 66	– 127	– 8	– 23
Liquid assets opening balance	105	174	47	70
Liquid assets closing balance	39	47	39	47

Quartely Summary	Jan-March 2015	Apr-June 2015	July-Sept 2015	Oct-Dec 2015	2015	Jan-March 2014	Apr-June 2014	July-Sept 2014	Oct-Dec 2014	2014
Income Statement, SEKm
Rental income	801	816	832	850	3,299	820	843	833	822	3,318
Property costs	– 283	– 256	– 235	– 300	– 1,074	– 302	– 262	– 234	– 298	– 1,096
Net operating income	518	560	597	550	2,225	518	581	599	524	2,222
Central administrative expenses	– 29	– 32	– 21	– 31	– 113	– 26	– 30	– 23	– 29	– 108
Joint venture (Income from prop mgmnt)	–	2	12	9	23	–	–	–	–	–
Net interest costs	– 151	– 152	– 152	– 147	– 602	– 169	– 171	– 167	– 157	– 664
Income from property management incl. results joint venture	338	378	436	381	1,533	323	380	409	338	1,450

Changes in value. properties	329	551	– 62	1,019	1,837	52	305	– 3	– 10	344
Changes in value. derivatives	– 102	239	– 84	163	216	– 170	– 196	– 132	– 162	– 660
Joint venture (changes in value and tax)	–	0	– 3	1	– 2	–	–	–	–	–
Current tax	– 5	– 4	– 4	– 3	– 16	– 3	– 1	– 6	– 1	– 11
Deferred tax	– 109	– 216	– 61	– 301	– 687	– 31	– 99	– 55	273	88
Net income for the period/year	451	948	222	1,260	2,881	171	389	213	438	1,211
Other total net income	– 6	0	4	– 6	– 8	0	4	0	4	8
Total net income for the period/year	445	948	226	1,254	2,873	171	393	213	442	1,219
Balance Sheet, SEKm
Investment properties	38,951	40,187	40,826	41,818	41,818	38,668	39,385	39,733	37,599	37,599
Joint venture	–	479	510	526	526	–	–	–	–	–
Other fixed assets	599	489	270	269	269	255	408	350	442	442
Liquid assets	73	55	105	39	39	185	177	174	47	47
Total assets	39,623	41,210	41,711	42,652	42,652	39,108	39,970	40,257	38,088	38,088
Shareholders' equity	13,340	14,288	14,514	15,768	15,768	12,601	12,994	13,207	13,649	13,649
Deferred tax liability	3,721	3,937	3,998	4,299	4,299	3,731	3,830	3,885	3,612	3,612
Other provisions	21	19	18	14	14	–	–	–	23	23
Derivatives	1,447	1,202	1,299	1,117	1,117	853	1,055	1,188	1,357	1,357
Long term interest-bearing liabilities	19,791	20,483	20,680	20,396	20,396	20,730	20,802	20,761	18,446	18,446
Non-interest-bearing liabilities	1,303	1,281	1,202	1,058	1,058	1,193	1,289	1,216	1,001	1,001
Total shareholders' equity and liabilities	39,623	41,210	41,711	42,652	42,652	39,108	39,970	40,257	38,088	38,088
Financial key ratios
Net operating income margin	65%	69%	72%	65%	67%	63%	69%	72%	64%	67%
Interest rate, avarage	3.2%	3.0%	3.0%	2.9%	3.0%	3.5%	3.4%	3.3%	3.2%	3.3%
Interest coverage ratio	324%	349%	379%	353%	351%	291%	322%	345%	315%	318%
Return on actual net asset value	13.1%	26.0%	5.5%	33.2%	20.4%	5.2%	12.2%	6.6%	6.3%	7.6%
Return on total capital	8.5%	10.8%	5.0%	14.6%	10.0%	5.6%	8.7%	5.7%	4.9%	6.5%
Return on equity	13.6%	28.4%	6.2%	34.7%	21.7%	5.4%	12.3%	6.6%	13.3%	9.5%
Investments in properties, SEKm	1,117	834	740	862	3,553	960	523	369	673	2,525
Sales, SEKm	78	183	18	861	1,140	96	125	19	2,814	3,054
Loan to value ratio	50%	51%	50%	49%	49%	53%	52%	52%	49%	49%
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	2.06	2.30	2.66	2.32	9.35	1.97	2.32	2.49	2.06	8.84
Income prop mgmt after tax (EPRA EPS), SEK	1.95	2.25	2.40	2.43	9.03	1.80	2.13	2.34	1.99	8.26
Earnings after tax, SEK	2.75	5.78	1.35	7.68	17.57	1.04	2.37	1.30	2.67	7.38
Outstanding number of shares, thousand	164,000	164,000	164,000	164,000	164,000	164,000	164,000	164,000	164,000	164,000
Property value, SEK	238	245	249	255	255	236	240	242	229	229
Long term net asset value (EPRA NAV), SEK	113	118	121	129	129	105	109	111	114	114
Actual net asset value (EPRA NNNAV), SEK	99	105	107	116	116	94	97	99	100	100
Dividend, SEK (2015 proposed)	–	–	–	–	4.90	–	–	–	–	4.60
Dividend ratio	–	–	–	–	52%	–	–	–	–	52%
Property related key ratios
Rental value, SEK/sq,m,	1,082	1,092	1,103	1,095	1,095	1,045	1,047	1,040	1,070	1,064
Economic occupancy rate	88.7%	88.7%	89.6%	91.5%	90.3%	87.9%	89.0%	88.3%	88.8%	88.7%
Property costs, SEK/sq,m,	336	302	276	348	316	334	289	256	340	307
		11,602	11,758	12,282	12,282	10,394	10,552	10,621	11,118	11,118
Property value, SEK/sq,m,	11,384

Multi-Year Summary	2015	2014	2013	2012	2011	2010	2009	2008	2007	2006
Income Statement, SEKm
Rental income	3,299	3,318	3,249	3,073	2,919	2,759	2,694	2,501	2,259	2,014
Property costs	– 1,074	– 1,096	– 1,105	– 1,042	– 1,003	– 960	– 942	– 831	– 771	– 700
Net operating income	2,225	2,222	2,144	2,031	1,916	1,799	1,752	1,670	1,488	1,314
Central administrative expenses	– 113	– 108	– 96	– 93	– 83	– 84	– 81	– 71	– 69	– 67
Joint venture (Income from prop mgmnt)	23	–	–	–	–	–	–	–	–	–
Net interest costs	– 602	– 664	– 702	– 683	– 660	– 574	– 541	– 626	– 495	– 364
Income from property management
incl. results joint venture	1,533	1,450	1,346	1,255	1,173	1,141	1,130	973	924	883
Changes in value, properties	1,837	344	328	– 69	194	1,222	– 1,027	– 1,262	920	1,145
Changes in value, derivatives	216	– 660	429	– 110	– 429	291	102	– 1,010	99	178
Joint venture (changes in value and tax)	– 2	–	–	–	–	–	–	–	–	–
Current tax	– 16	– 11	– 6	– 7	– 10	– 5	– 10	–14	– 22	– 10
Deferred tax	– 687	88	– 390	404	– 217	– 685	– 35	650	– 434	– 522
Net income for the year	2,881	1,211	1,707	1,473	711	1,964	160	– 663	1,487	1,674
Other total net income	– 8	8	3	– 4	0	–	–	–	–	–
Total net income for the year	2,873	1,219	1,710	1,469	711	1,964	160	– 663	1,487	1,674
Balance Sheet, SEKm
Investment properties	41,818	37,599	37,752	36,328	33,867	31,768	29,267	29,165	27,717	24,238
Joint venture	526	–	–	–	–	–	–	–	–	–
Other fixed assets	269	442	291	259	207	156	201	230	123	200
Liquid assets	39	47	70	44	97	12	8	9	7	8
Total assets	42,652	38,088	38,113	36,631	34,171	31,936	29,476	29,404	27,847	24,446
Shareholders' equity	15,768	13,649	13,127	12,065	11,203	11,082	9,692	10,049	11,204	10,184
Deferred tax liability	4,299	3,612	3,700	3,310	3,714	3,502	2,824	2,785	3,322	2,723
Other provisions	14	23	–	–	–	–	–	–	–	–
Derivatives	1 117	1,357	683	1,105	1,003	574	865	966	– 44	55
Long term interest-bearing liabilities	20,396	18,446	19,481	19,094	17,160	15,781	15,294	14,607	12,582	10,837
Non-interest-bearing liabilities	1,058	1,001	1,122	1,057	1,091	997	801	997	783	647
Total shareholders' equity and liabilities	42,652	38,088	38,113	36,631	34,171	31,936	29,476	29,404	27,847	24,446
Financial key ratios
Net operating income margin	67%	67%	66%	66%	66%	65%	65%	67%	66%	65%
Interest rate, avarage	3.0%	3.3%	3.7%	3.9%	4.1%	3.7%	3.7%	4.7%	4.2%	3.7%
Interest coverage ratio	351%	318%	292%	284%	278%	299%	309%	255%	287%	343%
Return on actual net asset value	20.4%	7.6%	13.2%	7.9%	6.4%	21.5%	1.6%	– 8.3%	16.20%	20.7%
Return on total capital	10.0%	6.5%	6.4%	5.3%	6.2%	9.8%	2.1%	1.2%	9.1%	10.4%
Return on equity	21.7%	9.5%	14.6%	13.5%	6.6%	20.9%	1.6%	– 6.1%	14.9%	19.2%
Investments in properties, SEKm	3,553	2,525	1,768	2,798	2,015	1,506	1,165	2,738	2,598	2,283
Sales, SEKm	1,140	3,054	687	253	107	227	36	28	39	460
Loan to value ratio	49%	49%	51%	52%	50%	50%	52%	50%	46%	45%
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	9.35	8.84	8.21	7.65	7.15	6.96	6.89	5.93	5.63	5.38
Income prop mgmt after tax (EPRA EPS), SEK	9.03	8.26	8.04	7.27	7.01	6.62	6.93	5.85	5.50	5.09
Earnings after tax, SEK	17.57	7.38	10.41	8.98	4.34	11.98	0.98	– 4.04	9.07	10.21
Outstanding number of shares, thousand	164,000	164,000	164,000	164,000	164,000	164,000	164,000	164,000	164,000	164,000
Property value, SEK	255	229	230	222	207	194	178	178	169	148
Long term net asset value (EPRA NAV), SEK	129	114	107	100	97	92	82	84	88	79
Actual net asset value (EPRA NNNAV), SEK	116	100	97	90	87	85	73	75	85	76
Dividend, SEK (2015 proposed)	4.90	4.60	4.25	3.95	3.70	3.60	3.05	3.15	3.00	2.85
Dividend ratio	52%	52%	52%	52%	52%	52%	51%	53%	53%	53%

Property related key ratios
Rental value, SEK/sq,m,	1,095	1,064	1,036	1,015	995	974	969	921	896	864
Economic occupancy rate	90.3%	88.7%	88.4%	88.6%	89.3%	89.0%	89.8%	89.7%	87.9%	87.1%
Property costs, SEK/sq,m,	316	307	307	298	300	298	300	268	262	259
Property value, SEK/sq,m,	12,282	11,118	10,285	9,916	9,835	9,499	9,036	8,984	9,098	8,466

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 capital allocation and involvement in subsidiary Boards.

Condensed Income statement SEKm	2015 Oct-Dec	2014 Oct-Dec	2015 Jan-Dec	2014 Jan-Dec
Income	7	8	21	21
Operating expenses	– 27	– 26	– 90	– 84
Net fi nancial items	8	– 2	9	11
Dividend/group contributions	815	897	815	897
Change in derivatives	163	– 162	216	– 660
Income before tax	966	715	971	185
Tax	– 75	– 65	– 76	51
Net income for the period/year	891	650	895	236
Comprehensive income for the parent company
Net income for the period/year	891	650	895	236
Items that will be reclassifi ed into net income
Translation diff erence foreign operations	– 19	7	– 24	14
Unrealized change, currency hedge	19	– 7	24	– 14
Total net income for the period/year	891	650	895	236
Condensed Balance sheet SEKm		31 Dec 2015		31 Dec 2014
Participations in group companies		6,030		6,030
Receivables, group companies		19,918		17,990
Other assets		112		181
Liquid assets		0		16
Total		26,060		24,217
Shareholders' equity		4,718		4,577
Derivatives		1,117		1,357
Interest bearing liabilities		18,005		16,280
Interest bearing liabilities, group companies		2,105		1,883
Other liabilities		115		120
Total		26,060		24,217
Pledged assets (receivables group companies) Contingent liabilities (guaranteed commitments		15,309 2,150		15,200 2,165

for subsidiaries) Accounting Principles

Castellum follows the EU-adopted IFRS standards. This interim report has been prepared according to IAS 34 Interim Financial Reporting and the Annual Accounts Act. During the period Castellum acquired 50% of the shares in CORHEI Fastighets AB (former Ståhls). The investment is accounted for according to the equity method and constitutes the part of the joint venture. Otherwise, accounting principles and methods for calculations have remained unchanged compared with the Annual Report of the previous year.

Opportunities and Risks for Group and Parent Company

Opportunities and risks in the cash fl ow

Over time, increasing market interest rates normally constitute an eff ect of economic growth and increasing infl ation, which is expected 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 increased 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 eff ect on income in the short run may occur at diff erent points in time.

Sensitivity analysis - cash fl ow

Eff ect on income next 12 months
	Eff ect on income, SEKm	Probable scenario
	+/– 1% (units)	Boom	Recession
Rental level / Index	+ 33/– 33	+	–
Vacancies	– 37/+ 37	+	–
Property costs	– 11/+ 11	–	0
Interest costs	– 78/– 30*	–	+

* Due to the interest-rate fl oor in credit agreements, Castellum is not able to take full advantage of negative interest rates. This results in a negative outcome, even for a one-percentage-point reduction of the interest rate.

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. 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 upwarded adjustment in prices, while a weaker demand has the opposite eff ect. 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 eff ect.

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	– 8,364	– 4,182	–	4,182	8,364
Loan to value ratio	61%	54%	49%	44%	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 a low loan-to-value ratio and long-term credit agreements.

Annual General Meeting

For the AGM on March 17, 2016 the Board of Directors proposes:

a dividend of SEK 4.90 per share and March 21, 2016 as record day. The proposal is an increase of 7% compared to previous year,
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 Mr. Johan Strandberg representing SEB Fonder (chairman), Mr. Rutger van der Lubbe representing Stichting Pensioenfonds ABP, Mr. Björn Franzon (chairman) representing the Szombatfalvy family and Global Challenges Foundation, and Castellum's Chairman of the Board of Directors Charlotte Strömberg, proposes for the AGM;

re-election of the present Board members Mrs. Charlotte Strömberg, Mr. Per Berggren, Mrs. Anna-Karin Hatt. Mrs. Nina Linander, Mr. Christer Jacobson and Mr. Johan Skoglund, as members of the Board of Directors. Mr. Jan Åke Jonsson, board member since 2012, has declined re-election. Mrs. Christina Karlsson Kazeem is proposed to be elected as a new member of the the board of directors. Mrs. Charlotte Strömberg is proposed to be re-elected as Chairman of the Board of Directors.
that remuneration to the Board of Directors is proposed to be the following. The Chairman of the Board of Directors: SEK 720,000, to each of the other members of the Board of Directors: SEK 315,000, member of the board of Directors' Remuneration Committee, including the Chairman: SEK 30,000, Chairman of the Board of Directors' Audit and Finance Committee: SEK 50,000, to each of the other members of the Board of Directors' Audit and Finance Committee: SEK 35,000. The proposed total remuneration to the members of the Board of Directors, including remuneration for committee work, accordingly amounts to SEK 2,820,000 (SEK 2,650,000 previous year). – for AGM to decide on appointing a new Election Com-
mittee for the AGM 2017 and for the Chairman of the Board of Directors to contact the three largest owner ship registered or otherwise known shareholders as per the last share trading day in August 2016 and invite them each to appoint one member, and that the three members appointed constitute, together with the Chairman of the Board of Directors, the Election Committee. The Elec tion Committee appoints a Chairman amongst its members. tionCommittee app

Gothenburg January 20, 2016 Gothenburg January

Henrik Saxborn Henrik

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

Board of Directors

Board member

Nina Linander Board member

Johan Skoglund Board member

Executive Group Management

Charlotte Strömberg Chairman of the Board

Board member

Ulrika Danielsson CFO

Tage Christoff ersson Cecilia Fasth MD Eklandia Fastighets AB

Claes Junefelt

Corallen

Claes Larsson MD Aspholmen Fastigheter AB

Henrik Saxborn CEO

Erika Olsén Chief Investment Officer

Ola Orsmark MD Fastighets AB Briggen

Hornsberg 10, Stockholm Christer Sundberg MD Harry Sjögren AB

The Castellum Share

The Castellum share is listed on Nasdaq Stockholm Large Cap. At the end of the period the company had about 19,100 shareholders. Shareholders registered abroad cannot be broken down in terms of directly held and nominee registered shares except for one foreign shareholders who has fl agged for holding over 5%, Stichting Pensioenfonds ABP. Castellum has no direct registered shareholder with holdings exceeding 10%. The ten single largest shareholders registered in Sweden are presented in the table below.

Shareholders on 31-12-2015		Percentage of
	Number of	voting rights
Shareholders	shares thousand	and capital
SEB Fonder	7,068	4.3%
Lannebo Fonder	6,200	3.8%
AMF Försäkring & Fonder	4,810	2.9%
Länsförsäkringar Fonder	3,969	2.4%
Handelsbanken Fonder	2,865	1.8%
Stiftelsen Global Challenges	2,500	1.5%
Kåpan Pensioner	2,205	1.4%
Danske Invest & Danica Pension	2,029	1.2%
Carnegie Fonder	2,000	1.2%
Magdalena Szombatfalvy	1,935	1.2%
Board and executive management Castellum	303	0.2%
Other shareholders registered in Sweden	48,513	28.4%
Shareholders registered abroad	81,538	49.7%
Total registered shares	164,000	100.0%
Repurchased shares	8,007
Total registered shares	172,007

There is no potential common stock (eg. convertibles)

Source: Modular Finance AB acoording to information from Euroclear Sweden AB

Distribution of shareholders by country 31-12-2015

The Castellum share price as at 31 December, 2015 was SEK 120.70 (122.10) equivalent to a market capitalization of SEK 19.8 billion (20.0), calculated on the number of outstanding shares.

During the year a total of 188 million (133) shares were traded, equivalent to an average of 751,000 shares (532,000) per day, corresponding on an annual basis to a turnover rate of 114% (81%). The share turnover is based on statistics from Nasdaq Stockholm, Chi-X, Burgundy, Turquoise and BATS Europe.

Net asset value

Net asset value is the total equity which the company manages to its owners by creating return and growth given a certain level of risk.

The long term net asset value (EPRA NAV) can be calculated to SEK 129 per share (114). The share price at the end of the year was thus 94% (107%) of the long term net asset value.

Net asset value		SEKm SEK/share
Equity according to the balance sheet	15,768	96
Reversed
Derivatives according to balance sheet	1,117	7
Deferred tax according to balance sheet	4,299	26
Long term net asset value (EPRA NAV)	21,184	129
Deduction
Derivatives as above	– 1,117	– 7
Estimated real liability, deferred tax 5%*	– 1,121	– 6
Actual net asset value (EPRA NNNAV)	18,946	116

* Estimated real deferred tax liability net has been calculated to 5% based on a discount rate of 3%. Further, assessments have been made that tax loss carry forwards are realized in 2 years with a nominal tax of 22%, giving a present value of deferred tax liability of 21%, and that the properties are realized in 50 years where 33% are sold directly with a nominal tax of 22% and that 67% are sold indirect through company disposals where the buyers tax discount is 6%, which gives a present value of deferred tax liability of 6%.

Earnings

Income from property management adjusted for nominal tax attributable to income from property management (EPRA EPS) amounted to SEK 9.03 (8.26). This results in a share price yield of 7.5% (6.8%) corresponding to a multiple of 13 (15). Income from property management must be adjusted by a long-term increase in the property value.

Earings per share amounted in 2015 to SEK 17.57 (7.38), which based on the share price provides a return on 14.6% (6.1%), corresponding to a multiple of 7 (17).

Dividend yield

The latest carried dividend of SEK 4.90 (4.60) corresponds to a yield of 4.1% (3.8%) based on the share price at the end of the year.

Total share yield

During the last 12-month period the total yield of the Castellum share has been 2.3% (27%), including a dividend of SEK 4.60.

Net asset yield including long-term change in value

In companies managing real assets, such as real estate, the income from property management only refl ects part – albeit a large part – of the overall result. The defi nition of a real asset is that its value is protected. This means that over time – and with proper maintenance – the real asset increases in value to compensate for infl ation.

The net asset value – i.e., the denominator of the yield ratio income/capital – is adjusted annually in accordance with IFRS regulations for changes in value. In order to provide an accurate fi gure of the yield, the numerator – i.e., income – must be similarly adjusted. Therefore, the recorded net income has to be supplemented with a

component of value changes as well as with eff ective tax to provide an accurate view of income and yield. One problem is that changes in value can vary greatly between years and quarters, thus leading to volatile results. However, by being a long-term player with stable cash fl ow and a balanced real estate portfolio, Castellum is able to make use of long-term value changes.

Net asset yield and earnings including		Sensitivity analysis
long-term change in value		–1%-unit	+1%-unit
Income from prop. management 2015	1,533	1,533	1,533
Change in property value (on average 10 years)	440	40	840
D:o %	1.1%	0.1%	2.1%
Current tax, 5%	– 77	– 77	– 77
Earnings after tax	1,896	1,496	2,296
Earnings SEK/share	11.56	9.12	14.00
Return on actual long-term net asset value	10.2%	8.0%	12.4%
Earnings / share price	9.6%	7.6%	11.6%
P/E	10	13	9

EPRA Key ratios
	2015	2014
EPRA Earnings (Income from property management after tax), SEKm	1,481	1,355
EPRA Earnings (EPS) SEK/share	9.03	8.26
EPRA NAV (Long term net asset value), SEKm	21,184	18,618
EPRA NAV, SEK/share	129	114
EPRA NNNAV (Net asset value), SEKm	18,946	16,432
EPRA NNNAV, SEK/share	116	100
EPRA Vacancy Rate	10%	11%

The share's dividend yield Share price/net asset value

Yield earnings per share

Growth, yield and fi nancial risk

		3 years	10 years
		average/	average/
	1 year	year	year
Growth
Rental income SEK/share	–1%	2%	6%
Income from prop. management SEK/share	6%	7%	6%
Net income for the year after tax SEK/share	138%	25%	8%
Dividend SEK/share	7%	7%	6%
Long term net asset value SEK/share	13%	9%	6%
Actual net asset value SEK/share	16%	9%	6%
Real estate portfolio SEK/share	11%	5%	7%
Change in property value	4.6%	2.1%	1.1%
Yield
Return on actual long term net asset value	18.2%	11.4%	10.6%
Return on actual net asset value	20.4%	11.6%	10.6%
Return on total capital	10.0%	6.7%	6.6%
Total yield of the share (incl. dividend)
Castellum	2.3%	13.5%	9.1%
Nasdaq Stockholm AB (SIX Return)	10.4%	17.8%	9.2%
Real Estate Index Sweden (EPRA)	25.4%	27.5%	12.9%
Real Estate Index Europe (EPRA)	18.8%	18.4%	4.9%
Real Estate Index Eurozone (EPRA)	17.4%	15.5%	6.2%
Real Estate Index Great Britain (EPRA)	12.1%	19.0%	2.1%
Financial risk
Loan to value ratio	49%	51%	50%
Interest coverage ratio	351%	311%	302%

The Castellum share's price trend and turnover since the IPO May 23, 1997 until December 31, 2015

Calendar

Annual report 2015	mid-February 2016	The Board of Directors in Castellum proposes a
Annual General Meeting 2016	17 March 2016	dividend to the shareholders of SEK 4.90 per share.
Interim Report January-March 2016	13 April 2016	Record date for AGM	11 March 2016
Half-year Report January-June 2016	13 July 2016	Annual General Meeting	17 March 2016
Interim Report January-September 2016	12 October 2016	Ex-dividend date	18 March 2016
Year-end Report 2016	19 January 2017	Record date for dividend	21 March 2016
Annual General Meeting 2017	23 March 2017	Dividend payment	24 March 2016

www.castellum.se

On Castellum's website it is possible to download as well as subscribe to Castellum's Pressreleases and Interim Reports. For further information please contact Henrik Saxborn, CEO, tel +46 705 60 74 50 or Ulrika Danielsson, CFO, tel +46 706 47 12 61.

Invitation to Annual General Meeting 2015

The Annual General Meeting of shareholders will be held on Thursday 17 March 2016 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 11 March 2016 and must also have notified their attendance to the company on Friday 11 March 2016, preferably before 4 pm.

Summons to the Annual General Meeting will be around 15 February 2016 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.

Notification 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 [email protected], or by filling out a notification form on www.castellum.se. The notification must state name/business name, personal identification 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 11 March 2016. 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. For practical reasons the request should be received by the company no later than 28 January, 2016. The request should be addressed to Castellum AB, Att: Henrik Saxborn, Box 2269, 403 14 Gothenburg.

Subsidiaries

Aspholmen Fastigheter AB

Rörvägen 1, Box 1824, 701 18 Örebro Phone +46 (0)19-27 65 00 [email protected] www.aspholmenfastigheter.se

Fastighets AB Corallen

Bataljonsgatan 10, Box 7, 551 12 Jönköping Phone +46 (0)36-580 11 50 [email protected] www.corallen.se

Fastighets AB Briggen

Riggaregatan 57, Box 3158, 200 22 Malmö Phone +46 (0)40-38 37 20 [email protected] www.briggen.se

Eklandia Fastighets AB

Theres Svenssons gata 9, Box 8725, 402 75 Göteborg Phone +46 (0)31-744 09 00 [email protected] www.eklandia.se

Fastighets AB Brostaden

Tjurhornsgränd 6, Box 5013, 121 05 Johanneshov Phone +46 (0)8-602 33 00 [email protected] www.brostaden.se

Harry Sjögren AB

Kråketorpsgatan 20, 431 53 Mölndal Phone +46 (0)31-706 65 00 [email protected] www.harrysjogren.se

Castellum AB (publ) • Box 2269, 403 14 Gothenburg • Visiting address Kaserntorget 5 Phone +46 (0)31-60 74 00 • Fax +46 (0)31-13 17 55 • Email [email protected] • www.castellum.se Domicile: Gothenburg • Corporate identity no: 556475-5550 In the event of confl ict in interpretation or differences between this report and the Swedish version, the latter will have priority.

AI assistant

Castellum — Interim / Quarterly Report 2015

2900_10-k_2016-01-20_edd6e20e-d3fb-4b6f-a824-e116ff12a6b2.pdf

YEAR-END REPORT

Year-end report 2015

KEY RATIOS

Castellum - on the off ense in 2015!

High investment rate

Strong fi nances

Increased cost effi ciency

Sustainability eff orts rewarded

A changed world – changed approaches and processes

Mission and vision

Business concept

Business model

Sustainable business

Sustainability eff orts are focused on:

Development of commercial properties in growth regions

Customer focus through local organizations

Strong balance sheet with low fi nancial risk

STRATEGIC TOOLS

OUTCOME

• Loan to value ratio not permanently exceeding 55%. Interest coverage

Interest coverage ratio

Objective 10%

Customers and Organization

Customers - a refl ection of the diverse Swedish economy

Nine out of ten customers recommend Castellum

High leasing activity

A decentralized and small-scale organization infers deep local knowledge and interaction

Satisfi ed employees

Sustainable business

Market comments

Swedish economy

Macro indicators

Rental market

Property market

Interest and credit market

Income, Costs and Results

Rental income

Property costs

Central administrative expenses

Income from joint ventures

Net interest

Changes in value

Income from Property Management per share

Tax

Tax calculation 2015

Income over time

Real Estate Portfolio

Investments

Changes in the real estate portfolio

Investments

Castellums' real estate portfolio 31-12-2015

Property related key ratios

Property value by property type Property value by region

Property value

Internal valuations

Average valuation yield

Average valuation yield, Mkr

Average valuation yield over time

Uncertainity range

External valuation

Acquisitions and sales

Larger investments and sales

Joint venture

Property value by property type Property value by city

Balance sheet per 31-12-2015

Income statement 2015

Value of the part of the joint venture accounted for 31-12-2015

Financing

Interest bearing liabilities

Credit maturity structure 31-12-2015

Interest rate maturity structure

Secured credit facilities 31-12-2015

Interest rate maturity structure 31-12-2015

Currency

Interest rate and currency derivatives

Castellum's financial policy and commitments in credit agreements

Condensed Consolidated statement of Comprehensive Income

Castellum Interim / Quarterly Report 2015