INTERIM REPORT JANUARY – SEPTEMBER 2019

7% increase in income from property management

Important events during the quarter

In September, Castellum once again gained international recognition for its sustainability efforts. For the fourth year in a row, Castellum maintained its position as the only Nordic company in the real estate- and construction sector on the Dow Jones Sustainability Index. Also for the fourth consecutive year, Castellum was named a global sector leader in the Global Real Estate Sustainability Benchmark (GRESB) and received the EPRA Gold Award for the highest score among the best sustainability reports in Europe.

Castellum signed a collaboration agreement with Einar Mattsson to jointly develop the areas in Hagastaden, Stockholm that Castellum previously acquired the development rights for. The development will take place over several stages, with the preliminary start of foundation work in 2021. All buildings, office spaces and commercial spaces are expected to be ready for occupancy in early 2025. The intent of this collaboration is for Einar Mattsson to acquired the residential development rights from Castellum.

United Spaces, a co-working company owned by Castellum, signed a collaboration agreement in September with Geely, the Chinese industrial group. This collaboration will mean that United Spaces will have overall responsibility for the development and operation of a major 4,000 sq.m. co-working operation in the Lindholmen district of Gothenburg.

Heart Aerospace, Sweden's only electric-powered aircraft manufacturer, signed a lease for Säve airport. This is a stage in the work on developing a cluster for innovation and development of the sustainable transportation and mobility of the future at Säve airport.

Income for the period January-September 2019 amounted to MSEK 4,343 (MSEK 4,141 previous year).
Income from property management amounted to MSEK 2,380 (2,219), corresponding to SEK 8.71 (8.12) per share, an increase of 7%.
Changes in value on properties amounted to MSEK 2,505 (3,150) and on derivatives to MSEK - 417 (202).
Net income after tax for the period amounted to MSEK 3,637 (5,051), corresponding to SEK 13.31 (18.49) per share.
Long term net asset value amounted to SEK 186 (168) per share. An increase of 11%.
Net investments amounted to MSEK 741 (3,009) of which MSEK 2,789 (1,333) were acquisitions, MSEK 2,061 (2,123) new constructions, extensions and reconstructions and MSEK 4,109 (447) sales. Property value by the end of the period amounted to SEK 92.7 billion.
Net lease for the period was MSEK 38 (157)

KEY METRICS	2019 July-Sept	2018 July-Sept	2019 Jan-Sept	2018 Jan-Sept	2018 Jan-Dec
Income, MSEK	1,472	1,401	4,343	4,141	5,577
Net operating income, MSEK	1,058	1,025	3,102	2,965	3,945
Income of property management, MSEK	837	799	2,380	2,219	2,952
D:o SEK/share	3.06	2.92	8.71	8.12	10.81
D:o growth	+5%	+13%	+7%	+13%	+17%
Net income after tax, MSEK	1,051	2,626	3,637	5,051	7,453
Net investments, MSEK	555	940	741	3,009	2,657
Net leasing, MSEK	– 42	29	– 38	157	161
Loan-to-value ratio	44%	46%	44%	46%	45%
Interest coverage ratio	550%	506%	505%	451%	454%
Long term net asset value (EPRA NAV) SEK/share	186	168	186	168	176
Actual net asset value (EPRA NNNAV) SEK/share	172	153	172	153	162

This is a translation of the Swedish language original. In the event of any differences between this translation and the Swedish original, the latter shall prevail.

Cover: Sketch of Säve Airport, Gothenburg by White Arkitekter. Read more on page 8.

Castellum moving forward – towards an exciting future!

In isolation, Q3 was an unremarkable quarter for Castellum – but still a quarter that meant continued growth, even if at a lower level than previously this year. Income from property management increased 5%, to SEK 3.06 per share. Accumulated growth over three quarters totalled 7%. Property values also continued to rise, which added an additional SEK 0.6 billion in value to our portfolio in the last quarter.

The net asset value thus increased to SEK 186 per share, despite a dividend pay-out of SEK 3.05 during the period. Our financial position is stronger than ever, and the loan-to-value ratio remains at 44%. This, together with the rating we received, enabled us to raise a 7-year Eurobond loan of MEUR 400 at a fixed coupon rate in EUR of 0.75%. Our investor base has thus expanded and Castellum's dependence on the Swedish credit market, which rarely offers loans on such long terms, has further decreased.

The poor net leasing result (MSEK -38) may seem concerning. It certainly also reflects a certain sluggishness in the market, but to some extent it is an effect of timing. Gross leasing remains high (MSEK 265), but a few major notices of termination at the end of the quarter resulted in negative net leasing. The major new E.ON and Swedish National Courts Administration projects, which will bring in a secured net leasing of MSEK 146, will not be recorded until the end of this year or early next year. There is still a shortage of premises in attractive locations, and Castellum's vacancy rate has never been lower.

Rental levels are rising...

This is why we view the possibility of a continued rent increases positively. To date this year, the growth in rental levels in our likefor-like portfolio has been 5.5%; renegotiations represent just under half of that approximately MSEK 100 (approximately 2.3%). This means that on average, we have raised rents by approximately 18% in the renegotiations we have concluded – a trend we expect will continue. In addition, a large portion of the leases have an index clause regarding a minimum increase in rent of at least 2% per year. In combination with a program of continual efficiency enhancements, this is expected to have a continued effect going forward, which should constitute a firm basis for continued earnings growth.

… and the required yield falling?

As regards shareholder value, the current year stands out as a strong one for Castellum on the stock market (+33.3%) and the industry as a whole (+42.9%). This trend could be interpreted as the market lowering the required yield for the property sector in light of moderate risk, strong yields and a certain amount of growth. Lacking an alternative with corresponding characteristics and an assessment of an extended period of low (or even negative) interest rates and inflation, both national and international capital

have been flooding into the sector. I think there is a great deal that indicates these healthy conditions will remain for the foreseeable future. If Castellum's income from property management (and thus its dividend) continue to grow 7% over time (as it has to date this year and over the last 10 years), the current investment yield of 3% will mean our owners can expect a total yield of around 10% annually. Most likely this will be a bit over the market's required yield and thus ought to provide a strong foundation for the current valuation.

Development for the future

The above will apply for the medium term. Over the long term, the picture is more complicated; here, we are working particularly intensively to understand and predict, and to construct services for future customer needs, which depend on both the physical product and various digital solutions and services.

In Europe, Castellum was elected as the only Nordic company to a group of experts (consisting of seven major property companies from five countries) in sustainability and innovation. The purpose of the group is to create a shared knowledge platform based on digital technology. I see this as the fast track for us to absolute leading-edge competence in this field, and that at a lower investment cost.

United Spaces is now testing web solutions and app systems as well as a new user portal that will result in such projects as the development of new lock systems. The finesse here is that we, as a major property owner, will be able to use this new knowledge from the co-working.

The acquisition of Säve airport appears to hold more potential than we first thought. From the original intent of being purely a logistics hub, we now see potential – starting with the tenants we already have – to develop Säve into a high-tech center in many types of transportation solutions. The likelihood thereby increases that the logistics facilities will also be supplemented with office space – and even housing. The municipality is already working with this in particular, improving access in the area.

In conclusion, I believe our operations will continue to progress, heading into the near future at a good clip, while the long-term work on improvement will determine our successes further on. Here, I think that on the strength of our size, our finances and our early leadership in digital solutions, we have a head start over many of our competitors. And we intend to take advantage of that.

Gothenburg October 18, 2019

Henrik Saxborn

CEO

Market comments

CASTELLUM'S UNITED SPACES LANDED PRESTIGIOUS GEELY ASSIGNMENT

The Castellum-owned co-working company – United Spaces – has signed an exclusive agreement with Geely, the Chinese automobile manufacturer and mobility services provider. The joint project will give United Spaces the responsibility to develop and manage a major coworking operation at Geely's newly-invested facility, currently known as the Geely Innovation Centre in Europe, which is under development at the Lindholmen cluster in Gothenburg. Relatively speaking, the office and meeting-place facilities created by United Spaces is regarded to be a big coworking project by Nordic standards. The working area itself is 4,000 sq. m. and can accommodate around 500-600 people and the workplaces will be completed for use in 2021.

"This is an important and prestigious cooperation for us. We're very proud that Geely has placed confidence in our ability to sustain our part in creating the Geely Innovation Centre in Europe. We share the same vision, which is to create a flexible and dynamic work-and-meeting space that is sustainable and inspiring, while promoting cooperation and creativity."

Yvonne Sörensen Björud, CEO of United Spaces

Swedish, Danish and Finnish economy

The Swedish economy is now showing signs of slowing after having developed relatively well in 2018, with a growth in GDP of 2.4%. For 2019 and 2020, the Riksbank estimates (Sept 2019) that Swedish GDP will grow 1.5%, and 1.9% in 2021. Household optimism – and, recently, optimism in the industrial sector – has dampened somewhat. This, together with lower housing investments, is reducing the rate of growth, even if investments in infrastructure can counteract the effect somewhat. Demand for exports is also expected to slacken in light of factors including geopolitical unrest. The long-term effects are difficult to foresee.

Of late, the Swedish job market has weakened relatively sharply after having been quite strong for a long period. According to the Riksbank, unemployment is expected to gradually increase from 6.6% this year to 6.8% in 2021. Inflation (CPIF) is expected to fall slightly to approximately 1.7% this year, and according to the Riksbank will remain around this level in 2020 and 2021.

Development of the Swedish krona exchange rate plays a key role for inflation in Sweden, as a weak exchange rate normally contributes to higher inflation. The Swedish krona weakened (TCW index) relatively drastically during 2018, and has during 2019 remained weak at a level last noted in early 2009.

MACRO INDICATORS - SWEDEN
Unemployment	7.1%	(August 2019)
Inflation	1.3%	(Sept 2019 compared to Sept 2018)
GDP-growth	0.1%	(Q2 2019 compared to Q1 2019)

According to Danmarks Nationalbank (Sept 2019), growth in the Danish GDP is estimated to peak at +1.8% in 2019, and thereafter to shrink slightly to approximately +1.5% per year in 2020–2021. Exports in 2019 are estimated to boost GDP while private consumption will fall slightly compared with 2018. Over the next two years, households are expected to increase consumption again while exports will fall slightly. Inflation in Denmark — expressed in terms of the harmonized consumer price index (HICP) — is expected to be around 0.8% in 2019, to then rise to approximately 1% in 2020 and 1.5% in 2021.

In Finland, the GDP growth rate is expected to be around 1.5% in 2019 and 1% for 2020 and 2021, which is slightly weaker than 2018 when GDP grew approximately 1.7% according to the Finnish Ministry of Finance (Oct 2019). Growth is impeded by such factors as lower housing investments but is supported by private and public consumption. Inflation (CPI) is estimated to increase 1.1% in 2019, 1.4% in 2020 and 1.7% in 2021.

Rental market

In Castellum's submarkets in Sweden, the rental market for office space has remained positive in 2019. High demand and low supply of office space resulted in vacancy rates remaining low as well as strong rental growth. The average rent in the CBDs of Stockholm, Gothenburg and Malmö has according to Newsec increased by 5%, 4% and 2% compared with Q3 2018.

Source: SCB

Rising rental levels have been noted in Stockholm and Gothenburg as a result of continued record low vacancy rates in the CBDs and the most attractive submarkets. Over the short term, the offering of new construction will be limited and primarily leased in advance. Top rental levels of approx. SEK 9,500/ sq.m. and approx. SEK 4,000/sq.m. have been noted in Stockholm and Gothenburg respectively. In regional cities, the growth in office rents in 2019 continued generally to increase. Increased demand was noted in the rental market for office space intended for co-working, above all in Stockholm, but also in Gothenburg and Malmö.

Rents for offices in the CBD of Helsinki increased approximately 4% year-on-year, while rents in the rest of central Helsinki increased approximately 8% on average, according to JLL. In Copenhagen, rents in the CBD increased approximately 3% year-on-year. Modern offices in attractive locations in Copenhagen are pushing rents upward. The high level of access to land and development rights in and around the city, however, is a limiting factor for rent potential.

The rental market in Sweden for warehouses/logistics spaces is positive, with rising rents in prime logistics locations, particularly in semi-central locations with good means of transportation and sorting yards, i.e., last-mile locations. This is driven by strong demand, based mainly on the growth in e-commerce (PostNord/HUI forecast growth of 14% in 2019). Rental levels are relatively stable for the largest logistics rental properties (> 10,000 square meters).

Property market

The volume for transactions over MSEK 40 in the transaction market in Sweden totalled around SEK 136 billion (108) over 280 transactions (303) through Sept 30, 2019. It can be stated that the transaction market remains strong, and that more major transactions are taking place than in previous years.

The mood among investors in the Swedish property market is positive, which is felt to depend on the expectation of low interest rates in the foreseeable future, as well as trends in the rental market remaining positive. The share of foreign investors through Sept 30, 2019 was approximately 37%, which is a historic high. A weak Swedish krona in combination with a great deal of liquidity on the global capital market (which is looking for returns in the low interest rate environment) could explain an increased influx of foreign capital into the Swedish property market.

Altogether, this has resulted in modern office properties in the most attractive locations in the CBDs of Stockholm, Gothenburg, Uppsala and Malmö continuing to show falling required yields. Properties with secure cash flows such as public sector properties, and compound property portfolios that generate healthy cash flows, are attractive to investors in the low interest rate environment, which results in falling required yields.

In Castellum's submarkets outside the metropolitan areas, the required yields for office properties were either stable or declined somewhat in 2019.

Warehouse and logistics properties attract a growing number of both domestic and international investors, driven largely by the growth of e-commerce. The required yields for completed transactions in 2019 were at record lows, since demand is high and increasing, and driving up prices. Low levels of supply among the most attractive logistics properties, in combination with high demand among investors, resulted in a dispersion effect with falling required yields, even among more secondary warehouse properties outside the most attractive locations.

In Denmark, the transaction volumes in the property market totalled approximately DKK 34 billion (53 billion) through Sept 30, 2019. The mood among investors remains strong, however, and a shift in investor interest from the housing segment to the office segment has been noted. The required yield for offices in the CBD in Copenhagen remains stable at 3.75%.

In Finland, the transaction volume in the Finnish property market totalled approximately MEUR 4.9 billion (5.1) through Sept 30, 2019. There is a great deal of demand among investors for the most attractive objects, and the required yield for offices in the CBD is estimated to have fallen further to 3.4%, which is roughly on a level with Stockholm. Increased investor interest has been noted for secondary and development properties as well.

Interest and Credit market

In December 2018, Sweden's Riksbank raised interest rates from -0.5% to -0.25%, the first increase in seven years. The Riksbank repo-rate path (Sept 2019) indicates that the next increase will take place by the end of 2019/beginning of 2020.

Swedish long-term interest rates have fallen substantially to date this year and, for example, the ten-year swap rate posted a new all-time-low of about +0.1% in mid-August. The STIBOR 3 months remained relatively stable between 0.00% and -0.07% in the third quarter.

All in all, the yield curve continued to become shallower. At the end of the quarter, the five-year swap rate — of particular importance to Castellum — stood at just under 0%, corresponding to a decrease of approximately 0.55% compared with the end of 2018.

The availability of financing in the Swedish capital market improved during the year after a significant downturn in the fourth quarter of 2018.

To date this year, Castellum issued MSEK 3,400 in SEK MTNs with tenors of between two and ten years. Under the EMTN program, an NOK issue was completed with a tenor of ten years and a volume corresponding to slightly more than MSEK 938 as well as an EUR issue at the end of August with a nominal amount of MEUR 400 and a tenor of seven years. The credit margins, which rose drastically in the fourth quarter of 2018, fell considerably in the spring; at present they are generally substantially lower than at the end of the preceding year.

In Denmark, management of the CIBOR interest rate (3 months) in Q3 2019 was in the interval around -0.35% to - 0.45% which also applied to Finland/EURIBOR (3 months).

Condensed consolidated statement of comprehensive Income

MSEK		2019 July-Sept	2018 July-Sept	2019 Jan-Sept	2018 Jan-Sept	Rolling 4 quarters Oct 18-Sept 19	2018 Jan-Dec
Rental income		1,329	1,305	3,934	3,862	5,257	5,185
Service income		115	96	338	279	451	392
Income coworking		28	-	71	-	71	–
Income	note 2	1,472	1,401	4,343	4,141	5,779	5,577
Operating expenses	note 3	– 147	– 160	– 519	-540	– 732	– 753
Maintenance	note 3	– 37	– 40	– 110	-116	– 161	– 167
Ground rent		–	– 5	–	- 18	– 5	– 23
Property tax	note 3	– 124	– 78	– 275	- 231	– 359	– 315
Coworking expenses	note 3	– 28	-	– 70	-	– 70	–
Leasing and property administration	note 3	– 78	- 93	– 267	- 271	– 370	– 374
Net operating income		1,058	1,025	3 ,102	2,965	4,082	3,945
Central administrative expenses	note 3	– 29	- 29	– 119	- 113	– 164	– 158
Acquisition cost		–	-	– 9	-	– 9	–
Net financial items	note 4
Net interest costs		– 186	- 197	– 587	- 633	– 789	– 835
Leasing cost/Ground rent		– 6	–	– 16	–	– 16	–
Income from property management including acquisition costs*	note 1	837	799	2,371	2,219	3,104	2,952
Income from property management		837	799	2,380	2,219	3,113	2,952
Goodwill, depreciation	note 8	–	–	– 179	–	– 179	–
Changes in value	note 5
Properties		623	2,323	2,505	3,150	4,571	5,216
Derivatives		– 120	177	- 417	202	– 467	152
Income before tax		1,340	3,299	4,280	5,571	7,029	8,320
Current tax	note 6	– 106	1	– 213	- 2	– 285	– 74
Deferred tax	note 6	– 183	- 674	– 430	- 518	– 705	– 793
Net income for the period/year		1,051	2,626	3,637	5,051	6,039	7,453
Other total net income
Items that can be reclassified into net income
Translation difference of currencies		110	- 137	266	178	239	151
Change in value derivatives, currency hedge		– 113	35	- 210	- 146	– 207	– 143
Total net income for the period/year**		1,048	2,524	3,693	5,083	6,071	7,461

Average number of shares, thousand		273,201	273,201	273,201	273,201	273,201	273,201
Income, SEK/share		3.85	9.61	13.31	18.49	22.10	27.28

* For calculation, Financial Key ratios, page 19.

** Net income and total net income for the period/year is entirely assignable to the parent company's shareholders.

Accounting principles can be found on page 20.

Comparisons, shown in brackets, are made with the corresponding period previous year except in parts describing assets and financing, where comparisons are made with the end of previous year.

Performance analysis, Jan-Sept 2019

NOTE 1 Income from property management

Income from property management, i.e. net income excluding transaction and restructuring costs, changes in value and tax amounted for the period January-September 2019 to MSEK 2,380 (2,219), equivalent to SEK 8.71 (8.12) per share – an increase with 7%. Income from the property management rolling four quarters amounted to MSEK 3,113 (2,793) equivalent to SEK 11.39/share (10.22) – an increase of 11%.

SEGMENT INFORMATION

	Income		Income from prop.mgmt
MSEK	2019 Jan-Sept	2018 Jan-Sept	2019 Jan-Sept	2018 Jan-Sept
Central	1,113	1,023	606	544
West	982	915	566	501
Öresund	878	831	505	440
Stockholm-North	1,253	1,360	766	754
Finland	46	12	19	9
Coworking	71	-	– 1	-
Total	4,343	4,141	2,461	2,248

The difference between the income from property management of MSEK 2,461 (2,248) above and the Group's accounted income before tax of MSEK 4,280 (5,571) consists of unallocated income from property management of MSEK - 81 (- 29), acquisition costs of MSEK - 9 (-), write-down goodwill of MSEK 179 (-), changes in property value of MSEK 2,505 (3,150) and changes in values of derivatives of MSEK - 417 (202).

NOTE 2 Income

The Group's income amounted to MSEK 4,343 (4,141) and the average occupancy rate was 93.0% (93.1%) including discounts of MSEK 72 (61). This also includes a lump sum of MSEK 14 (12) as a result of early termination of leases. Moreover, Castellum acquired the coworking company United Spaces in 2019, which brought income of MSEK 71.

INCOME FROM PROPERTY MANAGEMENT PER SHARE NET LEASING

DEVELOPMENT OF INCOME
MSEK	2019 Jan-Sept	2018 Jan-Sept	Change, %
Like-for-like holdings	3,678	3,503	5.0%
Development properties	311	223
Transaction	283	415
Coworking	71	-
Income	4,343	4,141	4.9%

The 5% increase in the like-for-like portfolio pertained primarily to higher rental levels, to which increased property tax contributed approximately 1 percentage point. Gross leasing (i.e. the annual value of total leasing) during the period was MSEK 265 (307), of which MSEK 34 (79) is related to leasing of new constructions, extensions and reconstructions. Notices of termination amounted to MSEK 303 (150), of which bankruptcies were MSEK 7 (10) and MSEK 14 (10) were notices of termination with more than 18 months remaining length of contract. Net lease for the period was MSEK - 38 (157). The time difference between reported net leasing and the effect in income thereof is estimated to be between 9-18 months and 12-24 months for investments in new constructions, extension or reconstruction.

NET LEASING

			Region
MSEK	Central	West	Öresund	Sthlm	North	Finland	Total
NEW LEASES	60	41	52	74	4	0	231
Existing properties	2	0	14	18	0	0	34
Investments	62	41	66	92	4	0	265
Total
NOTICES OF TERMINATIONS
Existing properties	- 66	- 79	- 47	- 89	- 3	- 12	- 296
Bankruptcies	- 2	- 2	0	- 3	0	0	- 7
Total	- 68	- 81	- 47	- 92	- 3	- 12	- 303
Net leasing	-6	- 40	19	0	1	- 12	- 38
D:o Q3 2018	54	42	14	37	10	-	157

NOTE 3 Costs

Direct property costs totalled MSEK 904 (905), corresponding to SEK 286/sq. m. (276). In addition, expenses for co-working totalled MSEK 70.

An assessment for taxes on real property took place in Sweden, which resulted in higher assessed values resulting in higher property tax of approximately MSEK 50 on an annual basis. A large part of the property tax will be charged onward to the customer, however, with higher rental income as a result. The effect on earnings will thus be extremely limited. The higher property tax will be recognized retroactively for the entire period in the third quarter.

Property admin amounted to MSEK 267 (271), corresponding to SEK 88 per sq.m. (84). Central admin amounted to MSEK 119 (113). Included in the central administrative expenses are also costs related to the profit-andshare-price related incentive plan for members of the Executive Management of MSEK 6 (13) and costs for Innovation MSEK 13 (5). Acquisition costs of MSEK 9 were attributable to the purchase of United Spaces.

DEVELOPMENT OF PROPERTY COSTS

MSEK	2019 Jan-Sept	2018 Jan-Sept	Change,%
Like-for-like holdings	764	741	3.1%
Transfer of site leaseholds	–	18	–
Development properties	66	51	–
Transaction	74	95	–
Direct property costs	904	905	– 0.1%
Coworking	70	–	–
Property admin	267	271	–
Central admin	119	113	–
Total costs	1,360	1,289	5.5%

Consumption for heating during the period has been calculated to 87% (91%) of a normal year according to the degree day statistics.

PROPERTY COSTS
	Office	Public sector properties	Ware house/ Logistics	Light industry	Retail	Total
Operating expenses	212	185	98	108	148	163
Maintenance	46	36	22	28	29	35
Real estate tax	135	107	28	27	75	88
Total prop. costs	393	328	148	163	252	286
Leasing & prop. admin						88
Total	393	328	148	163	252	374
D:o Q3, 2018	372	303	161	161	257	360

NOTE 4 Net interest

Net interest items were MSEK - 587 (–633). The average interest rate level was 2.0% (2.1%). Net interest income was positively affected by approx. MSEK 58 due to the 0.1 percentage point decline in the average interest rate level. Moreover, costs for site leasehold fees and to some extent leases will be recognised as financial expenses from 2019. In the first nine months of the year, these costs totalled MSEK 16.

NOTE 5 Changes in value

The property market remained steady for 2019 with stable prices as a result. There is particular interest for logistics facilities, centrally located office properties in large cities and properties with secure cash flows. This, together with a healthy rental market and project gains, means that Castellum recognized an unrealized change in value of MSEK 2,830, corresponding to a 3.1% increase in value.

Additionally, a realized decrease in value of MSEK - 325 was recognized, attributable to the sale of 28 properties for MSEK 4,109 less overhead costs and deferred tax totaling MSEK 173. The underlying property price, which accordingly amounted to MSEK 4,282, was therefore MSEK 152 below the valuation. Since the sale was conducted as a business transaction, it is also recognized as deferred tax income of approximately MSEK 450. The sales meant that Castellum left Sundsvall and Vaggeryd outside Jönköping. Castellum has also divested a portfolio of retail properties in Uppsala. Since every property is valuated individually, consideration has not been given to the portfolio premium that can be seen in the real estate market.

The market value of the derivatives changed by MSEK - 417 (202) mainly due to changes in long-term market interest rates.

CHANGE IN VALUE PROPERTIES

MSEK	2019 Jan-Sept	2018 Jan-Sept
Cash flow	574	412
Project gains/building rights	406	367
Required yield	1,645	2,308
Acquisitions	205	0
Sales	– 325	63
Total	2,505	3,150
D:o %	2.8%	3.7%

NOTE 6 Tax

Recognized tax totalled MSEK 643 (520), of which MSEK 213 (2) is tax paid. Current tax is calculated based on a nominal tax rate of 21.4%, while deferred tax is based on the lower tax rate, 20.6% that applies from 2021. Owing to the possibility of depreciation for tax purposes and direct tax deductions for certain property reconstructions and of utilizing tax loss carry forwards, the tax expenses paid are lower than 21.4%. Tax paid arises as a result of there being existing tax loss carry forwards in the former Norrporten Group, and can thus not be utilized in Castellum as a whole.

Remaining tax loss carryforwards can be calculated to MSEK 1,032 (1,261). Furthermore, there are untaxed reserves at and undervalue of MSEK 149 (144).

Fair values for the properties exceed their fiscal value by MSEK 53,824 (48,938) of which MSEK 6,181 (4,504) relates to the acquisition of properties accounted for as asset acquisitions. As deferred tax liability, a full nominal 20.6% tax of the net difference is reported, reduced by the deferred tax relating to asset acquisitions, i.e., MSEK 9,633 (8,934).

Castellum has no current tax disputes.

Contin. Note 6

		TAX CALCULATION 09-30-2019

MSEK	Basis current tax	Basis deferred tax
Income from property management	2,380
Non-deductible interest	67
Deductions for tax purposes
depreciations	– 780	780
reconstructions	– 262	262
Other tax allowances	7	21
Taxable income from property mgmt	1,412	1,063
Current income tax 21.4%, if tax losses are not utilized	302
Properties sold	–	– 2,226
Changes in value on properties	–	2,829
Taxable income before tax loss carry forwards	1,412	1,666
Tax loss carry forwards, opening balance	– 1,081	1,081
Previously uncapitalized tax loss carry forwards	– 370	370
Tax loss carry forwards, closing balance	1,032	- 1,032
Taxable income	993	2,085
Tax according to Income statement for the period	– 213	– 430

NET DEFERRED TAX LIABILITY 09-30-2019 MSEK Basis Nominal tax liability Real tax liability Tax loss carry forwards 1,032 221 211 Untaxed reserves – 149 – 32 – 32 Properties – 53,824 – 11,088 – 3,181 Total – 52,941 – 10,899 - 3,002 Properties, asset acq. 6,181 1,266 In the balance sheet - 46,760 -9,633

Deferred tax is in principle both interest free and amortization free and can therefore be considered as shareholder equity. The real deferred tax is lower than nominal partly due to the possibility of selling properties in a tax-efficient way, partly due to the time factor which means that the tax will be discounted.

Estimated real deferred tax liability net has been calculated to 6% 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 21.4%, giving a present value of deferred tax liability of 20%, and that the properties are realized in over 50 years where 33% are sold directly with a nominal tax of 20.6% and that 67% are sold indirectly through company disposals where the buyers tax discount is 7%. This provides a present value for deferred tax liability of 6%.

FOCUS ON INNOVATION AND DEVELOPMENT FOR SÄVE AIRPORT

Castellum acquired Säve Airport in December, 2018. The development property covers an area of more than 3 million square metres, strategically located close to the Gothenburg Harbour and city centre, as well as national transport routes. The acquisition constitutes part of Castellum's long-term strategy to expand the company's Logistics line of business.

Parallel with planning long-term development in the area, and as a complement to existing operations, the company will create an innovation and development cluster for sustainable transport and mobility. Heart Aerospace, Sweden's only electric-powered aircraft manufacturer is among the first tenants to move in to the area since the acquisition.

"We are very happy that Heart Aerospace has chosen to establish in the Säve Airport area. They're running an exciting operation that lines up perfectly with the innovation cluster we'd like to create in the area, while we plan development over the longer term".

Mariette Hilmersson, Managing Director for Castellum's Region West

Condensed consolidated Balance Sheet

MSEK		Sept 30, 2019	Sept 30, 2018	Dec 31, 2018
ASSETS
Investment properties	note 7	92,719	87,473	89,168
Goodwill	note 8	1,691	1,659	1,659
Leases, value in use	note 9	868	-	-
Other fixed assets		176	130	146
Current receivables		1,103	732	924
Liquid assets		217	51	243
Total assets		96,774	90,045	92,140
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity		41,775	37,371	39,749
Deferred tax liability	note 6	9,633	8,934	9,203
Other provisions		6	3	6
Interest-bearing liabilities	note 10	40,637	40,697	40,358
Derivatives	note 11	803	1,126	716
Lease agreement	note 9	868	-	–
Non interest-bearing liabilities		3,052	1,914	2,108
Total shareholders' equity and liabilities		96,774	90,045	92,140
Pledged assets (property mortgages)		20,949	26,091	21,803
Pledged assets (chattel mortgages)		–	-	–
Contingent liability		–	-	–

Condensed Changes in Equity

MSEK	Number of outstanding shares, thousand	Share capital	Other capital contribution	Currency translation reserve	Currency hedge reserve	Non controlling interest	Retained earnings	Total equity
Shareholders' equity 12-31-2017	273,201	137	12,434	123	– 126	– 2	21,170	33,736
Dividend, March and Sept 2018 (5.30 SEK/share)	–	–	–	–	–	–	– 1,448	– 1,448
Net income Jan-Sept 2018	–	–	–	–	–	–	5,051	5,051
Other total net income Jan-Sept 2018	–	–	–	178	- 146	–	–	32
Shareholders' equity 09-30-2018	273,201	137	12,434	301	– 272	– 2	24,773	37,371
Net income Oct-Dec 2018	–	–	–	–	–	–	2,402	2,402
Other total net income Oct-Dec 2018	–	–	–	- 17	3	–	–	- 14
Shareholders' equity 12-31-2018	273,201	137	12,434	274	– 269	– 2	27,175	39,749
Dividend March and Sept 2019 (6.10 SEK/share)	–	–	–	–	–	–	– 1,667	– 1,667
Net income Jan-Sept 2019	–	–	–	–	–	–	3,637	3,637
Other total net income Jan-Sept 2019	–	-	–	266	– 210	–	–	56
Shareholders' equity 09-30-2019	273,201	137	12,434	540	– 479	- 2	29,145	41,775

Balance sheet, September 30, 2019

NOTE 7 Real estate portfolio and property value

Investment properties

The real estate portfolio is located in growth areas in Sweden, Copenhagen and Helsinki. The commercial portfolio consists of 47% office, 23% public sector properties, 16% warehouse/logistics, 8% retail and 2% light industry. 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. 700,000 sq.m. of unutilized building rights and furthermore ongoing projects with remaining investments of approx. MSEK 1,100.

Investments

During the period, investments totalling MSEK 4,850 (3,456) were carried out, of which MSEK 2,789 (1,333) were acquisitions and MSEK 2,061 (2,123) new constructions, extensions and reconstructions. After sales of MSEK 4,109 (447) net investments amounted to MSEK 741 (3,009).

CHANGES IN THE REAL ESTATE PORTFOLIO

	Value, MSEK	Number
Real estate portfolio on January 1, 2019	89,168	647
+ Acquisitions	2,789	12
+ New constructions, extensions and reconstructions	2,061	-
- Sales	-4,434	- 28
+/- Unrealized changes in value	2,829	-
+/- Currency translation	306	-
Real estate portfolio on Sept 30, 2019	92,719	631

Property value

Internal valuations

Castellum assesses the value of the properties through internal valuations, as of previous year, corresponding to level 3 in IFRS 13. The valuations are based on a 10-year

cash flow 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 inflation 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 1,500 (1,480) 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 valuations has been historically small. Based on these internal valuations, property value at the end of the period were assessed to MSEK 92,719 (89,168), corresponding to SEK 21,971 per sq.m.

Average valuation yield

The average valuation yield for Castellum's real estate portfolio, excluding development projects and undeveloped land, can be calculated to 5.1% (5.1%).

AVERAGE VALUATION YIELD
(excl. project/land and building rights )			MSEK
Net operating income properties	3,348
+ Real occupancy rate, 94% at the lowest	157
- Property admin, SEK 30/sq.m.	- 96
Normalized net operating income (9 months)	3,409
Valuation (excl. building rights of MSEK (546)	88,438
Average valuation yield	5.1%
VALUATION YIELD PER CATEGORY
		Sept 30,2019	Dec 31, 2018
Office		5.0%	5.1%
Public sector properties		4.7%	5.0%
Warehouse/logistics		5.6%	5.8%
Retail		5.7%	5.9%
Light industry		6.8%	6.9%
Total		5.1%	5.3%
PROPERTY RELATED KEY RATIOS
	2019 Jan Sept	2018 Jan Sept	2018 Jan Dec

	Sept	Sept	Dec
Rental value, SEK/sq.m.	1,493	1,383	1,407
Economic occupancy rate	93.0%	93.1%	93.2%
Property costs, SEK/sq.m.	374	360	378
Net operating income, SEK/sq.m.	1,014	1,011	933
Property value, SEK/sq.m.	21,971	19,333	20,417
Number of properties	631	688	647
Lettable area, thousand sq.m.	4,183	4,435	4,283
Average valuation yield	5.1%	5.3%	5.3%

Castellum's real estate portfolio

			Sept 30, 2019	January-September 2019
Category	No. of proper- ties	Area thou- sand sq.m.	Property value MSEK	D:o/ sq.m.	Rental value MSEK	D:o/ sq.m.	Occup- ancy rate	Income MSEK	Property costs MSEK	D:o/ sq.m.	Net operating income MSEK
OFFICE
Stockholm	29	284	10,869	38,340	477	2,243	94.5%	451	87	411	364
West	64	361	10,258	28,444	481	1,777	95.0%	456	98	362	358
Central	79	543	10,371	19,089	610	1,498	90.4%	551	146	359	405
Öresund	43	397	11,074	27,875	617	2,072	88.5%	546	131	438	415
North	2	5	90	17,863	6	1,527	92.2%	6	2	452	4
Finland	1	14	894	61,963	39	3,602	116.5%	45	8	783	37
Total Office	218	1,604	43,556	27,152	2,230	1,853	92.2%	2,055	472	393	1,583
PUBLIC SECTOR PROPERTIES
Stockholm	12	89	5,528	61,883	203	3,027	94.6%	192	33	497	159
West	15	110	2,194	19,939	110	1,329	93.1%	102	17	203	85
Central	29	308	8,276	26,891	397	1,721	96.9%	385	80	345	305
Öresund	8	90	3,307	36,927	149	2,218	98.6%	147	20	302	127
North	10	99	1,933	19,466	111	1,494	93.5%	104	21	286	83
Total Public sector properties	74	696	21,238	30,516	970	1,858	95.9%	930	171	328	759
WAREHOUSE /LOGISTICS
Stockholm	37	265	5,153	19,464	241	1,214	90.1%	217	32	162	185
West	69	594	6,883	11,588	358	804	90.6%	325	57	127	268
Central	29	147	1,232	8,411	90	819	92.0%	83	19	177	64
Öresund	29	194	1,815	9,334	123	843	91.0%	112	25	170	87
Total Warehouse/Logistics	164	1,200	15,083	12,573	812	903	90.7%	737	133	148	604
RETAIL
Stockholm	29	150	3,395	22,563	178	1,581	95.5%	170	26	234	144
West	15	58	1,088	18,729	58	1,330	95.3%	55	12	272	43
Central	20	115	1,756	15,216	105	1,210	97.0%	102	22	250	80
Öresund	11	46	833	18,302	51	1,509	85.6%	44	10	292	34
Total Retail	75	369	7,072	19,140	392	1,417	94.5%	371	70	252	301
LIGHT INDUSTRY
Stockholm	10	44	693	15,942	43	1,309	94.7%	40	7	225	33
West	16	66	676	10,240	41	839	95.2%	40	7	124	33
Central	10	29	335	11,489	23	1,049	96.8%	22	5	230	17
Öresund	4	42	331	7,862	24	749	91.8%	22	4	115	18
Total Light industry	40	181	2,035	11,259	131	965	94.7%	124	23	163	101
Total investment properties	571	4,050	88,984	21,971	4,535	1,493	93.0%	4,217	869	286	3,348
Leasing and property admin									267	88	- 267
Total after leasing and property admin									1,136	374	3,081
Development	34	133	2,716	–	64	–	–	39	22	–	17
Undeveloped land	26	–	1,019	–	–	–	–	–	–	–	–
Total	631	4,183	92,719	–	4,599	–	–	4,256	1,158	–	3,098

The table above relates to the properties owned by Castellum at the end of the period and reflects the income and costs of the properties as if they had been owned during the period. The discrepancy between the net operating income of MSEK 3,098 accounted for above and the net operating income of MSEK 3,102 in the income statement is explained by the deduction of the net operating income of MSEK 62 on properties sold during the year, as well as the adjustment of the net operating income of MSEK 58 on properties acquired/completed during the period, which are recalculated as if they had been owned or completed during the whole period.

More detailed description about property type on page 24, definitions.

Customers

Castellum's real estate portfolio and customer segments

Castellum's portfolio is well distributed over various segments, whereby almost half consist of office buildings and a quarter comprise public service properties. The latter provide a stable and secure income base, in the form of customers as well as longer contract durations. Castellum's exposure to the retail segment currently represents 8% of income value, but this segment includes grocery stores and car dealerships. The latter are in locations that are becoming more attractive from a logistics perspective. Another type of retail exposure also occurs in the storage/logistics segment, in the form of storage and distribution from the fast-growing e-commerce segment, which favours rental growth and contributes to the transformation of well-situated properties in the form of the last mile.

Lease maturity structure

Contract maturity for Castellum's portfolio appears in the table below. The relatively low proportion of contracts to reach maturity during 2019 is primarily due to the fact that most contracts have already been renegotiated.

LEASE MATURITY STRUCTURE 09-30-19
MSEK	No. of leases	Lease value MSEK	Percentage of value
Commercial, term
2019	172	20	0%
2020	2,021	721	14%
2021	1,237	905	17%
2022	1,156	999	19%
2023	597	775	15%
2024+	488	1,671	32%
Total commercial	5,671	5,091	97%
Residential	440	40	1%
Parking spaces and other	5,830	86	2%
Total	11,941	5,217	100%

Risk exposure, credit risk

Castellum's lease portfolio features a good risk exposure. The Group has approx. 5,700 commercial leases and 440 residential leases, and their distributing terms of size is presented in the table below. The single largest lease as well as the single largest customer accounts for approx. 2% of the Group's total rental income, meaning that Castellum's exposure to a single customer credit risk is very low.

LEASE SIZE
Lease size, MSEK	No. of leases	Share	Lease value MSEK	Share
Commercial
< 0.25	2,668	22%	211	4%
0.25-0.5	948	8%	349	7%
0.5-1.0	819	7%	577	11%
1.0-3.0	747	6%	1,274	24%
< 3.0	489	4%	2,680	51%
Total	5,671	47%	5,091	97%
Residential	440	4%	40	1%
Parking spaces and other	5,830	49%	86	2%
Total	11,941	100%	5,217	100%

COMMERCIAL LEASES DISTRIBUTED BY SECTOR

Castellum's development portfolio

Larger investments and sales

Larger developments

		Rental value			Total inv.	of which
Property	Area, sq.m.	MSEK	SEK/sq.m.	Econ. occup. Oct 2019	incl.land MSEK	inv. 2019, MSEK	Remain inv. MSEK	Completed	Category
Öskaret 1 , phase 1 , Stockholm	9,092	45	4,950	28%	419	158	158	Q2 2020	Reconstruction office
Hisingen Logistics Park phase 2, Gothenburg	34,484	24	700	100%	294	169	125	Q2 2020	New construction logistics
Masthugget 26:1, Gothenburg	4,185	13	3,200	0%	230	62	130	Q1 2020	New construction office
Örnäs 1:17, Upplands-Bro	15,719	15	1,000	0%	204	93	41	Q4 2019	New construction warehouse/ logistics
Visionen 3 (former 1), Jönköping	5,155	10	1 850	80%	87	52	26	Q2 2020	New construction office
Vargön 4, Jönköping	4,488	6	1 350	100%	74	51	18	Q4 2019	New construction car dealership
Moränen 3, Malmö	3,421	5	1 350	73%	54	28	26	Q1 2020	New construction retail/ light industry
Developments completed/partly moved in
Olaus Petri 3:244, Örebro	15,023	37	2,450	100%	495	65	42	Q1 2019	New construction office
Spejaren 4, Huddinge	9,300	24	2,600	88%	349	79	34	Q2 2019	New construction car dealership
Smygmaskan 1, Malmö	9,600	26	2,700	95%	347	99	27	Q2 2019	New construction office
Generatorn 1, Mölndal	6,800	13	1,600	100%	141	40	2	Q3 2019	New construction office/ warehouse
Tibble 1:647, Brunna	8,894	12	1,300	24%	140	32	17	Q3 2019	New construction warehouse/ light industry
Backa 20:5, Gothenburg	4,852	9	1,750	100%	103	48	6	Q3 2019	New construction car dealership
Solsten 1:172, Härryda	13,729	94	1,400	100%	90	63	20	Q4 2019	Reconstruction and extension office/light industry
Total developments > MSEK 50					3,027	1,039	672

Larger acquisitions			Rental value
Property	Area, sq.m.	MSEK	SEK/sq.m.	Econ.occup. Oct 2019	Acquisition MSEK	Access	Category

6 properties in Linköping	68,897	112	1,600	95%	1,631	March 2019 Office
Gullbergsvass 1:12 and 1:2, Gothenburg	16,604	42	2,550	98%	865	March 2019 Office
Part of the harbour 22:31, Malmö	-	-	-	-	144	April 2019	Land, new construction E.ON

Larger sales

	Area,		Rental value	Underlying	Deferred tax
Property	sq.m.	MSEK	SEK/sq.m.	property price MSEK	and transaction costs, MSEK	Net sales price, MSEK	Vacancy	Category
20 properties in Sundsvall	154,491	258	1,650	3,462	-137	3,325	March 2019	Office, public sector properties, retail
Boländerna 28:3, 28:4, 35:1 and 35:2,
Uppsala	49,795	69	1,396	694	-26	668	April 2019	Retail

NOTE 8 Goodwill

In 2016, the CORHEI and Norrporten companies were acquired. In connection to the acquisitions, a goodwill situation arose, primarily related to the difference between nominal tax, and the calculated supplementary tax which was applied at time of acquisition. A write-off for goodwill is primarily justified for a major downturn in the real estate market or a situation wherein properties included in the transaction above are divested. In the first quarter of the year, the entire portfolio in Sundsvall was divested, which results in an impairment of MSEK 179. In parallel United Spaces, a coworking company, was acquired during the same period, resulting in increased goodwill of MSEK 210. Goodwill for the year thus changed by MSEK 32.

NOTE 9 Leasing agreement

IFRS 16 Leases entered force on January 1, 2019, meaning that Castellum must valuate its leases and recognize the right-of-use as an asset with a corresponding liability. At the balance sheet date, the value of Castellum's leases was approximately MSEK 868, divided into site leasehold agreements of SEK 483 million and rental agreements in United Spaces, the coworking company acquired during the year, of MSEK 385. There were no retroactive applications.

NOTE 10 Interest bearing liabilities and liquid assets Castellum must maintain a low level of financial risk, mea-

ning a medium- to long-term LTV ratio of less than 50% and an interest coverage ratio of not less than 200%.

Interest bearing liabilities

At the end of the period, Castellum held credit agreements totalling MSEK 60,737 (56,358) of which MSEK 49,302 (45,962) were long-term and MSEK 11,435 (10,396) were short-term. Of the utilized borrowing facilities at the end of the period, MSEK 30,101 (30,862) was long-term and MSEK 10,319 (9,253) short-term.

After deduction of cash of MSEK 217 (243), net interestbearing liabilities were MSEK 40,420 (40,115), of which MSEK 27,635 (21,599) were MTNs outstanding and MSEK 4,973 (5,360) commercial paper outstanding (nominal MSEK 27,674 and MSEK 4,975 respectively).

During the period bank credit facilities of approximately MSEK 7,800 were extended, approx. MSEK 1,600 terminated and the framework amount of Castellum's MTN program was raised to MSEK 20,000. Castellum was also active in the Swedish bond market during the period and bonds with a nominal value of MSEK 2,800 matured while new issues amounted to MSEK 3,400 as part of Castellum's Swedish MTN program. Moreover, a nominal amount of MNOK 850 was issued with a ten-year tenor and MEUR 400 was issued with a seven year tenor under Castellum's EMTN program.

Most of Castellum's borrowings are revolving bank credit facilities, which gives great flexibility. Bonds issued under the MTN program and commercial paper broaden the funding base, and comprise the majority of the utilized borrowing facilities. At the end of the period, the fair value of liabilities essentially corresponded with the carrying amounts. Long-term loan commitments in banks are normally secured by pledged property deeds. Issued commercial paper and bonds are unsecured. Undertakings to meet specific financial ratios are included as covenants under certain financing agreements including the EMTN program.

Of net interest-bearing liabilities totalling MSEK 40,420 (40,115), MSEK 7,056 (12,400) was secured against property deeds and MSEK 33,364 (27,715) was unsecured, which means that approximately 17% (31%) of loans outstanding were secured.

Castellum's share of unsecured assets at the end of the period was 57% (53%). Secured borrowing in relation to total assets was 7% (13%). The financial covenants stipulate an LTV ratio not exceeding 65%, an interest coverage ratio of at least 150% and for EMTN also that the share of secured borrowing may not exceed 45% of the Group's total assets, which Castellum fulfils with comfortable margins: 44%, 505% and 7% respectively. The average duration of Castellum's credit agreements was 3.5 years (3.4). Margins and fees for credit agreements are established with an average duration of 3.3 years (3.0). The debt ratio at the end of the period was 10 (11).

Castellum has an official credit rating from the credit rating institute Moody's. The credit rating was upgraded in June to investment grade level at Baa2 with a stable outlook. The rating is expected to result in further improvements to financial flexibility for Castellum by supporting both Castellum's relative funding cost and access to loan capital over time.

CREDIT MATURITY STRUCTURE 09-30-2019

		Utilized in
Credit agreements	MSEK	Bank	MTN/Cert	Total
0 - 1 year	11,435	1,797	8,522	10,319
1 - 2 years	5,964	2,012	3,952	5,964
2 - 3 years	11,357	866	4,241	5,107
3 - 4 years	13,496	2,543	2,552	5,095
4 - 5 years	11,376	12	6,814	6,826
> 5 years	7,109	582	6,527	7,109
Total	60,737	7,812	32,608	40,420

Interest rate maturity structure

In order to secure a stable and low net interest cash flow the interest rate maturity structure is distributed over time. The average fixed interest term was 3.4 years (3.1). The average effective rate at Sept 30, 2019 was 1.81% (1.91%) excluding unutilized credit agreements, and 1.96% (2.05%) including unutilized credit agreements. Castellum utilizes interest rate derivatives to achieve the desired interest rate maturity structure. Interest rate derivatives is a cost efficient and flexible way to achieve the desired fixed 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, while credit fees are reported in the segment for 0-1 year.

Currency

Castellum owns properties in Denmark and Finland with a value of MSEK 7,333 (6,895), 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- and cross currency interest rate derivatives
	Interest bearing credit volume, MSEK	Average interest rate	Volume payable interest, MSEK	Closed payable interest	Volume receivable interest, MSEK	Closing receivable interest	Closing interest rate**	Average interest rate
0 - 1 year	23,024	1.1%*	5,364	1.1%	– 14,759	0.1%	2.15%	0.3 year
1 - 2 years	4,200	1.4%	500	- 0.2%	–	0.0%	1.23%	1.6 years
2 - 3 years	1,498	2.1%	2,250	0.0%	–	0.0%	0.85%	2.5 years
3 - 4 years	750	1.7%	700	1.2%	–	0.0%	1.42%	3.6 years
4 - 5 years	5,666	2.1%	4,850	2.3%	– 4,766	2.1%	2.31%	4.2 years
5 - 10 years	5,282	1.4%	11,108	1.8%	– 5,247	1.4%	1.77%	7.6 years
Total	40,420	1.4%	24,772	1.5%	– 24,772	0.8%	1.81%	3.4 years

INTEREST RATE MATURITY 09-30-2019

* Including applicable credit-agreement fees and net premium/discounts on issued MTNs ** Calculated on the net volume of interest-bearing credits and derivatives

NOTE 11 Interest rate and currency derivatives

Castellum utilizes interest rate derivatives to achieve the desired interest rate maturity structure. At the end of June 2019, the derivative portfolio was restructured to correspond with a deficit value of MSEK 215. In accordance with the IFRS 9 accounting standard, derivatives are subject to market valuation. If the agreed interest rate deviates from the market interest rate, notwithstanding credit margins, a theoretical surplus or deficit value arises in the interest rate derivatives, where changes in value not affecting the cash flow are recognized in profit or loss. At maturity, a derivative's market value is dissolved in its entirety and the change in value over time has thus not affected equity. Castellum also holds derivatives in order to hedge currency fluctuation in its investments in Denmark and Finland as well as to manage currency risk and adjust its interest rate structure in connection

with borrowing in the international capital market. 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.

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 flows to present value while instruments containing options are valued at current repurchase price.

As of September 30, 2019, the market value of the interest rate derivatives portfolio amounted to MSEK – 885 (– 689) and the currency derivative portfolio to MSEK 82 (- 27). All derivatives are, as at previous year, classified in level 2 according to IFRS 13.

CASTELLUM'S FINANCIAL POLICY AND COMMITMENTS IN CREDIT AGREEMENTS

	Policy	Commitment	Outcome
Loan-to-value ratio	Not exceeding 50%	Not exceeding 65%	44%
Intererst coverage ratio	At least 200%	At least 150%	505%
The share of secured borrowing/total assets		Not exceeding 45%	7%
Funding risk
– average capital tied up	At least 2 years		3.5 years
– proportion maturing within 1 year	No more than 30% of outstanding loans and unutilized credit agreements		12%
– average maturing credit price	At least 1.5 years		3.3 years
– liquidity reserve	Secured credit agreements corresponding to MSEK 750		Achieved
	and 4.5 months upcoming loan maturities
Interest rate risk
– average interest duration	1.5 - 3.5 years		3.4 years
– proportion maturing within 6 months	No more than 50%		27%
Credit and counterparty risk
– rating restriction	Credit institutions with high ratings, at least S&P BBB+		Achieved
Currency risk
– translation exposure	Shareholders' equity is not hedged		Not hedged
– transaction exposure	Handled if exceeding MSEK 25		Less than MSEK 25

Condensed consolidated Cash Flow statement

MSEK	2019 July-Sept	2018 July-Sept	2019 Jan-Sept	2018 Jan-Sept	Rolling 12 months Oct 18-Sept 19	2018 Jan-Dec
Net operating income	1,058	1,025	3,102	2,965	4,082	3,945
Central administrative expenses	– 29	– 29	– 119	– 113	– 164	– 158
Reversed depreciations	17	5	46	14	51	19
Net interest rate paid	– 173	– 190	– 536	– 636	– 729	– 829
Tax paid	35	70	– 39	62	– 176	– 75
Translation difference of currencies	– 3	– 11	56	25	39	8
Cash flow from operating activities before change in working capital	905	870	2,510	2,317	3,103	2,910
Change in current receivables	- 535	12	– 692	– 183	– 734	– 225
Change in current liabilities	740	51	550	– 152	809	107
Cash flow from operating activities	1,110	933	2,368	1,982	3,178	2,792
Investments in new constructions, extensions and reconstructions	– 588	– 727	– 2,061	– 2,164	– 2,734	– 2,837
Property acquisitions	– 19	– 314	– 2,789	– 1,333	– 3,911	– 2,455
Change in liabilities at acquisitions of property	20	25	153	17	144	8
Property sales	52	60	4,109	447	6,297	2,635
Change in receivables at sales of property	– 40	2	85	15	– 79	– 149
Other investments	– 22	– 14	– 296	– 46	– 335	– 85
Cash flow from investment activities	– 597	– 968	– 799	– 3,064	- 618	– 2,883
Change in long term liabilities	356	726	279	2,369	– 65	2,025
Change in short term liabilities	24	–	8	9	10	11
Swap termination	–		– 215		– 672	– 457
Dividend paid	– 833	– 724	– 1,667	– 1,448	– 1,667	– 1,448
Cash flow from financing activities	– 453	2	– 1,595	930	– 2,394	131
Cash flow for the period/ year	60	– 33	– 26	– 152	166	40
Liquid assets opening balance	157	84	243	203	51	203
Liquid assets closing balance	217	51	217	51	217	243

The Parent company

Condensed Income statement MSEK	2019 July-Sept	2018 July-Sept	2019 Jan-Sept	2018 Jan-Sept
Income	21	16	61	50
Operating expenses	– 48	– 41	– 155	– 133
Net financial items	11	15	30	17
Change in derivatives	– 149	181	– 494	156
Income before tax	– 165	171	– 558	90
Tax	5	– 38	18	– 20
Net income for the period/year	– 160	133	– 540	70
Comprehensive income for the parent company
Net income for the period/year	- 160	133	- 540	70
Items that will be reclassified into net income
Translation difference foreign operations	55	- 31	122	100
Unrealized change, currency hedge	- 82	31	- 132	- 100
Total net income for the period/year	- 187	133	- 550	70

Condensed Balance sheet MSEK	Sept 30 2019	Sept 30 2018	Dec 31 2018
Participations, group companies	19,908	19,675	19,678
Receivables, group companies	38,152	38,322	39,423
Other assets	127	148	109
Liquid assets	52	0	1
Total	58,239	58,145	59,211
Shareholders' equity	15,601	16,415	17,818
Derivatives	803	1,126	716
Interest bearing liabilities	38,076	36,915	36,738
Interest bearing liabilities, group companies	3,510	3,540	3,711
Other liabilities	249	149	228
Total	58,239	58,145	59,211
Pledged assets (receivables group contributions)	17,364		21,486 17,387
Contingent liability (guaranteed commitments for subsidiaries)	2,559	3,624	3,616

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 inflation, 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 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 the anticipated increased inflation.

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 FLOW

Effect on income next 12 months
	Effect on income, MSEK +/- 1% (units)	Probable scenario Boom Recession
Rental level/index	+ 43/ - 43	+	–
Vacancies	+ 46/ - 46	+	–
Property costs	- 12/ + 12	–	0
Interest costs	- 86/ + 42	0	–

Opportunities and risks in property values

Castellum reports its properties at fair value with changes in value in the income statement. This means that the result in particular but also the financial 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 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 reflect the uncertainty that exists in the assumptions and calculations made.

SENSITIVITY ANALYSIS - CHANGE IN VALUE
Properties	-20%	-10%	0%	+10%	+20%
Changes in value, MSEK	- 18,544	- 9,272	-	9,272	18,544
Loan-to-value ratio	55%	48%	44%	40%	36%

Financial risk

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

For more detailed information about Risks and uncertainties visit Castellum's website or Castellum's Annual Report 2018, "Risk and Risk management" on pages 92-100.

CASTELLUM CONTINUES TO BE RECOGNIZED WITH AWARDS FOR SUSTAINABILITY EFFORTS

In September, Castellum once again drew international attention for its sustainability efforts. For the fourth consecutive year, Castellum has become the only listed Nordic real-estate company to be assigned a place in the global Dow Jones Sustainability Index. For the fourth consecutive year, Castellum was also named a global sector leader in the Global Real Estate Sustainability Benchmark (GRESB) and received the EPRA Gold Award for the highest rating among the best sustainability reports in Europe.

Castellum has environmentally certified 33 percent of its real estate portfolio. The company works actively to achieve several challenging sustainability goals, including total diversity for all professions throughout the company and 100% climate neutrality by 2030. Castellum has also fulfilled WELL-certification, the only certification system which takes the health and wellbeing of those who work in the building into account.

"We see ourselves as community-builders. With this as a springboard, our strategy is to take sustainability issues very seriously from all possible economical, ecological and social standpoints. The objective is to integrate our sustainability efforts into everything we do, and they should constitute a natural consideration in all our daily activities. This year's GRESB ranking is proof positive that our strategy is right and that focusing on sustainability is profitable. I want to thank all employees who have contributed to this amazing result."

Henrik Saxborn, CEO at Castellum AB

Financial Key Ratios

A number of the financial measures presented by Castellum in the interim report are not defined in accordance with the IFRS accounting standards. However, the company believes that these measures provide useful supplementary information to both investors and Castellum management, as they facilitate evaluation of company performance. It is to be noted that, since not all companies calculate financial measurements in the same manner, these are not always comparable to measurements used by other companies. Hence, these financial measures should not be seen as a substitute for measures defined according to the IFRS. Unless otherwise stated, the table below presents measures, along with their reconciliation, which are not defined according to the IFRS. Definitions for these measures appear on the page 24.

	July-Sept 2019	July-Sept 2018	Jan-Sept 2019	Jan-Sept 2018	Rolling 12 months Oct 18-Sept 19	Jan-Dec 2018
Average number of shares, thousand (related to financial key ratios)	273,201	273,201	273,201	273,201	273,201	273,201
Outstanding number of shares, thousand (related to balance sheet ratios)	273,201	273,201	273,201	273,201	273,201	273,201

Income from property management

Castellum's operations are focused on cash-flow growth from ongoing management operations – i.e. income growth from property management – the prime yearly objective being a 10% increase in property management income. Income from property management also forms the basis of the annual shareholder dividend: at least 50% of property-management income. Income from property management is calculated before paid tax, as well as after the theoretical tax that Castellum would have paid on income from property management, had there been no loss carry forwards.

	July-Sept 2019 MSEK SEK/share		July-Sept 2018 MSEK SEK/share		Jan-Sept 2019 MSEK SEK/share		Jan-Sept 2018 MSEK SEK/share		MSEK SEK/share	Rolling 12 months Oct 18-Sept 19	Jan-Dec 2018 MSEK SEK/share
Income before tax	1,340	4.90	3,299	12.08	4,280	15.67	5,571	20.39	7,029	25.73	8,320	30.45
Reversed:
Transaction costs	-	-	-	-	9	0.03	-	-	9	0.03	–	–
Goodwill down-writing	-	-	-	-	179	0.66	-	-	179	0.66	-	-
Changes in value, properties	- 623	2.28	-2,323	-8.50	-2,505	- 9.17	- 3,150	- 11.53	- 4,571	- 16.73	– 5,216	– 19.09
Changes in value, derivatives	120	0.44	- 177	-0.65	417	1.52	- 202	-0.74	467	1.71	– 152	– 0.55
= Income from property management	837	3.06	799	2.92	2,380	8.71	2,219	8.12	3,113	11.39	2,952	10.81

EPRA Earnings (Income from property

management after tax)

EPRA Earnings / EPRA EPS	721	2.64	713	2.61	2,078	7.61	2,025	7.41	2,689	9.84	2,636	9.65
Reversed; Current tax income from pro perty management	- 116	-0.42	- 86	-0.31	- 302	- 1.10	- 194	-0.71	- 424	- 1.55	– 316	– 1.16
Income from property management	837	3.06	799	2.92	2,380	8.71	2,219	8.12	3,113	11.39	2,952	10.81

Net Asset Value

Net asset value is the total equity which the company manages for its owners. Based on this equity, Castellum wants to create return and growth at a low level of risk. Net asset value can be calculated both long and short term. Long-term net asset value is based on the balance sheet, with adjustments for items that will not lead to any short-term payment. In Castellum's case, these would include such things as goodwill, derivatives and deferred tax liability. Actual net asset value is equity according to the balance sheet, adjusted for the market value of the deferred tax liability.

	Sept 30, 2019 MSEK SEK/share		Sept 30, 2018 MSEK SEK/share		Dec 31, 2018 MSEK SEK/share
Equity according to the balance sheet	41,775	153	37,371	137	39,749	145
Reversed:
Derivatives according to balance sheet	803	3	1,126	4	716	3
Goodwill according to balance sheet	- 1,481	- 5	- 1,659	- 6	– 1,659	– 6
Deferred tax according to balance sheet	9,633	35	8,934	33	9,203	34
Long term net asset value (EPRA NAV)	50,730	186	45,772	168	48,009	176
Deduction
Derivatives as above	- 803	- 3	- 1,126	- 4	– 716	– 3
Estimated real liability, deferred tax 6%*	- 3,002	- 11	- 2,837	- 11	– 2,975	– 11
Short term net asset value (EPRA NNNAV)	46,925	172	41,809	153	44,318	162

* Estimated real deferred tax liability net has been calculated to 6% 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 21.4%, giving a present value of deferred tax liability of 20%, and that the properties are realized in 50 years where 33% are sold directly with a nominal tax of 20.6% and that 67% are sold indirect through company disposals where the buyers tax discount is 7%, which gives a present value of deferred tax liability of 6%.

Financial risk

Castellum's strategy is to own, develop and manage properties at low financial risk. This is expressed in a loan-to-value ratio not permanently exceeding 50% and an interest-coverage ratio of at least 200%

Interest coverage ratio	July-Sept 2019	July-Sept 2018	Jan-Sept 2019	Jan-Sept 2018	Rolling 12 months Oct 18-Sept 19	Jan-Dec 2018
Income from property management	837	799	2,380	2,219	3,113	2,952
Reversed;
Net interest	186	197	587	633	789	835
Income from property management excl. net interest	1,023	996	2,967	2,852	3,902	3,787
Interest coverage ratio	550%	506%	505%	451%	495%	454%

Cont. Financial Key Ratios

Loan-to-value ratio	Sept 30, 2019	Sept 30, 2018	Dec 31, 2018
Interest-bearing liabilities	40,637	40,697	40,358
Liquid assets	- 217	- 51	- 243
Net interest-bearing liabilities net	40,420	40,646	40,115
Investment properties	92,719	87,473	89,168
Acquired properties not taken into possession	- 184	- 40	- 31
Divested properties still in Castellum's possession	79	-	164
Net investment properties	92,614	87,433	89,301
Loan-to-value ratio	44%	46%	45%

Investment

In order to achieve the overall objective of 10% growth, i. e. income from property management per share, annual net investments of at least 5% of the property value will be made.

Proportion of the property value, %	1%	1%	1%	4%	0%	3%
Net investments	555	940	741	3,009	389	2,657
Net sales prices	- 52	- 60	- 4,109	- 447	- 6,297	– 2,635
Total investments	607	1,000	4,850	3,456	6,686	5,292
New constructions, extensions and reconstructions	588	686	2,061	2,123	2,275	2,837
Acquisitions	19	314	2,789	1,333	3,911	2,455
Net investments	July-Sept 2019	July-Sept 2018	Jan-Sept 2019	Jan-Sept 2018	Rolling 12 months Oct 18-Sept 19	Jan-Dec 2018

Other Financial Key Ratios

	July-Sept 2019	July-Sept 2018	Jan-Sept 2019	Jan-Sept 2018	Rolling 12 months Oct 18-Sept 19	Jan-Dec 2018
Net operating income margin	73%	73%	73%	72%	72%	71%
Interest rate level, on average	2.0%	2.1%	2.0%	2.2%	2.0%	2.2%
Debt ratio	10	10	10	11	10	11
Return on long term net asset value	4.1%	28.1%	9.9%	17.5%	12.8%	18.5%
Return on actual net asset value	3.0%	29.9%	10.4%	20.3%	14.4%	22.0%
Return on total capital	6.9%	15.2%	7.9%	9.4%	9.3%	10.6%
Return on equity	10.3%	30.2%	12.5%	20.4%	16.5%	22.6%
Property value, SEK/share	339	320	339	320	339	326
Gross leasing	95	75	265	307	366	408
Net leasing	– 42	29	– 38	157	– 34	161

Accounting principles

Castellum complies with the IFRS standards adopted by the EU. This Interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Annual Accounts Act. Disclosures in accordance with IAS 34 Interim Financial Reporting are provided in notes and elsewhere in the Interim report.

IFRS 16 Leases entered force on January 1, 2019, and Castellum has applied the recommendation as of that date. There were thus no retroactive applications. The transition to IFRS 16 had no material impact on the Group's earnings and financial position, or on its cash flow statement. In its capacity as lessee, Castellum has conducted a detailed review and analysis of the Group's leases, during which site leasehold agreements were identified as the single most material alongside rental agreements in United Spaces, the coworking company acquired during the year. Apart from these two items, only a smaller number of leases have been identified, such as for vehicles, office equipment and the like. As a consequence of the transition to IFRS 16, the cost for site leasehold fees as a whole was reported as a financial expense — a difference compared to previous policies, in which this was reported as an operating cost charged to net operating income. Moreover, the rental cost for United Spaces is allocated between impairments and financial expenses. Site leasehold agreements and leases at United Spaces have been valued and the right-of-use has been recognized as an asset together with a corresponding liability. At Sept 30, 2019, the combined value of these two items was MSEK 868. In addition, a review was conducted of how the Group's policies applied in its capacity as lessor are impacted by IFRS 16, in which connection Castellum verified that IFRS 16 entails no material effect on the Group's reported rental incomes.

Otherwise, accounting policies and calculation methods remain unchanged compared to last year's Annual Report.

Election Committee

At Castellum AB's Annual General Meeting held on March 21, 2019, it was resolved that the Election Committee for the Annual General Meeting 2020 should consist of the Chairman of the Board of Directors and a member appointed by each of the four largest ownership registered or otherwise known shareholders, as per the last trading day of August 2019. If such a shareholder should not wish to appoint a member, the fifth largest shareholder should be consulted, and so on. The Election Committee consists of:

Patrik Essehorn, appointed by Rutger Arnhult through companies
- Vincent Fokke, appointed by Stichting Pensioenfonds ABP
- Carl Lindgren, appointed by the Szombatfalvy sphere
- Göran Espelund, appointed by Lannbo Fonder
- Charlotte Strömberg, the Chairman of the Board

The Election Committee has appointed Patrik Essehorn as Chairman of the Election Committee.

Shareholders are welcome to submit their proposals and views to the Election Committee by December 2, 2019, at the latest, to Castellum AB, Att: Charlotte Strömberg, Box 2269, 403 14 Gothenburg, or by e-mail to [email protected].

The Election Committee's proposals will be announced in the notice for the Annual General Meeting 2020 and on the company's website. The Annual General Meeting in Castellum AB will be held on March 19, 2020.

Gothenburg October 18, 2019

Henrik Saxborn CEO Castellum AB

This Interim Report has not been examined by the company's auditors.

This information is information that Castellum is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08.00 a.m. CET on Friday October 18, 2019.

Events after the reporting period

No significant events occurred after the end of the period.

The Castellum share

The Castellum share is listed on Nasdaq Stockholm Large Cap. At the end of the period the company had about 54,100 shareholders. The ten individual largest owner constellations confirmed as of September 30, 2019 are presented in the table below.

SHAREHOLDERS 09-30-2019

Shareholders	Number of shares, thousand	Percentage of voting rights and capital
Rutger Arnhult	29,904	10.9%
APG Asset Management	16,016	5.9%
BlackRock	13,710	5.0%
PGGM Pensioenfonds	9,340	3.4%
Vanguard	9,005	3.3%
Szombatfalvy-sphere	8,456	3.1%
Lannebo Fonder	7,203	2.6%
AMF Försäkring & Fonder	6,260	2.3%
SEB Fonder & Liv	5,790	2.1%
SHB Fonder & Liv	4,592	1.7%
Board and Executive Management Castellum	172	0.1%
Other shareholders registered in Sweden	60,071	22.0%
Shareholders registered abroad	102,682	37.6%
Total registered shares	273,201	100%

There is no potential common stock (e.g. convertibles)

Source: Holdings by Modular Finance AB. Collected and analyzed data from Euroclear, Morningstar, Finansinspektionen, Nasdaq and Millistream.

The Castellum share price as of September 30, 2019 was SEK 210.80 (159.10) equivalent to a market capitalization of SEK 57.6 billion (43.5), calculated on the number of outstanding shares.

Since the beginning of the year a total of 213 million (227) shares were traded, equivalent to an average of 1,132,000 shares (1,207,000) per day, corresponding on an annual basis to a turnover rate of 104% (110%). The share turnover is based on statistics from Nasdaq Stockholm, Cboe CXE EU, Turquoise and Cboe BXE EU.

Net asset value

The net asset value is the aggregated capital that the company manages for its owners. From this capital, Castellum wants to generate return and growth at low risk.

The long term net asset value (EPRA NAV) can be calculated to SEK 186 per share (168). The share price at the end of the year was thus 113% (95%) of the long term net asset value.

Earnings

Coffee break, Eminent, Malmö.

Income from property management adjusted for tax attributable to income from property management (EPRA EPS) amounted to SEK 9.84 (9.52) on rolling annual basis. This results in a share price yield of 4.7% (6.0%) corresponding to a multiple of 21 (17).

Income from property management must be adjusted by a long-term increase in the property value and effective tax paid.

Net income after tax amounted on rolling annual basis to SEK 22.10 per share (27.46), which from the share price gives a yield of 10.5% (17.3%), corresponding to a P/E of 10 (5).

Dividend yield

The recent AGM approved dividend of SEK 6.10 (5.30) corresponds to a yield of 2.9% (3.3%) based on the share price at the end of the period.

Total share yield

During the last 12-month period the total yield of the Castellum share has been 37% (29%), including a dividend.

Net asset yield including long-term change in value

In companies managing real assets, such as real estate, the income from property management only reflects part – albeit a large part – of the overall result. The definition 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 inflation.

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 figure 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 effective 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 flow and a balanced real estate portfolio, Castellum is able to make use of long-term value changes.

NET ASSET YIELD AND EARNINGS INCLUDING LONG-TERM CHANGE IN VALUE

		Sensitivity analysis
		-1%-unit	+1%-unit
Income from prop.mgmt rolling 12 months	3,113	3,113	3,113
Change in property value (on average 10 years)	3.1%	2.1%	4.1%
D:o MSEK	2,712	1,837	3,586
Current tax 10%	– 302	– 302	– 302
Earnings after tax	5,522	4,648	6,397
Earnings SEK/share	20.21	17.01	23.42
Return on actual long-term net asset value	10.1%	8.6%	11.6%
Earnings/share price	9.6%	8.1%	11.1%
P/E	10	12	9

Sept 30, 2019	Sept 30, 2018	Dec 31, 2018
2,078	2,025	2,636
7.61	7.41	9.65
50,730	45,772	48,009
186	168	176
46,925	41,809	44,318
172	153	162
7%	7%	7%
5.0%	5.2%	5.1%
5.1%	5.3%	5.2%

GROWTH, YIELD AND FINACNCIAL RISK
	1 year	3 years aver- age/ year	10 years aver- age/ year
Growth
Rental income SEK/share	5%	3%	4%
Income from property mgmnt SEK/share	12%	9%	7%
Net income for the year after tax SEK/share	neg.	1.5%	neg.
Dividend SEK/share	15%	13%	8%
Long term net asset value SEK/share	11%	12%	10%
Actual net asset value SEK/share	12%	12%	11%
Real estate portfolio SEK/share	6%	9%	8%
Change in property value	5.2%	5.0%	3.1%
Yield
Return on actual long term net asset value	12.8%	19.6%	14.3%
Return on actual net asset value	14.4%	20.1%	14.7%
Return on total capital	9.3%	10.5%	8.0%
Total yield of the share (incl. dividend)
Castellum	36.7%	22.3%	18.2%
Nasdaq Stockholm (SIX Return)	5.6%	10.0%	12.1%
Real Estate Index Sweden (EPRA)	39.9%	21.3%	21.0%
Real Estate Index Europe (EPRA)	8.7%	6.5%	10.8%
Real Estate Index Eurozone (EPRA)	3.8%	5.7%	10.0%
Real Estate Index Great Britain (EPRA)	5.3%	4.6%	8.6%
Financial risk
Loan-to-value ratio	44%	46%	49%
Interest coverage ratio	495%	429%	346%

THE SHARE'S DIVIDEND YIELD

SHARE PRICE/NET ASSET VALUE

YIELD EARNINGS PER SHARE

THE CASTELLUM SHARE'S PRICE TREND AND TURONVER SINCE THE IPO, MAY 23, 1997 UNTIL SEPTEMBER 30, 2019

Definitions

SHARE RELATED KEY RATIOS

Data per share

In calculating income and cash flow per share the average number of shares has been used, whereas in calculating assets, shareholders' equity and net asset value per share the number of outstanding shares has been used. The number of historical shares that have been recalculated with reference to the bonusissue element (i.e. the value of the subscription right) in the completed new share issue.

Dividend pay-out ratio

Dividend as a percentage of income from property management.

Dividend yield

Proposed dividend as a percentage of the share price at the end of the period.

EPRA EPS - Earnings per Share

Income from property management adjusted for nominal tax attributable to income from property management, divided with the average number of shares. With taxable income from property management means income from property management with a deduction for tax purposes of depreciation and reconstruction.

EPRA NAV - Long term net asset value

Reported equity according to the balance sheet, adjusted for interest rate derivatives and deferred tax.

EPRA NNNAV - Actual net asset value

Reported equity according to the balance sheet, adjusted for actual deferred tax instead of nominal deferred tax.

Number of shares

Registered number of shares - the number of shares registered at a given point in time. Outstanding number of shares - the number of shares registered with a deduction for the company's own repurchased shares at a given point in time.

Total yield per share

Share price development with addition of the dividends during the period which was reinvested in shares that day shares traded ex-dividend.

PROPERTY RELATED KEY RATIOS

Economic occupancy rate

Rental income accounted for during the period as a percentage of rental value for properties owned at the end of the period. Properties acquired/completed during the period have been restated as if they had been owned or completed during the whole year, while properties disposed of have been excluded entirely. Development projects and undeveloped land have been excluded.

Income from property management

Net income for accounted for after reversal of transaction and restructuring costs, revaluation of results due to stepwise acquisition, changes in value and tax, both for the Group and for joint venture.

Net operating income

Net operating income as a percentage of rental income.

Operating expenses

This item includes both direct property costs, such as operating expenses, maintenance, ground rent and real estate tax, as well as indirect costs for leasing and property administration.

Property type

The property's primary rental value with regard to the type of premises. Premises for purposes other than the primary use may therefore be found within a property type. Castellum's property types are: office, public sector properties (customers that are directly or indirectly tax funded), warehouse/logistics, light industry, retail and developments and undeveloped land.

Rental income

Rents debited plus supplements such as reimbursement of heating costs and real estate tax.

Rental value

Rental income plus estimated market rent for vacant premises.

SEK per square metre

Property-related key ratios, expressed in terms of SEK per square metre, are based on properties owned at the end of the period. Properties acquired/completed during the year have been restated as if they had been owned or completed for the whole year, while properties disposed of have been excluded entirely. Development projects and undeveloped land have been excluded. In the interim accounts key ratios have been recalculated on an annual basis, disregarding seasonal variations normally occurring in operations.

FINANCIAL KEY RATIOS

Interest coverage ratio

Income from property management after reversal of net financial items and income from property management in joint venture as a percentage of net interest items.

Loan-to-value ratio

Interest-bearing liabilities after deduction for liquid assets as a percentage of the properties' fair value with deduction for acquired properties not taken in possession, and with addition for properties disposed of, still in possession, at the year-end.

Return on actual net asset value

Income after tax as a percentage of initial net asset value during the year, but with actual deferred tax instead of nominal tax. In the interim accounts the return has been recalculated on an annual basis, disregarding seasonal variations normally occurring in operations.

Return on long term net asset value

Income after tax with reversed changes in value of derivatives and deferred tax as a percentage of initial long term net asset value. In the interim reports the return has been recalculated on annual basis, disregarding seasonal variations normally occurring in operations.

Return on equity

Income after tax as a percentage of average equity. In the interim accounts the return has been recalculated on an annual basis, disregarding seasonal variations normally occurring in operations.

Return on total capital

Income before tax with reversed net financial items and changes in value on derivatives during the year as a percentage of average total capital. In the interim accounts the return has been recalculated on an annual basis, disregarding seasonal variations normally occurring in operations.

Financial calendar

Year-end Report 2019	24-Jan-20
Annual report 2019	Week 8, 2020
(English language version)
Annual General Meeting 2020	19-March-20
Interim report Jan-March 2020	24-April-20
Half-year report Jan-June 2020	15-July-20
Interim report Jan-Sept 2020	15-Oct-20

www.castellum.com

Visit Castellum's website to download and/or subscribe to Castellum's Pressreleases and Financial Reports.

For further information please contact : Henrik Saxborn, CEO, Castellum AB Phone +46 31 60 74 50

Ulrika Danielsson, CFO, Castellum AB Phone +46 706 47 12 61

About Castellum

CASTELLUM INTERIM REPORT JANUARY-SEPTEMBER 2019

Castellum is one of the largest listed real estate companies in Sweden. Property values amount to SEK 92.7 billion and holdings comprise office, warehousing/logistics and public sector properties, covering a total leasable area of 4.2 million square metres. The real estate portfolio is owned and managed under the Castellum brand through a decentralized organization with strong and clear local presence in 20 cities in Sweden and also in Copenhagen and Helsinki.

In 2019, Castellum received two awards for sustainability efforts; designated Number One in the world by GRESB for the offices-and-logistics sector, as well as the Level Gold award for sustainability reporting from the EPRA (European Public Real Estate Association). In addition, Castellum is the only Nordic real-estate and construction company elected to the Dow Jones Sustainability Index (DJSI), joining a select group of companies in the world who perform best on sustainability issues. The Castellum share is listed on Nasdaq Stockholm Large Cap.

Castellum AB (publ) • Box 2269, 403 14 Gothenburg • Visiting address: Östra Hamngatan 16 Phone: +46-31-60 74 00 • E-post: [email protected] • www.castellum.com Domicile: Gothenburg • Corp.id.no: 556475-5550

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Castellum — Interim / Quarterly Report 2019

2900_10-q_2019-10-18_9f652ee8-d893-480b-b87e-5a2fc3a60f8b.pdf

INTERIM REPORT JANUARY – SEPTEMBER 2019

7% increase in income from property management

Important events during the quarter

Castellum moving forward – towards an exciting future!

Rental levels are rising...

… and the required yield falling?

Development for the future

Henrik Saxborn

Market comments

CASTELLUM'S UNITED SPACES LANDED PRESTIGIOUS GEELY ASSIGNMENT

Swedish, Danish and Finnish economy

Rental market

Property market

Interest and Credit market

Condensed consolidated statement of comprehensive Income

Comparisons, shown in brackets, are made with the corresponding period previous year except in parts describing assets and financing, where comparisons are made with the end of previous year.

Performance analysis, Jan-Sept 2019

NOTE 1 Income from property management

SEGMENT INFORMATION

NOTE 2 Income

INCOME FROM PROPERTY MANAGEMENT PER SHARE NET LEASING

NET LEASING

NOTE 3 Costs

DEVELOPMENT OF PROPERTY COSTS

NOTE 4 Net interest

NOTE 5 Changes in value

CHANGE IN VALUE PROPERTIES

NOTE 6 Tax

Contin. Note 6

FOCUS ON INNOVATION AND DEVELOPMENT FOR SÄVE AIRPORT

Condensed consolidated Balance Sheet

Condensed Changes in Equity

Balance sheet, September 30, 2019

Investment properties

Investments

CHANGES IN THE REAL ESTATE PORTFOLIO

Property value

Internal valuations

Average valuation yield

Castellum's real estate portfolio

Customers

Castellum's real estate portfolio and customer segments

Lease maturity structure

Risk exposure, credit risk

COMMERCIAL LEASES DISTRIBUTED BY SECTOR

Castellum's development portfolio

Larger investments and sales

Larger developments

Larger sales

NOTE 8 Goodwill

NOTE 9 Leasing agreement

NOTE 10 Interest bearing liabilities and liquid assets Castellum must maintain a low level of financial risk, mea-

Interest bearing liabilities

CREDIT MATURITY STRUCTURE 09-30-2019

Interest rate maturity structure

Currency

INTEREST RATE MATURITY 09-30-2019

NOTE 11 Interest rate and currency derivatives

CASTELLUM'S FINANCIAL POLICY AND COMMITMENTS IN CREDIT AGREEMENTS

Condensed consolidated Cash Flow statement

The Parent company

Opportunities and Risks for Group and Parent company

Opportunities and risks in the cash flow

SENSITIVITY ANALYSIS - CASH FLOW

Opportunities and risks in property values

Financial risk

CASTELLUM CONTINUES TO BE RECOGNIZED WITH AWARDS FOR SUSTAINABILITY EFFORTS

Financial Key Ratios

Income from property management

EPRA Earnings (Income from property

Net Asset Value

Financial risk

Investment

Other Financial Key Ratios

Accounting principles

Election Committee

Events after the reporting period

Castellum Interim / Quarterly Report 2019