Castellum — Interim / Quarterly Report 2020

Apr 24, 2020

INTERIM REPORT JANUARY – MARCH 2020

Strong start of the year results in 9% increase in income from property management and a stable position in a difficult time

Important events during the period

No other event during the quarter can be compared to the global pandemic caused by COVID-19, the new coronavirus. At present, it is impossible to estimate how long the crisis will impact society, or how deep its effects will be.

Castellum stands respectfully in the face of the situation that has arisen and the difficulties in assessing the short- and long-term consequences of the crisis, but our basic understanding is that our operations, with a dedicated and active organization, are well-equipped to meet the financial challenges caused by society's measures to fight the spread of contagion.

The building permit to construct a new office building in central Malmö of 27,000 square meters, with E.ON as the main customer, gained legal power during the quarter. The investment amounts to approximately SEK 1.3 billion and will commence in the second quarter. The lease agreement with E.ON will contribute with SEK 69 million on an annual basis and is included in the period's net leasing.

At Hisingen Logistics Park outside Gothenburg, Castellum is building one of Northern Europe's largest solar cell installation. The installation will have an annual electricity production of approximately 3.3 GWh and is one of a total of 100 solar cell roof installations planned over the next three years.

Castellum has signed a three-year agreement with Volvo Group that will test and develop autonomus heavy vehicles and electric vehicles at Castellum Säve. Testing operations will be located on existing premises, and the test track will be part of the now-closed runway. Our vision is for Säve to be a hub for innovation, logistics and testing operations.

• Income for the period January–March 2020 amounted to MSEK 1.476 (MSEK 1,433 previous year).
• Income from property management amounted to MSEK 794 (726), corresponding to SEK 2.91 (2.66) per share, an increase of 9%.
• Changes in value on properties amounted to MSEK 3 (689) and on derivatives to MSEK –167 (–121).
• Net income after tax for the period amounted to MSEK 482 (1,341), corresponding to SEK 1.76 (4.91) per share.
• Long term net asset value (EPRA NRV) amounted to SEK 193 (178) per share. An increase of 8%.
• Net lease for the period was MSEK 99 (–7).
• Net investments amounted to MSEK 643 (–726) of which MSEK 75 (2,518) were acquisitions, MSEK 568 (777) new constructions, extensions and reconstructions and MSEK 0 (4,021 ) sales. Property value by the end of the period amounted to SEK 96.3 billion.

KEY RATIOS 2020 Jan–March Income, MSEK 1,476 Net operating income, MSEK 1,038 Income of property management, MSEK 794 D:o SEK/share 2.91 D:o growth +9% Net income after tax, MSEK 482 Net investments, MSEK 643 Net leasing, MSEK 99 Loan to value ratio 44% Interest coverage ratio 497% Net asset value (EPRA NRV, SEK/share 193 Net asset value EPRA NTA, SEK/share 185 Net asset value EPRA NDV, SEK/share 153
		2019 Jan–March
		1,433
		977
		726
		2.66
		+9%
		1,341
		– 726
		– 7
		45%
		465%
		178
		171
		141

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: The cover shows a sketch of E.ON's new Nordic head office, being constructed by Castellum in central Malmö. E.ON and Castellum intend to construct an office building in which everything from production and choice of materials to energy solutions and operation is permeated with a sustainability perspective. The office building is part of an urban development project in central Malmö. E.ON will begin occupancy of the building in the first quarter of 2023.

Challenging times

At the time of writing – April 24, 2020 – I fi nd myself needing to comment on Castellum's accounts for the fi rst quarter and at the same time assess the future under these extremely special circumstances now prevailing for Castellum, for the real estate sector, for Sweden and the world.

We can fi rst state, briefl y, that the fi rst quarter was a strong one, showing a 9% increase in income from property management, which is naturally due to the fi rst months results of the year being impacted marginally, at best, by the ongoing coronavirus crisis. We can also state that at the end of the quarter, when most customers pay three months' rent in advance, we collected 96% of these rents. This is a strong indication that revenue for Q2 will also be close to normal. What is most important right now, however, is looking forward and trying to envisage the immediate outlook for Castellum.

Castellum's basic conditions, in brief

5,700 customers provide extremely strong resistance to crises. They are spread across a range of diff erent industries, with the public sector one of the most prominent. Only 7% of the property portfolio is retail. 92% of the property values are in Sweden, spread over 17 cities in diff erent regions. Our balance sheet is strong. Financing for at least a year ahead is in place. Our cash fl ow is solid.

With that said, we can refl ect on how crises often strike fi nancially in our industry. Distinguishing among various dimensions is important here:

Balance sheet

We know from experience with earlier crises that drawn-out processes such as this one strike property values harder and faster than rental income. It is easy to realize that if property values fall going forward, it means that the net asset value presented in yearend reports are already history. A hypothetical calculation: At a 50% loan-to-value ratio, a 10% fall in property values would mean a 20% reduction in net assets – with an accompanying upswing in loan-to-value ratio. As far as Castellum is concerned, we can state that even a 20% fall in property values would mean our position continues to be reasonable – a loan-to-value ratio of 53% against 43% by the start of the year.

Lacking a comparison object in property valuation, we have chosen not to make any general changes to required yields at the start of the quarter and just made individual adjustments at the property level.

Profi t or loss

As noted, the change in income from property management is signifi cantly slower than that. During the IT crisis of 2000 and the fi nancial crisis of 2008–09, Castellum succeeded in increasing its income from property management (and thus its dividend) every year. A large number of bankruptcies could impair this outcome. The time aspect is of course crucial. How drawn out will the crisis and the restrictions be? How quickly can we return to normal? What we can see today is that 96% of rents for the second quarter following almost normal payment pattern and that 140 customers with a quaterly rent of MSEK 58 has got liquitidyhelp maily by switch to monthly rents.

The volume of canceled contracts actually decreased in March compared with the preceding year, and we experienced no bankruptcies. At the same time, new contracts for MSEK 117 have been signed, so net leasing in March alone totaled MSEK 90. It should be noted that MSEK 69 can be ascribed to our long-term lease with E.ON for the new head offi ce in Malmö. Net leasing for the full quarter totaled MSEK 99, of which MSEK –10 was in existing leases and MSEK +109 in projects.

Financing

Most important of all for a property company, however, is certainty in fi nancing its operations over both the short and long term. In conjunction with continued normal operations and a planned

rate of investment, our advance commitments will cover a period up through mid-2021 without any new fi nancing whatsoever being added.

The bond market, which was at a standstill for a time, has begun to function again but with higher pricing, and banks seem willing to increase loans to stable customers.

What are we doing to help?

We want to make the eff ort to support our tenants, our employees, our shareholders and society at large.

Tenants

We have increased dialogues markedly as of late, and are supporting our customers who are in most need of it by reducing liquidity stress. In most cases, this means going from quarterly to monthly debiting, and for the absolutely most critical situations we grant temporary relief from rent. Right now only a very small portion of the total rental value has serious problems and requires help. The companies granted relief correspond to only 4% of the total rental income.

Personnel

Over the last fi ve weeks, we have made pronounced changes to our working model so that an absolute majority of our employees are working from home. There are exceptions, where we manage essential functions or cannot work from home for other reasons. In this context, I would like to extend my warmest thanks to all our employees who are now working far longer than the normal working hours to support customers and ensure that properties and projects are functioning despite these diffi culties.

Society

Our projects, the Swedish National Courts Administration and E.ON's head offi ce in Malmö, are continuing according to plan and are part of preserving employment in the region. 23% of our portfolio consists of government authorities and agencies where it is important that we ensure these functions have premises that will work under the prevailing crisis. In addition, several new projects are being planned for the courts, the Swedish Police and the Swedish Migration Agency that will strengthen their operations. These projects represent a total investment volume of approximately SEK 2.5 billion. As a purely social initiative, we have earmarked MSEK 0.5 per year over three years for Children´s Rights in Society (BRIS) to guarantee staying open around the clock in times when children can be as severely aff ected as the elderly.

Shareholders

As a listed company, our primary task is to create a yield – shareholder value – for our owners within the limits allowed by the company's performance and social conditions.

It is extremely diffi cult to predict the outcome of this year, but we hope that this crisis will not seriously impact Castellum's longterm dividend capacity. With respect in the face of the prevailing situation, we can still state that judging by previous harsh crises, it is not impossible that we will still end up in the black.

In summary, I am – as I have said – very respectful in the face of this situation and the future, but certain that we at Castellum have the fi nancial resources, the capacity and the competence to come through these diffi cult times unscathed.

Gothenburg, April 24 2020

Henrik Saxborn CEO, Castellum

Market comments

CASTELLUM IS BUILDING E.ON'S NORDIC HEAD OFFICE

Castellum is constructing a new Nordic head office for E.ON, for approximately 1,500 employees, in the Nyhamnen district of Malmö near the central station. This is Castellum's largest project ever, and the start of construction is planned for the second quarter of 2020.

Both E.ON and Castellum want to build an office building that, from a sustainability perspective, is extraordinary. This perspective will permeate all aspects of the project: construction management, choice of materials and energy solutions. The building will be equipped with cooling and heating via ectogrid™ – a solution by E.ON to share residual thermal energy among buildings. The new construction will be certified under BREEAM Outstanding, the highest environmental certification level, and in accordance with the WELL building standard. The latter places unique demands on the health and wellness of people at their work.

This planned new construction covers approximately 27,000 square meters of leasable area, of which E.ON will lease approximately 24,000 square meters. E.ON will begin occupancy of the building in the first quarter of 2023. The office building is part of an urban development project in central Malmö. In the same area, Castellum is also planning to develop a new court building that will house Malmö District Court, the Administrative Court in Malmö and the Rent and Tenancy Tribunal in Malmö. Once completed, the area will grow into a compact mixed-purpose district with nearly 13,000 new workplaces and 6,000 homes.

"In these troubled times as a result of the coronavirus, it is particularly gratifying to be able to continue investing in important urban development projects such as the one including E.ON's new head office. Together with our future project that is equally as large – the new courthouse building right across the street – our position as a long-term urban developer in central Malmö will be strengthened," says Henrik Saxborn, CEO of Castellum AB.

Swedish, Danish and Finnish economies

According to the Riksbank (Feb 2020), the performance of the Swedish economy expressed as growth in GDP was weaker in 2019 (+1.2%) compared to 2018 (+2.2%). In light of the coronavirus crisis, the trend for 2020 is particularly difficult to assess – there are many indications of a substantial economic downturn. Drastic reductions in global trade, reduced travel, stops in supply chains and drastically reduced private consumption during the first months of 2020 all point to rising unemployment, with implications for private consumption. In combination with falling share prices, this could ultimately promote a downturn in the housing market, which in turn could likely decrease household optimism despite robust financial and monetary policy

measures being implemented.

The Swedish job market was severely impacted at the end of the quarter, and layoff announcements in the job market are increasing sharply in light of the coronavirus epidemic. Developments over the rest of the year are also extremely difficult to assess here. Powerful fiscal stimulus packages have been initiated and announced, which should have a positive effect – all other things being equal – but to what extent is unclear.

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 krona was weak in 2019 (TCW index) and continued to be so in the first quarter of 2020. According to the Riksbank (Feb 2020), however, inflation (CPIF) will probably end up the target level of 2% for 2020 and 2021, and the latest trends – including a significant fall in energy prices – point to a strengthening of this downturn.

Danish and Finnish GDP growth is also deemed to have been negatively impacted in 2020 as a consequence of the global coronavirus crisis. Private consumption is also expected to decrease here, for similar reasons as in Sweden. Fiscal measures have been implemented, but the extent to which these can halt the trend is unclear.

Altogether, the short-term trend for the economy is extremely difficult to assess, and there are forecasts indicating a fall in GDP on the order of 3–4% for full-year 2020 as well as unemployment of around 10% in Sweden as well as Denmark and Finland.

MACRO INDICATORS – SWEDEN

Unemployment	7.2%	(March 2020)
Rate of inflation	1.0%	(March 2020 compared with March 2019)
GDP growth	0.2%	(Q4 2019 compared with Q3 2019)

Source: Statistics Sweden

Rental market

COVID-19 has fundamentally changed society. National borders have been closed. Stores and restaurants stand empty while people's opportunities for mobility have been curtailed. Compared with other countries, the restrictions in Sweden have been relatively mild. It is too early to speak about the effects of society's measures to prevent the spread of contagion on rental and vacancy levels, but we can state that Castellum entered this crisis with historically low vacancy levels and record-high rental levels in all markets.

Despite uncertainty going forward, premises are still being shown and new contracts are beeing signed, even if only a few of them. This is also demonstrated by net leasing for Castellum in March 2020 being on a par with 2019. Average rent in the CBD markets of Stockholm, Gothenburg and Malmö increased approximately 7%, 2% and 4%, respectively, compared with Q1 2019.

Rising rental levels have been noted in Stockholm and Gothenburg as a result of continued record low vacancy rates in the CBD areas and the most attractive submarkets up until the outbreak of COVID-19, after which there have been no completed transactions. Over the short term, the offering of new construction will be limited and primarily leased in advance. Top rental levels of approximately SEK 9,500 per square meter and SEK 4,000 per square meter have been noted in Stockholm and Gothenburg respectively. In the first few months of the year, growth in office rents in regional cities also continued to increase.

Initial 2020 rent levels for offices in the Helsinki CBD continued to increase by around 4% to new record levels. Strong demand has spread from the CBD in Helsinki to the surrounding areas, with rent increases as a result. However, there is still a high vacancy rate in secondary areas, as well as in properties of lower quality. In Copenhagen, rents in the CBD has been stable in early 2020. Modern offices in attractive locations in Copenhagen are pushing rents upward. The high level of access to land and building rights in and around the city is, however, a limiting factor for rent potential.

The rental market in Sweden for warehouses/logistics spaces has been positive at the beginning of the year, with rising rents in prime logistics locations, particularly in semi-central locations with good means of transportation and sorting yards ('last-mile' locations). This is driven by a strong demand, based mainly on the growth in e-commerce. Rental levels are relatively stable for the largest logistics rental properties (>10,000 square meters), a situation that appears to continue despite COVID-19.

Property market

The volume of transactions over MSEK 40 during Q1 2020 in the transaction market in Sweden is estimated to around SEK 43 billion (Q1 2019: around SEK 37 billion) over 92 transactions (Q1 2019: 93). The shutdown of society owing to COVID-19 virus has resulted in several business transactions in the property market either being postponed or canceled. At the same time, it should be added that several procedures that were in progress during the outbreak have been completed.

The mood among investors in the Swedish property market has dampened considerably. The share of foreign investors during Q1 2020 was approximately 40% (27), which was a historic high. A weak Swedish krona in combination with a great deal of liquidity in 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. However, these levels could possible fall, since investors tend to focus on domestic markets in turbulent periods.

Altogether, this leads to a cautious property market with uncertainty around the long-term effects of the coronavirus. Properties with secure cash flows such as public sector properties remain attractive to investors in uncertain times.

In Castellum's submarkets outside the metropolitan areas, the required yield for office properties was stable in Q1 2020 up until the outbreak of COVID-19, after which there is a severe lack of completed transactions.

Warehouse and logistics properties attracts a growing number of both domestic and international investors, driven largely by the growth of e-commerce. Since demand is high – which drives up prices – the required yields for completed transactions in early Q1 2020 were at record lows. 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 volume in the property market during Q1 2020 totaled DKK 11.4 billion (Q1 2019: approximately DKK 9.4 billion). 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 is deemed to have fallen to 3.5%.

In Finland, the transaction volume in the Finnish property market totaled approximately EUR 1.7 billion during Q1 2020 (Q1 2019: approximately EUR 1.3 billion). 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 to 3.4%, which is roughly in a level with Stockholm. Increased investor interest has been noted for secondary and development properties as well.

Interest and credit markets

In December 2019, Sweden's Riksbank raised the repo rate from –0.25% to zero. The Riksbank's latest repo-rate path (Feb 2020) indicates that the repo rate will remain at zero until early 2022.

Swedish long-term interest rates fell drastically in 2019 until early autumn, when they bottomed out and subsequently trended upward again. However, the upswing broke off in early 2020 and at the end of the first quarter the 5-year swap rate, for example, was approximately 20 basis points lower than at the start of the year. Current levels remain historically very low. STIBOR 3m, on the other hand, rose gradually during the first quarter of 2020. At the end of the quarter, STIBOR 3m was around +0.3%, compared with +0.15% at the end of 2019. All in all, the yield curve became somewhat flatter in the first quarter of the year.

Access to financing in the Swedish capital market deteriorated radically at the end of the first quarter, with credit spreads widening drastically. The Euro capital market is showing similar tendencies, even though access to capital is somewhat better there.

In Denmark, the CIBOR 3m rose somewhat during the first quarter of 2020, primarily in light of the Danish krona coming under a certain amount of pressure against the Euro, which led Danmarks Nationalbank to raise its marginal rate by 15 basis points during the quarter. At the end of the first quarter of 2020, CIBOR 3m was around –0.15%, compared to –0.4% at the end of 2019. EURIBOR 3m was around –0.3% at the end of the first quarter.

Castellum's agenda for the sustainable city

Castellum shall be one of the most sustainable property company in Europe and a major player in the construction of a sustainable society. Our sustainability initiatives are fully integrated into our operations and are ingrained in both our ownership and our daily work with managing and developing our property portfolio, customer relations, employees and financing.

Castellum's sustainability agenda, "The sustainable city," is divided into four areas of focus: The Planet, Future-Proofing, wellness and Social Responsibility. These areas of focus ensure that we conduct our operations responsibly and create long-term solutions from an economic, ecological and social perspective. We have also established measurable targets that are monitored and reported annually.

Castellum is the first real estate company in the Nordic region to have its climate targets approved by the Science Based Targets (SBT) initiative. Castellum's target is to achieve 100% climate neutrality in its operations by 2030, thereby supporting the UN's climate agreement and the national ambition for a fossil fuel-free Sweden.

For a complete account of outcomes for 2019, refer to Castellum's Annual Report.

EVENTS DURING THE QUARTER

E.ON's new head office, with new sustainable solutions

Castellum has decided to construct an office building that will become a new Nordic head office for E.ON for approximately 1,500 employees located in the Nyhamnen district of Malmö near the central station. Sustainability will permeate all aspects of the project: construction management, choice of materials and energy solutions. The building will be equipped with cooling and heating via ectogrid™ – a solution from E.ON to share residual thermal energy among buildings. The goal is to certify the building by the highest environmental certification level – BREEAM Outstanding – and in accordance with the WELL building standard, which imposes unique requirements on wellness at the workplace.

Test track for electric vehicles at Castellum Säve

Castellum has signed a three-year agreement with Volvo group that will test and develop autonomus heavy vehicles and electric vehicles at Castellum Säve, next to Säve airport. Testing will be located at existing premises, and the test track will be part of the now-closed runway. The choice to create a test track for heavy vehicles and electric vehicles at Castellum Säve is in line with Castellum's plans for the area. The objective is to create one of the Nordic region's most modern and largest logistics hubs, and an area for innovation and development focused on sustainable transportation and mobility.

One of Northern Europe's largest solar cell installations

Castellum has begun the construction of one of Northern Europe's largest solar cell installations at its new Hisingen Logistics Park outside Gothenburg. The investment totals MSEK 27 and encompasses the construction of a 30,000-square meter solar cell roof with an annual production of approximately 3.3 GWh. This corresponds to the annual electricity consumption of 660 standard houses. The installation is expected to be in operation by late 2020 or early 2021. This is part of Castellum's major "100 on Sun" initiative, which means the company will construct 100 solar cell installations on existing buildings through 2025.

The best gender equility in Europe

Castellum ranks at the top of 600 listed companies when it comes to gender equality, it is shown in a survey conducted of European Women on Boards, which was presented in January 2020.

Castellum's Board of Directors comprises as many women as men and also has a woman as Chairman of the Board. Executive Management has a fully even gender distribution, with 50% of each gender. This is significantly better than the average in Europe, where women represent only 27% of Board and management members. Read more about the survey at https://europeanwomenonboards.eu

OUR FOCUS AREAS

THE PLANET

We will responsibly and efficiently reduce resource use and carbon emissions that cause global warming.

FUTURE-PROOFING

We will create a sustainable property portfolio in a changing world.

WELLNESS

We will promote health, wellness and productivity.

SOCIAL RESPONSIBILITY

We will conduct business in a responsible manner in relation to the community as well as to our stakeholders.

"Castellum's target is to achieve 100% climate neutrality in its operations by 2030."

100% <2% För nyproduktion av kontor ONGOING TARGETS

• BREEAM Excellent. Övriga typer • 1% water conservation per year
• av projekt certifieras. • 1.5% energy efficiency enhancements per year
• • Tillföra ekosystemtjänster i större projekt 100% Av medarbetarna • All new production and major reconstructions sustainability certified
• Bring ecosystem services to major projects
• <3% Långtidssjukfrånvaro • <2% short-term sick leave• <3% long-term sick leave
• 4% of all employees to be apprentices or interns
• ska utbildas i uppförandekoden • Create job opportunities for young people and the long-term unemployed
• 100% of employees to be trained in the Code of Conduct

Condensed Consolidated statement of Comprehensive Income

MSEK		2020 Jan–March	2019 Jan–March	Rolling 12 months April 19 – March 20	2019 Jan–Dec
Rental income		1,345	1,309	5,301	5,265
Service income		100	111	441	452
Coworking income		31	13	122	104
Income	note 2	1,476	1,433	5,864	5,821
Operating expenses	note 3	– 184	– 225	– 670	– 711
Maintenance expenses	note 3	– 34	– 40	– 151	– 157
Property tax	note 3	– 91	– 77	– 381	– 367
Coworking expenses	note 3	– 36	– 12	– 123	– 99
Leasing and property administration expenses	note 3	– 93	– 102	– 365	– 374
Net operating income		1,038	977	4,174	4,113
Central administrative expenses	note 3	– 37	– 48	–152	– 163
Aquisition costs		–	–	– 9	– 9
Net financial costs	note 4
Net interest costs		– 200	– 199	– 783	– 782
Leasing cost/Ground rent		– 7	– 4	– 25	– 22
Income from property management incl. aquistion costs*	note 1	794	726	3,205	3,137
Income from property management		794	726	3 214	3,146
Goodwill, depreciation		–	– 179	–	– 179
Changes in value	note 5
Properties		3	689	3,232	3,918
Derivatives		– 167	– 121	– 157	– 111
Income before tax		630	1,115	6,280	6,765
Current tax	note 6	– 42	– 33	– 174	– 165
Deferred tax	note 6	– 106	259	– 1,315	– 950
Net income for the period/year		482	1,341	4,791	5,650
Other total net income
Items that can be reclassified into net income
Translation difference of currencies		415	43	464	92
Change in value derivatives, currency hedge		– 275	– 9	– 313	–47
Total net income for the period/year**		622	1,375	4,942	5,695
Average number of shares, thousand		273,201	273,201	273,201	273,201
Income, SEK/share		1.76	4.91	17.54	20.68

* For calculation, Financial Key ratios, page 21.

** 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 23.

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, January–March 2020

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–March 2020 to MSEK 794 (726), equivalent to SEK 2.91 (2,66) per share – an increase with 9%. Income from the property management rolling four quarters amounted to MSEK 3,214 (3,013) equivalent to SEK 11.76/share (11.03) – an increase of 7%.

SEGMENTINFORMATION
	Income		Income from prop.mgmt
MSEK	2020 Jan–March	2019 Jan–March	2020 Jan–March	2019 Jan–March
Central	396	356	220	183
West	343	320	202	175
Öresund	296	284	164	150
Stockholm–North	395	447	247	250
Finland	15	13	7	– 2
Coworking	31	13	– 4	1
Total	1,476	1,433	836	757

The difference between the income from property management of MSEK 836 (757) above and the groups accounted income before tax of MSEK 630 (1,115) consists of unallocated income from property management of MSEK –42 (–31), writedown godwill of MSEK 0 (–179), changes in property value of MSEK 3 (689) and changes in values of derivatives of MSEK–167 (–121).

NOTE 2 Income

0

The Group's income amounted to MSEK 1,476 (1,433) and the average occupancy rate was 92.2% (93.3) including discounts of MSEK 28 (21). This also includes a lump sum of MSEK 3 (0) as a result of early termination of leases. Moreover, Castellum acquired the coworking company United Spaces in the first quarter 2019, which brought income of MSEK 31 (13) in the first quarter this year.

DEVELOPMENT OF INCOME MSEK 2020 Jan–March 2019

MSEK	Jan–March	Jan–March	Change, %
Like-for-like holdings	1,296	1,259	3.0%
Development properties	66	43
Transactions	83	118
Coworking	31	13
Income	1,476	1,433	3.0%

Rental income in like-for-like increased by 3.0% the fist quarter. The increase is due to higher rents by 3.7%, which is offset by higher vacancies and incentives by 0.7%. Gross leasing (i.e. the annual value of total leasing) during the period was MSEK 185 (87), of which MSEK 109 (6) were leasing of new constructions, extensions and reconstructions. Notices of termination amounted to MSEK 86 (94), of which bankruptcies were MSEK 1 (3) and MSEK 7 (3) were notices of termination with more than 18 months remaining length of contract. Net lease for the period was MSEK 99 (–7). 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 JAN–MARS 2020

			Region
MSEK	Central		West Öresund	Sthlm	North	Total
NEW LEASES
Existing prop.	20	23	16	16	1	76
Investments	22	0	69	18	0	109
Total	42	23	85	34	1	185
NOTICES OF TERMINATIONS
Existing prop.	–23	–13	–12	–37	0	–85
Bankruptcies	0	0	–1	0	0	–1
Total	–23	–13	–13	–37	0	–86
Net leasing	19	10	72	–3	1	99
D:o Q1 2019	4	2	–10	–4	1	–7

INCOME FROM PROPERTY MANAGEMENT PER SHARE NET LEASING

10 11 12 13 14 15 16 17 18 19 20

0

NOTE 3 Costs

Direct property costs totaled MSEK 309 (342), corresponding to SEK 293 per sq. m. (318). Property costs for the likefor-like portfolio decreased 5.5%, despite increased property tax due to the property taxation that took place early 2019. In addition, expenses for coworking totaled MSEK 36 (12).

Property administration expenses amounted to MSEK 93 (102), corresponding to SEK 90 per sq.m. (101).

Central administrative expenses was MSEK 37 (48), and includes costs related to the profit-and-share-price related incentive plan for 7 (6) persons in Executive Management of MSEK 3 (3).

DEVELOPMENT OF PROPERTY COSTS
MSEK	2020 Jan–March	2019 Jan–March	Change,%
Like-for-like holdings	275	291	– 5.5%
Development properties	15	18	–
Transaction	19	33	–
Direct property costs	309	342	– 9.6%
Coworking	36	12	–
Property admin	93	102	–
Central admin	37	48	–
Total costs	475	504	– 5.8%

Consumption for heating during the period has been calculated to 76.6% (83.1%) of a normal year according to the degree day statistics.

PROPERTY COSTS
	Office	Public sector properties	Warehouse/ Logistics	Light industry	Retail	Total
Operating expenses	224	198	115	113	144	174
Maintenance	42	37	18	34	33	33
Real estate tax	133	107	27	27	75	86
Total prop. costs	399	342	160	174	252	293
Leasing & prop. admin						90
Total	399	342	160	174	252	383
D:o Q1, 2019	411	353	191	203	305	419

NOTE 4 Net interest

Net interest items were MSEK –200 (–199). The average interest rate level was 2.0% (2.1%). Net interest income was positively affected by approx. MSEK 4 due to the average interest rate level decreased by 0.1%-units. Further, costs for ground rent amounted to MSEK 5 (4) and for lease agreement to MSEK 2 (0).

NOTE 5 Changes in value

The property market has the first quarter 2020 been cautious due to the uncertainty that exist around the longterm impact from the COVID-19. It has resulted in unchanged valuations on portfoliolevel, meaning that Castellums change in value for the first quarter amounted to MSEK 3 (689). Since every property is valuated individually, a portfolio premium that can be seen in the real estate market has not been taken into consideration.

The market value of the derivatives changed by MSEK –167 (–61) mainly due to changes in long-term market interest rates.

CHANGE IN VALUE PROPERTIES

MSEK	2020 Jan–March	2019 Jan–March
Cash flow	– 6	85
Project gains/building rights	4	86
Required yield	–	667
Acquisitions	5	134
Sales	–	– 283
Total	3	689
D:o %	0.0%	0.8%

NOTE 6 Tax

Recognized tax totaled MSEK –148 (226), of which MSEK –42 (–33) is actual tax. 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. Due to the possibility to deduct depreciation and reconstructions for tax purposes, and to utilize tax loss carry forwards, the tax paid is low. 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 724 (854). Furthermore, there are untaxed reserves ov 425 (327). Fair values for the properties exceed their fiscal value by MSEK 56,780 (56,365) of which MSEK 6,575 (6,553) 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 10,279 (10,153).

Castellum has no current tax disputes.

Contin. Note 6

TAX CALCULATION 03-31-2020

MSEK	Basis current tax	Basis deferred tax
Income from property management	794
Non-deductible interest	45
Deductions for tax purposes
depreciations	– 318	318
reconstructions	– 85	85
Other tax allowances	–111	– 22
Taxable income from property mgmnt	325	381
Current income tax 21.4%, if tax losses are not utilized	70
Properties sold	–	–
Changes in value on properties	–	3
Changes in value on derivatives	–	–
Taxable income before tax loss carry forwards	325	384
Tax loss carryforwards, opening balance	– 854	854
Tax loss carryforwards, closing balance	724	– 724
Taxable income	195	514
Tax according to the Income Statement for the period	– 42	– 106

NET DEFERRED TAX LIABILITY 03-31-2020
MSEK	Basis	Nominal tax liability	Real tax liability
Tax loss carryforwards	724	155	155
Untaxed reserves	– 425	– 91	– 91
Properties	– 56,780	– 11,697	– 2,045
Total	– 56,481	– 11,633	– 1,981
Properties, asset acq.	6,575	1,354
In the balance sheet	– 49,906	– 10,279

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-effi cient 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 4% based on a discount rate of 3%. Further, assessments have been made that tax loss carryforwards are realized in 2020 a nominal tax of 21.4% and that the properties are realized in over 50 years where 100% are sold indirectly through company disposals (earlier assesments was 67%) where the buyers tax discount is 7% – that is in line with transactions made by Castellumthe last years. The change in assessment is made in order to correlate with new guidelines from EPRA.

NORTHERN EUROPE'S LARGEST SOLAR CELL INSTALLATIONS ON ROOFS

Castellum is building one of Northern Europe's largest solar cell installations on one of its newest logistics facilities: Hisingen Logistics Park, outside Gothenburg. The project is part of Castellum's major "100 on Sun" initiative – the construction of 100 solar cell installations on existing buildings through 2025.

Hisingen Logistics Park is one of Castellum's most modern logistics facilities, strategically located in proximity to the Nordic region's largest ports, industries, national transportation links and the city of Gothenburg. A 30,000-square meter solar cell roof installation will be constructed here. The installation will have an annual electricity production of approximately 3.3 GWh, corresponding to the annual electricity consumption of 660 standard houses.

"To support the UN's climate goals and Swedish goals for a fossil fuel-free Sweden, we have decided that our operations will be 100% climate neutral by 2030. If we are to succeed at this, we must take comprehensive initiatives in renewable energy. I am proud of the fact that, as the Nordic region's most sustainable property company, we are now investing in building Castellum's single largest solar cell installation to date. This is just the beginning of several large-scale initiatives we will be taking in the next few years," says Henrik Saxborn, CEO of Castellum AB.

Construction start for the new solar cell installation at Hisingen Logistics Park is planned for the spring, and operation is expected to commence by the end of the year. Last year, Castellum began 14 large solar cell installation projects. 23 large solar cell installations have previously been installed that altogether generate approximately 1,200 MWh, enough for the annual electricity consumption of around 240 houses.

Condensed Consolidated Balance Sheet

MSEK		March 31, 2020	March 31, 2019	Dec 31, 2018
ASSETS
Investment properties	note 7	96,262	89,231	95,168
Goodwill	note 8	1,691	1,703	1,691
Leases, value in use	note 9	849	919	846
Other fixed assets		182	167	179
Current receivables		1,226	1,663	928
Liquid assets		1,174	150	173
Total assets		101,384	93,833	98,985
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity		42,623	39,457	43,777
Deferred tax liability	note 6	10,279	8,936	10,153
Other provisions		6	6	5
Interest-bearing liabilities	note 10	43,544	40,566	40,826
Derivatives	note 11	506	777	715
Lease agreement	note 9	849	919	846
Non interest-bearing liabilties		3,577	3,172	2,663
Total shareholders' equity and liabilities		101,384	93,833	98,985
Pledged assets (property mortages)		19,698	21,826	20,903
Pledged assets (chattel mortages)		–	–	–
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 12-31-2018	273,201	137	12,434	274	– 269	– 2	27,175	39,749
Dividend, March and Sept 2019 (5.30 SEK/share)	–	–	–	–	–	–	– 1,667	– 1,667
Net income Jan–March 2019	–	–	–	–	–	–	1,341	1,341
Other total net income Jan–March 2019	–	–	–	43	– 9	–		34
Shareholders' equity 03-31-2019	273,201	137	12,434	317	– 278	– 2	26,849	39,457
Net income April–Dec 2019	–	–	–	–	–	–	4,309	4,309
Other total net income April–Dec 2019	–	–	–	49	– 38	–	–	11
Shareholders' equity 12-31-2019	273,201	137	12,434	366	– 316	– 2	31,158	43,777
Dividend March and Sept 2020 (6.50 SEK/share)	–	–	–	–	–	–	– 1,776	– 1,776
Net income Jan–March 2020	–	–	–	–	–	–	482	482
Other total net income Jan–March 2020	–	–	–	415	– 275	–	–	140
Shareholders' equity 03-31-2020	273,201	137	12,434	781	– 591	– 2	29,864	42,623

Balance sheet, March 31, 2020

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 property consists of 47% office, 23% public sector properties, 17% warehouse/logistics, 7% 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 larger projects with remaining investments of approx. SEK 2.3 billion.

Investments

During the period, investments totalling MSEK 643 (3,295 ) were carried out, of which MSEK 75 (2,518) were acquisitions and MSEK 568 (777) new constructions, extensions and reconstructions. After sales of MSEK 0 (4,021) net investments amounted to MSEK 643 (–726).

CHANGES IN THE REAL ESTATE PORTFOLIO

	Value, MSEK	Number
Real estate portfolio on January 1, 2020	95,168	632
+ Acquisitions	75	3
+ New constructions, extensions and reconstructions	568	–
– Sales	–	–
+/– Unrealized changes in value	3	–
+/– Currency translation	448	–
Real estate portfolio on March 31, 2020	96,262	635

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 (1,600) 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 96,262 (95,168), corresponding to SEK 22,451 per sq.m (22,363).

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	1,137
+ Real occupancy rate, 94% at the lowest	66
– Property admin, SEK 30/sq.m.	–35
Normalized net operating income (3 months)	1,168
Valuation (excl. building rights of MSEK 654)	91,861
Average valuation yield	5,1%

Valuation yield per category

Total	5.1%	5.1%
Light industry	6.4%	6.6%
Retail	5.8%	5.8%
Warehouse/logistics	5.7%	5.6%
Public sector properties	4.7%	4.8%
Office	4.9%	5.0%
	March 31,2020	Dec 31,2019

PROPERTY RELATED KEY RATIOS

	2020 Jan–March	2019 Jan–March	2019 Jan–Dec
Rental value, SEK/sq.m.	1,516	1,462	1,495
Economic occupancy rate	92.2%	93.3%	92.60%
Property costs, SEK/sq.m.	383	419	384
Net operating income, SEK/sq.m.	1,014	944	1,001
Property value, SEK/sq.m.	22,451	21,084	22,363
Number of properties	635	631	632
Lettable area, thousand sq.m.	4,253	4,166	4,255
Average valuation yield	5.1%	5.1%	5.1%

Castellum's real estate portfolio

			2020-03-31		January–March 2020
Type	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	283	11,200	39,542	162	2,282	93.2%	151	30	413	121
West	66	375	10,810	28,828	169	1,806	93.4%	158	32	342	126
Central	78	540	10,709	19,824	208	1,540	90.9%	189	50	373	139
Öresund	43	398	11,651	29,317	207	2,079	88.1%	182	46	463	136
North	2	5	93	18,339	2	1,592	94.9%	2	1	552	1
Finland	1	14	913	63,260	15	4,224	100.0%	15	2	748	13
Total Office	219	1,615	45,376	28,091	763	1,888	91.4%	697	161	399	536
PUBLIC SECTOR PROPERTIES
Stockholm	12	89	5,658	63,360	69	3,090	92.8%	64	11	497	53
West	15	110	2,163	19,659	38	1,382	90.9%	35	7	238	28
Central	31	314	8,701	27,732	139	1,769	96.4%	134	27	342	107
Öresund	8	91	3,400	37,495	50	2,211	98.6%	49	8	352	41
North	10	99	1,992	20,057	37	1,497	94.1%	35	8	311	27
Total Public sector properties	76	703	2, 914	31,169	333	1,895	95.1%	317	61	342	256
WAREHOUSE/LOGISTICS
Stockholm	38	280	5,490	19,590	87	1,235	88.9%	77	12	171	65
West	69	594	7,034	11,840	125	843	90.6%	113	21	143	92
Central	30	165	1,323	8,027	33	799	90.2%	30	7	157	23
Öresund	32	215	2,121	9,888	44	826	91.9%	41	10	194	31
Total Warehouse/Logistics	169	1,254	15,968	12,737	289	922	90.3%	261	50	160	211
RETAIL
Stockholm	29	151	3,335	22,160	58	1,548	93.2%	54	8	228	46
West	15	58	1,101	18,951	21	1,407	93.6%	19	4	258	15
Central	21	114	1,825	16,076	37	1,316	95.7%	36	7	246	29
Öresund	11	45	855	18,786	17	1,514	84.6%	15	4	335	11
Total Retail	76	368	7,116	19,357	133	1,450	92.9%	124	23	252	101
LIGHT INDUSTRY
Stockholm	10	44	746	17,152	14	1,263	95.2%	13	3	245	10
West	16	66	707	10,717	14	846	91.9%	13	2	140	11
Central	10	29	348	11,830	8	1,050	97.0%	7	2	233	5
Öresund	4	42	340	8,076	8	791	93.9%	8	1	115	7
Total Light industry	40	181	2,141	11,830	44	966	94.2%	41	8	174	33
Total investment properties	580	4,121	92,515	22,451	1,562	1,516	92.2%	1,440	303	293	1,137
Leasing and property admin									93	90	–93
Total after leasing
and property administration									396	383	1,044
Project(s)	35	132	3,267	–	20	–	–	8	6	–	2
Undeveloped land Total	20 635	– 4,253	480 96,262	– –	– 1,582	– –	– –	– 1,448	– 402	– –	– 1,046

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 1,046 accounted for above and the net operating income of MSEK 1,038 in the income statement is explained by the adjustment of the net operating income of MSEK 13 on properties acquired/completed during the period, which are recalculated as if they had been owned or completed during the whole period and MSEK –5 from the coworkingcompany that is not included above.

More detailed description about property type on page 26, 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 7% of income value, but this segment includes grocery stores and car dealerships. 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 2020-03-31
MSEK	No. of leases	Lease value MSEK	Percentage of value
Commercial, term
2020	1,087	124	2%
2021	1,676	935	17%
2022	1,193	1,058	19%
2023	1,106	1,123	21%
2024	228	433	8%
2025+	383	1,649	30%
Total commercial	5,673	5,322	97%
Residential	444	41	1%
Parking spaces and other	5,912	93	2%
Total	12,029	5,456	100%

Risk exposure, credit risk

Castellum's lease portfolio features a good risk exposure. The Group has approx. 5,700 commercial leases and 444 residential leases, and their distributiin 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	2,630	22%	206	4%
0.25–0.5	950	8%	350	6%
0.5–1.0	827	7%	584	11%
1.0–3.0	764	6%	1,314	24%
< 3.0	502	4%	2,868	52%
Total	5,673	47%	5,322	97%
Residental	444	4%	41	1%
Parking spaces and other	5,912	49%	93	2%
Total	12,029	100%	5,456	100%

Castellum Säve, a hub for innovation, testing and logistics solutions

Castellum's development portfolio

CASTELLUM INTERIM REPORT JANUARY-MARCH 2020

Hisingen Logistics park, phase 2 GOTHENBURG New construction, logistic Investment: MSEK 294

Backa 20:5, phase 2 GOTHENBURG New construction, retail Investment: MSEK 82

New construction, offi ce Investment: MSEK 238

Masthugget 26:1 GOTHENBURG

Visionen 3 JÖNKÖPING New and reconstruction, offi ce Investment: MSEK 87

GreenHaus HELSNINGBORG New construction, offi ce Investment: MSEK 305

Sellerin 3 LUND New construction, warehouse/logistics Investment: MSEK 88

Nya Domstolsverket MALMÖ New construction, offi ce Investment: MSEK 1.3

Moränen 3 MALMÖ New construction, retail/ light industry Investment: MSEK 54

E.ON MALMÖ New construction, offi ce Investment: BSEK 1.3

Kungspassagen UPPSALA New and reconstruction, offi ce

Investment: MSEK 443

Örnäs 1:17 UPPLANDS-BRO New construction, warehouse/logistics Investment: MSEK 204

Öskaret 1

Verkstaden 14 VÄSTERÅS

New construction, offi ce Investment: MSEK 198

Ongoing Completed/partly moved in

Planned

15

Larger investments

Larger developments

			Rental value		Total inv.	of which
Property	Area, sq.m.	MSEK	SEK/sq.m.	Econ. occup. April 2019	incl.land MSEK	inv. 2019, MSEK	Remain inv. MSEK	Completed	Category
Sjustjärnan 1 / E.ON, Malmö	31,460	78	2,775	93%	1,296	216	1,080	Q1 2023	New construction, office
Öskaret 1, Stockholm	10 841	60	5 550	65%	638	456	182	Kv 4 2020	Reconsctruction, office
Dragarbrunn 21:1, Uppsala	12,166	32	2,750	69%	443	155	288	Q4 2021	New and reconstruction, office
GreenHaus, Helsingborg	7,000	19	2,800	31%	305	52	253	Q2 2022	New construction, office
Hisingen Logistikpark etapp 2, Göteborg	34,484	24	700	100%	294	263	31	Q2 2020	New construction, locistic
Masthugget 26:1, Göteborg	4,185	13	3,200	0%	238	161	77	Q4 2020	New construction, office
Verkstaden 14 , Västerås	5,800	14	2,430	88%	198	6	192	Q1 2022	New construction, office
Sellerin 3, Lund	5,190	7	1,300	40%	88	28	60	Q1 2021	New construction, warehouse / car dealer
Visionen 3, Jönköping	5,155	10	1,850	80%	87	67	20	Q2 2020	Reconsctruction, office
Backa 20:5, Göteborg	4,600	7	1,500	100%	82	28	54	Q1 2021	New construction, warehouse / office
Developments completed/partly moved in
Örnäs 1:17, Upplands-Bro	15,719	15	1,000	54%	204	183	21	Q1 2020	New construction, locistic
Moränten 3, Malmö	3 421	5	1 350	82%	54	51	3	Q1 2020	New construction, light industry
Total developments > MSEK 50					3,927	1,666	2,261

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. Goodwill attributable to deferred taxes was at the end of the period MSEK 1,480 (1,480). Further, United Spaces, a coworking company, was acquired during the first quarter 2019 resulting in a goodwill of MSEK 211 (221).

NOTE 9 Leasing agreement

IFRS 16 Leases entered force on January 1, 2019, meaning that Castellum valuates its leases and recognize the rightof-use as an asset with a corresponding liability. At the balance sheet date, the value of Castellum's leases was approximately MSEK 849 (846), divided into site leasehold agreements of MSEK 483 (483) and rental agreements in United Spacesof MSEK 366 (363).

NOTE 10 Interest bearing liabilities and liquid assets Castellum shall maintain a low level of financial risk, meaning a substainable 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 56,313 (60,604) of which MSEK 46,179 (49,433) were long-term and MSEK 10,134 (11,171) were short-term. Of the utilized facilities at the end of the period, MSEK 34,209 (30,233) was long-term and MSEK 8,161 (10,420) short-term.

After deduction of cash of MSEK 1,174 (173), net interest-bearing liabilities were MSEK 42,370 (40,653), of which MSEK 27,879 (27,512) were MTNs outstanding and MSEK 4,398 (5,136) commercial paper outstanding (nominal MSEK 27,865 and MSEK 4,402 respectively).

During the period, bank credit facilities of approximately MSEK 2,125 were extended and MSEK 4,070 were terminated. Castellum has alo, as part of Castellum's Swedish MTN program, issued new bonds with a nominal amount of MSEK 1,450 while bonds with a nominal value of MSEK 1,675 matured.

Most of Castellum's borrowings are revolving bank credit facilities, which means great flexibility. Bonds issued under the MTN program and commercial paper expands the funding base, and acount for 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 bank loan commitments 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 42,370 (40,653), MSEK 10,093 (7,249) was pledged against property deeds and MSEK 32,277 (33,404 ) was unsecured, which means that approximately 24% (18%) of loans outstanding were secured. The proportion of secured financing used, with the addition of commercial paper outstanding backed by secured bank credit commitments, was thus 15% (13) of the properties' value. Castellum's share of unsecured assets at the end of the period was 60% (57). Secured borrowing in relation to total assets was 10% (7). 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 showing current levels for those ratios at: 44%, 497% and 10% respectively. For used credit volume the average duration incl. extension options was at the end of the period 4.0 years (3.8). Margins and fees for credit agreements are fixed at the same time with an average duration of 3.2 years (3.2). The net debt to EBITDA was at the end of the period 11 (10).

Castellum has an official credit rating from the credit rating agency Moody's. The rating, which is an Investment Grade rating, is Baa2 with a stable outlook. The rating is expected to result in further improvement of financial flexibility for Castellum by supporting both Castellum's relative

funding cost and access to loan capital over time.

CREDIT MATURITY STRUCTURE 03-31-2020

		Utilized in
Credit agreements	MSEK	Bank	MTN/Cert	Total
0 – 1 year	10,134	838	7,323	8,161
1 – 2 years	5,095	894	4,201	5,095
2 – 3 years	11,266	5,121	3,395	8,516
3 – 4 years	18,404	992	8,192	9,184
4 – 5 years	1,708	11	1,697	1,708
> 5 years	9,706	2,237	7,469	9,706
Total	56,313	10,093	32,277	42,370

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 3.2 years (3.3). The average effective rate at March 31, 2020 was 1.87% (1.82%) excluding unutilized credit agreements, and 1.97% (1.99%) 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 exposure

Castellum owns properties in Denmark and Finland with a value of MSEK 7,708 (7,247), 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 MATURITY 03-31-2020 Credit, MSEK Closing average Interest rate Volume fixed Interest rate, MSEK Closed fixed Interest rate** Volume variable interest rate MSEK*** Closing variable interest rate*** Closing interest rate Average fixed interest rate term 0 – 1 year 25,923 1.4%* 5,933 1.2% – 15,329 0.4% 2.28% 0.3 yr 1 – 2 years 2,849 1.3% 1,350 0.0% – – 0.87% 1.4 yr 2 – 3 years 550 2.2% 1,600 0.0% – – 0.55% 2.4 yr 3 – 4 years 6,291 2.1% 5,100 2.3% –4,766 2.1% 2.24% 3.6 yr 4 – 5 years 699 1.7% 400 0.8% – – 1.35% 4.6 yr 5 – 10 years 6,059 1.3% 10,958 1.8% – 5,246 1.4% 1.74% 7.8 yr Total 42,370 1.5% 25,341 1.5% – 25,341 0.9% 1.87% 3.2 yr Derivatives

* Including credit-agreement fees and exchange rate differences for MTNs

** Castellum pays fixed interest rates

*** Castellum receives interest rates

NOTE 11 Interest rate and currency derivatives

Castellum utilizes interest rate derivatives to achieve the desired interest rate maturity structure. 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 March 31, 2020, the market value of the interest rate derivatives portfolio amounted to MSEK – 748 (–592) and the currency derivative portfolio to MSEK 242 (–123). All derivatives are, as at previous year, classified in level 2 according to IFRS 13.

	Policy	Commitment	Outcome
Loan to value ratio	Not exceeding 50%	Not exceeding 65% 44%
Intererst coverage ratio	At least 200%	At least 150%	497%
The share of secured borrowing/total assets		Not exceeding 45% 10%
Funding risk
– average capital tied up	At least 2 years		4.0 years
– proportion maturing within 1 year	No more than 30% of outstanding loans and unutilized credit agreements		11%
– average maturing credit price	At least 1.5 years		3.2 years
– liquidity reserve	Secured credit agreements corresponding to MSEK 750 and 4.5 months upcoming loan maturities		Achieved
Interest rate risk
– average interest duration	1.5 – 3.5 years		3.2 years
– proportion maturing within 6 months	No more than 50%		32%
Credit and counterparty risk
– rating restriction	Credit institutions with high ratings, at least S&P BBB+		Achieved
Currency risk
– translation exposure	Net investment are hedged		Achived
– transaction exposure	Handled if exceeding MSEK 25		Achived

CASTELLUM'S FINANCIAL POLICY AND COMMITMENTS IN CREDIT AGREEMENTS

Condensed Consolidated Cash Flow Statement

MSEK	2020 Jan–March	2019 Jan–March	Rolling 12 months April 19–March 20	2019 Jan–Dec
Net operating income	1,038	977	4,174	4,113
Central adminstrative expenses	– 37	– 48	– 152	– 163
Reversed depreciations	23	9	78	64
Net interest rate paid	– 135	– 157	– 739	– 761
Tax paid	1	– 132	– 28	– 161
Translation difference of currencies	66	34	77	45
Cash flow from operating activities before change in working capital	956	683	3,410	3,137
Change in current receivables	– 275	– 250	– 190	– 165
Change in current liabilities	61	281	344	564
Cash flow from operating activities	742	714	3,564	3,536
Investments in new constructions, extensions and reconstructions	– 568	– 777	– 2,553	– 2,762
Property acquisitions	– 75	– 2,518	– 907	– 3,350
Change in liabilities at acquisitions of property	– 143	6	124	273
Property sales	–	4,021	117	4,138
Change in receivables at sales of property	– 23	– 497	635	161
Other investments	– 26	– 252	– 199	– 425
Cash flow from investment activities	– 835	– 17	– 2,783	–1,965
Change in long term interest-bearing iabilities	1,982	36	2,487	540
Change in long term other liabilities	–	–	– 307	– 307
Change in short term liabilities	–	8	–	8
Swap termination	–	–	– 215	– 215
Dividend paid	– 888	– 834	– 1,722	– 1,667
Cash flow from financing activities	1,094	– 790	243	– 1,641
Cash flow for the period/ year	1,001	– 93	1,024	– 70
Liquid assets opening balance	173	243	150	243
Liquid assets closing balance	1,174	150	1,174	173

The Parent company

Condensed Income statement MSEK	2020 Jan–March	2019 Jan–March	2019 Jan–Dec
Income	25	20	105
Operating expenses	– 56	– 58	– 222
Net financial items	22	9	13
Dividend/Group contribution	–	–	1,541
Change in derivatives	– 275	– 146	– 137
Impairment of shares in subsidiaries	–	–	202
Income before tax	– 284	– 175	1,502
Tax	6	7	2
Net income for the period/year	– 278	– 168	1,504
Comprehensive income for the parent company
Net income for the period/year	– 278	- 168	1,504
Items that will be reclassified into net income
Translation difference foreign operations	174	40	42
Unrealized change, currency hedge	– 221	– 24	– 21
Total net income for the period/year	– 325	152	1,525

Condensed Balance sheet MSEK	March 31 2020	March 31 2019	Dec 31 2019
Participations, group companies	20,159	19,888	20,147
Receivables, group companies	28,010	29,051	28,777
Other assets	12,874	9,420	11,048
Liquid assets	60	34	54
Total	61,103	58,393	60,026
Shareholders' equity	15,575	15,999	17,676
Derivatives	506	777	715
Interest bearing liabilities	41,302	36,548	38,065
Interest bearing liabilities, group companies	2,560	4,014	3,346
Other liabilities	1,160	1,055	224
Total	61,103	58,393	60,026
Pledged assets (receivables group contributions)	16,427	17,401	17,343
Contingent liability (guaranteed commitments for subsidiaries)	2,238	3,622	2,538

Opportunities and Risks for Group and Parent company

Opportunities and risks in the cash flow

Risk and uncertainty factors regarding cash flow from ongoing operations is mainly attributable to changes in rental levels, vacancies and interest rates. The sensivity analysis below shows how much 1%-units in change affects cash flow next 12 months.

SENSITIVITY ANALYSIS – CASH FLOW

Effect on income next 12 months
	Effect on income, MSEK +/– 1% (units)	Boom	Probable scenario Recession
Rental level/index	+58/–58	+	–
Vacancies	+63/–63	+	–
Property costs	–16/+16	–	0
Interest costs*	–108/89	0	–

*The assymmetry is due to the fact that at present, Castellum deems the opportunities for fully including negative market rates to be limited.

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	–19 252	–9 626	–	9 626	19 252
Loan to value ratio	55%	49%	44%	40%	37%

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.

Sustainability

With sustainability risks Castellum refers to risks that are directly or indirectly connected with environmental risks, climate changes, code of conduct and responsibility risks.

For more detailed information about Risks and uncertainties visit Castellum's website or Castellum's Annual Report 2019, "Risk and Risk management" on pages 110–121.

The COVID-19 coronavirus

Castellum's customer structure has a healthy spread. 23% of revenue comes from government authorities and agencies, which is a stable and secure customer group with a long duration in our portfolio. It is also a customer group that is less dependent on the business cycle or crises. Exposure to the industries that are currently most affected – hotels, restaurants, and retail – is low, but there are customers in these segments that are requesting deferments of rent payments. Here, Castellum is finalizing individual agreements where the transition from quarterly to monthly payments is the most frequent solution. As regards the rents for Q2, agreements totaling MSEK 58 – corresponding to 4% of total revenue – have been signed, the majority of which are transitions to monthly rent. These customer are partally found in the industries covered by state support for rent discounts, the purpose of which is to provide businesses in vulnerable industries a reduction of 50% in the rent for Q2 – the state paying for one half and the property owner for the other. However, Castellum is waiting for more

clarity and information on how the government's proposal will work in practice.

Our projects are progressing according to plan. We have received a few reports of obstacles, which are however more of a general character and currently involve no tangible delays.

We are experiencing a cautious transaction market as a result of the difficulties in foreseeing the long-term consequences COVID-19 may have.

Castellum has strong financial muscle, with unutilized credit facilities and liquid assets totaling SEK 14 billion, which will easily cover all maturities in 2020 and well into 2021 while there is space to meet the needs of operations. Castellum's credit maturity structure for the remainder of 2020 consists of MSEK 4,398 in commercial paper and MSEK 1,575 in bonds.

With a strong balance sheet, financial resources in place and a dedicated organization that is able to act, Castellum is in a strong starting position for managing this crisis.

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, whichare not defined according to the IFRS. Definitions for these measures appear on the page 24.

	Jan–March 2020	Jan–March 2019	Rolling 12 months April 19– March 20	Jan–Dec 2019
Average number of shares, thousand (related to financial key ratios)	273,201	273,201	273,201	273,201
Outstanding nu,ber of shares, thousand (related to balance sheet ratios)	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.

	Jan–March 2020 Jan–March 2019			Rolling 12 months April 19– March 20		Jan–Dec 2019
		MSEK SEK/share		MSEK SEK/share		MSEK SEK/share		MSEK SEK/share
Income before tax	630	2.31	1,115	4.08	6,280	22.99	6,765	24.76
Reversed:
Transaction and restructuring costs	–	–	–	–	9	0.03	9	0.03
Goodwill, write-down	–	–	179	0.66	–	–	179	0.66
Changes in value, properties	– 3	– 0.01	– 689	– 2.52	– 3,242	– 11.83	– 3,918	–14.34
Changes in value, derivatives	167	0.61	121	0,44	157	0.57	111	0.41
= Income from property management	794	2.91	726	2.66	3,214	11.76	3,146	11.52
EPRA Earnings (Income from property management after tax)
Income from property management	794	2.91	726	2.66	3,214	11.76	3,146	11.52
Reveresed; Current tax income from property management	– 70	– 0.26	– 84	– 0.31	– 279	– 1.02	– 293	– 1.08
EPRA Earnings / EPRA EPS	724	2.65	642	2.35	2,935	10.74	2,853	10.44

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 in different ways, where mainly time and turnover in the portfolio has impact on the value. Long term net asset value, so called EPRA NRV, 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. Net asset value EPRA NTA is the same as EPRA NRV but with the differences that goodwill that are not attributal to deferred taxes are not seen as an asset. Furthermore the deferred tax should be based on market value according to how the company has made transactions the last years. Net asset value EPRA NDV is equal to equity according to the balance sheet but with adjustment for goodwill.

		March 31, 2020	March 31, 2019				Dec 31, 2019
		MSEK SEK/share		MSEK SEK/share			MSEK SEK/share
Equity according to the balance sheet	42,623	156	39,457	144	43,777		160
Reversed:
Declared, undistributed dividend	888	3	833	3
Derivatives according to balance sheet	506	2	777	3		715	3
Goodwill according to balance sheet	– 1,480	– 5	– 1,480	– 5	– 1,480		– 5
Deferred tax according to balance sheet	10,279	37	8,936	33	10,153		37
Net asset value, EPRA NRV	52,816	193	48,523	178	53,165		195
Deduction:
Goodwill due to aquisition of United Spaces	– 211	– 1	– 223	– 1		– 211	– 1
Estimated real liability, deferred tax 4%*	– 1,981	– 7	– 1,849	–7	– 1,925		– 7
Net asset value, EPRA NTA	50,624	185	46,451	170	51,029		187
Reversed:
Derivatives according to above	– 506	– 2	– 777	– 3		– 715	– 3
Deferred tax	– 8,298	– 30	– 7,310	–27	– 8,228		– 30
Net asset value, EPRA NTA	41,820		153 38,364	140	42,086		154

* Estimated real deferred tax liability net has been calculated to 4% based on a discount rate of 3%. Further, assessments have been made that tax loss carry forwards are realized in 2020 and that the properties are realized in 50 years 100% are sold indirect through company disposals where the buyers tax discount is 7%.

Cont. Financial Key Ratios

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%. Furthermore, ned debt to EBIDTA that expresses how many years it takes for a company to repay its interestbearing debt, is an important financial risk metric.

Interest coverage ratio	Jan–March 2020	Jan–March 2019	Rolling 12 months April 19– March 20	Jan–Dec 2019
Income from property management	794	726	3,214	3,146
Reversed;
Net interest	200	199	783	782
Income from property management excl. net interest	994	925	3,997	3,928
Interest coverage ratio	497%	465%	510%	502 %
Loan to value ratio	March 31, 2020	March 31, 2019		Dec 31, 2018
Interest-bearing liabilities	43,544	40,566		40,358
Liquid assets	– 1 174	– 150		– 243
Net interest-bearing liabilities net	42,370	40,416		40,115
Investment properties	96,262	89,231		89,168
Acquired properties not taken into possession	– 161	– 37		– 31
Divested properties still in Castellum's possession	27	661		164
Net investment properties	96,128	89,855		89,301
Loan to value ratio	44%	45%		45%
Net debt to EBIDTA	March 31, 2020	March 31, 2019	Rolling 12 months April 19– March 20	Dec 31, 2018
Interest-bearing liabilities	43,544	40,566	43,544	40,826
Liquid assets	– 1,174	– 150	– 1,174	– 173
Net interest-bearing liabilities net	42,370	40,416	42,370	40,653
Net operating income	1,038	977	4,174	4,113
Central administrative expenses	– 37	– 48	– 152	– 163
Operating income	1,001	929	4,022	3,950
Net debt to EBIDTA	11	11	11	10

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.

Net investments	Jan–March 2020	Jan–March 2019	Rolling 12 months April 19– March 20	Jan–Dec 2019
Acquisitions	75	2,518	907	3,350
New constructions, extensions and reconstructions	568	777	2,553	2,762
Total investments	643	3,295	3,460	6,112
Net sales prices	–	– 4,021	– 117	– 4,138
Net investments	643	– 726	3,343	1,974
Proportion of the property value, %	1%	– 1%	4%	2%

Other Financial Key Ratios

	Jan–March 2020	Jan–March 2019	Rolling 12 months April 19– March 20	Jan–Dec 2019
Net operating income margin	72%	69%	73%	72 %
Interest rate level, on average	2.0%	2.1%	2.0%	2,0 %
Return on long term net asset value	11	11	11	10
Return on actual net asset value	4.1%	9,5%	12.6%	12,6 %
Return on total capital	4.0%	7.0%	7.6%	8.4 %
Return on equity	4.5%	13.5%	12.4%	14.5 %
Property value, SEK/share	352	327	352	348
Gross leasing	185	87	509	411
Net leasing	99	– 7	82	– 24

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.

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

Events after the reporting period

Nothing essential has happened after the reporting period.

Gothenburg April 24, 2020

Henrik Saxborn Chief Executive Offi cer, Castellum AB (publ)

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 CET on Friday April 24, 2020.

The Castellum share

The Castellum share is listed on Nasdaq Stockholm Large Cap. At the end of the period the company had approx. 65,000 shareholders. The ten individual largest owner constellations confirmed as of March 31, 2020 are presented in the table below.

SHAREHOLDERS 03-31-2020

Shareholders	Number of shares, thousand	Percentage of voting rights and capital
Rutger Arnhult	34,301	12.6%
APG Asset Management	16,498	6.0%
BlackRock	12,789	4.7%
PGGM Pensioenfonds	9,353	3.4%
Vanguard	9,031	3.3%
Szombatfalvy-sfären	7,884	2.9%
AMF Försäkring & Fonder	6,769	2.5%
Lannebo Fonder	5,849	2.1%
SHB Fonder & Liv	5,388	2.0%
Norges Bank	3,380	1.2%
Board and Executive Management Castellum	181	0.1%
Other shareholders registered in Sweden	65,752	24.1%
Shareholders registered abroad	96,026	35.1%
Total registered shares	273,201	100,0%

There is no potential common stock (eg. convertibles)

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

The Castellum share price as of March 31, 2020 was SEK 168 (180.35) equivalent to a market capitalization of SEK 45.9 billion (49.3), calculated on the number of outstanding shares.

Since the beginning of the year a total of 83 million (80) shares were traded, equivalent to an average of 1,314,000 shares (1,271,000) per day, corresponding on an annual basis to a turnover rate of 120% (116%). 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 NRV, can be calculated to SEK 193 per share (178). The share price at the end of the year was thus 87% (99%) of the long term net asset value.

Earnings

Income from property management adjusted for tax attributable to income from property management (EPRA EPS) amounted to SEK 10.74 (9.73) on rolling annual basis. This results in a share price return of 6.4% (5.4%) corresponding to a multiple of 16 (19). 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 17.54 per share (29.39), which from the share price gives a yield of 10.4% (16.3%), corresponding to P/E of 10 (6).

Dividend yield

The recent AGM approved dividend of SEK 6.50 (6.10) corresponds to a return of 3.9% (3.3%) based on the share price at the end of the period. Of the dividend, SEK 3.25 has been issued in March and the remainder will be paid out in September.

Total share yield

During the last 12-month period the total return of the Castellum share has been –3.4% (36.6%), 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

–1%-unit +1%-unit
3,214 3,214
2.3% 4.3%
2,052 3,837
– 298 – 298
4,968 6,753
18.18 24.72
8.6% 11.5%
10.8% 14.7%
9 7

EPRA KEY RATIOS
	March 31, 2020	March 31, 2019	Dec 31, 2019
EPRA Earnings (Income from prop erty mgmt after tax), MSEK	724	642	2,853
EPRA Earnings (EPS), SEK/share	2.65	2.35	10,44
EPRA NRV, MSEK	52,816	48,523	53,165
EPRA NRV, SEK/share	193	178	195
EPRA NTA, MSEK	50,624	46,674	51,029
EPRA NTA, SEK/share	185	171	187
EPRA NDV, MSEK	41,820	38,587	42,086
EPRA NDV, SEK/share	153	141	154
EPRA Vacancy rate	8%	7%	7%
EPRA Cost ratio, incl costs for vacancy	26%	30%	26%
EPRA Cost ratio, exkl. costs for vacancy	25%	28%	24%
EPRA Return	5%	4.9%	5%
EPRA "Topped-up" Yield	5.1%	5%	5.2%

GROWTH, YIELD AND FINACNCIAL RISK 1 year 3 years average/ year 10 years average/ year Growth Rental income SEK/share 2% 3% 4% Income from property mgmt SEK/share 7% 10% 7% Net income for the year after tax SEK/share neg. neg. 21% Dividend SEK/share 7% 9% 8% Long term net asset value SEK/share 8% 13% 11% Real estate portfolio SEK/share 8% 9% 8% Change in property value 6.8% 5.8% 2.7% Return Return on actual long term net asset value 12.6% 19.2% 14.9% Return on actual net asset value 12.4% 21.2% 16.8% Return on total capital 7.6% 10.2% 8.2% Total return of the share (incl. dividend) Castellum –3.4% 16.4% 14.4% Nasdaq Stockholm (SIX Return) –2.4% 2.8% 9.3% Real Estate Index Sweden (EPRA) 0.4% 17.2% 16.7% Real Estate Index Europe (EPRA) –15.3% –0.2% 7.7% Real Estate Index Eurozone (EPRA) –20.0% –1.3% 6.7% Real Estate Index Great Britain (EPRA) –14.7% –3.0% 6.1% Financial risk Loan to value ratio 44% 45% 49%

Interest coverage ratio 510% 452% 358%

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 MARCH 31, 2020

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 return 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 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.

Net debt to EBIDTA

Interest bearing liabilities with decution of liquid assets in relation to net operating income after decution of central administrative expenses.

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 occuring 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

Half-year report January – June 2020 15-July-20 Interim report January – September 2019 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, phone +46 31 60 74 50 or Ulrika Danielsson, CFO, phone +46 706 47 12 61.

About Castellum

Castellum is one of the largest listed real estate companies in Sweden. Property values total SEK 95.2 billion and holdings comprise office, warehousing/ logistics and public-sector properties, covering a total leasable area of 4.3 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 17 cities in Sweden, as well as Copenhagen and Helsinki. Castellum is ranked as the most equal of 600 listed European companies by European Women on Boards 2020. 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. 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). The Castellum share is listed on Nasdaq Stockholm Large Cap.

Castellum's AGM 2020

CASTELLUM INTERIM REPORT JANUARY-MARCH 2020

At the Annual General Meeting on March 19, 2020 decisions were i.e. made on;

• a dividend of SEK 6.50 per share, distributed to the shareholders in two equal payments of SEK 3.25 per share. Record days for the dividend: Monday March 23, 2020 for the first payment and Monday September 21, 2020 for the second payment,
• re-election of present members of the Board of Directors; Mrs. Charlotte Strömberg, Mr. Per Berggren, Mrs. Anna-Karin Hatt, Mr. Christer Jacobson, Mrs. Christina Karlsson Kazeem and Mrs. Nina Linander and Zdravko Markovski and Joacim Sjöberg were elected as new members of the Board of Directors. Mrs. Charlotte Strömberg was re-elected as Chairman of the Board of Directors,
• that the level of renumeration to the members of the Board of Directors shall be SEK 4,640,000 in total,
• to elect Deloitte as auditor in the company for the period until the end of the AGM 2021,
• to appoint a new election committee for the AGM 2021 according to the Election Committees' proposal,
• The AGM adopted the Board of Directors' proposal regarding the guidelines for remuneration to the executive management.
• a mandate for the Board to resolve on new share issues and a mandate to decide on acquisition and transfer of the company's own shares.

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