Castellum — Interim / Quarterly Report 2019

Jan 24, 2020

YEAR-END REPORT 2019

7 % growth in income from property management and proposed increased dividend for the 22nd consecutive year.

• Income for 2019 amounted to MSEK 5,821 (MSEK 5,577 previous year).
• Income from property managemenet amounted to MSEK 3,146 (2,952), corresponding to SEK 11.52 (10.81) per share, an increase of 7 %.
• Changes in value on properties amounted to MSEK 3,918 (5,216) and on derivatives to MSEK -111 (152).
• Net income after tax for the year amounted to MSEK 5,650 (7,453), corresponding to SEK 20.68 (27.28) per share.
• Long term net asset value (EPRA NAV) amounted to SEK 195 (176) per share, an increase of 11 %.
• Net investments amounted to MSEK 1,974 (2,657) of which MSEK 3,350 (2,455) pertained acquisitions, MSEK 2,762 (2,837) new developments, extensions and redevelopment and MSEK 4,138 (2,635) to sales. Property value amounted to SEK 95.2 billion by the end of the year.
• Net leasing for the year was MSEK 24 (161).
• The Board proposes an increased dividend for the 22nd consecutive year of SEK 6.50 (6.10) per share, equivalent to an increase of 7 %, distibuted in two equal payments of SEK 3.25.

Important events during the quarter

Castellum acquires properties in central Västerås

Castellum has acquired two office properties in central Västerås. Possession was taken on December 18, 2019 and January 9, 2020, respectively.

The acquisition covered two office properties with a total leasable area of approximately 7,551 square meters. The acquisition price is MSEK 215. The acquisition also included unutilized development rights valued at MSEK 5.

Castellum invests in Helsingborg

Castellum began the construction of the 7,000-square-meter GreenHaus office property in the new Oceanhamnen district of Helsingborg. The total investment for the project, including land acquisition, is estimated at MSEK 305.

In conjunction with GreenHaus opening its doors, the Castellum-owned company United Space will offer individuals and businesses the opportunity for co-working on one of the floors of the building.

Castellum finalizes the acquisition of Säve airport

Castellum and Serneke came to an agreement that Castellum would fulfill its commitment, ahead of schedule, to disbursing the earn-out for Säve airport through a one-time payment of MSEK 300. In addition to full right of disposition over the area, this will provide Castellum with the possibility of substantial time savings in its development of one of the Nordic region's largest, most modern and innovative logistics hubs.

KEY METRICS	2019 Oct–Dec	2018 Oct–Dec	2019 Jan–Dec	2018 Jan–Dec
Income, MSEK	1,478	1,436	5,821	5,577
Net operating income, MSEK	1,011	980	4,113	3,945
Income of property management, MSEK	766	733	3,146	2,952
D:o SEK/share	2.80	2.68	11.52	10.81
D:o growth	+ 4 %	+ 28 %	+ 7 %	+ 17 %
Net income after tax, MSEK	2,013	2,402	5,650	7,453
Net investments, MSEK	1 ,233	– 352	1 ,974	2,657
Net leasing, MSEK	–	–	6.50	6.10
Dividend, SEK/share (proposed)	–	–	7 %	15 %
D:o growth	14	4	– 24	161
Loan-to-value ratio	43 %	45 %	43 %	45 %
Interest coverage ratio	512 %	463 %	502 %	454 %
Long term net asset value (EPRA NAV) SEK/share	195	176	195	176
Actual net asset value (EPRA NNNAV) SEK/share	180	162	180	162

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

A golden decade!

Here, at the start of a new decade, a look at our company from a somewhat wider perspective than usual may be appropriate – in particular, since Castellum's objectives and operations are long-term in nature. It is easy to state that the past ten years were a golden decade for both Castellum and the property industry as a whole:

CASTELLUM		2009	2019	Growth ( %/a)
Property value	MSEK	29,267	95,168	13 %
LTV ratio		51 %	43 %	–
Income from prop. mgmt	SEK/share	5.98	11.52	7 %
Net asset value	SEK/share	71	195	11 %
Dividend	SEK/share	3.12	6.5*	8 %
Share price	SEK/share	63	222	18 %

* Board of Directors' proposal to the AGM

In short, this table shows that the Castellum share returned a total yield of 18 % on average over a period when the average 5 year swap-interest rate was 1.2 % and the average inflation was 1.1 %.

Major changes over time

The figures are excellent – but they don't show how Castellum fundamentally changed in the 2010s as regards geographies, segment consolidation and areas of operation. In 2009, for example, Stockholm made up only 18% of our property portfolio, compared to today's 30 %. We had hardly any public sector properties ten years ago, but today they make up 23 % of the value in our property portfolio. Stores and shopping centers have gone in the other direction. In 2009, they were 24 % of the portfolio. Now they are only 8 %. Castellum's logistics initiatives have led to us currently holding one of Sweden's largest logistics portfolios. Moreover, we have an entirely new business area: Co-working. Here, the acquisition of United Spaces gave us a flying start with growing, profitable operations from the first year, which is unusual in this sector. United Spaces will also impact the development of our other operations, with continually expanding service content often based on our proprietary digital software.

Long-term ambitions

What are our long-term ambitions for the 2020s? I anticipate a continued systematic shift of our portfolio toward increased density, even in micro-areas. Since at present it is difficult to find objects with a high yield, project operations will constitute a growing element. For example, the development of Säve – which is now being resolutely expedited after the buyout of Serneke – will entail investment plans of approximately SEK 10 billion over the period. Services together with related services that bring us closer to individual people – the end customers – will definitely also increase in significance.

We have imposed a tough sustainability goal on ourselves for the 2020s: By 2030, Castellum will be fully climate-neutral – including our entire value chain as well as projects, their subcontractors and materials. These represent 98% of our emissions and are the toughest challenge for the industry as a whole, as it is for Castellum. Moreover, we have a sustainability agenda: "The Sustainable City," with 16 interim goals that build on the

UN Sustainable Development Goals. Our solar cell initiative, the "100 på sol" (100 on Sun) project, has already been inaugurated. It involves the construction of 100 solar cell parks on our properties. This work could have been far more extensive if the current taxation rules had not put obstacles in our way.

At present, we are far from having all the solutions to becoming climate neutral by 2030. But we know that ambitious goals drive innovation. And we know that sustainability is also a prerequisite for sustainable long-term growth and profitability!

Continued growth

Castellum will continue to grow. We will work further on our ambitious target of 10 % growth in income from property management, measured in SEK per share. But it goes without saying that if, ten years from now, we find ourselves in a landscape dominated by low interest rates and inflation as well as further reduced required yields, this target will be impossible to reach every year.

For the foreseeable future, I see the market we are in remaining strong, with continued stable rental growth. I also see Castellum standing strong in this market. We have never had a larger development portfolio. Our management organization has been markedly reinforced over the past few years. And our financial position has never been better, which now permits an extended duration of our credit portfolio.

I am therefore looking forward to the new decade with optimism, and I am convinced that the 2020s will also be successful for Castellum.

Gothenburg, January 24, 2020

Henrik Saxborn Chief Executive Officer

Also in 2019 many good things happened! What I chiefly have in mind:

• We renegotiated rents upward by an average of 22 % to a total value of MSEK 140, and growth in rental value was 4.4 %
• Efficiency enhancements have yielded results, with a decrease of MSEK 60 in the cost base
• The rating we received enabled us to raise a 7-year Eurobond loan of MEUR 400 at a fixed coupon rate in EUR of 0.75 %.
• Net asset value increased from SEK 176 to SEK 195 per share
• Our LTV ratio decreased further to 43 %
• And our dividend increased for the 22nd consecutive year, by 7 % to SEK 6.50

Read more in the report.

Business focus 2019 and sustainability

Customer-oriented business

Through local organizations close to the customer, Castellum makes business decisions right where operations take place, thereby offering customers shorter decision-making processes and prompt responses — facilitating everyday life. We know that business is conducted between people and in dialogue with customers, we create customized solutions that increase well-being, efficiency, profitability and job satisfaction. That's how we get cities, vast development areas and tenants to flourish – and always, by focusing on the people.

Castellum shall offer existing and potential customers the best and most appropriate premises possible, and we are to position ourselves as an innovative and sustainable player. A clear customer focus is obtained through long-term relationships and service that consistently exceeds customer expectations.

Every year, a Satisfied Customer Index Survey is carried out. In the latest survey, conducted in the autumn of 2018, Castellum continued to enjoy consistently high ratings with a weighted index of 77 on a scale of 100. The industry benchmark index for offices amounts to 73 on the same scale.

High leasing activity

During the year, Castellum still experienced high leasing activity, resulting in the signing of 648 (780) new leases for a total annual value of MSEK 411 (408).

Responsible business

Castellum's sustainability efforts are all about conducting ope-

rations in a responsible manner and creating long-term solutions from economic, ecological and social perspectives. Sustainability efforts have long been a natural part of business operations at Castellum. Over the years, the company's ambitious goals have contributed to sustainability gains for both tenants and the environment. Well-integrated sustainability efforts contribute to increased social value as well as to better management and monitoring of the company's properties.

Castellum's agenda for "The Sustainable City" consists of a number of ongoing goals on an annual basis and a number of milestones to be reached by 2030.

Castellum owns the largest number of environmentally certified buildings among the listed real estate companies in Sweden and Castellum's buildings are 51 % more energy efficient than the Swedish benchmark for premises. Out of the real estate portfolio 164 properties, equivalent to 36 % of the area, are certified according to Green Building, Miljöbyggnad, BREEAM or LEED. Certification is underway for another 2% of the portfolio.

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

	CASTELLUM'S SUSTAINABILITY AGENDA: THE SUSTAINABLE CITY TARGETS AND OUTCOME 2019
Focus area	Target	Outcome
	1 % water conservation per year in the like-for-like portfolio.	3 % water conservation in the like-for-like portfolio.
	15 % in energy savings per sq.m. to 2025 compared with the index 2015 and energy savings per sq.m. of > 1.5 % yearly in the like-for-like portfolio.	8 % energy savings compared with 2015 and a 8 % decrease in the like-for-like portfolio.
The planet	100 % fossil-independent vehicles by 2020.	86 % fossil-independent vehicles.
	Net-zero carbon dioxide emissions and 100 % non-fossil energy by 2030.	77 % lower carbon dioxide emissions in scope 1 and 2 since 2007. 96 % non fossil energy. Castellum's total emissions incl scope 3 will be described in the annual report 2019.
	50 % of the real-estate portfolio in sq.m. will be environmentally certified in 2025.	36 % is environmentally certified and certification is underway for another 2 %. Castellum owns the largest number of environmentally certified buildings among the Swedish listed real estate companies.
Future proofing	All new constructions and larger reconstructions shall be environmentally certified. Miljöbyggnad level Gold is applicable for new- or reconstruction of office and retail premises.	Achieved.
Eco-system services will be evaluated for new constructions and major developments and at least as many eco-system services - or more - will be recreated on site.	Achieved.
Well-being	Equality among all occupational categories by 2025.	Executive management team: 50 % women, 50 % men Regional management teams: 34 % women, 66 % men Property management/customer relations: 28 % women, 72 % men Business- and project development: 35 % women, 65 % men Support functions: 63 % women, 37 % men Managers: 41 % women, 59 % men
	< 2 % short-term sick leave.	1 % short-term sick leave
	< 3 % long-term sick leave.	2 % long-term sick leave
	By 2025, 20 % of Castellum's employees are to have international backgrounds to more closely reflect the composition of society.	6 % of Castellum's employees has international background.
Social respon	4 % of the Castellum workforce are to be apprentices; incentives offered to major-development entrepreneurs who create work opportunities for young people.	A total of 84 young people had internship or holiday work. 22 of those were apprentices equivalent to approx. 5 % of Castellum's work force, of which 7 were created through development projects.
sibility	All of the employees to undergo training in and follow the Code of Conduct.	All employees has been trained in the Conde of Conduct via an e-learning.

Market comments

Swedish, Danish and Finnish economy

The Swedish economy remains stable, with marginally lower growth. For 2019, the Riksbank estimates that Swedish GDP grew 1.1. For 2020, it is estimated that the GDP will grow 1.2 %, and thereafter grow more markedly by 1.7 % and 1.9 % in 2021 and 2022 respectively. (Riksbanken, Dec. 2019) The rate of growth in household consumption is deemed to have declined to approximately 1 % in 2019, and will increase again to approximately 2 % in the period 2020–2022. It is estimated that public consumption will grow by approximately 1 % annually from 2020 to 2022. Exports performed well in 2019 according to the Riksbank, but is predicted to grow more slowly, around 3 % from 2020 to 2022. It is estimated that investments will increase somewhat, primarily in 2021 and 2022, which will have a positive impact. However, uncertainty is significant in the light of continued geopolitical unrest.

Swedish job market statistics showed deficiencies in 2019, which produced some uncertainty about unemployment levels. According to the Riksbank, however, it is expected to have increased from 6.3 % in 2018 to 6.8 % in 2019. A continued upswing to just over 7 % is expected in 2022. Inflation (CPIF) is expected to have fallen slightly to 1.7 % in 2019. According to the Riksbank, it will remain around this level in 2020 and 2021. Development of the Swedish krona exchange rate plays a key role for inflation in Sweden, as a weak exchange rate normally contributes to higher inflation. The Swedish krona weakened (KIX index) relatively drastically in 2018, and through 2019 remained weak at a level last noted in early 2009, despite a small amount of recovery at the end of the year. According to Danmarks Nationalbank (September 2019), growth in the Danish GDP was deemed to have peaked at +1.8 % in 2019, and thereafter to shrink

slightly to approximately + 1.5 % per year in 2020–2021. Exports in 2019 are judged to have boosted GDP while private consumption fell slightly compared to 2018. Over the next two years, households are expected to increase consumption again while exports will fall slightly. Inflation in Denmark — expressed in terms of the harmonized consumer price index (HICP) — was deemed to be around 0.8 % in 2019, and will then rise to approximately 1 % in 2020 and 1.5 % in 2021.

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

MACRO INDICATORS – SWEDEN
Unemployment	6.9%	(Nov 2019)
Inflation	1.8%	(Dec 2019 compared with Dec 2018)
GDP growth	0.3%	(Q3 2019 compared with Q2 2019)

Source: Statistics Sweden

Rental market

The rental market in Castellum's submarkets in Sweden remained strong in 2019. High demand for and low supply of office space resulted in vacancy rates remaining low as well as strong rental growth. According to Newsec, the average rent in the CBDs of Stockholm, Gothenburg and Malmö increased approximately 7 %, 4 % and 4 %, respectively, year-on-year. Top rents performed even more strongly.

GreenHaus

Late in the autumn of 2019, Castellum began the construction of GreenHaus, a modern 7,000-square-meter office building, in the new Oceanhamnendistrict of central Helsingborg. The building is expected to be completed in the spring of 2022 and certified under WELL, the only construction standard that takes the wellness of people in their work life into consideration. The WELL concept is an international construction standard developed by researchers, medical professionals and architects. People who work in this type of building have better conditions for being healthier and more inventive as well as better performance.

The building is 31% leased and will also contain co-working operations through United Spaces, a co-working company owned by Castellum.

The total investment for the project, including land acquisition, is estimated at MSEK 305.

Rising rental levels have been noted in Stockholm and Gothenburg as a result of continued record low vacancy rates in the CBDs and the most attractive submarkets. In 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 regional cities, the growth in office rents in general continued to increase in 2019. Increased demand was noted in the rental market for office space intended for co-working, above all in Stockholm, but also in Gothenburg and Malmö.

The rental levels for offices in the Helsinki CBD continued to increase in 2019, up 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 are still high vacancy rates in secondary areas, as well as in properties of lower quality. In Copenhagen, rents in the CBD increased approximately 2 – 3 % in 2019. Modern offices in attractive locations in Copenhagen are pushing rents upward. The high level of access to land and development rights in and around the city, however, is a limiting factor for rent potential.

The rental market in Sweden for warehouses/logistics spaces is positive, with rising rents in prime logistics locations, particularly in semi-central locations with good means of transportation and sorting yards ('last-mile' locations). This is driven by 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).

Property market

For 2019, the volume of transactions over MSEK 40 in the transaction market in Sweden totalled around SEK 218 billion (157) based on 447 transactions (433). The volume for 2019 means that the previous record quotation of SEK 201 billion from 2016 has been broken, driven primarily by an increased share of large transactions.

The mood among investors in the Swedish property market is positive, with a lower required yield as a result, which is felt to depend on the expectation of low interest rates in the foreseeable future, as well as trends in the rental market remaining positive. The share of foreign investors during 2019 was approximately 30 %, which is a historic high. A weak Swedish krona in combination with a great deal of liquidity on the global capital market could explain an increased influx of foreign capital into the Swedish property market.

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

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

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

The transaction volume in the Danish property market in 2019 totaled approximately DKK 52 billion (approximately DKK 69 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 remains stable at 3.75 %.

In Finland, the transaction volume in the Finnish property market totaled approximately EUR 6.6 billion in 2019 (approximately EUR 9.4 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 level with Stockholm. Increased investor interest has been noted for secondary and development properties as well.

Interest and credit market

In December 2019, Sweden's Riksbank raised the repo interest rate from – 0.25 % to zero. The raise was expected based on the Riksbank's communication in late autumn, if not entirely logical given the Riksbank's earlier views on the impact of inflation on the repo rate. The Riksbank's new repo-rate path (Dec 2019) indicates that the repo rate will remain at zero until 2022. Swedish long-term interest rates fell drastically in 2019 to early autumn, when they bottomed out and subsequently trended upward again. To date, however, the upswing has not been greater than, for example, the 5-year swap rate standing approximately ten points lower on the last day of the year than at the beginning of 2019. Current levels remain historically very low.

The STIBOR 3 months rose gradually in the fourth quarter, in pace with the market having discounted a raise in the repo rate. At the end of 2019, the STIBOR 3 months was + 0.15 %, compared with – 0.1 % at the end of Q3 and – 0.15 % at the end of 2018. In all, the yield curve was somewhat steeper in the fourth quarter compared with the end of Q3, but is still shallower than at the beginning of the year. The availability of financing in the Swedish capital market gradually improved during the year up to the end of the fourth quarter, when demand decreased somewhat.

In 2019, Castellum also utilized the EUR market and the Norwegian market to finance long-term bonds. The credit margins, which rose drastically in the fourth quarter of 2018, fell considerably in the spring of 2019 and stabilized at lower levels at the end of the year.

The credit spreads for Castellum fell somewhat more in the euro market than in the Swedish krona market in 2019.

In Denmark, the CIBOR 3 months interest rate in 2019 was relatively stable at between – 0.40 % and – 0.45 %, which also applied to the Finland/Euribor 3 months.

Condensed consolidated statement of comprehensive Income

MSEK		2019 Oct–Dec	2018 Oct–Dec	2019 Jan-Dec	2018 Jan–Dec
Rental income		1,331	1,323	5,265	5,185
Service income		114	113	452	392
Income coworking		33	–	104	–
Income	note 2	1 ,478	1,436	5 ,821	5,577
Operating expenses	note 3	– 192	– 213	– 711	– 753
Maintenance	note 3	–47	– 51	– 157	– 167
Ground rent		–	– 5	–	– 23
Property tax	note 3	– 92	– 84	– 367	– 315
Coworking expenses	note 3	– 29	–	– 99	–
Leasing and property administration	note 3	– 107	– 103	– 374	– 374
Net operating income		1 ,011	980	4,113	3,945
Central administrative expenses	note 3	– 44	– 45	– 163	– 158
Acquisition costs		–	–	– 9	–
Net financial items	note 4	–
Net interest costs		– 195	– 202	– 782	– 835
Leasing costs/Ground rent		– 6	–	– 22	–
Income from property management including acquisition costs*	note 1	766	733	3,137	2,952
Income from property management		766	733	3 ,146	2,952
Goodwill, depreciation	note 8	–	–	– 179	–
Changes in value	note 5
Properties		1,413	2,066	3,918	5,216
Derivatives		306	– 50	– 111	152
Income before tax		2 ,485	2,749	6,765	8,320
Current tax	note 6	48	– 72	– 165	– 74
Deferred tax	note 6	– 520	– 275	– 950	– 793
Net income for the period/year		2,013	2,402	5,650	7,453
Other total net income
Items that can be reclassified into net income
Translation difference of currencies		– 174	– 27	92	151
Changes in value on derivatives, currency hedge		163	3	–47	– 143
Total net income for the period/year**		2,002	2,378	5,695	7,461
Average number of shares, thousand		273,201	273,201	273,201	273,201
Income, SEK/share		7.37	8.79	20.68	27.28

* For calculation, Financial Key ratios, page 24.

** 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 25.

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

Performance analysis, Jan–Dec 2019

NOTE 1 Income from property management

Income from property management, i.e. net income excluding transaction and restructuring costs, changes in value and tax for the year amounted to MSEK 3,146 (2,952), equivalent to SEK 11.52 (10.81) per share – an increase of 7 %. During the year, changes in value on properties amounted to MSEK 3,918 (5,216) and on derivatives to MSEK – 111 (152). Net income after tax for the year was MSEK 5,650 (7,453), equivalent to SEK 20.68 (27.28) per share.

SEGMENT INFORMATION
	Income			Income from prop.mgmt
MSEK	2019 Jan–Dec	2018 Jan–Dec	2019 Jan–Dec	2018 Jan–Dec
Central	1,504	1,408	815	712
West	1,328	1,227	749	665
Öresund	1,176	1,122	665	602
Stockholm–North	1,651	1,795	1 008	1 012
Finland	58	25	22	10
Coworking	104	–	1	–
Total	5,821	5,577	3,260 3,001

The difference between the income from property management of MSEK 3,260 (3,001) above and the Group's accounted income before tax of MSEK 6,765 (8,320) consists of unallocated income from property management of MSEK – 114 (– 49), acquisition costs of MSEK 9 (–) write-down goodwill of MSEK 179 (–), changes in property value of MSEK 3,918 (5,216) and changes in values of derivatives of MSEK – 111 (152).

NOTE 2 Income

The Group's income amounted to MSEK 5,821 (5,577) and the average occupancy rate was 92.6 % (93.2 %) including discounts of MSEK 90 (87). This also includes a lump sum of MSEK 16 (14) as a result of early termination of leases. Furthermore Castellum aquired the co-working company United Spaces 2019, which has contributed with revenue of 104 MSEK.

DEVELOPMENT OF INCOME MSEK ²⁰¹⁹ Jan–Dec ²⁰¹⁸ Jan–Dec Change, % Like-for-like holdings 5,047 4,832 4.4 % Development properties 301 172 Transaction 369 573 Coworking 104 – Income 5,821 5,577 4.4 %

The 4% increase in the like-for-like portfolio pertained primarily to higher rental levels, to which increased property tax contributed approximately 0,8 percentage point. Gross leasing (i.e. the annual value of total leasing) during the period was MSEK 411 (408), of which MSEK 56 (109) is related to leasing of new constructions, extensions and reconstructions. Notices of termination amounted to MSEK 435 (247), of which bankruptcies were MSEK 16 (11) and MSEK 18 (19) were notices of termination with more than 18 months remaining length of contract. Net lease for the period was MSEK - 24 (161). The time difference between reported net leasing and the effect in income thereof is estimated to be between 9–18 months and 12–24 months for investments in new constructions, extension or reconstruction.

NET LEASING
			Region
MSEK	Central	West	Öresund	Sthlm	North	Finland	Total
NEW LEASES
Existing properties	88	55	68	140	4	–	355
Investments	1	14	23	18	–	–	56
Total	89	69	91	158	4	–	411
NOTICES OF TERMINATIONS
Existing properties	– 125	– 115	– 52	– 112	– 3	– 12	– 419
Bankruptcies	– 8	– 2	–	– 6	–	–	– 16
Total	– 133	– 117	– 52	– 118	– 3	– 12	– 435
Net leasing	– 44	– 48	39	40	1	– 12	– 24
D:o Q4 2018	59	58	19	18	7	–	161

INCOME FROM PROPERTY MANAGEMENT PER SHARE NET LEASING

Income from property management SEK/share rolling 4 quarters (bars)

Yearly growth four quarters (line)

NOTE 3 Costs

Direct property costs totalled MSEK 1,235 (1,258), corresponding to SEK 292/sq. m. (288). In addition, expenses for co-working totalled MSEK 99.

An assessment for taxes on real property took place in Sweden, which resulted in higher assessed values resulting in higher property tax of approximately MSEK 50 on an annual basis. A large part of the property tax will be charged onward to the customer, however, with higher rental income as a result. The effect on earnings will thus be very limited. Property admin amounted to MSEK 374 (374), corresponding to SEK 92 per sq.m. (90). Central admin amounted to MSEK 163 (158). Included in the central administrative expenses are also costs related to the profit-and-shareprice related incentive plan for members of the Executive Management of MSEK 10 (18) and costs for Innovation MSEK 23 (16). Acquisition costs of MSEK 9 were attributable to the purchase of United Spaces.

DEVELOPMENT OF PROPERTY COSTS

MSEK	2019 Jan–Dec	2018 Jan–Dec	Change,%
Like-for-like holdings	1,068	1,074	2.0 %
Transfer of site leaseholds	–	23
Development properties	66	55
Transaction	101	133
Direct property costs	1,235	1,258	– 1.8 %
Coworking	99	–
Property admin	374	374
Central admin	163	158
Total costs	1,871	1,790	4.5 %

Consumption for heating during the period has been calculated to 88.2 % of a normal year according to the degree day statistics.

PROPERTY COSTS

SEK/sqm	Office	Public sector properties	Ware house/ Logistics	Light industry	Retail	Total
Operating expenses	217	185	102	113	149	166
Maintenance	49	42	23	29	30	38
Real estate tax	135	106	29	28	73	88
Total prop. costs	401	333	154	170	252	292
Leasing & prop. admin						92
Total	401	333	154	170	252	384
D:o Q4, 2018	386	314	162	171	269	378

NOTE 4 Net interest

Net interest costs were MSEK – 782 (– 835). The average interest rate level was 2.0 % (2.2 %). Net interest costs was positively affected by approx. MSEK 65 due to the 0.2 percentage point decline in the average interest rate level. Moreover, costs for site leasehold fees and to some extent leases will be recognised as financial expenses from 2019. In the first nine months of the year, these costs totalled MSEK 22.

NOTE 5 Changes in value

The property market remained steady for 2019 with stable to raising prices as a result. There is particular interest for logistics facilities, centrally located office properties in large cities and properties with secure cash flows. This, together with a healthy rental market and project gains, means that Castellum recognized an unrealized change in value of MSEK 4,276 corresponding to a 4.7 % increase in value.

Additionally, a realized decrease in value of MSEK – 358 was recognized, attributable to the sale of 28 properties for MSEK 4,138 less overhead costs and deferred tax totaling MSEK 220. The underlying property price, which accordingly amounted to MSEK 4,358, was therefore MSEK 138 below the valuation. Since the sale was conducted as a business transaction, it is also recognized as deferred tax income of approximately MSEK 468. The sales meant that Castellum left Sundsvall and Vaggeryd outside Jönköping. Castellum has also divested a portfolio of retail properties in Uppsala. Since every property is valuated individually, consideration has not been given to the portfolio premium that can be seen in the real estate market.

The market value of the derivatives changed by MSEK – 111 (152) mainly due to changes in long-term market interest rates.

CHANGE IN VALUE PROPERTIES

MSEK	2019 Jan–Dec	2018 Jan–Dec
Cash flow	1,638	2,093
Project gains/building rights	532	751
Required yield	1,742	2,439
Acquisitions	364	43
Unrealized changes in value on properties	4,276	5,325
D:o %	4.7 %	6.3 %
Sales	– 358	– 110
Total	3,918	5,216
D:o %	4.3 %	6.2 %

NOTE 6 Tax

Recognized tax totalled MSEK 1,115 (864), of which MSEK 165 (74) is current 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. Owing to the possibility of depreciation for tax purposes and direct tax deductions for certain property reconstructions and of utilizing tax loss carry forwards, the tax expenses paid are lower than 21.4 %. Tax paid arises as a result of there being existing tax loss carry forwards in the former Norrporten Group, and can thus not be utilized in Castellum as a whole.

Remaining tax loss carryforwards can be calculated to MSEK 854 (1,081). Furthermore, there are untaxed reserves at and undervalue of MSEK 327 (144).

Fair values for the properties exceed their fiscal value by MSEK 56,365 (50,553) of which MSEK 6,553 (4,976) 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 10,153 (9,203).

Castellum has no current tax disputes.

Continuation Note 6

TAX CALCULATION 2019
MSEK	Basis current tax	Basis deferred tax
Income from property management	3 ,146
Non-deductible interest	190
Deductions for tax purposes
depreciations	– 1,166	1 ,166
reconstructions	– 658	658
Other tax allowances	– 142	190
Taxable income from property mgmt	1,370	2,014
Current income tax 21.4 %, if tax losses are not utilized	293
Properties sold	-	– 2,273
Changes in value on properties	-	4,276
Taxable income before tax loss carry forwards	1,370	4,017
Tax loss carry forwards, opening balance	– 1,081	1,081
Previously uncapitalized tax loss carry forwards	– 370	370
Tax loss carry forwards, closing balance	854	– 854
Taxable income	773	4 614
Tax according to Income statement for the period	– 165	– 950

NET DEFERRED TAX LIABILITY 12-31-2019
MSEK	Basis	Nominal tax liability	Real tax liability
Tax loss carry forwards	854	182	175
Untaxed reserves	– 327	– 71	– 71
Properties	– 56,365	– 11,612	– 3,331
Total	– 55,838	– 11,501	– 3,227
Properties, asset acq.	6,553	1,348
In the balance sheet	– 49,285	– 10,153

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

Estimated real deferred tax liability net has been calculated to 6 % based on a discount rate of 3 %. Further, assessments have been made that tax loss carry forwards are realized with a nominal tax of 21.4 %, giving a present value of deferred tax liability of 20 %, and that the properties are realized in over 50 years where 33 % are sold directly and that 67 % are sold indirectly through company disposals where the buyers tax discount is 7 %. This provides a present value for deferred tax liability of 6 %.

United Spaces expands into Uppsala

In 2020, Castellum's co-working company United Spaces will establish itself in Uppsala, in a beautiful and distinguished old property that has been owned by Castellum for some time. The building, known to residents of the city as the Rådhuset, is undergoing a renaissance in which space is being created for individuals and companies to grow in a creative, inspiring environment.

United Spaces, a wholly owned Castellum company, currently operates in Stockholm, Gothenburg and Malmö as well as Arlanda Airport. The idea behind the company is to provide office and meeting space for members who want to see their businesses – and themselves – grow, attract talent, discover ideas and create contacts. This will be the company's first establishment in Uppsala, which means that after taking possession in November 2020 United Spaces can offer 400 members access to the 2,600 square meter premises in the Rådhuset, on the main square in central Uppsala.

–We are extremely pleased about establishing ourselves in Uppsala. Even better that it's in the Rådhuset, considering the location, the history of the property and its gorgeous premises. We've been looking at Uppsala for a while. There is great potential here, considering it's a growth city with an expanding economy, says Yvonne Sörensen Björud, CEO of United Spaces.

Castellum acquired United Spaces in early 2019, with the objective of growing in the co-working segment and creating synergies with existing operations in office properties.

–It's gratifying to see our subsidiary, United Spaces, opening its doors in our property. The premises are highly suitable to co-working. We hope the location and special atmosphere will bring that little bit extra to United Spaces' members, says Robert Ahlstedt, acting Business Area Manager for Castellum Uppsala.

Condensed consolidated Balance Sheet

MSEK		Dec 31, 2019	Dec 31, 2018
ASSETS
Investment properties	note 7	95,168	89,168
Goodwill	note 8	1,691	1,659
Leases, value in use	note 9	846	–
Other fixed assets		179	146
Current receivables		928	924
Liquid assets		173	243
Total assets		98,985	92,140
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity		43,777	39,749
Deferred tax liability	note 6	10,153	9,203
Other provisions		5	6
Interest-bearing liabilities	note 10	40,826	40,358
Derivatives	note 11	715	716
Lease agreement	note 9	846	–
Non interest-bearing liabilities		2,663	2,108
Total shareholders' equity and liabilities		98,985	92,140
Pledged assets (property mortgages)		20,903	21,803
Pledged assets (chattel mortgages)		–	–
Contingent liability		–	–

Condensed Changes in Equity

MSEK	Number of outstanding shares, thousand	Share capital	Other capital contribution	Currency translation reserve	Currency hedge reserve	Non- controlling interest	Retained earnings	Total equity
Shareholders' equity 12-31-2017	273,201	137	12,434	123	– 126	– 2	21,170	33,736
Dividend, March and Sept 2018 (5.30 SEK/share)	–	–	–	–	–	–	– 1,448	– 1,448
Net income 2018	–	–	–	–	–	–	7,453	7,453
Other total net income 2018	–	–	–	151	– 143	–	–	8
Shareholders' equity 12-31-2018	273,201	137	12,434	274	– 269	– 2	27,175	39,749
Dividend March and Sept 2019 (6.10 SEK/share)	–	–	–	–	–	–	– 1,667	– 1,667
Net income 2019	–	–	–	–	–	–	5,650	5,650
Other total net income 2019	–	–	–	92	– 47	–	–	45
Shareholders' equity 12-31 2019	273,201	137	12,434	366	– 316	– 2	31,158	43,777

Balance sheet December 31, 2019

NOTE 7 Real estate portfolio and property value

Investment properties

The real estate portfolio is located in growth areas in Sweden, Copenhagen and Helsinki. The commercial portfolio consists of 47 % office, 23 % public sector properties, 16 % warehouse/logistics, 8 % retail and 2 % light industry. The properties are located from inner city sites to well-situated workingareas with good means of communication and services. The remaining 4 % consist of projects and undeveloped land.

Castellum owns approx. 700,000 sq.m. of unutilized building rights and furthermore ongoing projects with remaining investments of approx. SEK 1.2 billion.

Investments

During the period, investments totalling MSEK 6,112 (5,292) were carried out, of which MSEK 3,350 (2,455) were acquisitions and MSEK 2,762 (2,837) new constructions, extensions and reconstructions. After sales of MSEK 4,138 (2,635) net investments amounted to MSEK 1,974 (2,657).

CHANGES IN THE REAL ESTATE PORTFOLIO
	Value, MSEK	Number
Real estate portfolio on January 1, 2019	89,168	647
+ Acquisitions	3,350	17
+ New constructions, extensions and reconstructions	2,762	– 4
– Sales	– 4,496	– 28
+/– Unrealized changes in value	4 ,276
+/– Currency translation	108
Real estate portfolio on Dec 31, 2019	95,168	632

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 1,600 (1,500) 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 historically been small. Based on these internal valuations, property value at the end of the period were assessed to MSEK 95,168 (89,168), corresponding to SEK 22,363 (20,417) per sq.m.

Average valuation yield

The average valuation yield for Castellum's real estate portfolio, excluding development projects and undeveloped land, can be calculated to 5.1 % (5.3 %).

AVERAGE VALUATION YIELD

(Excl. project/land and building rights )	MSEK
Net operating income properties	4,455
+ Index/CPI 2020	94
+ Real occupancy rate, 94 % at the lowest	228
– Property admin, SEK 30/sq.m.	– 128
Normalized net operating income	4,649
Valuation (excl. building rights of MSEK (520 )	90,614
Average valuation yield	5.1 %

VALUATION YIELD PER CATEGORY
	Dec 31, 2019	Dec 31, 2018
Office	5.0 %	5.1 %
Public sector properties	4.8 %	5.0 %
Warehouse/logistics	5.6 %	5.8 %
Retail	5.8 %	5.9 %
Light industry	6.6 %	6.9 %
Total	5.1 %	5.3 %

Uncertainty range

A property's market value can only be confirmed when sold. The value range of +/– 5 – 10 %, often used in property valuations in a normal market, should therefore be seen as an indication of the uncertainty that exists in assumptions and calculations. In a market with lower liquidity, the range may be wider. For Castellum, an uncertainty range of +/– 5 % means a range in value of the property portfolio of MSEK 90,410 – 99,926 corresponding to +/– MSEK 4,758.

External valuation

In order to validate the valuation, 178 properties – representing 55 % of the value of the portfolio – were valuated externally by Forum Fastighetsekonomi in Sweden and CBRE in Denmark. The properties were selected on the basis of the largest properties in terms of value, but they also reflected the composition of the portfolio as a whole in terms of category and geographical location. The external valuations of the selected properties amounted to MSEK 51,790 within an uncertainty range of +/– 5 – 10 % on property level, depending on each property's category and location. Castellum's valuation of the same properties totalled 52,713 i.e., a net deviation of MSEK 923 corresponding to 1.8 %. The gross deviations were MSEK 1,181 and MSEK – 2,104, respectively, with an average deviation of 6 %.

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

PROPERTY RELATED KEY RATIOS

	2019 Jan–Dec	2018 Jan–Dec
Rental value, SEK/sq.m.	1,495	1,407
Economic occupancy rate	92.6 %	93.2 %
Property costs, SEK/sq.m.	384	378
Net operating income, SEK/sq.m.	1,001	933
Property value, SEK/sq.m.	22,363	20,417
Number of properties	632	647
Lettable area, thousand sq.m.	4,255	4,283
Average valuation yield	5.1 %	5.3 %

Castellum's real estate portfolio

			Dec 31, 2019			January–December 2019
Category	No. of proper- ties	Area thou- sand sq.m.	Property value MSEK	D:o/ sq.m.	Rental value MSEK	D:o/ sq.m.	Occup- ancy rate	Income MSEK	Property costs MSEK	D:o/ sq.m.	Net operating income MSEK
OFFICE
Stockholm	29	284	11,138	39,279	638	2,251	94.1 %	601	118	417	483
West	65	372	10,726	28,801	655	1,760	94.6 %	620	137	367	483
Central	78	534	10,627	19,899	806	1,510	90.6 %	731	193	361	538
Öresund	43	398	11,225	28,239	826	2,077	88.9 %	734	182	458	552
North	2	5	92	18,285	8	1,521	91.8 %	7	2	456	5
Finland	1	14	859	59,552	53	3,660	110.7 %	58	12	841	46
Total Office	218	1,607	44,667	27,796	2,986	1,858	92.1 %	2,751	644	401	2,107
PUBLIC SECTOR PROPERTIES
Stockholm	12	89	5,619	62,910	270	3,020	93.8 %	253	45	504	208
West	15	110	2,127	19,333	147	1,337	93.2 %	137	24	216	113
Central	31	314	8,612	27,441	544	1 ,735	94.0 %	512	108	345	404
Öresund	8	91	3,370	37,146	199	2,190	98.4 %	195	28	311	167
North	10	99	1,988	20,021	147	1,485	93.6 %	138	29	293	109
Total Public sector properties	76	703	21,716	30,882	1,307	1,859	94.5 %	1,235	234	333	1,001
WAREHOUSE /LOGISTICS
Stockholm	37	265	5,197	19,634	322	1,216	91.4 %	294	45	170	249
West	69	594	6,958	11,712	480	808	90.4 %	434	81	136	353
Central	29	145	1,252	8,608	121	829	92.1 %	111	25	175	86
Öresund	30	205	1,983	9,682	170	835	91.3 %	156	35	172	121
Total Warehouse/Logistics	165	1,209	15,390	12,729	1,093	904	91.0 %	995	186	154	809
RETAIL
Stockholm	29	150	3,461	22,992	239	1,584	93.9 %	224	34	226	190
West	15	58	1,110	19,103	80	1,375	95.9 %	77	17	277	60
Central	21	121	1,820	15,018	145	1,197	95.8 %	139	31	255	108
Öresund	11	46	851	18,700	68	1,500	85.3 %	58	13	295	45
Total Retail	76	375	7,242	19,294	532	1,417	93.6 %	498	95	252	403
LIGHT INDUSTRY
Stockholm	10	44	717	16,480	56	1,294	95.3 %	53	10	238	43
West	16	66	716	10,845	56	851	95.5 %	54	9	133	45
Central	10	29	347	11,906	31	1,052	96.8 %	30	7	227	23
Öresund	4	42	339	8,064	32	750	90.3 %	29	5	117	24
Total Light industry	40	181	2,119	11,724	175	966	94.7 %	166	31	170	135
Total investment properties	575	4,075	91,134	22,363	6,093	1,495	92.6 %	5,645	1,190	292	4,455
Leasing and property admin									374	92	–374
Total after leasing
and property admin									1,564	384	4,081
Development	35	180	3,223	–	84	–	–	52	30	–	22
Undeveloped land	22	–	811	–	–	–	–	–	–	–	–
Total	632	4,255	95,168	–	6,177	–	–	5,697	1,594	–	4,103

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 4,103 accounted for above and the net operating income of MSEK 4,113 in the income statement is explained by the deduction of the net operating income of MSEK 60 on properties sold during the year, as well as the adjustment of the net operating income of MSEK 55 on properties acquired/completed during the period, which are recalculated as if they had been owned or completed during the whole period and 5 Mkr attributable the Coworking company.

More detailed description about property type on page 28, definitions.

PROPERTY VALUE BY PROPERTY TYPE PROPERTY VALUE BY REGION

Customers

Castellum's real estate portfolio and customer segments

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

Lease maturity structure

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

LEASE MATURITY STRUCTURE 12-31-19
MSEK	No. of leases	Lease value MSEK	Percentage of value
Commercial, term
2020	1,648	421	8 %
2021	1,441	856	16 %
2022	1,187	1,040	20 %
2023	837	941	18 %
2024	209	379	7 %
2025+	345	1,483	28 %
Total commercial	5,667	5,120	97 %
Residential	436	40	1 %
Parking spaces and other	5,828	89	2 %
Total	11,931	5,249	100 %

Risk exposure, credit risk

Castellum's lease portfolio features a good risk exposure. The Group has approx. 5,700 commercial leases and 436 residential leases, and their distributing terms of size is presented in the table below. The single largest lease as well as the single largest customer accounts for approx. 2 % of the Group's total rental income, meaning that Castellum's exposure to a single customer credit risk is very low.

LEASE SIZE

Lease size, MSEK	No. of leases	Share	Lease value MSEK	Share
Commercial
< 0.25	2,654	22 %	210	4 %
0.25–0.5	951	8 %	350	7 %
0.5–1.0	822	7 %	581	11 %
1.0–3.0	744	6 %	1,287	24 %
< 3.0	496	4 %	2,692	51 %
Total	5,667	47 %	5,120	97 %
Residential	436	4 %	40	1 %
Parking spaces and other	5,828	49 %	89	2 %
Total	11,931	100 %	5,249	100 %

COMMERCIAL LEASES DISTRIBUTED BY SECTOR

Castellum's development portfolio

Säve airport GOTHENBURG New construction warehouse/logistics Investment: 1.1 MdSEK

Investering: 87 Mkr Vargön 4

Visionen 3 JÖNKÖPING New and reconstruction office Investment: 87 MSEK

CASTELLUM YEAR-END REPORT 2019

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

Backa 20:5, phase 1 GOTHENBURG New construction car dealership Investment: 103 MSEK

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

New construction office Investment: 305 MSEK

GreenHaus HELSNINGBORG

JÖNKÖPING New construction car dealership Investment: 74 MSEK

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

Smygmaskan 1 MALMÖ

New construction office Investment: 347 MSEK

Masthugget 26:1 GOTHENBURG New construction office Investment: 238 MSEK

Generatorn 1 MÖLNDAL New construction office/ warehouse Investment: 141 MSEK

Solsten 1:172 HÄRRYDA Reconstruction office /light industry Investment: 90 MSEK

Nya Domstolsverket MALMÖ

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

New construction office Investment: 1.3 MdSEK

E.ON MALMÖ New construction office Investment: 1.1 MdSEK

Ongoing Completed/partly moved in

15

Kungspassagen UPPSALA New and reconstruction office Investment: 443 MSEK

CASTELLUM YEAR-END REPORT 2019

Tibble 1:647 BRUNNA New construction warehouse/logistics Investment: 145 MSEK

Öskaret 1 STOCKHOLM Reconstruction office Investment: 638 MSEK

Hagastaden STOCKHOLM Reconstruction office Investment: 550 MSEK

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

Spejaren 4 HUDDINGE New construction car dealership Investment: 349 MSEK

Slakthusområdet STOCKHOLM

New construction office

Olaus Petri 3:244 ÖREBRO New construction office Investment: 495 MSEK

Planned

Ongoing

Completed/partly moved in

Larger investments and sales

Larger developments

		Rental value			Total inv.	of which
Property	Area, sq.m.	MSEK	SEK/sq.m.	Econ. occup. Jan 2020	incl.land MSEK	inv. 2019, MSEK	Remain inv. MSEK	Date of completion	Category
Öskaret 1, Stockholm	10,841	60	5,550	28 %	638	272	248	Q4 2020	Reconstruction office
Dragarbrunn 21:1, Uppsala	12,166	32	2,750	69 %	443	33	316	Q4 2021	Reconstruction and extension office
GreenHaus, Helsingborg	7,000	19	2,800	31 %	305	9	268	Q2 2022	New construction office
Hisingen Logistics Park phase 2, Gothenburg	34,484	24	700	100 %	294	224	68	Q2 2020	New construction logistics
Masthugget 26:1, Gothenburg	4,185	13	3,200	0 %	238	97	103	Q4 2020	New construction office
Örnäs 1:17, Upplands-Bro	15,719	15	1,000	54 %	204	107	26	Q1 2020	New construction logistics
Sellerin 3, Lund	5,190	7	1,300	40 %	88	16	72	Q1 2021	New construction car dealership
Visionen 3 (former 1), Jönköping	5,155	10	1,850	80 %	87	59	20	Q2 2020	New construction office
Backa 20:5, Gothenburg	4,600	7	1,500	100 %	82	13	69	Q1 2021	New construction warehouse/office
Moränen 3, Malmö	3,421	5	1,350	73 %	54	47	5	Q1 2020	New construction retail/light industry
Developments completed/partly moved in
Olaus Petri 3:244, Örebro	15,023	37	2,450	100 %	495	85	23	Q1 2019	New construction office
Spejaren 4, Huddinge	9,300	24	2,600	98 %	349	105	8	Q2 2019	New construction car dealership
Smygmaskan 1, Malmö	9,600	26	2,700	100 %	341	108	16	Q2 2019	New construction office
Generatorn 1, Mölndal	6,800	13	1,600	100 %	141	40	0	Q3 2019	New construction office/ware house
Tibble 1:647, Brunna	8,894	12	1,300	46 %	145	35	12	Q3 2019	New construction warehouse/ light industry
Backa 20:5, Gothenburg	4,852	9	1,750	100 %	103	53	0	Q3 2019	New construction car dealership
Solsten 1:172, Härryda	13,729	19	1,400	100 %	90	82	0	Q4 2019	Reconstruction and extension office/light industry
Vargön 4, Jönköping	4,488	6	1,350	100 %	74	54	6	Q4 2019	New construction car dealership
					4,171	1,439	1,260
Larger acquisitions			Rental value		Total inv. Total inv.	of which of which
Fastighet Property Property	Area, Area, sq.m. sq.m.	MSEK Mkr MSEK	SEK/sq.m. kr/kvm SEK/sq.m.	Econ. occup. Uthyrn.grad Econ. occup. Jan 2020 jan 2020 Jan 2020	incl.land incl.land MSEK MSEK	inv. 2019, Anskaffn. inv. 2019, värde, Mkr MSEK MSEK	Remain Remain inv. MSEK inv. MSEK	Date of Date of completion completion	Tillträde Kategori Category Category
6 properties in Linköping	68,897	112	1,600	95 %		1,624		March 2019	Office
Gullbergsvass 1:12 och 1:2, Gothenburg	16,604	42	2,550	98 %		865		March 2019	Office
Kol 13 & Kungsängen 14, Västerås	7,551	11	2,000	99 %		215		Dec 19/Jan 20	Office
Godsfinkan 1, Malmö	–	–	–	–		206		Nov 2019	Land, new construction Court
Part of the harbour 22:31, Malmö	–	–	–	–		148		April 2019	Land, new construction E.ON

Larger sales
		Rental value		Underlying	Deferred tax
Property	Area, sq.m.	MSEK	SEK/sq.m.	property price MSEK	and transaction costs, MSEK	Net sales price, MSEK	Access	Category
20 properties in Sundsvall	154,491	258	1,650	3,465	– 165	3,300	March 2019	Office, public sector properties, retail
Boländerna 28:3 & 4, 35:1 & 2, Uppsala	49,795	69	1,396	695	– 26	668	April 2019	Retail

Sunnanå, Malmö 10,606 7 716 100 % 124 Jan 2020 Logistic

NOTE 8 Goodwill

In 2016, the CORHEI and Norrporten companies were acquired. In connection to the acquisitions, a goodwill situation arose, primarily related to the difference between nominal tax, and the calculated supplementary tax which was applied at time of acquisition. A write-off for goodwill is primarily justified for a major downturn in the real estate market or a situation wherein properties included in the transaction above are divested. In the first quarter of the year, the entire portfolio in Sundsvall was divested, which results in an impairment of MSEK 179. In parallel United Spaces, a coworking company, was acquired during the same period, resulting in increased goodwill of MSEK 211. Goodwill for the year thus changed by MSEK 32.

NOTE 9 Leasing agreement

IFRS 16 Leases entered force on January 1, 2019, meaning that Castellum must valuate its leases and recognize the right-of-use as an asset with a corresponding liability. At the balance sheet date, the value of Castellum's leases was approximately MSEK 846, divided into site leasehold agreements of SEK 483 million and rental agreements in United Spaces, the coworking company acquired during the year, of MSEK 363. There were no retroactive applications.

NOTE 10 Interest bearing liabilities and liquid assets

Castellum must maintain a low level of financial risk, meaning a medium- to long-term LTV ratio of less than 50 % and an interest coverage ratio of not less than 200 %.

Interest bearing liabilities

At the end of the year, Castellum held credit agreements totalling MSEK 60,604 (56,358) of which MSEK 49,433 (45,962) were long-term and MSEK 11,171 (10,396) were short-term. Of the utilized borrowing facilities at the end of the year, MSEK 30,233 (30,862) was long-term and MSEK 10,420 (9,253) short-term.

After deduction of cash of MSEK 173 (243), net interestbearing liabilities were MSEK 40,653 (40,115), of which MSEK 27,512 (21,599) were MTNs outstanding and MSEK 5,136 (5,360) commercial paper outstanding (nominal MSEK 27,589 and MSEK 5,138 respectively).

During the year bank credit facilities of approximately MSEK 7,800 were extended, approx. MSEK 1,600 terminated and the framework amount of Castellum's MTN program was raised to MSEK 20,000. Castellum was also active in the Swedish bond market during the year and bonds with a nominal value of MSEK 3,300 matured while new issues amounted to MSEK 4,100 as part of Castellum's Swedish MTN program. Moreover, a nominal amount of MNOK 850 was issued with a ten-year tenor and MEUR 400 was issued with a seven year tenor under Castellum's EMTN program.

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

Of net interest-bearing liabilities totalling MSEK 40,653 (40,115), MSEK 7,249 (12,400) was secured against property deeds and MSEK 33,404 (27,715) was unsecured, which means that approximately 18 % (31 %) of loans outstanding were secured. Castellum's share of unsecured assets at the end of the year was 57 % (53 %). Secured borrowing in relation to total assets was 7 % (13 %).

The financial covenants stipulate an LTV ratio not exceeding 65 %, an interest coverage ratio of at least 150 % and for EMTN also that the share of secured borrowing may not exceed 45 % of the Group's total assets, which Castellum fulfils with comfortable margins:

43 %, 502 % and 7 % respectively. The average duration of Castellum's credit agreements was 3.8 years (3.6). Margins and fees for credit agreements are established with an average duration of 3.2 years (3.0). The debt ratio at the end of the period was 10 (11).

Castellum has an official credit rating from the credit rating institute Moody's. The credit rating was upgraded in June 2019 to investment grade level at Baa2 with a stable outlook. The rating is expected to result in further improvements to financial flexibility for Castellum by supporting both Castellum's relative funding cost and access to loan capital over time.

	CREDIT MATURITY STRUCTURE 12-31-2019
		Utilized in
Credit agreements	MSEK	Bank	MTN/CP	Total
0 – 1 year	11,171	2,036	8,384	10,420
1 – 2 years	6,962	2,011	4,951	6,962
2 – 3 years	8,735	842	3,243	4,085
3 – 4 years	18,539	1,628	7,561	9,189
4 – 5 years	1,609	11	1,598	1,609
> 5 years	13,588	1,477	6,911	8,388
Total	60,604	8,005	32,648	40,653

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 3.3 years (3.1). The average effective rate at Dec 31, 2019 was 1.82 % (1.91 %) excluding unutilized credit agreements, and 1.99 % (2.05 %) including unutilized credit agreements. Castellum utilizes interest rate derivatives to achieve the desired interest rate maturity structure. Interest rate derivatives is a cost efficient and flexible way to achieve the desired fixed interest term.

In the interest rate maturity structure, interest rate derivatives are accounted for in the earliest time segment in which they can mature. Credit margins and fees are distributed in the table by reported underlying loans, while credit fees are reported in the segment for 0 – 1 year.

Currency

Castellum owns properties in Denmark and Finland with a value of MSEK 7,247 (6,895), which means that the Group is exposed to currency risk. The currency risk is primarily related to when income statement and balance sheet in foreign currencies are translated into Swedish kronor.

				Interest- and cross currency interest rate derivatives
	Interest bearing credit volume, MSEK	Average interest rate	Volume payable interest, MSEK	Closed payable interest	Volume receivable interest, MSEK	Closing receivable interest	Closing interest rate**	Average interest rate
0 - 1 year	22,882	1.1 %*	5,323	1.1 %	– 14,719	0.2 %	2.19 %	0.2 year
1 – 2 years	4,550	1.4 %	1,350	0.0 %	–	–	1.11 %	1.4 years
2 – 3 years	1,148	2.1 %	1,600	0.0 %	–	–	0.89 %	2.5 years
3 – 4 years	5,959	2.1 %	4,600	2.6 %	– 4,766	2.2 %	2.39 %	3.8 years
4 – 5 years	300	2.3 %	900	0.4 %	–	–	0.90 %	4.5 years
5 – 10 years	5,814	1.4 %	10,958	1.8 %	– 5,246	1.3 %	1.80 %	7.7 years
Total	40,653	1.4 %	24,731	1.5 %	– 24,731	0.8 %	1.82 %	3.3 years

INTEREST RATE MATURITY 12-31-2019

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

NOTE 11 Interest rate and currency derivatives

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

with borrowing in the international capital market. As for currency derivatives, a theoretical surplus/sub value occurs if the agreed exchange rate deviates from the current exchange rate, where the effective portion of value changes is accounted for in other total income.

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

As of December 31, 2019, the market value of the interest rate derivatives portfolio amounted to MSEK – 592 (– 689) and the currency derivative portfolio to MSEK – 123 (– 27). All derivatives are, as at previous year, classified in level 2 according to IFRS 13.

CASTELLUM'S FINANCIAL POLICY AND COMMITMENTS IN CREDIT AGREEMENTS

	Policy	Commitment	Outcome
Loan-to-value ratio	Not exceeding 50 %	Not exceeding 65 %	43 %
Intererst coverage ratio	At least 200 %	At least 150 %	502 %
The share of secured borrowing/total assets		Not exceeding 45 %	7 %
Funding risk
– average capital tied up	At least 2 years		3.8 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 - 4,5 years		3.3 years
– proportion maturing within 6 months	No more than 50%		31 %
Credit and counterparty risk
– rating restriction	Credit institutions with high ratings, at least S&P BBB+		Achieved
Currency risk
– translation exposure	Shareholders' equity is not hedged		Not hedged
– transaction exposure	Handled if exceeding MSEK 25		Less than MSEK 25

Condensed consolidated Cash Flow statement

MSEK	2019 Oct–Dec	2018 Oct–Dec	2019 Jan–Dec	2018 Jan–Dec
Net operating income	1,011	980	4,113	3,945
Central administrative expenses	– 44	– 45	– 163	– 158
Reversed depreciations	18	5	64	19
Net interest paid	– 225	– 193	– 761	– 829
Tax paid	– 122	– 137	– 161	– 75
Translation difference of currencies	– 11	– 17	45	8
Cash flow from operating activities before change in working capital	627	593	3,137	2,910
Change in current receivables	527	– 42	– 165	– 225
Change in current liabilities	14	– 48	564	– 200
Cash flow from operating activities	1,168	503	3,536	2,485
Investments in new constructions, extensions and reconstructions	– 701	– 673	– 2,762	– 2,837
Property acquisitions	– 561	– 1,122	– 3,350	– 2,455
Change in liabilities at acquisitions of property	120	– 9	273	8
Property sales	29	2,188	4,138	2,635
Change in receivables at sales of property	76	– 164	161	– 149
Other investments	– 129	– 39	– 425	– 85
Cash flow from investment activities	– 1,166	181	– 1,965	– 2,883
Change in long term interest bearing liabilities	261	– 344	540	2,025
Change in other long term liabilities	– 307	307	– 307	307
Change in long term receivables	–	2	8	11
Swap termination	–	– 457	– 215	– 457
Dividend paid	–	–	– 1,667	– 1,448
Cash flow from financing activities	– 46	– 492	– 1,641	438
Cash flow for the period/ year	– 44	192	– 70	40
Liquid assets opening balance	217	51	243	203
Liquid assets closing balance	173	243	173	243

The Parent company

Condensed Income statement MSEK	2019 Oct–Dec	2018 Oct–Dec	2019 Jan–Dec	2018 Jan–Dec
Income	44	30	105	80
Operating expenses	– 67	– 60	– 222	– 193
Net financial items	– 17	12	13	29
Dividend/group contribution	1,541	1,545	1,541	1,545
Changes in value on derivatives	357	– 48	– 137	108
Impairment of shares in subsidiaries	202	– 23	202	– 23
Income before tax	2,060	1,456	1,502	1,545
Tax	– 16	– 27	2	– 67
Net income for the period/year	2,044	1,429	1,504	1,478
Comprehensive income for the parent company
Net income for the period/year	2,044	1,429	1,504	1,478
Items that will be reclassified into net income
Translation difference foreign operations	– 80	– 7	42	93
Unrealized change, currency hedge	111	1	– 21	– 99
Total net income for the period/year	2,075	1,423	1,525	1,472

Condensed Balance sheet MSEK	Dec 31 2019	Dec 31 2018
Participations, group companies	20,147	19,678
Receivables, group companies	28,777	29,062
Other assets	11,048	10,470
Liquid assets	54	1
Total	60,026	59,211
Shareholders' equity	17,676	17,818
Derivatives	715	716
Interest bearing liabilities	38,065	36,738
Interest bearing liabilities, group companies	3,346	3,711
Other liabilities	224	228
Total	60,026	59,211
Pledged assets (receivables group contributions)	17,343	17,387
Contingent liability (guaranteed commitments for subsidiaries)	2,538	3,616

Opportunities and Risks for Group and Parent company

Opportunities and risks in the cash flow

Over time, increasing market interest rates normally constitute an effect of economic growth and increasing inflation, which is expected to result in higher rental income. This is partly due to the fact that the demand for premises is thought to increase. This leads to reduced vacancies and hence to the potential for increasing market rents. It is also partly due to the fact that the index clause in commercial contracts compensates for the anticipated increased inflation.

An economic boom therefore means higher interest costs but also higher rental income, while the opposite relationship is true during a recession. The changes in rental income and interest cost do not take place at the exact same time, which is why the effect on income in the short run may occur at different points in time.

SENSITIVITY ANALYSIS – CASH FLOW
Effect on income next 12 months
	Effect on income, MSEK +/– 1 % (units)	Boom	Probable scenario Recession
Rental level/index	+ 57 / – 57	+	–
Vacancies	+ 62 / – 62	+	–
Property costs	– 16 / + 16	–	0
Interest costs	– 88 / +56	0	–

Opportunities and risks in property values

Castellum reports its properties at fair value with changes in value in the income statement. This means that the result in

particular but also the financial position may be more volatile. Property values are determined by supply and demand, where prices mainly depend on the properties' expected net operating incomes and the buyers' required yield. An increasing demand results in lower required yields and hence an upwarded adjustment in prices, while a weaker demand has the opposite effect. In the same way, a positive development in net operating income results in an upward adjustment in prices, while a negative development has the opposite effect.

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

	SENSITIVITY ANALYSIS – CHANGE IN VALUE
Properties	–20 %	–10 %	0 %	+10 %	+20 %
Changes in value, MSEK	– 19,034	– 9,517	–	9,517	19,034
Loan-to-value ratio	53 %	48 %	43 %	39 %	36 %

Financial risk

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

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

Castellum helps Statistics Sweden hold more efficient meetings using AI

In the autumn of 2019, the statistical authority Statistics Sweden reviewed how it could use its meeting rooms more efficiently, using Castellum's concept for creating data-driven knowledge about how people use office premises. The goal was to create a better working environment for the 750 employees at the agency's offices in Örebro.

Like many other operations, Statistics Sweden needs efficient solutions for various types of meetings. Proper access to well-designed meeting rooms is particularly important, since the agency recently decided to switch from individual rooms to an open office plan in the Örebro property they lease from Castellum.

–Prior to the work on changing the premises in Örebro, it was important for Statistics Sweden to have the best basis for decision-making possible. They wanted to be able to asses the need for both the number and the size of the meeting rooms required as a supplement to the new, open office environment. That is why they turned to us for help with capacity measurement, says Björn Johansson, Key Account Manager at Castellum.

By installing sensors in the existing meeting rooms at Statistics Sweden, presence and movement in the spaces was continuously measured over four months. The results, in the form of valuable data, was analyzed to draw conclusions about how Statistics Sweden's employees used the meeting rooms. This analysis formed the basis for the design of the new

office – for example, how many meeting rooms Statistics Sweden needs, how they were to be designed and what size they should be.

–We have operations in Örebro and Stockholm, and therefore a great need of efficient solutions for travel-free meetings. We also need flexible solutions for more regular meetings of different sizes, as well as for various development projects. The results of the capacity measurement will be a valuable basis for the design of the Örebro premises, says Statistics Sweden's Deputy Director General Helen Stoye.

The AI and sensor project is part of a larger concept for data-driven knowledge, named Matilda, that is being carried out by Castellum. The purpose is to develop smart premises and properties using AI. The initial stage involves setting up sensors in premises in order to increase knowledge of how different areas are used. By doing this, Castellum can provide its customers with valuable advice on how their premises should be adapted to be as functional as possible, based on their specific operations and needs. Over the longer term, Matilda and AI can also form the basis of several new service offerings.

21

Quarterly summary

	2019 Jan-March	2019 Apr-June	2019 July-Sept	2019 Oct-Dec	2019	2018 Jan-March	2018 Apr-June	2018 July-Sept	2018 Oct-Dec	2018
Income Statement, MSEK
Income	1,433	1,438	1,472	1 ,478	5,821	1,352	1,388	1,401	1,436	5,577
Property costs	-456	– 371	– 414	– 467	– 1, 708	- 414	- 386	- 376	– 456	– 1,632
Net operating income	977	1,067	1,058	1,011	4,113	938	1,002	1,025	980	3,945
Central administrative expenses	– 48	– 42	– 29	– 44	– 163	- 46	- 38	- 29	– 45	– 158
Lease cost/Ground rent	– 4	– 6	– 6	– 6	– 22	–	–	–	–	–
Net interest costs	– 199	– 202	– 186	– 195	– 782	- 227	- 209	- 197	– 202	– 835
Income from property mgmt	726	808	837	766	3,146	665	755	799	733	2,952
Transaction and restructuring costs	–	– 9	–	–	– 9	–	–	–	–	–
Write-down goodwill	– 179	–	–	–	– 179	–	–	–	–	–
Changes in value. properties	689	1,193	623	1,413	3,918	231	596	2,323	2,066	5,216
Changes in value. derivatives	– 12	– 176	– 120	306	– 111	- 7	32	177	– 50	152
Current tax	– 33	– 74	– 106	48	– 165	- 2	- 1	1	– 72	– 74
Deferred tax	259	– 506	– 183	– 520	– 950	- 122	278	- 674	– 275	– 793
Net income for the period/year	1,341	1,245	1,051	2,013	5,650	765	1,660	2,626	2,402	7,453
Other total net income	34	25	–3	– 11	45	0	134	- 102	– 24	8
Total net income for the period/year Balance Sheet, MSEK	1,375	1,270	1,048	2,002	5,695	765	1,794	2,524	2,378	7,461
Investment properties	89,231	91,427	92,719	95,168	95,168	82,031	84,298	87,473	89, 168	89,168
Goodwill	1,703	1,691	1,691	1,691	1,691	1,659	1,659	1,659	1,659	1,659
Other fixed assets	2,749	2,122	2,147	1,953	1,953	842	867	862	1,070	1,070
Liquid assets	150	157	217	173	173	34	84	51	243	243
Total assets	93,833	95,397	96,774	98,985	98,985	84,566	86,908	90,045	92,140	92,140
Shareholders' equity	39,457	40,727	41,775	43,777	43,777	33,053	34,847	37,371	39,749	39,749
Deferred tax liability	8,936	9,433	9,633	10,153	10,153	8,534	8,257	8,934	9,203	9,203
Other provisions	6	6	6	5	5	3	3	3	6	6
Derivatives	777	701	803	715	715	1,296	1,323	1,126	716	716
Long term interest-bearing liabilities	40,566	40,242	40,637	40,826	40,826	39,062	39,992	40,697	40,358	40,358
Non-interest-bearing liabilities	4,091	4,288	3,920	3,509	3,509	2,618	2,486	1,914	2,108	2,108
Total shareholders' equity and liabilities	93,833	95,397	96,774	98,985	98,985	84,566	86,908	90,045	92,140	92,140
Financial key ratios
Net operating income margin	69 %	76 %	73 %	70 %	72 %	69 %	72 %	73 %	68 %	71 %
Interest rate, avarage	2.1 %	2.1 %	2.0 %	1.9 %	2.0 %	2.4 %	2.3 %	2.1 %	2.0 %	2.2 %
Interest coverage ratio	465 %	504 %	550 %	512 %	502 %	393 %	461 %	506 %	463 %	454 %
Return on actual net asset value	13.3 %	14.5 %	10.3%	19.6 %	15.1 %	8.8 %	20.6 %	29.9 %	24.0 %	22.0 %
Return on total capital	7.0 %	9.4%	6.9 %	9.8 %	8.4 %	5.3 %	7.3 %	15.2 %	13.3 %	10.6 %
Return on equity	13.8 %	12.6 %	10.3 %	19.3 %	14.5 %	9.3 %	20.0 %	30.2 %	25.7 %	22.6 %
Investments in properties, MSEK	3,295	948	607	1,262	6,112	734	1,722	1,000	1,836	5,292
Sales, MSEK	4,021	36	52	29	4,138	232	155	60	2,188	2,635
Loan-to-value ratio	45 %	44 %	44 %	43 %	43 %	48 %	47 %	46 %	45 %	45 %
Data per share (since there are no potential
common stock there is no effect of dilution)
Average number of shares, thousand	273,201	273,201	273,201	273,201	273,201	273,201	273,201	273,201	273,201	273,201
Income from property management, SEK	2.66	2.99	3.06	2.80	11.52	2.43	2.76	2.92	2.68	10.81
Income prop mgmt after tax (EPRA EPS), SEK	2.35	2.61	2.64	2.84	10.44	2.27	2.53	2.61	2.24	9.65
Earnings after tax, SEK	4.91	4.56	3.85	7.37	20.68	2.80	6.08	9.61	8.79	27.28
Outstanding number of shares, thousand	273,201 327	273,201 335	273,201 339	273,201	273,201	273,201	273,201	273,201	273,201	273,201
Property value, SEK				348	348	300	309	320	326	326
Long term net asset value (EPRA NAV), SEK	178 165	184 170	186 172	195 180	195 180	151 135	157 142	168 153	176 162	176 162
Actual net asset value (EPRA NNNAV), SEK	–	–	–	–	6.50	–	–	–	–	6.10
Dividend, SEK (2019 proposed)	–	–	–	–	56 %	–	–	–	–	56 %
Dividend ratio
Property related key ratios
Rental value, SEK/sq.m.	1,462	1,502	1,532	1,529	1,495	1,363	1,386	1,392	1,429	1,407
Economic occupancy rate	93.3 %	93.0 %	92.7 %	91.7 %	92.6 %	92.9 %	93.2 %	93.0 %	93.3 %	93.2 %
Property costs, SEK/sq.m. Property value, SEK/sq.m.	419 21, 084	333 21,679	374 21,971	420 22,363	384 22,363	382 18,461	354 18,762	344 19,333	419 20,417	378 20,417

Multi-Year summary

	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010
Income Statement, MSEK
Income	5,821	5,577	5,182	4,533	3,299	3,318	3,249	3,073	2,919	2,759
Property costs	– 1,708	– 1,632	– 1,605	– 1,497	– 1,074	– 1,096	– 1,105	– 1,042	– 1,003	– 960
Net operating income	4,113	3,945	3,577	3,036	2,225	2,222	2,144	2,031	1,916	1,799
Central administrative expenses	– 163	– 158	– 162	– 143	– 113	– 108	– 93	– 93	– 83	– 84
Joint venture (income from property mgmt)	–	–	–	3	23	–	–	–	–	–
Net interest costs	– 22	–	–	–	–	–	–	–	–	–
Interest derivatives	– 782	– 835	– 885	– 832	– 602	– 664	– 702	– 683	– 660	– 574
Income from property mgmt (incl. results JV)	3,146	2,952	2,530	2,065	1,533	1,450	1,346	1,255	1,173	1,141
Transaction and restructuring costs	– 9	–	–5	– 163	–	–	–	–	–	–
Write-down goodwill	– 179	–	–	– 373	–	–	–	–	–	–
Changes in value. properties	3,918	5,216	4,540	4,085	1,837	344	328	– 69	194	1,222
Changes in value. derivatives	– 111	152	247	82	216	– 660	429	– 429	– 429	291
Revaluation of results due to stepwise
acquisition	–	–	–	27	– 2	–	–	–	–	–
Current tax	– 165	– 74	– 96	– 23	– 16	– 11	– 6	– 7	– 10	– 5
Deferred tax	– 950	– 793	– 1,340	– 727	– 687	88	– 390	404	– 217	– 685
Net income for the period/year	5,650	7,453	5,876	4,972	2,881	1,211	1,707	1,473	711	1,964
Other total net income	45	8	– 8	6	– 8	8	3	– 4	0	–
Total net income for the period/year	5,695	7,461	5,868	4,978	2,873	1,219	1,710	1,469	711	1,964
Balance Sheet, MSEK
Investment properties	95,168	89,168	81,078	70,757	41,818	37,599	37,752	36,328	33,867	31,768
Goodwill /Joint Venture (year 2015)	1,691	1,659	1,659	1,659	526	–	–	–	–	–
Other fixed assets	1,953	1,070	772	5,640	269	442	291	259	207	156
Liquid assets	173	243	203	257	39	47	70	44	97	12
	98,985	92,140	83,712	78,313	42,652	38,088	38,113	36,631	34,171	31,936
Total assets	43,777	39,749	33,736	29,234	15,768	13,649	13,127	12,065	11,203	11,082
Shareholders' equity	10,153	9,203	8,405	7,065	4,299	3,612	3,700	3,310	3,714	3,502
Deferred tax liability Derivatives	715	716	1,352	1,582	1,117	1,357	683	1,105	1,003	574
Long term interest-bearing liabilities	40,826	40,358	38,226	38,467	20,396	18,446	19,481	19,094	17,160	15,781
Non-interest-bearing liabilities	3,514	2,114	1 ,993	1,965	1,072	1,024	1,122	1,057	1,091	997
Total shareholders' equity and liabilities	98,985	92,140	83,712	78,313	42,652	38,088	38,113	36,631	34,171	31,936
Financial key ratios
Net operating income margin	72 %	71 %	69%	67 %	67 %	67 %	66 %	66 %	66 %	65 %
Interest rate, avarage	2.0 %	2.0 %	2.4 %	2.7 %	3.0 %	3.3 %	3.7 %	3.9 %	4.1 %	3.7 %
Interest coverage ratio	502 %	454 %	386 %	348 %	351 %	318 %	292 %	284 %	278 %	299 %
Return on actual net asset value	15.1 %	22.0 %	18.3 %	20.9 %	20.4 %	7.6 %	13.2 %	7.9 %	6.4 %	21.5 %
Return on total capital	8.4 %	10.6 %	10.1 %	11.9 %	10.0 %	6.5 %	6.4 %	5.3 %	6.2 %	9.8 %
Return on equity	14.5 %	22.6 %	20.6 %	20.1 %	21.7 %	9.5 %	14.6 %	13.5 %	6.6 %	20.9 %
Investments in properties, MSEK	6,112	5,292	6,488	31,491	3,553	2,525	1,768	2,798	2,015	1,506
Sales, MSEK	4,138	2,635	875	6 754	1 140	3 054	687	253	107	227
Loan-to-value ratio	43 %	45 %	47 %	50 %	49 %	49 %	51 %	52 %	50 %	50 %
Data per share (since there are no potential common stock there is no effect of dilution)
Average number of shares, thousand	273,201	273,201	273,201	234,540	189,014	189,014	189,014	189,014	189,014	189,014
Income from property management, SEK	11.52	10.81	9.26	8.80	8.11	7.67	7.12	6.64	6.21	6.04
Income prop mgmt after tax (EPRA EPS), SEK	10.44	9.65	8.39	8.26	7.84	7.17	6.97	6.31	6.08	5.75
Earnings after tax, SEK	20.68	27.28	21.51	21.20	15.24	6.41	9.03	7.79	3.76	10.39
Outstanding number of shares, thousand	273,201	273,201	273,201	273,201	189,014	189,014	189,014	189,014	189,014	189,014
Property value, SEK	348	326	297	259	221	199	200	192	179	168
Long term net asset value (EPRA NAV), SEK	195	176	153	133	112	99	93	87	84	80
Actual net asset value (EPRA NNNAV), SEK	180	162	138	121	100	87	84	78	75	74
Dividend, SEK (2019 proposed)	6.50	6.10	5.30	5.00	4.25	3.99	3.69	3.43	3.21	3.12
Dividend ratio	56 %	56 %	57 %	57 %	52 %	52 %	52 %	52 %	52 %	52 %
Property related key ratios
Rental value, SEK/sq.m.	1,495	1,407	1,341	1,304	1,095	1,064	1,036	1,015	995	974
Economic occupancy rate	92.6 %	93.2 %	90.9 %	91.3 %	90.3 %	88.7 %	88.4 %	88.6 %	89.3 %	89.0 %
Property costs, SEK/sq.m.	384	378	364	376	316	307	307	298	300	298
Property value, SEK/sq.m.	22,363	20,417	18,268	16,558	12,282	11,118	10,285	9,916	9,835	9,499

Financial Key Ratios

A number of the financial measures presented by Castellum in the interim report are not defined in accordance with the IFRS accounting standards. However, the company believes that these measures provide useful supplementary information to both investors and Castellum management, as they facilitate evaluation of company performance. It is to be noted that, since not all companies calculate financial measurements in the same manner, these are not always comparable to measurements used by other companies. Hence, these financial measures should not be seen as a substitute for measures defined according to the IFRS. Unless otherwise stated, the table below presents measures, along with their reconciliation, which are not defined according to the IFRS. Definitions for these measures appear on the page 28.

	Oct–Dec 2019	Oct–Dec 2018	Jan–Dec 2019	Jan–Dec 2018
Average number of shares, thousand (related to financial key ratios)	273,201	273,201	273,201	273,201
Outstanding number of shares, thousand (related to balance sheet ratios)	273,201	273,201	273,201	273,201

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.

	Oct–Dec 2019 MSEK SEK/share		Oct–Dec 2018 MSEK SEK/share		Jan–Dec 2019 MSEK SEK/share		Jan–Dec 2018 MSEK SEK/share
Income before tax	2,485	9.10	2,749	10.06	6,765	24.76	8,320	30.45
Reversed:
Transaction costs	–	–	–	–	9	0.03	–	–
Goodwill down-writing	–	–	–	–	179	0.66	–	–
Changes in value, properties	– 1,413		– 5.17 – 2,066	– 7.56	– 3 ,918	– 14.34	– 5,216	– 19.09
Changes in value, derivatives	– 306	– 1.13	50	0.18	111	0.41	– 152	– 0.55
= Income from property management	766	2.80	733	2.68	3,146	11.52	2,952	10.81
EPRA Earnings (Income from property management after tax)
Income from property management	766	2.80	733	2.68	3,146	11.52	2,952	10.81
Reversed; Current tax income from property management	9	0.04	– 122	– 0.44	– 293	– 1.08	– 316	– 1.16
EPRA Earnings / EPRA EPS	775	2.84	611	2.24	2,853	10.44	2,636	9.65

Net Asset Value

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

		Dec 31 2019 MSEK SEK/share		Dec 31 2018 MSEK SEK/share
Equity according to the balance sheet	43,777	160	39,749	145
Reversed:
Derivatives according to balance sheet	715	3	716	3
Goodwill according to balance sheet	– 1,480	– 5	– 1,659	– 6
Deferred tax according to balance sheet	10,153	37	9,203	34
Long term net asset value (EPRA NAV)	53,165	195	48,009	176
Deduction
Derivatives as above	– 715	– 3	– 716	– 3
Estimated real liability, deferred tax 6 %*	– 3,227	– 12	– 2,975	– 11
Short term net asset value (EPRA NNNAV)	49,223	180	44,318	162

* Estimated real deferred tax liability net has been calculated to 6 % based on a discount rate of 3 %. Further, assessments have been made that tax loss carry forwards are realized in 2 years with a nominal tax of 21.4 %, giving a present value of deferred tax liability of 20 %, and that the properties are realized in 50 years where 33 % are sold directly with a nominal tax of 20.6 % and that 67 % are sold indirect through company disposals where the buyers tax discount is 7 %, which gives a present value of deferred tax liability of 6 %.

Financial risk

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

Interest coverage ratio	Oct–Dec 2019	Oct– Dec 2018	Jan–Dec 2019	Jan–Dec 2018
Income from property management	766	733	3,146	2,952
Reversed;
Net interest	186	202	782	835
Income from property managementexcl. net interest	952	935	3,928	3,787
Interest coverage ratio	512 %	463 %	502 %	454 %

Continuation Financial Key Ratios

Loan-to-value ratio	Dec 31 2019	Dec 31 2018
Interest-bearing liabilities	40,826	40,358
Liquid assets	– 173	– 243
Net interest-bearing liabilities net	40,653	40,115
Investment properties	95,168	89,168
Acquired properties not taken into possession	– 304	– 31
Divested properties still in Castellum's possession	3	164
Net investment properties	94,867	89,301
Loan-to-value ratio	43 %	45 %

Investment

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

Net investments	Oct–Dec 2019	Oct–Dec 2018	Jan–Dec 2019	Jan–Dec 2018
Acquisitions	561	1,122	3,350	2,455
New constructions, extensions and reconstructions	701	715	2,762	2,837
Total investments	1,262	1,836	6,112	5,292
Net sales prices	– 29	– 2,188	– 4,138	– 2,635
Net investments	1,233	– 352	1,974	2,657
Proportion of the property value, %	1 %	0 %	2 %	3 %

Other Financial Key Ratios

	Oct–Dec 2019	Oct–Dec 2018	Jan–Dec 2019	Jan–Dec 2018
Net operating income margin	70 %	68 %	72 %	71 %
Interest rate level, on average	1.9 %	2.0 %	2.0 %	2.2 %
Debt ratio	11	11	10	11
Return on long term net asset value	19.2 %	19.5 %	12.6 %	18.5 %
Return on actual net asset value	19.6 %	24.0 %	15.1 %	22.0 %
Return on total capital	9.8 %	13.3 %	8.4 %	10.6 %
Return on equity	19.3 %	25.7 %	14.5 %	22.6 %
Property value, SEK/share	348	326	348	326
Gross leasing	146	101	411	408
Net leasing	12	4	–24	161

Accounting principles

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

IFRS 16 Leases entered force on January 1, 2019, and Castellum has applied the recommendation as of that date. There were thus no retroactive applications. The transition to IFRS 16 had no material impact on the Group's earnings and financial position, or on its cash flow statement. In its capacity as lessee, Castellum has conducted a detailed review and analysis of the Group's leases, during which site leasehold agreements were identified as the single most material alongside rental agreements in United Spaces, the coworking company acquired during the year. Apart from these two items, only a smaller number of leases have been identified, such as for vehicles, office equipment and the like. As a consequence of the transition to IFRS 16, the cost for site leasehold fees as a whole was reported as a financial

expense — a difference compared to previous policies, in which this was reported as an operating cost charged to net operating income. Moreover, the rental cost for United Spaces is allocated between impairments and financial expenses. Site leasehold agreements and leases at United Spaces have been valued and the right-of-use has been recognized as an asset together with a corresponding liability. At December 31, 2019, the combined value of these two items was MSEK 846 In addition, a review was conducted of how the Group's policies applied in its capacity as lessor are impacted by IFRS 16, in which connection Castellum verified that IFRS 16 entails no material effect on the Group's reported rental incomes. The company has chosen to voluntarily early adopt the changes in IFRS 9 "Interest Rate Benchmark Reform amendments to IFRS 9, IAS 39 and IFRS 7". The change did not had any impact on the financial reports.

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

Annual General Meeting 2020

For the Annual General Meeting on March 19, 2020 the Board of Directors proposes a dividend of SEK 6.50 per share, distributed to the shareholders divided in two equal payments of SEK 3.25 per share, which is an increase by 7 % compared with previous year. The first record day for distribution is proposed to be March 23, 2020 and the second record day for distribution is proposed to be September 21, 2020.

The Election Committee of Castellum, appointed in accordance with the resolution at the Annual General Meeting 2019, consists of Patrik Essehorn (Chairman) appointed by Rutger Arnhult trough companies, Vincent Fokke appointed by Stichting Pensioenfonds ABP, Carl Lindgren appointed by the Szombatfalvy sphere, Göran Espelund appointed by Lannebo Fonder, and Charlotte Strömberg, Chairman of the Board of Directors of Castellum.

The proposed Board members are:

a)Charlotte Strömberg (Chairman) b)Per Berggren c)Anna-Karin Hatt d)Christer Jacobson e)Christina Karlsson Kazeem f) Nina Linander g)Zdravko Markovski (new election) h)Joacim Sjöberg (new election)

The Board member Johan Skoglund has declined re-election.

Remuneration to the members of the Board of Directors is proposed to be the following (2019 remuneration within brackets):

• The Chairman of the Board of Directors: SEK 1,015,000 (SEK 985,000).
• Each of the other members of the Board of Directors: SEK 425,00 (SEK 410,000).
• Chairman of the Remuneration Committee: SEK 100,000 (SEK 50,000).
• Each of the other members of the Remuneration Committee: SEK 75,000 (SEK 50,000).
• Chairman of the Audit and Finance Committee: SEK 200,000 (SEK 150,000).
• Each of the other members of the Audit and Finance Committee: SEK 100,000 (SEK 75,000).

The proposed Board remuneration, including remuneration for committee work, accordingly amounts to SEK 4,640,000 (SEK 3,895,000), taking into account that the Board is proposed to be increased to eight Board members and provided that the number of committee members remains unchanged compared to last year.

In accordance with the Audit and Finance Committee's recommendation, Deloitte is proposed for re-election as auditor in Castellum until the end of the Annual General Meeting 2021. If the Annual General Meeting resolves to elect Deloitte as auditor, Deloitte has announced that Hans Warén will continue as the main responsible auditor at Deloitte. It is proposed that the auditor's fee shall be paid as per approved accounts.

Gothenburg January 24, 2020

Henrik Saxborn CEO Castellum AB

Board of Directors

Per Berggren Board member Charlotte Strömberg Chairman of the board

Anna Karin Hatt Board member Christina Karlsson Kazeem Board member

Board member

Board member

Christer Jacobson Board member

This Year-End Report has not been examined by the company's auditors.

This information is information that Castellum is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08.00 a.m. CET on Friday January 24, 2020.

The Castellum share

The Castellum share is listed on Nasdaq Stockholm Large Cap. At the end of the year the company had about 5,700 shareholders. The ten individual largest owner constellations confirmed as of December 31, 2019 are presented in the table below.

SHAREHOLDERS 12-31-2019

	Number of shares, thousand	Percentage of voting rights and capital
Rutger Arnhult	32,434	11.9 %
APG Asset Management	16,498	6.0 %
BlackRock	13,659	5.0 %
PGGM Pensioenfonds	9,396	3.4 %
Vanguard	8,883	3.3 %
Szombatfalvy-sfären	8,438	3.1 %
Lannebo Fonder	6,930	2.5 %
AMF Försäkring & Fonder	6,671	2.4 %
Norges Bank	5,721	2.1 %
SHB Fonder & Liv	4,040	1.5 %
Board and Executive Management Castellum	172	0.1 %
Other shareholders registered in Sweden	63,087	23.1 %
Shareholders registered abroad	97,272	35.6 %
Total registered shares	273,201	100 %

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

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

The Castellum share price as of December 31, 2019 was SEK 222,00 (163.35) equivalent to a market capitalization of SEK 60 billion (44.6), calculated on the number of outstanding shares.

Since the beginning of the year a total of 270 million (300) shares were traded, equivalent to an average of 1,080,000 shares (1,201,000) per day, corresponding on an annual basis to a turnover rate of 99 % (110 %). The share turnover is based on statistics from Nasdaq Stockholm, Cboe CXE EU, Turquoise and Cboe BXE EU.

Net asset value

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

The long term net asset value (EPRA NAV) can be calculated to SEK 195 per share (176). The share price at the end of the year was thus 114 % (93 %) 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 10.44 (9.65) on rolling annual basis. This results in a share price yield of 4.7 % (5.9 %) corresponding to a multiple of 21 (17).

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

Net income after tax 2019 to SEK 20.68 per share (27.28), which from the share price gives a yield of 9.3 % (16.7 %), corresponding to a P/E of 11 (6).

Dividend yield

The proposed dividend of SEK 6.50 (6.10) corresponds to a yield of 2.9 % (3.7 %) based on the share price at the end of the year.

Total share yield

During 2019 the total yield of the Castellum share, has been 39 % (22.3 %), including a dividend of SEK 6.10.

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.

DISTRIBUTION OF SHAREHOLDERS BY COUNTRY 12-31-2019

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

		Sensitivity analysis
		– 1 %-unit	+ 1 %-unit
Income from prop.mgmt rolling 12 months	3,146	3,146	3,146
Changes in value on properties (on average 10 years)	3.3 %	2.3 %	4.3 %
D:o MSEK	2,943	2,051	3,834
Current tax 9 %	– 284	– 284	– 284
Earnings after tax	5,805	4,913	6,696
Earnings SEK/share	21.25	17.98	24.51
Return on actual long-term net asset value	10.0 %	8.6 %	11.5 %
Earnings/share price	9.6 %	8.1 %	11.0 %
P/E	10	12	9

EPRA KEY RATIOS
	Dec 31, 2019	Dec 31, 2018
EPRA Earnings (Income from property mgmt after tax), MSEK	2,853	2,636
EPRA Earnings (EPS), SEK/share	10.44	9.65
EPRA NAV (long term net asset value), MSEK	53,165	48,009
EPRA NAV, SEK/share	195	176
EPRA NNNAV (net asset value), MSEK	49,223	44,318
EPRA NNNAV, SEK/share	180	162
EPRA Vacancy rate	7 %	7 %
EPRA Yield	5.0 %	5.1 %
EPRA "Topped-up" Yield	5.2 %	5.2 %

10 3 years years aver average/ age/ 1 year year year Growth Rental income SEK/share 3 % 3 % 4 % Income from property mgmnt SEK/share 7 % 9 % 7 % Net income for the year after tax SEK/share neg. neg. neg. Dividend SEK/share 7 % 9 % 8 % Long term net asset value SEK/share 11 % 14 % 11 % Actual net asset value SEK/share 11 % 15 % 11 % Real estate portfolio SEK/share 6 % 9 % 8 % Change in property value 4.4 % 5.6 % 3.3 % Yield Return on actual long term net asset value 12.6 % 18.9 % 14.5 % Return on actual net asset value 15.1 % 20.0 % 15.1 % Return on total capital 14.5 % 10.9 % 8.3 % Total yield of the share (incl. dividend) Castellum 38.9 % 25.3 % 17.9 % Nasdaq Stockholm (SIX Return) 35.0 % 12.2 % 12.4 % Real Estate Index Sweden (EPRA) 53.7 % 27.1 % 21.2 % Real Estate Index Europe (EPRA) 29.7 % 10.7 % 11.4 % Real Estate Index Eurozone (EPRA) 21.0 % 9.3 % 10.3 % Real Estate Index Great Britain (EPRA) 30.6 % 8.6 % 9.5 % Financial risk Loan-to-value ratio 43 % 46 % 49 % Interest coverage ratio 502 % 439 % 352 %	GROWTH, YIELD AND FINACNCIAL RISK

THE SHARE'S DIVIDEND YIELD

SHARE PRICE/NET ASSET VALUE 160%

YIELD EARNINGS PER SHARE

THE CASTELLUM SHARE'S PRICE TREND AND TURONVER SINCE THE IPO, MAY 23, 1997 UNTIL DECEMBER 31, 2019

Arcam has both functionality and the "wow" factor

Arcam EB, part of the GE Additive family, is a world leader in the manufacture of 3D printers for metal products. Since 2019, they have been one of Castellum's customers in a specially adapted five-floor, 15,000-square-meter building in Mölnlycke Business Park east of Gothenburg.

–Arcam has expanded drastically over the past few years, and there were several reasons we needed to find a more long-term, uniform solution as regards premises for our operations, says Karl Lindblom, CEO of Arcam EBM.

Arcam's former premises were small and spread across three different locations. One important reason for the move was that the company needed more suitable premises that better promoted safe workspaces in production, labs and training centers. Arcam's challenging technology required a safe laboratory environment, and the company wanted the possibility of separating warehouses and production.

Based on Arcam's needs, the building in Mölnlycke underwent a complete internal conversion. An addition for warehouses and logistics was built as well. The project began in the spring of 2018, and the first phase was occupied in the summer of 2019.

–All the parties involved, including Castellum, have been highly professional and we've kept to the schedule, which I think is proof that the partnership worked well despite the narrow time frames, Karl Lindblom says.

The entire operation – including the head office with office spaces, meeting rooms and break rooms, production, laboratories, warehouses and logistics – is now gathered under one roof in the premises. There is also space for training centers and a display about additive manufacturing (also known as 3D printing). The front desk, meeting rooms and display spaces are all located on the ground floor. One floor down are premises for 100 people working on research and development as well as laboratory operations, production, a warehouse and logistics. Office space for 400 people is divided between the two upper floors.

–We wanted to put all the company's resources under one roof to enable excellent cross-functional collaboration. Previously, for example, the lab and the development division were in different locations. Now, we wanted to create a work environment that both encourages and facilitates collaboration over divisional and functional borders, Karl Lindblom says.

In partnership with Castellum, Arcam has created an inviting environment with a good mix of carefully prepared open workspaces and smaller conference rooms. Arcam's operations are reflected in its choices of materials and colors for its decor and furniture. Metal is combined with natural materials such as light-colored wood, leather and wool to connect with the company's Swedish origins. There is also a large two-floor break room with large, airy surfaces to let in natural light – a space that is suited for lunch breaks and coffee breaks as well as for small informal gatherings or large meetings that bring the whole company together. To a visitor, it's clear that Arcam's new premises were not nominated for Sweden's most attractive office of 2019 by chance.

–Last but not least, our ambition in designing our new premises was to create a "wow" factor. We want our visitors and customers – and our current and potential employees – to see Arcam as the impressive modern and functional workplace it truly is, Karl Lindblom concludes.

Definitions

SHARE RELATED KEY RATIOS

Data per share

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

Dividend pay-out ratio

Dividend as a percentage of income from property management.

Dividend yield

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

EPRA EPS - Earnings per Share

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

EPRA NAV - Long term net asset value

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

EPRA NNNAV - Actual net asset value

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

Number of shares

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

Total yield per share

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

PROPERTY RELATED KEY RATIOS

Economic occupancy rate

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

Income from property management

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

Net operating income

Net operating income as a percentage of rental income.

Operating expenses

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

Property type

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

Rental income

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

Rental value

Rental income plus estimated market rent for vacant premises.

SEK per square metre

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

FINANCIAL KEY RATIOS

Interest coverage ratio

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

Loan-to-value ratio

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

Return on actual net asset value

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

Return on long term net asset value

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

Return on equity

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

Return on total capital

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

Financial calendar

Annual report 2019 Week 6, 2020 (English language version) Annual General Meeting 2020 19-March-20 Interim report Jan–March 2020 24-April-20 Half-year report Jan–June 2020 15-July-20 Interim report Jan–Sept 2020 15-Oct-20

www.castellum.com

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

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

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

Invitation to Annual General Meeting 2020

The Annual General Meeting of shareholders in Castellum (publ) will be held on Thursday March 19, 2020 at 5 pm at Chalmers Kårhus, RunAn, at Chalmersplatsen 1 in Gothenburg. The entrance opens at 4 pm. Shareholders wishing to attend the Annual General Meeting must be registered as shareholders in the share register kept by Euroclear Sweden AB by Friday March 13, 2020 and must also have notified their attendance to the company on Friday March 13, 2020 (preferably before 4 pm).

Summons to the Annual General Meeting will be around February 17, 2020 and the summons will be available at www.castellum.com. Also Castellum's annual report and other documents which will be presented at the Annual General Meeting will be available on the website by then. The summons will include the items to be addressed at the Annual General Meeting. Shareholders who wish to attend the Annual General Meeting are welcome to notify their attendance as described below: by filling out a notification form on www.castellum.com, by post to Castellum AB (publ), c/o Euroclear Sweden AB, Box 191, 101 23 Stockholm eller per telefon 08 – 401 43 76. .The notification must state name/company name, personal identification

About Castellum

Castellum is one of the largest listed real estate companies in Sweden. Property values amount to 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 and also in Copenhagen and Helsinki.

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

The Castellum share is listed on Nasdaq Stockholm Large Cap.

number/company registration number, address and telephone number. Summons will be sent promptly and free of charge for the recipient to the shareholders upon request. The request may be presented in the same way as notice of attending the Annual General Meeting. For information regarding the processing of personal data please visit www.euroclear.com.

For those shareholders, who wish to be represented by proxy, the company provides a proxy form on www.castellum.com. Shareholders with nominee registered shares must temporarily register such nominee shares in their own name in order to have the right to participate at the Annual General Meeting. Such registration must have been carried out at Euroclear Sweden AB no later than Friday March 13, 2020. Shareholders must, in good time before this date, instruct their nominees to effect such registration.

A shareholder have the right to have a matter addressed at the coming Annual General Meeting. For practical reasons the request should be received by the company no later than January 31, 2020. The request should be addressed to Castellum AB, Att: Henrik Saxborn, Box 2269, 403 14 Gothenburg, Sweden.

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