Eastnine — Interim / Quarterly Report 2018

Nov 15, 2018

Interim Report January – September ²⁰¹⁸ Q3

Significant accounting changes: As of 1 July 2018, Eastnine Group applies consolidated financial reporting (acc. to IFRS). Previously, Eastnine applied AB applied the investment entity consolidation exception, with subsidiaries recognised at fair value through profit or loss. Historic numbers have not been restated in the actual financial statements on p. 15-16. However, this report does include historic pro-forma numbers (see p. 20), based on the same new consolidation principles as for the actual financial statements, for comparative purposes. Any references to pro-forma numbers are marked "pro-forma". All other financial information is based on actual non-restated financial statements.

Growth and value gains in our core segment

1 January – 30 September 2018

• Rental income¹ increased by 62.5% to EUR 6,614k (9M 2017: 4,070k) primarily due to acquisitions. Comparable rental income¹ increased by 4.9%
• Occupancy was 97.5% (98.1%)
• Average rent increased 3.5% to EUR 14.30/sqm/month
• Net operating income¹ increased by 77.0% to EUR 5,569k (3,147k)
• Profit from property management¹ increased to EUR 2,095k (-936k)
• Unrealised value changes in properties amounted to EUR 4,620k (0), of which EUR 3,675k in Q3 following a revaluation of the completed third tower of 3Burės
• Other unrealized value changes amounted to EUR -3,420k (-133k), of which EUR -5,145k (-3,296k) refers to Melon Fashion Group due to RUB depreciation, and EUR 1,974k (3,430k) increase refers to property funds
• Net profit amounted to EUR 4,716k (832k), corresponding to EUR 0.21 (0.03) per share ¹ Pro-forma, (see p. 20)

Key events during Q3 2018

• The construction of the third tower in 3Burės, with 13,270 sqm fully let office space, was completed
• 368,822 shares were repurchased at an average price of SEK 94.70, totalling EUR 3,368k and the buyback program was extended until the end of 2018

Key events after Q3 2018

• The two original towers of 3Burės in Vilnius were awarded LEED Platinum certification for green buildings
• A shareholders' meeting in Melon Fashion Group decided to pay a dividend in December, corresponding to approximately EUR 2,200k for Eastnine's holding, a direct yield of 6.7% including a dividend already paid in June
• Mattias Lundgren has been appointed as Interim CFO following the resignation of Lena Krauss with effect from 19 November

Key figures

		REPORTED	PRO-FORMA¹	PRO-FORMA¹	PRO-FORMA¹
		Q3 2018	Q3 2017	9M 2018	9M 2017
Rental income	EURk	2,339	1,657	6,614	4,070
Net operating income	EURk	2,104	1,330	5,569	3,147
Profit from property management	EURk	1,217	-16	2,095	-936
Unrealised changes in value, properties	EURk	3,675	0	4,620	0
Unrealised changes in value, other	EURk	-718	2,737	-3,420	-133
Realised changes in value	EURk	25	875	2,474	2,168
Profit before tax	EURk	4,199	3,596	5,770	1,100
Profit after tax2	EURk	3,451	3,501	4,716	832
Earnings per share2	EUR	0.16	0.15	0.21	0.03
Surplus ratio	%	90.0	80.3	84.2	77.3
Property value	EURk	156,102	99,703	-	-
Loan-to-value	%	37.5	33.1	-	-
			30 SEP 2018	31 DEC 2017	30 SEP 2017
	EUR		10.66	10.57	9.79
NAV per share3	SEK		110.2	103.9	94.5
	EUR		10.84	10.68	9.88
(EPRA) NAV per share1	SEK		112.0	105.0	95.3

¹Deviates from reported financial statements due to changes in accounting principles (see p. 11). ²All period are as reported. ³Adjusted for share buybacks. 1 EUR = 10.33 SEK on 30 Sep 2018 (source: Reuters).

This is Eastnine

Eastnine is a Baltic real estate company listed on Nasdaq Stockholm in 2007. Eastnine's aim is to generate predictable cash flows by being a long-term provider of sustainable prime office space in the Baltic capitals, where the combination of well-educated young talent, an agile business climate and high productivity has created a vibrant region for Nordic and international businesses. Eastnine enables them to grow by offering modern office premises in a market with a deficit of suitable buildings.

Eastnine's plan is to transform from its previously diversified Eastern European investment strategy, into a pure Baltic real estate company by the end of 2020.

Transformation Strategy

Property value, Real Estate Direct Targets for Real Estate Direct 2020 Status 30 Sep 2018

Loan to value below 65%	37%
Interest coverage ratio at least 2.0x	5.6x
Portfolio fully transformed into direct real estate by the end of 2020	53% (of invested equity)
Profit from property management capacity in direct real estate of EUR 15m by the end of 2020, annualised	7.4m (annualised Q3 2018)
Dividend at least 50% of profit from property management. Until 2020, at least 2% of NAV	2.0% of NAV per 31 Dec 2017
Return on equity of 13-15% over a 5-year period, in Real Estate Direct segment	17.4% (last 12 months)

Completion of the third tower and consolidated reporting

"The 3Burės complex of 41,700 sqm will have the highest sustainability rating"

Eastnine continued its transformation into a real estate company during the quarter. We expanded our property portfolio by completing the development of the third tower of 3Burės in Vilnius and changed our financial reporting whereby we now consolidate our property subsidiaries in the financial statements.

Successful delivery in Vilnius

In the third quarter, we completed the two-year construction of the third tower of 3Burės in the heart of Vilnius central business district. It was delivered on time. In total, we invested EUR 29m including land acquisition and construction costs. The 23-floor office property has a leasable area of 13,300 sqm and is expected to receive its LEED Platinum certification later this year. The value of the property, which is fully occupied by Swedbank and Visma on long leases, was revalued upon completion with a positive contribution to the results. In October, the two original towers of 3Burės were awarded LEED Platinum, meaning that the full complex of 41,700 sqm will have the highest possible sustainability rating.

New financial reporting

Another key step is the change of financial reporting as of 1 July. Previously, we applied investment entity reporting that is more appropriate for investment companies. From this report and in future, we consolidate the results and balances of our subsidiaries into Eastnine's financial statements. This, we believe, will make it easier for investors and shareholders to assess our performance. We are also pleased to be included now in Nasdaq Stockholm's real estate index.

Eastnine is in build-up phase and currently manages only a handful of properties. This means that specific tenant customisations and revaluations may lead to volatile quarterly key metrics such as surplus ratio, yield and return on equity. I recommend you not only to look at isolated quarters, but also to look through to the medium term. As we deploy cash, expand our property portfolio and divest non-core holdings, volatility will decrease on a group level.

Steadily growing earnings

The pro-forma income statement (page 20), shows how we are transforming Eastnine and growing our earnings capacity. Until the second quarter of 2017, Eastnine managed only one property which was not enough to cover central administration expenses. Since then, we have steadily improved our cash flow and after the Latvian acquisitions earlier this year, our profit from property management is positive. In the third quarter, profit from property management reached EUR 1,217k, and is set to improve further as of November when the third tower of 3Burės starts to generate full income.

Underlying portfolio performance continues to be solid, with average occupancy remaining at a high level at 97.5% (as of 30 September 2018) and rental income seeing upticks largely because of rent indexation. As we have pointed out before, we will work with re-lettings next year when a few of our bigger lease contracts expire. On the one hand, this will mean temporarily higher vacancies and require investments in tenant customisation, but on the other hand it also gives us a unique opportunity to achieve higher rent levels in the currently strong rental market.

Although the real estate segments had an exceptionally strong quarter, our NAV per share increased by a more moderate 1.7% during the quarter. It was dampened partly by rouble weakness which led to a 3.8% writedown of Melon Fashion Group in EUR, and partly by our large cash position that equalled 25.2% of NAV.

Eyes remain set on acquisitions

Our key priority continues to be deployment of cash into strategic acquisitions. Our pipeline remains strong, and we are evaluating multiple opportunities.

Kestutis Sasnauskas, CEO

Market

Geographic breakdown, All segments¹ % of all segments

• Latvia 20%
• Lithuania 37%
• Russia 24%

¹Real Estate Direct: Property value less liabilities to credit institutions Real Funds and Other: Net Asset Value

¹Real Estate Direct: property value less liabilities to credit institutions Real Funds: Net Asset Value

Market

Baltics

Third quarter economic growth in the Baltic states remained healthy, largely fuelled by domestic demand as a result of wage growth and low unemployment. This is reflected in growing household consumption, construction and service sectors. The Baltic growth rates, however, have been somewhat subdued due to the ongoing turbulence and uncertainty concerning the global trade environment in combination with decelerating exports to Russia. According to flash estimates, GDP in Latvia grew by 4.8% and in Lithuania by 2.2% y-o-y in Q3 2018. Estonia has not yet published GDP growth for Q3 but grew by 3.7% in Q2 2018. According to Eurostat, September HICP annual inflation in Estonia was 3.5% (vs 3.9% in Jun), in Latvia 3.3% (2.7%), and in Lithuania 2.4% (2.6%). Inflation in the euro area was 2.1% in September, up from 2.0% in June.

According to the IMF's latest forecasts for FY 2018, the Baltic economies are expected to grow at rates of 3.5-3.7% with inflation of 2.5-3.0%, showing signs of convergence in relation to previous forecasts which projected 3.2-4.0% and 2.2-3.0% for growth and inflation rates respectively.

Prime office yields in the Baltic capitals are at around 6.25-6.50%, a slight decrease from a year ago, but still significantly higher than in the Nordic capitals. Prime office demand remains strong with low vacancies, pushing up average rents.

Russia

Incoming data for the third quarter indicates that the Russian economy remained robust following the boost from hosting the World Cup, with falling unemployment rates and retail sales gaining steam. The political landscape, however, is still heavily influenced by uncertainty concerning the pending sanctions awaiting approval in the U.S. Congress.

August consumer statistics indicated slight retail sales deceleration in real terms to 2.8% from 3.0% in May, with non-food sales growth increasing. Real wages increased 7.0% while real disposable income experienced a downturn to -0.9% y-o-y. Inflation hiked from 2.3% to 3.1% y-o-y. The consumer confidence index contracted q-o-q, however it is still considerably higher than in 2016. We treat this data as fairly supportive for MFG's business but acknowledge risks related to geopolitical developments as demonstrated by the drop in rouble value following uncertainty related to sanctions.

Earnings Jan – Sep 2018

The third quarter marked increased rental income and profit from property management in the core real estate operations. Real estate funds gave a positive contribution, while the weak rouble again caused a euro write-down of MFG despite strong results.

	Rental income
--	---------------

EUR '000	Q3 2018	Q3 2017¹
Comparable properties	1,686	1,657
Completed development	45	-
Acquisitions	607	-
Total rental income	2,339	1,657
EUR '000	9M 2018¹	9M 2017¹
Comparable properties	3,574	3,409
Completed development	45	-
Acquisitions	2,995	661

Changed financial reporting

It is Eastnine's assessment that the Company no longer falls within the IFRS classification of an investment entity, as a majority of its portfolio (excluding cash) now consists of directly owned real estate assets. As of 1 July 2018, Eastnine Group consequently reports consolidated financial statements of the parent company and its subsidiaries, including directly owned real estate subsidiaries.

Until and including Q2 2018, Eastnine's financial statements refer to the parent company alone, while subsidiaries were recognised at fair value through profit or loss. This change in status is accounted for prospectively, meaning that historic numbers have not been restated in the actual financial statements on p. 15-16. However, this report does include consolidated pro-forma numbers for the past six quarters, for comparative purposes (see p. 20). Any references to pro-forma numbers are marked "pro-forma". All other financial information is based on actual non-restated financial statements.

Revenues

Q3 2018

Rental income in the third quarter increased by 41.2% to EUR 2,339k (pro-forma Q3 2017: 1,657k). Comparable rental income in an identical portfolio grew by 1.8% year-on-year. This is a mixed result of a 3.5% uptick in average rent to EUR 14.3 (13.8) per sqm/month on one hand, and a reduced occupancy rate from 98.1% to 97.5% on the other. The acquisition of the Alojas properties in Riga in February 2018 added EUR 607k in rental income during the quarter, and EUR 45k was added after the third tower in 3Burės was completed in September 2018 and part of tenants moved in.

9M 2018 (pro-forma)

Pro-forma rental income for the nine-month period 2018 increased by 62.5% to EUR 6,614k (4,070). Comparable rental income in an identical portfolio grew by 4.8%, while the remainder of the period's growth came from acquisitions of the Alojas properties in Riga in February 2018 and of Vertas in Vilnius in June 2017, as well as a smaller portion from the third tower in 3Burės, which was completed in the latter part of September 2018.

Earnings

Q3 2018

Net operating income amounted to EUR 2,104k (pro-forma Q3 2017: 1,330k), corresponding to a surplus ratio of 90.0% (80.3%). The relatively high surplus ratio is due to the vast majority of lease agreements being triple-net, meaning that tenants cover costs related to the leased premises. The year-on-year increase of 58.2% in net operating income is mainly attributable to the acquisition of Alojas in Riga.

Profit from property management amounted to EUR 1,217k (-16k). Central administration expenses amounted to EUR 621k (1,115k) in Q3 2018. The year-onyear decrease of 44.3% is a mixed result of having closed the former holding companies in Cyprus and Luxembourg, and lowered operating and staff expenses. Unrealised value changes in properties amounted to EUR 3,675k (0).

Contribution to earnings, segment

EUR '000	9M 2018
Profit property management	1,847
Unrealised value changes	6,895
Contr. Real estate direct	8,742
Unrealised value changes	2,613
Realised value changes	66
Contr. Real estate funds	2,680
Unrealised value changes	-4,334
Realised value changes	1,008
Contribution Other	-3,326
Central admin and other operating expenses	-2,499
Unrealised value changes	-86
Financial net, central	-49
Profit before tax, Group	5,464
Profit after tax, Group	4,716

Unrealised value changes in investments amounted to EUR -1,060k (2,263k), whereof EUR -1,702k (-1,249k) refers to Melon Fashion Group and EUR 727k (2,213k) refers to East Capital Baltic Property Funds II and III. Unrealised value changes in derivatives amounted to 342k (474k).

Realised values and dividends amounted to EUR 25k (875k). Profit before tax amounted to EUR 3,472k (3,596k). Net profit after tax amounted to EUR 2,834k (3,501k).

9M 2018 (pro-forma)

Net operating income for the pro-forma 9M 2018 period amounted to EUR 5,569k (pro-forma 9M 2017: 3,147k), corresponding to a surplus ratio of 84.2% (77.3%). The year-on-year increase in net operating income is mainly attributable to the acquisition of Alojas in Riga in February 2018 and of Vertas in Vilnius in June 2017.

Profit from property management amounted to EUR 2,095k (-936k). Central administration expenses amounted to EUR 2,331k (3,162k).

Unrealised value changes in properties amounted to EUR 4,620k (0). Unrealised value changes in investments amounted to EUR -3,256k (-607k), whereof EUR -5,145k (-3,296k) refers to Melon Fashion Group and EUR 1,974k (3,430k) refers to East Capital Baltic Property Funds II and III. Unrealised value changes of derivatives amounted to EUR -164k (474k). Realised values and dividends amounted to EUR 2,474k (2,168k) referring to the exits in Komercijalna Banka Skopje, East Capital Eastern Europe Small Cap Fund and East Capital Global Frontier Markets Fund, as well as to dividends from Melon Fashion Group and Baltic Property Fund II during the period.

Profit before tax amounted to EUR 5,770k (1,100k). Net profit amounted to EUR 4,716k (832k).

Segment reporting

Pro-forma numbers per quarter are not available on segment level. The Real Estate Direct segment, comprising the directly owned property subsidiaries, generated profit before tax of EUR 8,742k for the 9M 2018 period.

The Real Estate Funds segment, comprising East Capital Baltic Property Fund II and III, generated profit before tax of EUR 2,680k, of which EUR 2,613k is reported as unrealised value changes although it includes a realised dividend income of EUR 640k, and EUR 66k is reported as realised value.

The segment Other, today comprising only Melon Fashion Group (and previous Other holdings that have been divested), generated profit before tax of EUR -3,326k of which EUR -5,145k refers to a EUR unrealised writedown of the MFG holding due to weakening of the RUB, whereas the RUB based fair value was unchanged. Realised dividend from MFG amounted to EUR 930k.

Combined unallocated central administration and other operating expenses for the 9M 2018 period amounted to EUR -2,499 and other unallocated items to net EUR -135k. Reported group profit before tax amounted to EUR 5,463k, and net profit to EUR 4,716k.

Financing

Interest-bearing liabilities at the end of the period amounted to EUR 58,501k (proforma 30 Sep 2017: 33,000k), corresponding to a loan-to-value ratio of 37.5% (33.1%). Unutilised credit facilities amounted to EUR 9,870k, of which the main part relates to the third tower of 3Burės. The average interest rate on bank loans was 2.2% (2.6%) in Q3 2018, including commitment fees on unutilised facilities. Interest expenses for Q3 2018 include a smaller positive one-off adjustment related to capitalised interest expenses in the newly developed third tower of 3Burės.

At 30 September 2018, average capital tie-up on interest bearing loans was 5.0 (6.1) years. The average fixed interest term was also 5.0 (6.1) years, as currently 100% of interest is fixed using fixed-interest derivatives. The derivatives are measured at fair value and the change in value is recognised through profit or loss, with no cash flow effect. At 30 September 2018, the fair value of derivatives was EUR -339k (-315k).

The 9M 2018 result includes financial income of EUR 683k (551k), pertaining to internal loans, which prior to the accounting changes on 1 July 2018 were not eliminated on Group level.

Tax

Tax expense for the third quarter amounted to EUR 748k (pro-forma Q3 2017: 95k), all of which relates to deferred tax in Eastnine Lithuania where corporate income tax of 15% is applied. No corporate income tax is paid in Estonia or Latvia, where corporate income tax of 20% is levied only on distributed profits.

Financial position and net asset value

Shareholders' equity amounted to EUR 232,415k (232,292k) on 30 September 2018. The equity/asset ratio was 77.0%. Net asset value (NAV) per share was EUR 10.66 (9.79). EPRA NAV per share was EUR 10.84 (9.88).

Cash flow

Q3 2018

Cash flow from operating activities before changes in working capital amounted to EUR 1,433k. Change in working capital was EUR 3,066k. Investing activities had an impact of EUR 2,868k, the majority of which refers to the newly developed third tower in 3Burės. Financing activities had an impact of EUR 533k, of which EUR 3,368k refers to share buybacks and EUR 3,340k refers to financing of the third tower. Total cash flow for the quarter was EUR -5,034k. Cash and cash equivalents at the end of the period amounted to EUR 58,515k.

Investments and divestments

No acquisitions or divestments were made during the third quarter. During the nine-month 2018 period, Eastnine's investments totalled EUR 33.1m (29.1) and divestments totalled EUR 42.4m (2.1).

EURM	9M 2018	9M 2017	Q3 2018	Q3 2017	FY 2017
Alojas Biroji	25.6	-	-	-	-
Alojas Kvartals	4.0	-	-	-	-
East Capital Baltic Property Fund III	3.5	6.0	-	6.0	6.0
Vertas	-	29.1	-	-	29.1
3Burės development	-	5.0	-	2.0	7.2
Total investments	33.1	40.1	-	8.0	42.4
East Capital Eastern Europe Small Cap Fund	16.2	6.1	-	1.9	8.1
Komercijalna Banka Skopje	13.9	-	-	-	-
East Capital Global Frontier Markets Fund	12.3	-	-	-	-
East Capital Baltic Property Fund II	-	-	-	-	9.8
Trev-2 Group	-	5.7	-	-	5.7
East Capital Bering Ukraine Fund Class R	-	-	-	-	1.3
Total divestments	42.4	11.8	-	1.9	24.9

Real Estate Direct

The real estate portfolio through direct holding is in its build-up phase and consists of 62,730 sqm of A class office space in Riga and Vilnius. The market is favourable with low vacancies and rising rent levels.

• 3Bures
• 3Bures, third tower
• Vertas
• Alojas Biroji
• Alojas Kvartals

¹Property value less liabilities to credit institutions

Portfolio 30 Sept 2018 (EURk)

	GLA	VALUE
	(SQM)	(EUR K)
Total Vilnius	51,070	126,590
Total Riga	11,660	29,512
Real Estate Direct	62,730	156,102

Property Portfolio

Eastnine's portfolio of directly owned real estate is concentrated on A class office properties in the Baltic capitals. On 30 September 2018, the portfolio consisted of five investment properties, three in Vilnius and two in Riga, with a total gross leasable area (GLA) of 62,730 sqm and a market value of EUR 156,102k. Floor space occupancy was 97.5% (98.1%) at the end of the period. The implied yield is 6.8% (6.1%) on annualised Q3 2018 net operating income.

During the third quarter, new leases were signed at a total annual rental value of EUR 439k, and rental contracts totalling EUR 1,598k were renegotiated with an average rent increase of 12%, reflecting the still strong demand for modern A class office premises in Vilnius and Riga.

Since the beginning of the year, two investment properties, Alojas Biroji and Alojas Kvartals in Riga, have been added and one development project, the third tower of 3Burės in Vilnius, has been completed and reclassified as investment property. There are currently no development projects in Eastnine's portfolio.

Eastnine's vision is to be a long-term provider of sustainable prime office space in the Baltics. Over the coming years, Eastnine will successively use its currently strong cash position to build a long-term property portfolio in the Baltic capitals, with the aim of being fully transformed into a pure real estate company by the end of 2020. Acquisitions will be made primarily within the A class office segment and may include development projects.

Vilnius

Eastnine's property portfolio in Vilnius comprises office properties with a gross leasable area of 51,070 sqm in central Vilnius, equal to 24% of the estimated A class market. The combined property value on 30 September 2018 was EUR 126,590k.

3Burės is facing larger vacancies in 2019, which should enable Eastnine to increase the property value through higher rents following investments in tenant customisation and quality improvements. Vacancy is expected to increase during the renovation period in 2019 but given the high demand for modern office premises and the low overall vacancy in Vilnius, this is expected to be temporary.

The development of the third tower of 3Burės was completed in September, adding 13,270 sqm to Eastnine's leasable floor space in central Vilnius. Tenants started moving in at the end of September and the property will be fully occupied by Swedbank, Visma and a restaurant by the end of this year. The annual rental income of the third tower of 3Burės is expected to be approximately EUR 2,100k.

Vertas continues to develop according to plan. The property, which has been fully occupied since acquisition in June 2017, temporarily has some vacancies due to tenant turnover. Most of these premises are already pre-let at higher average rent.

Riga

Eastnine's property portfolio in central Riga comprises commercial properties with a gross leasable area of 11,660 sqm, equal to 11% of the estimated A class market. The combined property value on 30 September 2018 was EUR 29,512k.

The Alojas properties in Riga were acquired as fully let at the end of February 2018. The purchase price discounted a temporary uptick in vacancy in mid-2019 when the lease contract of the anchor tenant, originally covering 50% of the leasable

Rental income and surplus ratio

Property value and LTV

space, will expire. Of this upcoming vacant floor space, 27% is already signed and the remaining 23% has full rent compensation until July 2019. Eastnine's average rent in Riga is expected to decline somewhat with the new lettings, as was discounted already in the purchase price.

Acquisitions and pipeline

During the first nine months of 2018, Eastnine expanded its portfolio into central Riga with the acquisition of the Alojas properties, as described above. Further acquisition and project opportunities are being evaluated in all three Baltic capitals, with the aim of being fully transformed into a real estate company by the end of 2020.

Value Change

Combined market value of Eastnine's properties on 30 September 2018 was EUR 156,102k (pro-forma 30 Sep 2017: 99,600k), all of which refers to investment properties.

All properties are externally valued at least once per year. One property (third tower of 3Burės) was externally valued in the third quarter 2018, resulting in a property value increase of 10.3%, and one property (Vertas) was externally valued in the second quarter resulting in an uplift of 3.3%. The market value of the remainder of the properties is reviewed quarterly based on the most recent external valuation,

or acquisition value. No other changes in property values were made during the period.

Unrealised value changes in properties were EUR 3,675k in the third quarter, due to the completion of the third tower of 3Burės. In the nine-month 2018 period, value changes were EUR 4,620k (pro-forma).

Sustainability

During the quarter we continued to work with previously initiated sustainability projects as well as newly added initiatives, including a new tenant engagement program with the intention to have it rolled out in 2019. After the end of the quarter, we also reached a milestone for environmental performance of our property portfolio as our Vilnius located building 3Burės was awarded Platinum LEED certification by USGBC. The third tower of 3Burės, also expects its Platinum certification confirmed by year-end. The certification process for the other properties in our portfolio will commence in 2019.

Real Estate Funds

Real Estate Funds

• EC Baltic Property Fund II
• EC Baltic Property Fund III

East Capital Baltic Property Fund II

The fair value of Eastnine's holding in East Capital Baltic Property Fund II continued to perform well, with a 7.8% uplift in the nine-month period and 2.2% in the third quarter. The fund has four commercial properties in Tallinn, representing 92% of the fund, as well as one retail property in Riga, which remained vacant until reopening.

Eastnine's share of the fund, %	45
Fair value of Eastnine's holding, EURm	21.8
% of Eastnine's equity	9.4
Value change Jul-Sep, %	2.2
Value change Jan-Sep, %	7.8

East Capital Baltic Property Fund III

The fair value of Eastnine's holding in East Capital Baltic Property Fund III increased by 5.0% in the nine-month period 2018 and by 1.2% in the third quarter, negatively affected by acquisition related costs in Galleria Riga. The fund made two acquisitions in Riga in April: P5 Industrial Park and Galleria Riga. Following these acquisitions, the fund has three commercial properties in Tallinn and two in Riga.

Eastnine's share of the fund, %	22
NFair value of Eastnine's holding, EURm	20.7
% of Eastnine's equity	8.9
Value change Jul-Sep, %	1.2
Value change Jan-Sep, %	5.0

Other

Other % of portfolio

Melon Fashion Group

Melon Fashion Group

The fair value of Eastnine's holding in Melon Fashion Group (MFG) is unchanged from the year-end valuation in RUB but decreased in Eastnine's books by 3.8% in July-September and by 8.7% in January-September due to a weaker RUB/EUR rate. In Q3 2018, MFG's total sales increased by 28%, supported by 9.7% comparable sales growth, 12% average selling space increase and continuous robust online growth. Combined online sales via own online store and third-party marketplaces grew by 78% and reached 11% of total sales in Q3 2018, vs 8% in Q3 2017. Profitability continued to improve with an EBITDA margin of 15.4%, 2.2 ppt above Q3 2017. Q3 and 9M EBITDA exceeded corresponding results last year by 50% and 59% respectively. Comparability was not materially affected by currency. Q3 2018 gross profit rose by 25% year-on-year, while gross margin dropped to 50.6% vs 51.9% in Q3 2017, due to local currency weakness. However, compared to 9M 2017, gross margin was practically unchanged. The total number of stores at the end of Q3 was 554, compared to 551 at the beginning of the year. During the 9M 2018 period, MFG continued to upgrade its store network adding 49 new format stores, including 18 new openings and 31 relocations, while 16 low-potential stores were closed. The franchise network expanded by 1 store net. The total selling area increased by approx. 7% year-to-date. Management's focus remains on the conversion to new format, online sales, and development of IT-solutions.

Eastnine's shareholding in the company, %	36
Fair value of Eastnine's holding, EURm	43.5
% of Eastnine's equity	18.7
Value change Jul-Sep, %	-3.8
Value change Jan-Sep, %	-8.7

Other information

Risks and uncertainties

The dominant risk in Eastnine's operations is commercial risk in the form of changes in rent levels, vacancies and interest rates, as well as changes in the economic or business climate, and currency rates in the markets where Eastnine is present. A more detailed description of Eastnine's material risks and uncertainties is provided in the Company's Annual Report 2017 on pages 55-56. An assessment for the coming months is provided in the Market comment on page 4.

Properties are recognised at fair value, and value changes are recognised through profit or loss in Eastnine's income statement. The effects on consolidated profit of changes in property value are presented in the sensitivity analysis on page 19 in this report.

Organisational and investment structure

Eastnine AB (publ) (the Parent Company) is a Swedish investment company listed on Nasdaq Stockholm. With the exception of Melon Fashion Group that is owned directly by the Parent Company, the activities are managed by the Estonian operating subsidiary Eastnine Baltics OÜ with local subsidiaries in Latvia and Lithuania, together called Eastnine Group.

Eastnine Group has 14 full-time employees, of which seven in its Stockholm headquarters, six in Vilnius and one in Tallinn. Gender representation is 50/50 in Eastnine's executive management as well as among all employees.

Parent Company

The Parent Company's net result for the nine-month 2018 period was EUR -572k (832k), and for Q3 2018 EUR -1,839k (3,501k), and comprises mainly value changes of its only direct holding Melon Fashion Group, as well as operating expenses and financial income/expenses of the Parent Company. See page 19.

Related parties

On 30 September 2018, Eastnine AB had a related party relationship with its subsidiaries, Board members and employees. Eastnine AB's management, Board members and their close relatives and related companies control 29.3 percent of voting rights in the Company, the majority of which is controlled by the East Capital Group. There has been no material related party transaction during the year.

Dividend and share buybacks

According to the current buyback program, buybacks may be carried out if the Eastnine share trades at a discount to its most recently reported Net Asset Value (NAV) per share in EUR. During the period 1 January through 30 September 2018, Eastnine repurchased 1,153,066 shares at an average price of SEK 90.41 per share. In May 2018, a total of 2,445,772 previously repurchased shares were cancelled. On 30 September 2018, the Company held 575,122 own shares in treasury, corresponding to 2.6 percent of total outstanding shares.

The total number of outstanding shares, including treasury shares, in Eastnine as of 30 September 2018 was 22,370,261. Adjusted for treasury shares, the number of outstanding shares was 21,795,139. The weighted average number of shares outstanding for the reporting period was 22,289,825.

The AGM 2018 resolved to pay an ordinary dividend for 2017 of SEK 2.10, or EUR 0.21, per share and that the dividend is to be distributed semi-annually of SEK 1.05 per share and dividend occasion. The first dividend payment was made on 2 May 2018. The record date for the second dividend is 29 October 2018, and the payment will be on 1 November 2018.

Commitments

Eastnine has a commitment to invest EUR 20m in East Capital Baltic Property Fund III. As at 30 September 2018, EUR 17.6m had been drawn down by the fund, of which EUR 3.5m in 2018. The remaining commitment amounted to EUR 2.4m.

Accounting principles

This interim report has been prepared in accordance with International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) 34 Interim Financial Reporting and applicable provisions in the Swedish Annual Accounts Act (Årsredovisningslagen). The interim report for the Parent company has been prepared in accordance with the Swedish Financial Reporting Board's standard RFR 2 and the Swedish Annual Accounts Act Chapter 9, Interim report.

During the period 1 January 2014 – 30 June 2018, Eastnine AB applied the investment entity consolidation exception in IFRS 10, which implies that all holdings, including subsidiaries, are recognised at fair value through profit or loss. In reassessing

Eastnine AB, it has been concluded that the Company no longer falls within the classification of an investment entity, as a majority of the portfolio (excluding cash) now consists of directly owned real estate assets. As of 1 July 2018, Eastnine Group reports consolidated financial statements of the parent company and its subsidiaries, including directly owned real estate subsidiaries. This change in status is accounted for prospectively.

Due to the change in status, changes in accounting principles are applied as of 1 July 2018, compared to the annual report for the previous year. As mentioned, the consolidated financial statements include the Parent Company and subsidiaries. For subsidiaries that were measured at fair value in accordance with IFRS 10, Business Combination (IFRS 3) is applied using the fair value of the investment on the date of the change of status as the deemed consideration transferred. Subsidiaries are consolidated prospectively from that date, which means that comparatives are not restated.

Intra-group receivables and liabilities, revenues or expenses and unrealised gains or losses arising from internal group transactions between group companies are eliminated in their entirety when the consolidated financial statements are prepared.

The holding in Melon Fashion Group (MFG) will continue to be measured, controlled and monitored based on fair value and accounted for as financial instruments at fair value through profit/loss, according to IFRS 9 and IAS 28 p.18-19. Properties are recognised at fair value, and value changes are recognised through profit or loss. Hedge accounting is not applied on interest rate swaps, instead the swaps are recognised at fair value through profit or loss. Loans and other financial debt are measured at amortised cost.

Deferred tax liability is reported in Eastnine Lithuania, where corporate income tax of 15% is applied. No corporate income tax is paid in Estonia or Latvia, where corporate income tax of 20% is levied only on distributed profits.

The separate financial statements of the Parent Company, Eastnine AB, are produced in accordance with RFR 2. The applied accounting principles appear in the applicable parts of the accounting principles for the group with the addition of valuation of shares in subsidiaries. Shares in subsidiaries are, from date of change in status to not being an investment entity, recognised at historical acquisition value and the value is regularly tested for impairment.

The new standards for financial instruments (IFRS 9) and revenue recognition (IFRS 15) have had no effect on how Eastnine recognises such items. The application of IFRS 16 Leases, from 2019, will mean that all leases, including rent for office facilities, are capitalised as assets and liabilities and that expenses consist of depreciation and interest. Eastnine rents office facilities in Stockholm to a minor extent and other leasing contracts will not either have a material effect.

Events after 30 September 2018

The two original towers of 3Burės in Vilnius were awarded LEED Platinum certification for green buildings, the highest certification level. Melon Fashion Group decided to pay a December dividend of approximately EUR 2,200k for Eastnine's holding, corresponding to a direct yield of 6.7% including the dividend of EUR 930k paid in June. Mattias Lundgren has been appointed as Interim CFO following the resignation of Lena Krauss, the company's CFO since 2014.

The Company repurchased a total of 135,287 shares during the period 1 October – 13 November 2018, corresponding to 0.6 percent of the Company's outstanding shares, at an average price of SEK 87.85 per share

The CEO certifies that the interim report presents a true and fair view of the Company's and the Group's operations, financial position and profits and describes the significant risks and uncertainties facing the Company and the Group.

Stockholm, 15 November 2018

Kestutis Sasnauskas Chief Executive Officer

Review Report

To the Board of Eastnine AB (publ)

Corporate identity number 556693-7404

Introduction

We have reviewed the condensed interim financial information (interim report) of Eastnine AB (publ) as of 30 September 2018 and the nine-month period then ended except for the pro-forma information on pages 1, 5-7, 9 and 20. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of the Review

We conducted our review in accordance with International Standard on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.

Stockholm, 15 November 2018

KPMG AB

Peter Dahllöf Authorized Public Accountant

This review report is a translation of the original review report in Swedish.

Income Statement - Group

	20181	2017	20181	2017
EUR thousands	Jan-Sep	Jan-Sep	Jul-Sep	Jul-Sep
Rental income	2,339	-	2,339	-
Property expenses	-235	-	-235	-
Net operating income	2,104	-	2,104	-
Central administration expenses	-621	-	-621	-
Interest expenses	-266	-	-266	-
Other financial income and expenses	0	-	0	-
Profit from property management	1,217	-	1,217	-
Unrealised changes in value of properties	3,675	-	3,675	-
Unrealised changes in value of derivatives	342	-	342	-
Unrealised changes in value of investments	-1,060	-	-1,060	-
Realised values and dividends from investments	25	-	25	-
Changes in fair value of subsidiaries and associated companies	1,035	1,754	-	4,012
Dividends received	930	500	-	-
Other income	119	709	-	233
Staff expenses	-880	-1,546	-	-606
Other operating expenses	-582	-1,074	-	-338
Financial income	683	551	-	188
Financial expenses	-40	-62	-	12
Profit/loss before tax	5,463	832	4,199	3,501
Deferred tax	-748	-	-748	-
Net profit/loss for the period2	4,716 4,716	832 832	3,451	3,501
Earnings per share, basic and diluted, EUR	0.21	0.03	0.16	0.15

¹For the nine months 2018, the income statement period presents Eastnine as an investment entity during the first six months (marked grey) and as a consolidating real estate company for the last three months

Net Profit/Loss for the period corresponds to Total Comprehensive income

Balance Sheet - Group

	20181	20172	20172
EUR thousands	30 Sep	31 Dec	30 Sep
ASSETS
Non-current assets
Intangible assets	7	-	-
Investment properties	156,102	-	-
Equipment	88	-	-
Shares in subsidiaries	-	153,963	197,747
Interests in associated companies	-	48,613	-
Other long-term securities holdings	85,957	-	-
Loans to group companies	-	25,100	22,900
Other non-current receivables	202	-	-
Total non-current assets	242,356	227,676	220,647
Current assets
Short-term receivables	1,105	-	-
Accrued interest income	-	2,430	2,231
Prepaid expenses and accrued income	-	218	470
Cash and cash equivalents	58,515	13,168	10,740
Total current assets	59,620	15,816	13,441
TOTAL ASSETS	301,976	243,492	234,088
EQUITY AND LIABILITIES
Equity
Share capital	3,660	3,658	3,658
Other contributed capital	262,666	277,425	283,513
Retained earnings including other reserves	-38,626	-55,711	-55,711
Net profit/loss for the year	4,716	17,085	832
Total Equity	232,415	242,457	232,292
Non-current liabilities
Liabilities to credit institutions	55,772	-	-
Derivatives	339	-	-
Deferred tax liabilities	3,472	-	-
Other non-current liabilites	2,338	-	-
Total non-current liabilities	61,921	-	-
Current liabilities
Liabilities to credit institutions	2,729	-	-
Other liabilities	4,911	1,035	1,796
Total current liabilities	7,640	1,035	1,796
TOTAL EQUITY AND LIABILITIES	301,976	243,492	234,088

¹Eastnine as a consolidating real estate company

²Eastnine as an investement entity

Statement of Changes in Equity - Group

		Other	Retained earnings	Total equity
EUR Thousands	Share	contributed
	capital	capital
Opening equity 1 January 2018	3,658 3,658	277,425 277,425	-38,626 -38,626 -38,626	242,457 242,457
Net profit/loss for the period	-	-	4,716	4,716
Total comprehensive income	-	-	4,716	4,716
Bonus issue	3	-3	-	-
Dividend to shareholders	-	-4,480	-	-4,480
Share buy-back	-	-10,304	-	-10,304
Long-term incentive program (LTIP)	-	26	-	26
Closing equity 30 September 2018	3,660 3,660	262,666262,666 262,666	-33,911 -33,911 -33,911	232,415 232,415

		Other
	Share	contributed	Retained	Total
EUR Thousands	capital	capital	earnings	equity
Opening equity 1 January 2017	3,655	299,613	-55,711	247,558
Net profit/loss for the period	-	-	832	832
Total comprehensive income	-	-	832	832
Bonus issue	3	-3	-	-
Dividend to shareholders	-	-2,267	-	-2,267
Share buy-back	-	-13,832	-	-13,832
Closing equity 30 September 2017	3,658 3,658	283,513 283,513	-54,879 -54,879 -54,879	232,292 232,292

Statement of Cash Flow - Group

	2018	2017	2018	2017
EUR thousands	Jan-Sep	Jan-Sep	Jul-Sep	Jul-Sep
Operating activities
Operating income before tax	5,463	343	4,199	3,301
Adjustments not included in cash flow from operating activities	-3,801	-1,754	-2,766	-4,012
Cash flow from current operations before changes in working capital	1,662	-1,411	1,433	-711
Cash flow from changes in working capital
Increase (-)/decrease(+) in other current receivables	-62	-42	-154	-33
Increase (+)/decrease(-) in other current payables	-4,009	15	-2,912	211
Cash flow from operating activities	-2,409	-1,438	-1,633	-533
Investing activities
Investments in existing properties	-2,864	-	-2,864	-
Purchase of equipment	-4	-	-4	-
Cash flow from investing activities	-2,868	-	-2,868	-
Financing activities
New loans	3,340	-	3,340	-
Loan to group company	-	-2,000	-	-2,000
Repayment of loans	-505	-	-505	-
Repayment of shareholder contributions	11,513	-	-	-
Dividend to shareholders	-2,240	-2,267	-	-
Own share buy-back	-10,304	-13,832	-3,368	-4,138
Cash flow from financing activities	1,804	-18,099	-533	-6,138
Cash flow for the period	-3,473	-19,537	-5,034	-6,671
Cash and cash equivalent at the beginning of the period	13,168	30,338	14,689	17,398
Effect of consolidating subsidiaries from 1 July 2018 1	48,869	-	48,869	-
Exchange rate differences in cash and cash equivalents	-49	-62	-9	12
Cash and cash equivalent at the end of the period	58,515	10,740	58,515	10,740

1 Until 30 June 2018, cash in subsidiaries was included in the fair value of subsidiaries

Segment Reporting

Eastnine classifies and evaluates the Company's various segments based on the nature of the investments. Segments are presented from the point of view of management and are divided into the following segments: Real Estate Direct, Real Estate Funds and Other. The segment report for 2018 presents Eastnine as an investment entity during the first six months (marked grey) and as a consolidating real estate company for the last three months.

Real Estate	Real Estate
Direct	Funds	Other	Unallocated	Total
2,339	-	-	-	2,339
-235	-	-	-	-235
2,104 2,104	-	-	-	2,104
-	-	-	-621	-621
-266	-	-	-	-266
8	-	-	-9	0
1,847 1,847	-	-	-630	1,217
3,675		-	-	3,675
342		-	-	342
-	727	-1,702	-86	-1,060
-	25	-	-	25
2,196	1,886	-2,632	-415	1,035
-	-	930	-	930
-	41	79	-	119
-	-	-	-880	-880
-	-	-	-582	-582
683	-	-	-	683
-	-	-	-40	-40
8,742 8,742	2,680 2,680	-3,326	-2,632	5,464
-748	-	-	-	-748
7,994 7,994	2,680 2,680	-3,326	-2,632	4,716
156,102 156,102	-	-	-	156,102 156,102
- -	42,489 42,489	43,468	-	85,957
58,501 58,501	-	-	-	58,501

EUR thousands	Real Estate	Real Estate
1 Jan – 30 Sep 2017	Direct	Funds	Other	Unallocated	Total
Changes in value of portfolio	2,111	3,430	-4,321	-	1,221
Dividends received	-	427	990	-	1,417
Other operating expenses	-	-	-	-884	-884
Changes in fair value of subsidiaries and associated companies d companies	2,111 2,111	3,857	-3,330	-884	1,754
Dividends received	-	-	500	-	500
Other income	-	33	501	175	709
Staff expenses	-	-	-	-1,546	-1,546
Other operating expenses	-	-	-	-1,074	-1,074
Operating profit/loss	2,111 2,111	3,890 3,890	-2,329	-3,329	343
Financial income	551	-	-	-	551
Financial expense	-	-	-	-62	-62
Profit/loss before tax	2,662 2,662	3,890 3,890	-2,329	-3,391	832
Assets	67,181 67,181	46,119 46,119	83,526	37,262	234,088 234,088

Long-term securities holdings

As the holdings in the subsidiaries have until 30 June 2018 been presented on a see-through basis, the tables below reflect the fair value hierarchy in the investment activities, including the effect of change in accounting principles as at 1 July 2018.

EUR Thousands

30 September 2018
	Real Estate	Real Estate			Other assets
Breakdown of values in securities holdings	Direct	Funds	Other	Cash and bank	and liabilities	Total
Opening balance 1 January 2018	71,734 71,734	37,064 37,064	90,213	27,957	708	227,676 227,676
Accrued interest expense converted to group loan	2,427	-	-	-	-	2,427
Purchases/additions	29,725	3,451	-	-33,176	-	-
Divestments/Reductions	-	-	-42,411	42,411	-	-
Repayment of loan from group companies	-14,000	-	-	14,000	-	-
Other	-	-	-	221	-636	-415
Dividend received	-	-	-	640	-	640
Changes in fair value recognised net in profit/loss	-	1,974	-4,334	-	-	-2,360
Change in accounting principles as at 1 July 2018	-89,887	-	-	-52,052	-72	-142,011
Closing balance 30 September 2018	- -	42,489 42,489	43,468	-	-	85,957

EUR Thousands

31 December 2017					Other assets
Breakdown of values in subsidiaries and associated companies	Real Estate	Real Estate			and liabilities,
including loans to group companies	Direct	Funds		Other Cash and bank	net	Total
Opening balance 1 January 2017	28,739	36,656	99,631	53,201	-1,334	216,893
Purchases/additions	36,300	6,033	1,324	-39,457	-	4,200
Divestments/Reductions	-	-9,765	-16,441	26,206	-	-
Other	-	-	-	-2,410	1,402	-1,008
Repaid shareholders contributions	-	-	-	-11,000	-	-11,000
Dividend received	-	-	-	1,917	640	2,557
Dividend paid to parent company	-	-	-	-500	-	-500
Changes in fair value recognised net in profit/loss	6,695	4,140	5,699	-	-	16,534
Closing balance 31 December 2017	71,734 71,734	37,064 37,064	90,213	27,957	708	227,676

Real Estate Funds consists of holdings in East Capital Baltic Property Fund II and East Capital Baltic Property Fund III and Other consists of the holdings in Melon Fashion Group (MFG). These holdings are valued externally normally at year-end, and the fair value of the holdings is assessed on a quarterly basis. More information on the holdings, including fair value changes during the period, can be found on page 10 in this report.

Holding	Class	Valuation method	Valuation assumptions
East Capital Baltic Property Fund II	Real Estate Funds	DCF	WACC 8-12%, Exit yield 6-8%
East Capital Baltic Property Fund III	Real Estate Funds	DCF	WACC 8-9%, Exit yield 7-8%
			Long-term growth 4.6%, Long term operating margin 11.5%, WACC
Melon Fashion Group	Other	DCF	16.1%. A 25% minority and liquidity discount is applied

Discounted Cash Flow model (DCF), weighted average cost of capital (WACC)

For the fair values of Real Estate Funds and Other - reasonably possible changes at the reporting date to one of the significant unobservable inputs, provided other inputs constant, would have the following effects:

Effect in EUR thousands	Real Estate Funds		Other
30 September 2018	Profit or loss		Profit or loss
Sensitivity analysis	Increase	Decrease	Increase	Decrease
Exit yield (0.5% movement)	-1,340	1,422	-	-
Weighted average cost of capital (WACC) (0.5% movement)	-571	581	-2,172	2,378
Long term growth rate (0.5% movement)	-	-	1,554	-1,424
Long term operating margin (0.5% movement)	-	-	1,450	-1,449

The following table analyses securities holdings measured at fair value in compliance with level 3. Derivatives are measured continuously at fair value according to level 2. Changes in fair value are recognised in profit and loss.

EUR thousands
30 September 2018	Real Estate	Real Estate
Changes in financial assets and liabilities in Level 3	Direct	Funds	Other	Total
Opening balance 2018	74,164 74,164	37,064 37,064	48,613	159,840 159,840
Purchases/additions	29,725	3,451	-	33,176
Repayment of loan from group companies	-14,000	-	-	-14,000
Changes in fair value recognised net in profit/loss	2,878	1,974	-5,144	-292
Change in accounting principles as at 1 July 2018	-92,767	-	-	-92,767
Closing balance 30 September 2018	- -	42,489 42,489	43,468	85,957

EUR thousands
31 December 2017	Real Estate	Real Estate
Changes in financial assets and liabilities in Level 3	Direct	Funds	Other	Total
Opening balance 2017	30,419 30,419	36,656 36,656	50,039	117,114 117,114
Purchase/additions	36,300	6,033	-	42,333
Divestments/Reductions	-	-9,765	-7,026	-16,791
Changes in fair value recognised net in profit/loss	7,444	4,140	5,600	17,184
Closing balance 31 December 2017	74,164 74,164	37,064 37,064	48,613	159,840

EUR -292 thousands (EUR 16,408 thousands) of changes in fair value recognised net in profit/loss relate to investments still held at the end of the period.

Sensitivity analysis - Properties

30 September 2018	Impact on pre-tax	Equity / asset ratio,	Loan-to value ratio,	30 September 2018
Change in property value	profit, EURt	%	%	Cash flow and earnings	Change	Effect, EURt
+1%	1,561	77.1%	37.1%	Rental income, total	1%	94
0	0	77.0%	37.5%	Property expenses	1%	9
-1%	-1,561	76.8%	37.9%	Interest expense	1 percentage point	N/A

Earnings and key ratios are affected by realised and unrealised changes in the value of properties. The table shows the effect of a 1 percentage point change in value before deferred tax deduction.

30 September 2018

%	Cash flow and earnings	Change	Effect, EURt
	Rental income, total
	Property expenses

The sensitivity analysis shows the effects on the Group's cash flow and earnings on an annualised basis after taking into account of the full effect of each parameter. The effect from change in interest rates is zero as currently 100% of the interest is fixed using fixedinterest derivates.

Income Statement - Parent Company

	2018	2017	2018	2017
EUR thousands	Jan-Sep	Jan-Sep	Jul-Sep	Jul-Sep
Changes in fair value of subsidiaries	4,477	4,060	-	4,271
Changes in fair value of securities holdings	-5,144	-2,306	-1,702	-259
Dividend received	930	500	-	-
Other income	145	709	25	233
Operating expenses	-1,961	-2,620	-501	-944
Operating profit/loss	-1,553	343	-2,177	3,301
Financial income	1,029	551	347	188
Financial expense	-49	-62	-9	12
Profit/loss before tax	-572	832	-1,839	3,501
Income tax	-	-	-	-
Net profit/loss for the period	-572	832	-1,839	3,501

Balance Sheet - Parent Company

	2018	2017	2017
EUR thousands	30 Sep	31 Dec	30 Sep
ASSETS
Fixed assets
Shares in subsidiaries	146,937	153,963	197,747
Other long-term securities holdings	43,468	48,613	-
Loans to group companies	27,527	25,100	22,900
Total non-current assets	217,932	227,676	220,647
Current assets
Other receivables	79	-	5
Accrued interest income	1,029	2,430	2,231
Prepaid expenses and accrued income	68	218	465
Cash and cash equivalents	10,852	13,168	10,740
Total current assets	12,029	15,816	13,441
TOTAL ASSETS	229,961	243,492	234,088
EQUITY AND LIABILITIES
Equity
Restricted capital
Share capital	3,660	3,658	3,658
Unrestricted capital
Share premium reserve	262,666	277,425	283,513
Retained earnings including other reserves	-38,626	-55,711	-55,711
Net profit/loss for the year	-572	17,085	832
Total equity	227,127	242,457	232,292
Current liabilities
Other liabilities	2,362	180	378
Accrued expenses and deferred income	473	855	1,418
Total current liabilities	2,834	1,035	1,796
TOTAL EQUITY AND LIABILITIES	229,961 229,961	243,492 243,492 243,492	234,088 234,088

PRO-FORMA

As of 1 July 2018, Eastnine Group reports consolidated financial statements of the parent company and its subsidiaries, including directly owned real estate subsidiaries. This change in status is accounted for prospectively, meaning that historic numbers have not been restated in the actual financial statements. However, consolidated pro-forma numbers for the past six quarters (Q1 2017 - Q2 2018) are presented below for comparative purposes. The pro-forma consolidations are based on the actual subsidiaries and holdings within the group during the comparative periods.

Income Statement - Group

EUR thousands	Q3 2018	Q2 2018	Q1 2018	Q4 2017	Q3 2017	Q2 2017	Q1 2017
Rental income	2,339	2,282	1,993	1,634	1,657	1,325	1,088
Property expenses	-235	-249	-562	-745	-327	-287	-309
Net operating income	2,104	2,034	1,431	888	1,330	1,038	779
Central administration expenses	-621	-1,008	-702	-991	-1,115	-1,116	-932
Interest expenses	-266	-319	-278	-219	-216	-220	-253
Other financial income and expenses	0	20	-299	-86	-15	-138	-79
Profit from property management	1,217	727	151	-408	-16	-435	-485
Unrealised changes in value of properties	3,675	945	-	4,546	-	-	-
Unrealised changes in value of derivatives	342	-372	-134	306	474	-	-
Unrealised changes in value of investments	-1,060	-2,233	37	10,181	2,263	-5,945	3,076
Realised values and dividends from investments	25	1,668	781	2,368	875	1,098	195
Profit before tax	4,199	735	836	16,992	3,596	-5,282	2,786
Deferred tax	-748	-182	-125	-739	-95	-101	-73
Net profit/loss for the period	3,451	553	711	16,253	3,501	-5,383	2,713

Condensed Balance Sheet - Group

EUR thousands		30 Sep 2018 30 Jun 2018	31 Mar 2018	31 Dec 2017	30 Sep 2017	30 Jun 2017	31 Mar 2017
ASSETS
Investment properties	156,102	122,843	121,995	92,395	89,455	89,385	60,880
Development properties	-	26,721	19,768	15,110	10,248	8,674	7,439
Long-term securities holdings	85,957	86,932	92,769	127,277	129,645	123,009	131,653
Other non-current assets	296	419	430	335	457	505	150
Total non-current assets	242,356	236,915	234,961	235,116	229,806	221,572	200,122
Other receivables	1,105	1,014	5,331	1,652	578	542	501
Cash and cash equivalents	58,515	63,558	56,497	44,991	41,918	50,467	86,209
Total current assets	59,620	64,572	61,827	46,642	42,495	51,009	86,710
TOTAL ASSETS	301,976	301,487	296,789	281,759	272,301	272,581	286,831
EQUITY AND LIABILITIES
Share capital	3,660	3,660	3,658	3,658	3,658	3,658	3,657
Other contributed capital	262,666	266,007	274,982	280,027	286,115	290,253	295,536
Retained earnings incl. net profit/loss for the year	-33,910	-37,362	-40,518	-41,228	-57,481	-60,984	-53,334
Total shareholders' equity	232,415	232,305	238,122	242,457	232,292	232,927	245,858
Liabilities to credit institutions	55,772	54,638	48,534	30,727	32,545	32,545	32,545
Derivatives	339	682	309	176	315	239	893
Deferred tax liabilities	3,472	2,724	2,542	2,417	1,678	1,584	1,483
Other non-current liabilites	2,338	2,045	1,745	893	595	699	637
Total non-current liabilities	61,921	60,089	53,130	34,213	35,133	35,067	35,559
Liabilities to credit institutions	2,729	1,029	1,533	1,818	455	909	1,364
Other liabilities	4,911	8,065	4,003	3,270	4,422	3,678	4,051
Total current liabilities	7,640	9,094	5,536	5,088	4,876	4,587	5,415
TOTAL EQUITY AND LIABILITIES	301,976	301,487	296,789	281,759	272,301	272,581	286,831

Key figures

	Q3 2018	Q2 2018	Q1 2018	Q4 2017	Q3 2017	Q2 2017	Q1 2017
Property-related
Leasable area, sqm t	62.7	49.4	49.4	37.8	37.8	37.8	28.4
Number of properties	5	5	5	3	3	3	2
Property value, EUR t	156,102	149,564	141,762	107,505	99,703	98,059	68,319
Surplus ratio, %	90.0%	89.1%	71.8%	54.4%	80.3%	78.4%	71.6%
Floor space occupancy rate, %	97.5%	99.6%	99.6%	97.0%	98.1%	97.6%	96.1%
Average rent, EUR/sqm/month	14.3	14.5	14.5	13.8	13.8	13.5	12.7
WAULT, years	2.8	1.9	2.2	2.5	2.4	2.6	2.3
Property yield, investments properties %	6.8%	6.9%	5.4%	4.1%	6.1%	5.7%	5.3%
Financial
Rental income, EUR t	2,339	2,282	1,993	1,634	1,657	1,325	1,088
Net operating income, EUR t	2,104	2,034	1,431	888	1,330	1,038	779
Profit from property management, EUR t	1,217	727	151	-408	-16	-435	-485
LTV (loan-to-value) ratio, %	37.5%	37.2%	35.3%	30.3%	33.1%	34.1%	49.6%
Equity / asset ratio, %	77.0%	77.1%	80.2%	86.1%	85.3%	85.5%	85.7%
Interest coverage ratio, multiple	5.6x	n.m.	n.m.	n.m.	n.m.	n.m.	n.m.
Average interest rate, %	2.2%	2.4%	2.5%	2.7%	2.6%	2.6%	3.0%
Return on equity, Real Estate Direct, %	24.1%	9.9%	4.5%	29.2%	9.9%	6.6%	6.5%
Return on equity, %	5.9%	0.9%	1.2%	27.4%	6.0%	-9.0%	4.4%
Share-related
Net asset value (NAV), EUR t	232,415	232,305	238,122	242,457	232,292	232,927	245,858
EPRA NAV, EUR t	236,226	235,711	240,974	245,050	234,285	234,749	248,234
Market capitalisation, EUR t	199,448	200,467	211,057	206,348	192,881	181,864	193,493
Market capitalisation, SEK t	2,060,301	2,093,856	2,173,884	2,028,711	1,861,202	1,749,530	1,854,048
Number of shares outstanding at the end of the period	22,370,261	22,370,261	24,816,033	24,816,033	24,816,033	24,816,033	25,661,563
Number of shares outstanding at the end of the period,
adjusted for repurchased shares	21,795,139	22,163,961	22,370,261	22,948,205	23,723,020	24,300,033	24,999,639
Weighted average number of shares, adjusted for
repurchased shares	22,289,825	22,453,671	22,590,768	24,334,377	24,669,783	24,998,136	25,381,932
Earnings per share, EUR	0.16	0.02	0.03	0.70	0.15	-0.22	0.11
Dividend per share, EUR	-	-	-	0.21	-	-	-
NAV per share, EUR	10.66	10.48	10.64	10.57	9.79	9.59	9.83
NAV per share, SEK	110.2	109.5	109.6	103.9	94.5	92.2	93.9
EPRA NAV per share, EUR	10.84	10.63	10.77	10.68	9.88	9.66	9.93
EPRA NAV per share, SEK	112.0	111.1	111.0	105.0	95.3	92.9	94.8
Share price, EUR1	8.92	8.96	8.50	8.32	7.77	7.33	7.57
Share price, SEK1	92.10	93.60	87.60	81.75	75.00	70.50	72.25
Other
SEK/EUR	10.33	10.44	10.30	9.83	9.65	9.62	9.55
Number of employees	14	13	12	11	10	11	10

Not adjusted for dividend

The above key ratios are deemed to be relevant for the type of operations conducted by Eastnine and to contribute to an increased understanding of the financial report.

Definitions

Eastnine applies European Securities and Markets Authority (ESMA) guidelines on alternative performance measures. According to these guidelines, an alternative performance measure is a financial metric of historical or future earnings performance, financial position, financial results or cash flows, which is not defined or stated in applicable rules for financial reporting (IFRS and the Swedish Annual Accounts Act).

Property related Key Figures

Average capital tie-up period

Average maturity of gross debt at end of period.

Average rent, EUR per sq.m

Rental income in relation to average leasable floor space.

Earnings capacity

Key figures of properties owned at the end of the period, based on performance over the last 12 months or estimates for properties held less than 12 months. The figures provide an overview but is not a forecast.

Floor space vacancy level

Unlet floor space in relation to total leasable floor space.

Gross leasable floor space (GLA)

Total gross floor space available for leasing.

Property yield, investment property

Net operating income for the period (annualised) divided by average value of investment properties.

Rental income

Charged rents, rent surcharges and rental guarantees less rent discount.

Rental value

Rental income and estimated market rent for vacant units.

Surplus ratio

Net operating income in relation to total rental income.

WAULT

Average remaining lease term to maturity of the portfolio weighted according to contracted rental income (Weighted average unexpired lease term).

Financial Key Figures

Average interest rate

Interest expense divided by average interest-bearing debt (liabilities to credit institutions) for the period.

EBIT

Operating profit after depreciation/ amortisation of non-current assets (Earnings before Interest and Tax).

EBITDA

Profit before depreciation, amortisation and impairment (Earnings before Interest, Tax, Depreciation and Amortisation).

Equity ratio

Total equity as a percentage of total assets.

Fair value See market value.

Interest coverage ratio

Profit from property management excluding interest expenses, in relation to interest expenses.

IRR (internal rate of return)

Annual average return on the invested amount calculated from the original investment, final selling amount and other capital flows, considering when in time these payments were made to or from Eastnine.

LTV (Loan-to-value) ratio

Liabilities to credit institutions divided by property value.

Market value

The value of which a holding is assumed to be able to be sold for at a given time. Listed holdings at the bid quote on the balance sheet date. To establish the market value of unlisted holdings, various valuation methods are used as applicable.

NAV discount

The difference between net asset value (NAV) and market capitalisation in relation to NAV. If market cap is lower than NAV the shares are traded with a NAV discount; if market cap is higher, they are traded with a premium.

Return on equity

Profit/loss for the period (annualised) as a percentage of average shareholders' equity.

Return on equity, Real Estate Direct

Profit/loss for the period (annulised) from segment Real Estate Direct as a percentage of average equity in Real Estate Direct.

Share-related Key Figures

Average number of outstanding shares

Registered number of shares less shares held by the Company.

Earnings per share

Net profit for the period attributable to equity holders of the Parent Company, divided by average number of shares outstanding during the year.

EPRA NAV

Total shareholders equity including derivatives and deferred tax liabilities

Equity per share

Shareholders' equity, attributable to equity holders of the Parent Company, divided by number of outstanding shares at the end of the period.

NAV (Net Asset Value)

Total shareholders equity

NAV per share

Net asset value per share in relation to the total number of registered shares on the balance sheet date (excluding repurchased shares).

Share buy-back

Purchasing of own shares on the stock market. Swedish companies have the option to own up to 10 percent of their own outstanding shares conditioned AGM approval.

Financial information and calendar

Interim report Q4 2018 – 15 February 2019 Annual Report 2019 – week 12 2019 Interim report Q1 2019 – 15 May 2019 Interim report Q2 2019 – 17 July 2019 Interim report Q3 2019 – 8 November 2019 Subscribe to financial reports and press releases directly to your e-mail on: www.eastnine.com or by sending an email to info@eastnine.com.

The information in this interim report is the information which Eastnine AB is required to disclose under the EU Market Abuse Regulation and the Securities Markets Act. It was released for publication at 08.00 a.m.

EASTNINE AB 23 Interim Report JAN-JUN 2018

Contact information

Kestutis Sasnauskas, CEO, +46 8 505 977 00 Lena Krauss, CFO, +46 73 988 44 66

Eastnine AB

Kungsgatan 35, Box 7214 SE-103 88 Stockholm, Sweden Tel: +46 8 505 977 00

www.eastnine.com