Eastnine — Interim / Quarterly Report 2020

May 12, 2020

January‒March 2020¹

FS

INTERIM REPORT

JANUARY - MARCH

2020

• Rental income increased by 52 per cent to EUR 4,475k (2,947). The increase is primarily attributable to a larger property portfolio, but also due to a higher occupancy rate and higher rent level. Rental income in a comparable portfolio increased by 5 per cent.
• Net operating income increased by 50 per cent to EUR 4,044k (2,689).
• Profit from property management increased by 77 per cent to EUR 2,262k (1,279).
• Unrealised value changes amounted to EUR -24,256k (3,803), of which EUR -2,738k (-) is attributable to properties, EUR -21,631k (3,669) to Melon Fashion Group (MFG), EUR 348k (789) to fund investment and EUR -235k (-656) to derivatives. The negative unrealised value changes are mainly an effect of the coronavirus pandemic.
• Profit/loss for the period amounted to EUR -22,253k (4,957), corresponding to EUR -1.05 per share (0.23).

¹Comparative figures for income statement items refer to the period January‒ March 2019 and for balance sheet items the date 31 December 2019.

Key events during the quarter

• The average rent level of net letting increased to EUR 16.3 per sq.m. per month, compared to an average of EUR 14.7 at the end of 2019.
• Net letting in the quarter amounted to EUR -85k, which is to be viewed in the context of the high occupancy rate.
• Occupancy increased by 3.0 percentage points to 95.7 per cent (92.7) and the average rent level in the entire property portfolio increased to EUR 15.0 per sq.m. per month (14.7).

Key events after the end of the period

No significant events have occurred after the end of the period.

	2020	2019	2019	2019/2020
Selective key figures	Jan-Mar	Jan-Mar	Jan-Dec	Apr-Mar
Rental income, EUR k	4,475	2,947	13,348	14,876
Profit from property management, EUR k	2,262	1,279	5,489	6,472
Net profit/loss for the year/period, EUR k	-22,253	4,957	35,266	8,056
Weighted yield requirement, %	6.1	6.4	6.3	6.1
Return on equity, %	-34.6	8.2	13.9	3.3
	2020	2019	2019	2020
	31 Mar	31 Mar	31 Dec	31 Mar
Investment properties, EUR k	288,020	195,972	290,256	288,020
Occupancy rate area, %	95.7	92.0	92.7	95.7
Equity / asset ratio, %	61	72	64	61
Loan-to-value, %	50	44	47	50
Environmentally certified properties2 , % of sq.m.	72	75	72	72
Long-term NAV per share3 , SEK	131	122	137	131

1 EUR = 10.87 SEK as of 31 March 2020 (source: Reuters).

²Environmental certified area in relation to total area (excluding properties expected to undergo significant development).

³Adjusted for share buybacks.

This is Eastnine

EASTNINE SHALL BE THE LEADING LONG-TERM PROVIDER OF MODERN AND SUSTAINABLE OFFICE PREMISES IN PRIME LOCATIONS IN THE BALTIC CAPITALS.

• Swedish real estate company Listed on Nasdaq Stockholm Mid Cap and the head office in Stockholm.
• Nordic tenants

Primarily large Nordic companies with international operations.

Baltic premium properties

Investing in modern and sustainable office properties in first-class locations in the Baltic capitals.

Targets
Operational	Status 31 March 2020
The portfolio to be comprised exclusively of real estate by the end of 2020.	71 %1
The profit from property management in Real Estate Direct shall have an annual capacity of
EUR 15m by the end of 2020.	EUR 12,3m (annualised Q1 2020)
Financial
Dividend to amount at least 50 % of profit from property management, while least 2 % of
equity until the portfolio is transferred into pure real estate by the end of 2020.	2.0 % of equity (proposal)
Return on equity in segment Real Estate Direct to amount to at least 13-15 % over a five-year
period.	12.3 % (last 12 months)
Interest coverage ratio of at least 2.0x	3.6x
Loan-to-value ratio shall not exceed 65 %.	50 %
1Share of total assets.

Real estate operations deliver record results and the Company is stable in an uncertain time

Best quarter ever in the real estate business

In the midst of turbulence, we are reporting our best-ever quarter in the real estate business. Rental income, net operating income, and profit from property management are at record high levels. Naturally, growth in the property portfolio is the primary reason, but factors such as a higher occupancy rate and higher rental levels contribute as well. Rental income in a comparable portfolio increased by five per cent.

The occupancy rate rose to 95.7 per cent, as a result of e.g. Swedbank moving into new premises in Vilnius and Lidl in Riga. The average rent level on the portfolio is now at EUR 15.0 per sq.m. per month, after an increase of 2 per cent since the beginning of the year. New lettings in the quarter were signed at a rent level of EUR 16.3. Both the rental and property markets for offices were strong in our active regions before the coronavirus pandemic, with increasing rental levels and decreasing property yield levels. It remains to be seen which consequences the pandemic will have in the longer term. As expected the markets have frozen while the crisis is at it's most intense.

Stable footing and well-prepared

The coronavirus pandemic will not leave anyone unaffected. People as well as companies and entire countries are affected, and most of them negatively. The pandemic affects and will continue to affect Eastnine, even if the effect on Eastnine's real estate business up until 30 April has been minor. The Company's strong balance sheet with low leverage, a focus on offices, chiefly large tenants and with good liquidity, means Eastnine has a stable footing and is well-prepared to handle questions or issues that arise. We have mapped out our risks and act on a daily basis to ensure the security and safety of our tenants and employees, as well as the financial stability of the Company. How long the pandemic lasts will be a crucial determinant of the seriousness of the economic consequences for countries, companies and individuals.

Individual support for the hardest-hit

We hope that the majority of the companies that are now hardest hit will eventually recover. Some will manage on

their own, but others will benefit from the support provided by governments, central banks and private companies such as banks or property companies. At the time of writing, several reports are stating that the strict lockdown rules which have been in place in several of our active countries are about to be eased. Eastnine has, in the first place, supported those tenants that have been hit hardest and that have not been able to carry out their operations due to lockdowns.

By way of example, Eastnine has chosen to support three of our restaurants in Vilnius through April and the first half of May by ordering a total of 230 meals per day to be delivered to staff caring for Covid-19 patients at Vilnius university hospital. The initiative has been highly appreciated by the tenants as well as by the hospital staff.

Value changes as a result of the coronavirus pandemic

The most evident effect on Eastnine arising from the coronavirus pandemic is attributable to our investment in the Russian fashion chain Melon Fashion Group. Virtually all retail stores were closed on 1 April, as the President of Russia imposed a paid non-working period and restrictions on movement outside. According to reports, the country will gradually start to open again from mid-May. E-commerce is operating, but it has also been negatively affected. The decline in value, of EUR -21.6m, is partly due to a depreciation of the rouble, which in turn is largely based on a decline of the oil price, and partly due to an expected decline in sales and revenues following the closing of retail stores. The value of Eastnine's property portfolio was largely unchanged during the quarter. Lower inflation forecasts for the coming years and expectations of a smaller rental loss in 2020, both results of the coronavirus pandemic, have had minor impacts.

Just as others do, we hope that further countries will manage to control the spread of Covid-19 shortly and that life gradually can return to a new normal.

Kestutis Sasnauskas, CEO

Effects of the coronavirus pandemic

Rental income

Eastnine has a robust tenant structure. The majority of Eastnine's tenants are large Nordic companies with international operations. The average remaining lease term of the ten largest tenants is 5.5 years, corresponding to 4.9 years across the entire portfolio. 95 per cent of the premises are offices. Eastnine has granted rent discounts of a total of EUR 33k for March and April, chiefly relating to businesses that are hardest hit by general lockdowns, as for example restaurants and gyms. On 30 April, no further discounts have been granted. Eastnine's lease rents are chiefly due monthly. Approved rent deferrals are nearly zero.

Financing

Eastnine enjoys robust liquidity, and the maturities of loans are well into the future. Cash and cash equivalents amounted to EUR 44m and unutilised credit facilities to EUR 27m at the end of March. EUR 3m of the facilities are comprised of an overdraft facility with a year's term which was taken up in February 2020. The majority of the unused facilities and nearly half of cash and cash equivalents are intended for use in the acquisition of S7-3.

The loan-to-value ratio amounted to 50 per cent, capital tie-up period to 3.3 years, and the fixed interest term to 2.9 years. No loans are maturing in 2020. The first loan maturity, comprising EUR 14.9m, occurs in September 2021. The financing is spread across three of the larger banks in the Baltics. The Company does not have any capital market financing.

Transaction and property valuations

General market uncertainty has meant a reduction in volumes of transactions. Up until February, property yields for offices were heading to record-low levels in our markets. At the end of March, they are unchanged compared to the beginning of the year. 100 per cent of Eastnine's property portfolio has been externally valued at 31 March and the value is only marginally affected, primarily for two reasons: downward adjustment of inflation forecasts, and expectations of minor rent losses. Eastnine has an ambition to continue growing the property portfolio and will be ready if interesting acquisition opportunities arise.

Melon Fashion Group

Eastnine's related company, MFG, has closed all retail outlets as of April after President Putin of Russia granted a paid non-working period for the Russian population, as well as imposing restrictions on for example staying outdoors. Eastnine's valuation of the holdings has therefore been negatively impacted. The unrealised value change amounted to EUR -22m for the period, of which approximately half is a consequence of the lock-down and the rest is an effect of a decrease of the rouble.

Staff

Wellbeing and safety of our staff are prioritised. Eastnine is following the official recommendations regarding work and employees in the countries where we operate. The Company has recommended all employees using public transport, to and from work, to work from home as much as possible. Physical meetings and travels have been reduced to a minimum.

Community initiatives

Eastnine has ordered 230 meals per day through the month of April and first half of May to be delivered to staff caring for Covid-19 patients at Vilnius university hospital. The meals have been delivered by three restaurants that are Eastnine tenants.

Market

Geographic breakdown of assets

Breakdown of segment valuations

Market development

Macro

The spread of the coronavirus has been a considerable challenge to the global economy. Historic GDP declines, rising unemployment and reduced inflation will thus be the hallmarks of 2020. In mid-March, the Baltic countries imposed sweeping lockdown measures, which slowed the initial contagion to relatively low levels. Sectors such as transportation, consumer durable goods and tourist facilities have been heavily affected, while Baltic export companies are sensitive to a global downturn and interruptions in supply chains.

The uncertainty around the return to normal and the global economic recovery is considerable, but the Baltics are in much better shape to weather this crisis than they were ahead of the 2009 financial crisis. Since the last crisis, bank lending to households and businesses has been restrained. In addition, the sovereign debts of the Baltic states are relatively low compared to many other countries, comprising around 37 per cent of GDP in Lithuania and Latvia, and only around 9 per cent of GDP in Estonia. Up until mid-April, the governments in the Baltic countries have announced stimulus programmes corresponding to 5‒7 per cent of GDP.

Rental market

Efforts to prevent the spread of the virus have had considerable effects on parts of the property market, not least of which being the hotel and retail properties. Residential developers have also been negatively impacted. The effects on the office market are thus far limited. During the first quarter, demand was relatively good, but vacancy rates rose to a modest 5 per cent in Vilnius and 12 per cent in Riga after the completion of several projects, e.g. U219 and Paupys in Vilnius, and Z-Towers and Origo One in Riga.

Rent levels were unchanged during the quarter, but there is a risk of downward pressure if the vacancies rise due to increased insecurity, and if the recession were to deepen. At the same time, the office market in Vilnius has a particular dynamic, with considerable demand from Nordic tenants which sees the benefits of a lower cost level.

Transaction market

After two record-breaking years with property transactions amounting to around a billion euros per year in the Baltics, transaction volumes are expected to sink in 2020. Transaction activity was limited during the first quarter. After the outbreak of the virus, banks shifted their focus to handling existing credits rather than granting new credits, while simultaneously adjusting their risk profiles. Yield requirements are unchanged at the end of the quarter, but were clearly on their way downwards before the coronavirus pandemic.

The period January‒March 2020

During the quarter, rental income continued to grow as a result of a larger property portfolio, higher occupancy rates and a higher rent level. The holding in MFG has lost value due to the coronavirus pandemic. The property value was largely unchanged.

Comprehensive income and financial position

	2020	2019
EUR thousands	Jan-Mar	Jan-Mar
Rental income	4,475	2,947
Property expenses	-431	-258
Net operating income	4,044	2,689
Central admin.	-824	-927
Financial income/exp.	-958	-483
Profit property mgmt	2,262	1,279
Unrealised value
changes	-24,256	3,802
Realised value
changes	-	22
Tax	-259	-146
Net profit/loss	-22,253	4,957

	2020	2019
EUR thousands	31 Mar	31 Dec
ASSETS
Investment properties	288,020	290,256
Right-of-use assets	1,179	1,204
Securities holdings	67,426	88,709
Other non-current
receivables	385	393
Cash and cash
equivalent	43,883	37,406
Other current
receivables	2,268	2,355
TOTAL ASSETS	403,160	420,322

245,917	268,192
143,107	137,771
2,198	1,963
6,574	6,315
1,152	1,175
4,213	4,907
403,160	420,322

Rental income

The income, which is entirely composed of rental income, increased by 52 per cent during the period to EUR 4,475k (2,947), primarily due to a larger property portfolio, but also due to a higher occupancy rate and higher rent levels. New lease agreements have been signed at higher level, meaning that the average rent level in

the property portfolio increased to EUR 15.0 per sq.m. and month at the end of the period, compared to EUR 14.7 per sq.m. at the end of 2019.

Rental income in a comparable portfolio increased by 5 per cent, compared with the same period last year, due to higher average occupancy and higher rent level.

Property expenses

Property expenses rose by 67 per cent to EUR -431k (-258) due to a larger real estate portfolio.

Earnings

Net operating income was EUR 4,044 EUR (2,689), corresponding to a surplus ratio of 90 per cent (91). The high surplus ratio is attributable to the fact that a majority of the tenants, in addition to rent, also pay for e.g. electricity, heating, cooling, water and wastewater, as well as repairs, maintenance and property management. The increase of 50 per cent in net operating income is mainly related to the acquisition of the properties S7‒1 and S7‒2 in Vilnius and Valdemara Centrs in Riga. Central administration expenses amounted to EUR -824k (-927) and profit from property management increased by 77 per cent to EUR 2,262k (1,279). Unrealised value changes in properties amounted to EUR -2,738k (-) and in investments to EUR -21,283k (4,459), of which EUR -21,631k (3,669) is attributable to Melon Fashion Group and EUR 348k (441) to East Capital Baltic Property Fund II. Unrealised value changes in derivatives amounted to EUR -235k (-656). Realised value changes and dividends amounted to EUR zero (22). Profit before tax amounted to EUR -21,994k (5,103) and the net profit-loss for the period to EUR -22,253k (4,957).

Segment Reporting

The Real Estate Direct segment, comprising the directly owned property subsidiaries, generated a profit before tax of EUR 113k in the first quarter of 2020. The Real Estate Fund segment, comprising the East Capital Baltic Property Fund II, generated a profit before tax of EUR 348k. The Other segment, comprising the holding in Melon Fashion Group, generated a profit before tax of EUR -21,631k, wholly attributable to an unrealised value change. The unrealised value change in MFG is an effect of the coronavirus pandemic and its consequences, in the form of e.g. closed retail outlets and the thereby expected loss of sales and profits. Depreciation of the rouble accounts for around half of the value change in euro.

Rental income and net operating income, EUR k

Contribution to earnings, per segment

	2020
EUR thousands	Jan-Mar
Profit from property
management	3,086
Unrealised value changes in
properties	2,738
Unrealised value changes in
derivatives	-235
Contribution Real Estate
Direct	113
Unrealised value changes	348
Contribution Real Estate
Funds	348
Unrealised value changes	-21,631
Contribution Other	-21,631
Central administration and
other operating expenses	-824
Profit/Loss before tax	-21,994
Tax	-259
Net profit/ loss for the period	-22,253

Unallocated central administration expenses and other operating expenses amounted to EUR -824k. Reported group profit before tax amounted to EUR -21,994k, and net profit-loss to EUR -22,253k.

Financing

Liabilities to credit institutions amounted to EUR 143,107k (137,771) at the end of the period, corresponding to a loan-to-value ratio of 50 per cent (47). Unutilised credit facilities amounted to EUR 26,700k (23,700), including a new overdraft facility of EUR 3,000k (-). The average interest rate at the end of the period amounted to 2.3 per cent (2.3) and the share of liabilities to credit institutions with fixed interest was 75 per cent (79), of which 100 per cent (100) were fixed using swaps.

At the end of the period, average capital tie-up period on liabilities to credit institutions was 3.3 years (3.5). Average fixed interest term was 2.9 years (3.1). The derivatives are measured at fair value and the change in value is recognised through profit or loss, with no effect on cash flow. At the end of the period, the fair value of derivatives was EUR -2,198k (-1,963). At the end of the term, the value is always zero.

Maturity structure, debt financing

		Interest maturity
Maturity	Loan agreement, EUR m	Utilised, EUR m	Unutilised, EUR m	Of which possible to utilise, EUR m	EUR m
Floating	-	-	-	-	35.6
2020	26.71	-	26.7	3.0	-
2021	14.9	14.9	-	-	-
2022	12.3	12.3	-	-	-
2023	70.4	70.4	-	-	62.1
2024	45.5	45.5	-	-	45.5
Total	169.8	143.1	26.7	3.0	143.1

1 EUR 23m relates to a line of credit to be used when the S7-3 property is taken into possession. The agreement is valid until 30 June 2020 and the credit will mature in February 2024.

Tax

The tax expenses for the period amounted to EUR -259k (-146), all of which relates to deferred tax in Lithuania where a corporate income tax of 15 per cent is applied. The stated deferred tax liability is primarily attributable to the difference between the stated value of properties and their tax value, as well as tax losses carried forward. No corporate income tax is paid in Estonia or Latvia, where a 20 per cent corporate income tax is levied only on distributed profits.

Financial position and net asset value

Equity amounted to EUR 245,917k (268,192) and the equity/asset ratio to 61 per cent (64). Long-term net asset value per share was EUR 12.0 (13.1) corresponding to 131 SEK per share (137). Equity per share was EUR 11.6 (12.7) corresponding to 126 SEK per share (133).

Cash flow

Cash flow from operating activities before changes in working capital amounted to EUR 2,336k (1,308) for the period. Change in working capital was EUR -684k (-1,465). Investment activities had an impact of EUR -543k (-37,109). Financing activities had an impact of EUR 5,368k (15,941). Total cash flow amounted to EUR 6,477k (-21,325). Cash and cash equivalents amounted to EUR 43,883k (43,794) at the end of the period.

Property portfolio

The property portfolio consisted, on 31 March, of around 99,500 sq.m. lettable area in Vilnius and Riga. Three of the properties, amounting to around 24,700 sq.m., were taken into possesion during the last quarter of 2019. The occupancy rate rose by 3 percentage points during the period.

Vilnius Riga

Property portfolio per category, value

Offices Retail and service Others

Property portfolio

Eastnine's property portfolio consists of modern office properties in two of the three Baltic capitals. On 31 March 2020, the portfolio consisted of nine investment properties, five in Vilnius and four in Riga, with a total lettable area of around 99,500 sq.m. and a market value amounting to EUR 288,020k. At the end of the period, the occupancy rate was 95.7 per cent (92.7). Compared with the end of the previous year, the occupancy rate has risen by 3.0 percentage points. There are currently no ongoing development projects in Eastnine's portfolio.

Eastnine intends to grow the property portfolio in the Baltic capitals. The increase will mainly take place through acquisitions and development of modern and sustainable offices.

Vilnius

Eastnine's property portfolio in central Vilnius consisted on 31 March of five properties with a total lettable area of 79,514 sq.m., which is estimated to correspond to a market share of 25 per cent of the market for premium offices in the city. The combined property value on 31 March 2020 was EUR 226,200k.

Two of the properties in Vilnius were part of the S7 acqusition, announced in February 2019. S7-1 was taken into possession at the same time, and S7-2 in October 2019. The ambition is that S7-3, which has been delayed due to property division, will be taken into possession in the second quarter of 2020. The properties are essentially fully occupied.

Riga

Eastnine's property portfolio in central Riga consists of four properties with a total lettable area of 19,970 sq.m., corresponding to 20 per cent of the market share of the estimated premium market for offices. The properties Kimmel and Alojas Kvartals are expected to undergo significant development in the future. The combined property value in Lithuania was EUR 61,820k on 31 March 2020.

Alojas Biroji is once again fully occupied after two vacant premises have been let out. One of the premises were moved into during the first quarter, and the other is expected to be filled in the second quarter.

Property portfolio

	Area,		Vacancy,		Value,
As of 31 March	sq.m.	Share, %	sq.m.	Share, %	EUR k	Share, %
Vilnius	79,514	80	3,881	4.9	226,200	79
Riga	19,970	20	403	2.0	61,820	21
Total	99,484	100	4,284	4.3	288,020	100

Rental income and surplus ratio

Property value and loan-tovalue ratio

Tenants

Eastnine has around 160 lease agreements with around 120 tenants. Danske Bank is the largest tenant with 17 per cent of total annual rent. The ten largest tenants lease 62,068 sq.m. at a total annual rent of EUR 10,991k. The average remaining lease term for the ten largest tenants amounted to 5.5 years, and for all tenants to 4.9 years.

Largest tenants

Tenant	Annual rent, EUR k	Share of annual contracted rent, %	Sq.m.	Lease term1 , years	Lease term (break option)2 , years
Danske Bank	2,923	17	16,400	2.3	2.3
Telia	2,856	17	15,960	9.0	9.0
Swedbank	1,821	11	11,266	11.5	5.5
Visma	845	5	4,938	3.8	3.8
Citco	647	4	3,009	7.3	2.3
Webhelp	538	3	2,726	2.4	2.4
LIDL	470	3	2,755	2.4	0.5
Cobalt	323	2	1,816	4.8	4.8
Europos Socialinio	286	2	1,769	3.1	1.0
Transact	283	2	1,430	8.3	2.3
Total	10,991		64 62,068	5.5	3.4

¹Weighted average of remaining lease term.

²Weighted average remaining lease term calculated up to "break option" date.

Acquisitions and divestments

Eastnine has not made any acquisitions or divestments during the period.

Value changes

The fair value of properties was largely unchanged during the quarter. The value at the end of the period was EUR 288,020k (290,256). The value change of EUR -2,236k (-), corresponding to -0.8 per cent (-) of property value, is primarily due to the lower inflation forecasts and an estimated minor rent loss as a result of the coronavirus pandemic.

Valuation model

Eastnine has changed its valuation model as of the first quarter of 2020. In conjunction with the change, all properties have been externally valued as of 31 March 2020. The external valuations were carried out by Colliers in Latvia and Lithuania.

The new valuation model is based on the present values of future cash flows, where the present value of operating surplus less remaining investments is calculated for a five to ten-year period. The cash-flow determinations with a longer calculation period than five years is normally applied to properties with only one or a handful of tenants with long lease terms, where the cash flow is more predictable. After this change of valuation model, internal and external valuations will be determined using the same valuation methodology.

Eastnine normally values the properties externally at least once over a rolling 12 month period. In-between, properties are internally valued using the same valuation model.

Valuation model

	2020
Valuation assumptions	31 Mar
Long-term inflation, %	2.0
Average discount rate, %	7.3
Weighted yield requirement, %	6.1
Long-term vacancy rate, %	4.5

The main parameters of the valuation model are inflation, discount rates, yield requirements and long-term vacancies. Inflation is based on the market forecast both in the short and long term, where a long-term inflation normally corresponds to a country's inflation target. The discount rate and yield requirement are based on estimations of the market return requirement for similar investment objects, with the addition of risks related to real estate, such as geographical location, the condition of the property, and future vacancy risk. Long-term vacancies are affected by the expected market development, geographical location and condition, and relates to an estimation of a normalised vacancy rate.

Valuation of properties

Property valuations are based on assessments and assumptions at the time of the valuation of both observable and non-observable input data. Observable data which has a considerable impact on the value are current rent levels, property expenses, determined and known future investments and actual inflation. Non-observable data are yield requirements and expected future rent levels and vacancies.

Cash-flow from rent payments are estimated based on current lease agreements and known and agreed-upon future changes. The rent development is expected to follow inflation, taking into consideration active indexing clauses in existing agreements. At the end of lease terms, the currently applicable market rent is estimated. Vacancies are assessed based on both the current vacancy rate on the market and the property, but also based on the property's location and condition. Operating and maintenance costs are based on historical outcomes and budgeted costs. A reservation for repair costs and property investments are normally calculated as a cost per square meter or as a percentage of estimated rental income.

Inflation is initially considered to be very low and then to increase in future periods. The long-term inflation is estimated to be 2.0 per cent.

Current earning capacity

In order to facilitate assessment of the Company's current position, Eastnine is presenting the current earning capacity. Earning capacity is a theoretical assessment to describe the Company's current earnings on 31 March 2020.

Earning capacity is a snapshot

Earning capacity is not to be regarded as a forecast for the coming twelve months, but as a snapshot of the potential result the Company can generate under given circumstances. It is based on the property portfolio held on the reporting day.

Earning capacity does not take into account an assessment of the development of rent levels, vacancy, property expenses, interest rates, value changes or other factors that may affect earnings. Eastnine's calculated earning capacity is based on the following assumptions about income and expenses:

• Rental income comprises contracted income including rent supplements, with deductions for any rental discounts, on the reporting day.
• Property expenses are based on an assessment of a normal year's operating expenses, maintenance costs, property taxes and site leasehold fees. Operating expenses include costs for property administration.
• Financial income and expenses have been calculated based on the Company's debt liability and average interest level on the reporting day. Central administration expenses have been calculated based

on the existing organisation and the current property portfolio on the reporting day.

Comment to earning capacity

Rental income from the portfolio, according to earning capacity, is on 31 March 5 per cent higher than at the end of the year 2019. This stems from a rise in the portfolio's occupancy rate and rent level.

The percentual increase in net operating income is higher than in rental income, which is to be expected as most lease agreements are triple-net and as vacancies have sunk. The percentual improvement of the profit from property management is larger than that of net operating income mainly because central administration remains nearly unchanged.

Agreed-upon acquisitions

Eastnine has entered into an agreement to acquire the S7-3 property in Vilnius. The property is expected to be taken into possession during the second quarter of 2020, at an agreed purchase consideration of around EUR 43m. The property is fully let. Annual rental income amounts to around EUR 2.5m, with an estimated surplus of 98 per cent. The property is not part of the table below.

	2020	2019	Change,
Current earning capacity, EUR thousands	31 Mar	31 Dec	percentage
Rental income	18,085	17,143	+5
Property expenses	-1,418	-1,456	-3
Net operating income	16,667	15,687	+6
Central administration expenses	-3,900	-3,870	+1
Interest expenses	-3,254	-3,122	+4
Other financial income and expenses	-202	-59	+242
Profit from property management	9,311	8,636	+8
	2020	2019
Key figures, current earning capacity	31 Mar	31 Dec	Change, unit
Surplus ratio, %	92	92	0
Interest coverage ratio, multiples	3.9	3.8	+0.1
Average interest rate level, %	2.3	2.3	0.0

Real Estate Fund

Real Estate Fund, % of assets

EC Baltic Property Fund II

East Capital Baltic Property Fund II

East Capital Baltic Property Fund II (EC Baltic Property Fund II), which is reocgnised at fair value, increased by 1.6 per cent during the period. The change in value is a consequence of the net operating surplus during the period. The fund has a total of five properties in offices, logistics and retail, of which four are in Tallinn and one in Riga. The fund, which was extended at year-end 2019 until May 2020, was during the quarter extended until May 2021. Eastnine's intention is to free up invested equity in the fund to enable further investments in directly-owned real estate.

	2020	2019
Key figures, EC Baltic Property Fund II	Jan-Mar	Jan-Mar1
Unrealised changes in value, EUR k	348	441
Realised changes in value and dividends, EUR k	-	-
Total return, %	1.6	2.0
Key figures, EC Baltic Property Fund II	2020, 31 Mar	2019, 31 Mar
Share of profit/loss, %	44	44
Fair value of Eastnine's shares, EUR k	22,160	21,812
Proportion of Eastnine's asset, %	5.5	5.2
1 At the end of March 2019 Eastnine also owned shares in East Capital Baltic Property Fund III, which is excluded from
the figures above.

Other

Other, % of assets

Melon Fashion Group

Melon Fashion Group

Melon Fashion Group had a good start to 2020 with increased sales during the first two months of the year. The coronavirus pandemic, and President Putin's granting of a paid non-working period for the population since the end of March, resulted in MFG closing essentially all retail stores on 1 April 2020. Total sales in the period increased by 37 per cent and amounted to RUB 5,382m (3,942). The increase in sales was primarily due to strong sales growth in e-commerce and the acquisition of the SELA brand in the late summer of 2019. MFG's aggregate online sales increased by 146 per cent during the period and made up 29 per cent (16) of MFG's total sales. The number of retail stores amounted to 802, including 249 operated by franchise partners, and the total retail area amounted to 160,000 sq.m. MFG's EBITDA for the first quarter 2020, excluding effects of IFRS 16, amounted to RUB -270m (-167) and the EBITDA margin to -5.0 per cent (-4.2). The first quarter is normally weaker than other quarters. No dividend has been received from MFG during the period. The fair value of Eastnine's holding in MFG decreased by EUR 21.6m during the period, as a conse-quence of negative effects from the coronavirus pandemic, including the closure of MFG's retail stores and a depreciation of the rouble, each accounting for about half.

	2020	2019
Key figures	Jan-Mar	Jan-Mar
Unrealised changes in value, EUR k	-21,631	3,669
Realised changes in value and dividends, EUR k	-	-
Total return, %	-32.3	7.5
	2020	2019
Key figures	31 Mar	31 Mar
Eastnine's share of the company, %	36	36
Fair value of Eastnine's holding, EUR k	45,266	66,897
Share of Eastnine's assets, %	11.2	15.9

Accounting principles and other information

General information

Eastnine AB (publ), corporate ID no. 556693-7404, is a Swedish limited company, listed on Nasdaq Stockholm, with its registered office in Stockholm. The Group's real estate operations are managed through the Estonian subsidiary Eastnine Baltics OÜ, with subsidiaries in Latvia and Lithuania, which together comprise the Eastnine Group. At the end of the period, the Eastnine Group employed 20 full-time employees, of which nine were employed at the head office in Stockholm, eight in Vilnius, two in Riga and one in Tallinn.

The Company and the Group's interim report concern the period January - March 2020. All figures are presented in EUR thousands unless otherwise stated. Rounding differences may occur.

Risks and uncertainties

The dominant risks in Eastnine's operations are commercial risks in the form of changes in rent levels, vacancies and interest rates, as well as changes in the economic or business climate, and exchange 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 2019 on pages 28‒29. Risks connected to the corona pandemic is on page 4 in this interim report and a market analysis for the coming months is provided in the Market section on p. 5.

Parent Company

Net profit/loss for the period amounted to EUR -21,534k (3,195). The result is primarily attributable to an unrealised value change in Melon Fashion Group of EUR -21,631k (3,669), and operating expenses and financial income. See p. 23 for the Parent Company's income statement and balance sheet.

Dividend

The Board has proposed a dividend of SEK 2.70 per share (2.30), to be paid out on two occasions in May and November, respectively, each of SEK 1.35 per share. The dividend would correspond to 2.0 per cent of net asset value on 31 December 2019.

Sustainability

Eastnine undertakes active sustainability efforts. At the end of the period, 72 per cent of property area was environmentally certified with either LEED Platinum or BREEAM Excellent. Properties that are expected to undergo significant redevelopment are not included. A further two properties are undergoing a certification process.

Eastnine's sustainability report, which was produced according to the Global Reporting Initiatives guidelines (GRI referenced) and published as part of the 2019 annual report, contains information about the Company's primary concerns, aims and indicators. Eastnine AB is a member of GRESB.

Eastnine have begun assessing a new development of a wooden office building in Riga - The Pine. This building is planned to receive double sustainability certificates: LEED Platinum and WELL.

Summary of material accounting principles

Eastnine AB (publ) prepares its consolidated accounts according to the International Financial Reporting Standards (IFRS), approved by the European Union as well as interpretations of these (IFRIC). The interim report has been prepared in accordance with the International Accounting Standards (IAS) 34 Interim Financial Reporting and the Swedish Annual Accounts Act (Årsredovisningslagen).

The Group applies the same accounting principles and valuation methods as in the latest annual report, with the exception mentioned below regarding IFRS 3. Other new or revised IFRS standards or other IFRIC interpretations applying from 1 January 2020 have not had a material effect on the Group's financial statements.

The Parent Company prepares its accounts in accordance with RFR 2, Reporting of a legal entity, as well as the Swedish Annual Accounts Act (Årsredovisningslagen) and apply the same accounting principles and valuation methods as at the last annual report.

Amendments in accounting principles

Ammendments in IFRS 3 Business Combination, has entered into force as of 1 January 2020. The changed definition results in a simplified assessment of whether an acquisition is to be considered as an asset acquisition or not. If the fair value in all material respects is concentrated to an identifiable asset or group of assets, the acquisition can be regarded as an asset acquisition. If not, the acquisition is to be tested against the criteria for business combination. All of the Group's property acquisitions have been classified as asset acquisitions, and the Company regards the change of standard as a simplification and reinforcement of future assessments.

The change in accounting principles has not had a material impact on the Group's or the Parent company's financial reports or key figures.

Estimates and assumptions in the financial statements In preparing these financial statements according to the IFRS, the executive management makes judgements, estimates and assumptions that affect the application of the Company's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may deviate from these estimates and assessments. Estimates and underlying assumptions are regularly reviewed. Revisions to estimates are reported in the period that the change takes place and in the future periods that are affected.

Key sources of uncertainty

The sources of uncertainty in the estimates below refer to such sources that result in a significant risk that the value of assets and liabilities may have to be substantially adjusted during the financial year. For valuation of investment properties, assessments and assumptions can have a significant effect on the Group's income and financial position. These valuations require estimates and assumptions of future cash flows as well as determination of the discounting factor (required yield). To reflect the inherent uncertainty of these assessments and assumptions, property valuations typically specify an uncertainty range of +/- 5–10 per cent.

In regard to other investments that are not traded on an active market and where fair value is determined not by actual bid quotes but by means of valuation models (see below in the section on financial instruments), there is a risk that the holdings will have substantially different fair values in future periods. The Company applies its models consistently from period to period, but the determination of fair value is inherently uncertain. Based on the controls that are applied, the Group considers the fair values reported in the balance sheet to be carefully calculated and considered to reflect the underlying financial values.

Important considerations in the application of the Group's accounting policies

The holdings in JSC Melon Fashion Group, one of the holdings in which Eastnine invested during its period as an investment entity, constitutes an associated company as Eastnine has considerable influence over the company.

This holding is recognised at fair value through profit/loss, using the exemption from the equity method in IAS 28. The assessment is that this exemption is applicable to Eastnine. The assessment is the same as that made in the Annual Accounts for 2019.

Eastnine has ownership shares in an umbrella fund amounting to around 12 per cent which, for Eastnine, means income shares of 44 per cent in a sub-fund. These shares have been assessed not to constitute associated companies, as Eastnine can not and has not been able to exert significant influence over the fund. Considering that the Company is not able to exert any influence over the fund, the holding is reported in accordance with IFRS 9 Financial Instruments.

Segment Reporting

Business segments are reported in the way which corresponds to the internal classification which is submitted to the Company's senior management and Board of Directors. Eastnine classifies and evaluates its various segments based on the nature of the investments. The following segments are used in the internal reporting: Real Estate Direct, Real Estate Funds and Other.

Related parties

Eastnine AB has a related party relationship with its subsidiaries, see Note 28 in the 2019 Annual Report, as well as with Board members and employees.

Eastnine AB's management, Board members and their close relatives and related companies control 30 (30) per cent of voting rights in the Company.

Commitments

Eastnine has a commitment to complete the acquisition of the S7-3 property in Vilnius, as part of a larger acquisition announced in February 2019. The property is expected to be taken into possession during the second quarter of 2020, and the purchase price is estimated to amount to around EUR 43m.

Events after the end of the period

No significant events have taken place after the end of the period.

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

Stockholm, 12 May 2020

Kestutis Sasnauskas CEO

This interim report has not been subject to review by the Company's auditor.

Share

After a strong start to the year, Eastnine's share price decreased in March as a result of the coronavirus pandemic. At the end of the period, the price had sunk by 20 per cent to SEK 109.2. Long-term net asset value amounted to SEK 131 per share.

Number of shares

Eastnine's share is listed on Nasdaq Stockholm Mid Cap, Real Estate. The total number of shares in Eastnine AB amounted to 22,370,261 on 31 March 2020, and adjusted for repurchased shares held in treasury, the number of shares issued amounted to 21,149,061. The number of shareholders amounted to around 5,411 at the end of the period, and the free float to 63 per cent. At the end of the period, the share price was SEK 109.2 and the market capitalisation to SEK 2.3 billion.

Dividend

The Board proposed to the Annual General Meeting a dividend of SEK 2.70 per share (2.30) for the 2019 financial year, paid semiannually. The dividend corresponds to a

Largest shareholders as at 31 March 2020

	Number of
Shareholder	shares	%
Peter Elam Håkansson1	6,067,090	27.0
Keel Capital	2,268,884	10.1
Mertiva AB	1,799,303	8.0
Lazard Asset Management	1,491,577	6.7
Nordnet Pensionsförsäkring	1,144,303	5.1
Norges Bank	768,770	3.4
Kestutis Sasnauskas	446,443	2.0
Dimensional Fund Advisors	343,929	1.5
Prioritet Finans	300,000	1.3
Jacob Grapengiesser	167,861	0.8
10 largest	14,798,160	65.9
Eastnine AB (repurchased shares)	1,221,200	5.5
Others	6,350,901	28.6
Total	22,370,261	100.0

¹Private and via companies (East Capital Holding AB and Rytu Invest AB). Source: Monitor

Key figures

	2020	2019
Data per share	31 Mar	31 Dec
Equity, EUR	11.6	12.7
Long-term equity, EUR	12.0	13.1
Share price, EUR	10.0	13.1
Equity, SEK	126	133
Long-term equity, SEK	131	137
Share price, SEK	109.2	137.4

dividend growth of 17 per cent. A dividend of SEK 2.70 per share amounts to 2.0 per cent of equity, which is in accordance with the current dividend policy.

Share buy-back

On 31 March 2020, the Company held 1,221,200 own shares in treasury, corresponding to 5.5 per cent of total outstanding shares. No shares have been repurchased since the first quarter of 2019.

At the AGM 2019, the Board received a new mandate to decide on share buy-back, providing that the company's holding of treasury shares not exceed at any time 10 per cent of all shares in the company.

Share price development, SEK

Consolidated Statement of Comprehensive Income

EUR thousands Jan-Mar Jan-Mar Jan-Dec Apr/Mar Rental income 4,475 2,947 13,348 14,876 Property expenses -431 -258 -1,402 -1,575 Net operating income 4,044 2,689 11,946 13,301 Central administration expenses -824 -927 -3,873 -3,770 Interest expenses -863 -411 -2,225 -2,676 Other financial income and expenses -95 -72 -359 -382 Profit from property management 2,262 1,279 5,489 6,472 Unrealised changes in value of properties -2,738 - 10,208 7,470 Unrealised changes in value of derivatives -235 -656 -1,006 -584 Unrealised changes in value of investments -21,283 4,459 17,742 -8,000 Realised value changes and dividends from investments - 22 5,403 5,381 Profit/loss before tax -21,994 5,103 37,836 10,740 Tax -259 -146 -2,570 -2,684 Net profit/loss for the period/year1 -22,253 4,957 35,266 8,056 Number of shares outstanding, adjusted for repurchased shares, thousand 21,149 21,149 21,149 21,149 Weighted average number of shares before dilution, thousand 21,149 21,305 21,187 21,149 Weighted average number of shares after dilution, thousand 21,149 21,337 21,231 21,197 Earnings per share before dilution, EUR -1.05 0.23 1.66 0.38		2020	2019	2019	2019/2020
	Earnings per share after dilution, EUR	-1.05	0.23	1.66	0.38

1 Total comprehensive income for the period/year corresponds to net profit/loss for the period/year.

Consolidated Statement of Financial Position

	2020	2019	2019
EUR thousands	31 Mar	31 Mar	31 Dec
ASSETS
Non-current assets
Intangible assets	2	3	2
Investment properties	288,020	195,972	290,256
Right-of-use assets, leaseholds	1,179	465	1,204
Equipment	208	90	216
Long-term securities holdings	67,426	97,357	88,709
Other non-current receivables	175	177	175
Total non-current assets	357,010	294,063	380,562
Current assets
Current assets	2,268	813	2,355
Cash and cash equivalents	43,883	43,794	37,406
Total current assets TOTAL ASSETS	46,151 403,160	44,607 338,670	39,761 420,322
EQUITY AND LIABILITIES
Equity
Share capital	3,660	3,660	3,660
Other contributed capital	252,230	256,669	252,252
Retained earnings including net profit/loss for the period	-9,972	-18,029	12,280
Total Equity	245,917	242,300	268,192
Non-current liabilities
Liabilities to credit institutions	137,907	84,297	132,571
Derivatives	2,198	1,614	1,963
Deferred tax liabilities	6,574	3,891	6,315
Lease liability	1,152	465	1,175
Other non-current liabilites	1,800	1,452	1,745
Total non-current liabilities	149,631	91,719	143,769
Current liabilities
Liabilities to credit institutions	5,200	2,670	5,200
Other liabilities	1,893	1,150	2,211
Accrued expenses and deferred income	519	831	951
Total current liabilities	7,613	4,651	8,361
TOTAL EQUITY AND LIABILITIES	403,160	338,670	420,322

Consolidated Statement of Changes in Equity

	Other
Share		Retained	Total
capital	capital	earnings	equity
3,660	260,145	-22,985	240,819
-	-	4,957	4,957
-	-3,525	-	-3,525
-	49	-	49
3,660	256,669	-18,028	242,300
-	-	30,309	30,309
-	-4,519	-	-4,519
-	102	-	102
3,660	252,252	12,281	268,192
-	-	-22,253	-22,253
-	-22	-	-22
3,660	252,230	-9,972	245,917
		contributed

Consolidated Statement of Cash Flow

	2020	2019	2019
EUR thousands	Jan-Mar	Jan-Mar	Jan-Dec
Operating activities
Profit/loss before tax	-21,994	5,103	37,836
Adjustments not included in cash flow from operating activities	24,330	-3,795	-27,868
Income tax paid	-	-	-
Cash flow from operating activities before changes in working capital	2,336	1,308	9,968
Cash flow from changes in working capital
Increase (-)/decrease(+) in other current receivables	87	-202	-1,742
Increase (+)/decrease(-) in other current payables	-771	-1,263	210
Cash flow from operating activities	1,652	-157	8,436
Investing activities
Investments in existing properties	-541	-287	-1,965
Acquisition of properties	-	-36,822	-
Purchase of equipment	-2	-	-152
Cash flow from investing activities	-543	-37,109	-98,230
Financing activities
New loans	6,636	20,200	74,029
Repayment of loans	-1,300	-734	-3,808
Payment of lease liabilities	-23	-	55
Dividend to shareholders	-	-	-4,519
Own share buy-back	-	-3,525	-3,525
Cash flow from financing activities	5,368	15,941	62,122
Cash flow for the period	6,477	-21,325	-27,672
Cash and cash equivalent at the beginning of the period	37,406	65,119	65,119
Exchange rate differences in cash and cash equivalents	-	-	-41
Cash and cash equivalent at the end of the period	43,883	43,794	37,406

Segment Reporting

Eastnine classifies and evaluates the 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 Fund and Other.

EUR thousands		Real Estate
1 Jan-31 Mar, 2020	Real Estate Direct	Fund		Other Unallocated	Total
Rental income	4,475	-	-	-	4,475
Property expenses	-431	-	-	-	-431
Net operating income	4,044	-	-	-	4,044
Central administration expenses	-	-	-	-824	-824
Interest expenses	-863	-	-	-	-863
Other financial income and expenses	-95	-	-	-	-95
Profit from property management	3,086	-	-	-824	2,262
Unrealised changes in value of properties	-2,738	-	-	-	-2,738
Unrealised changes in value of derivatives	-235	-	-	-	-235
Unrealised changes in value of investments	-	348	-21,631	-	-21,283
Profit/loss before tax	113	348	-21,631	-824	-21,994
Deferred tax	-259	-	-	-	-259
Net profit/loss for the year	-147	348	-21,631	-824	-22,253
Value of properties	288,020	-	-	-	288,020
Value of long-term securities holdings	-	22,160	45,266	-	67,426
Liabilities to credit institutions	143,107	-	-	-	143,107

EUR thousands	Real Estate	Real Estate
1 Jan-31 Mar 2019	Direct	Fund		Other Unallocated	Total
Rental income	2,947	-	-	-	2,947
Property expenses	-258	-	-	-	-258
Net operating income	2,689	-	-	-	2,689
Central administration expenses	-	-	-	-927	-927
Interest expenses	-411	-	-	-	-411
Other financial income and expenses	-57	-	-	-15	-72
Profit from property management	2,220	-	-	-941	1,279
Unrealised changes in value of derivatives	-656	-	-	-	-656
Unrealised changes in value of investments	-	789	3,669	-	4,459
Realised values and dividends from investments	-	22	-	-	22
Profit/loss before tax	1,564	811	3,669	-941	5,103
Deferred tax	-146	-	-	-	-146
Net profit/loss for the year	1,418	811	3,669	-941	4,957
Value of properties	195,972	-	-	-	195,972
Value of long-term securities holdings	-	44,776	52,581	-	97,357
Liabilities to credit institutions	86,967	-	-	-	86,967

Long-term securities holdings

Tables below reflect the long-term securities holdings measured at fair value in level 3. Segment "Real Estate Fund" consist the holdings in East Capital Property Fund II (end of year 2019 and during year 2020) and segement "Other" consist the holdings in JSC Melon Fashion Group. The asset of properties in the fund are normally valued externally at year end, and quarterly in between, internally valuation are executed by the fund manager. JSC Melon Fashion Group is valued quarterly of Eastnine.

Changes in long-term securities holdings measured at fair value in	Real Estate
level 3, EUR thousands	Fund	Other	Total
Opening balance 1 January 2020	21,812	66,897	88,709
Unrealised changes in values recognised net in profit/loss	348	-21,631	-21,283
Closing balance 31 March 2020	22,160	45,266	67,426
Changes in long-term securities holdings measured at fair value in	Real Estate
level 3, EUR thousands	Fund	Other	Total
Opening balance 1 January 2019	43,986	48,912	92,898
Purchases/additions	1,982	-	1,982
Divestments/Reductions	-25,090	-	-25,090
Unrealised changes in values recognised net in profit/loss	-243	17,985	17,742
Realised changes in values recognised net in profit/loss	1,177	-	1,177
Closing balance 31 December 2019	21,812	66,897	88,709

Valuation assumptions, securities holdings

Holdings	Segment	Valuation method1	Valuation assumptions1
East Capital Baltic Property Fund II	Real Estate Fund	DCF	WACC 8-9 %, yield requirement 6-8 %.
			Long-term growth 3.5 %, Long-term operating margin 9.6 %, WACC 18.4 %, 25% minority and liquidity
JSC Melon Fashion Group	Other	DCF	discount is applied.

1 Discounted cash flow model (DCF), weighted average cost of capital (WACC).

Sensitivity analysis

Sensitivity analysis, properties		Assumptions	Impact, EUR thousands
Rental income, %		+/- 5.0	16,570
Yield requirement, %		+/-0.25	-8,913/+8,215
Assumptions valuation model			31 March 2020
Long-term inflation, %			2.0
Average discount rate, %			7.3
Weighted yield requirement, %			6.1
Long-term vacancy rate, %			4.5
Sensitivity analysis, Long-term securities holdings, EUR thousands	Real Estate Fund		Other
Yield requirement, 0.5 percentage points movement	-992	1,138	- -
Weighted average cost of capital (WACC), movement 0.5 percentage points on Real

Long-term growth, 0.4 percentage points movement - - 874 -829 Long-term operating margin, 0.5 percentage points movement - - 1,553 -1,553

Estate Fund and 1.0 percentage points on Other

	Effect on profit or loss and equity				31 March
EUR thousands	Change, %	31 Mar 2020 31 Dec 2019		Cash flow and current earning, EUR thousands	2020
Currency rate, EUR/RUB	+/- 10	4,527	6,690	Market interest rate, +/- 50 bps	-25 / +88
Value of Real Estate Fund and Other	+/- 10	6,743	9,290	Market interest rate, +/- 100 bps	+155 / +176

Sensitivity analysis for market risks					Effect at
		Effect on profit or loss and equity			31 March
EUR thousands	Change, %	31 Mar 2020 31 Dec 2019		Cash flow and current earning, EUR thousands	2020
Currency rate, EUR/RUB	+/- 10	4,527	6,690	Market interest rate, +/- 50 bps	-25 / +88
Value of Real Estate Fund and Other	+/- 10	6,743	9,290	Market interest rate, +/- 100 bps	+155 / +176

-196 203 -3,475 4,000

Concentration of foreign currency assets

Monetary assets and liabilities EUR thousands	31 Mar 2020 31 Dec 2019
Currency in SEK	32	82
Lease liabilities in SEK	544	567

Non-monetary assets1 , EUR thousands	31 Mar 2020 31 Dec 2019
Currency in rouble (RUB)	45,266	66,897

1 Holdings in JSC Melon Fashion Group.

Income Statement - Parent Company

	2020	2019
EUR thousands		Jan-Mar
Other income	435	22
Central administration expenses	-677	-826
Operating profit/loss	-242	-804
Unrealised changes in value of investments	-21,631	3,669
Financial income	344	344
Financial expense	-6	-15
Profit/loss before tax	-21,534	3,195
Tax	-	-
Net profit/loss for the period	-21,534	3,195

Balance Sheet - Parent Company

	2020	2019	2019
EUR thousands	31 Mar	31 Mar	31 Dec
ASSETS
Fixed assets
Right-of-use asset, leaseholds	571	-	596
Equipment	83	-	88
Shares in group companies	143,433	146,964	143,433
Long-term securities holdings	45,266	52,581	66,897
Loans to group companies	27,527	27,527	27,527
Total non-current assets	216,881	227,073	238,541
Current assets
Other current assets	3,225	1,804	2,818
Cash and cash equivalents	2,626	3,543	3,038
Total current assets	5,850	5,347	5,856
TOTAL ASSETS	222,731	232,420	244,396
EQUITY AND LIABILITIES
Equity
Restricted capital
Share capital	3,660	3,660	3,660
Unrestricted capital
Share premium reserve	252,252	256,669	252,252
Retained earnings including net profit/loss for the year	-34,402	-28,688	-12,845
Total equity	221,509	231,641	243,066
Non-current liabilities
Lease liability	544	-	567
Other non-current liabilites	43	26	63
Total non-current liabilities	587	26	631
Current liabilities
Other liabilities	364	71	242
Accrued expenses and deferred income	271	669	457
Total current liabilities	635	752	699
TOTAL EQUITY AND LIABILITIES	222,731	232,420	244,396

Quarterly overview

Income Statement

EUR thousands	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019	Q4 2018	Q3 2018	Q2 20181
Rental income	4,475	4,161	3,142	3,099	2,947	2,516	2,339	2,282
Property expenses	-431	-410	-347	-387	-258	-396	-235	-249
Net operating income	4,044	3,751	2,795	2,712	2,689	2,120	2,104	2,034
Central administration expenses	-824	-1,184	-826	-936	-927	-1,055	-621	-1,008
Interest expenses	-863	-790	-498	-526	-411	-350	-266	-319
Other financial income and expenses	-95	-78	-101	-109	-72	369	0	20
Profit from property management	2,262	1,699	1,370	1,141	1,279	1,085	1,217	727
Unrealised changes in values:
Properties	-2,738	3,914	2,810	3,483	-	863	3,675	945
Derivatives	-235	702	-311	-740	-656	-618	342	-372
Investments	-21,283	11,918	1,782	760	4,459	6,941	-1,060	-2,233
Realised values and dividends from investments	-	2,588	22	1,595	22	2,928	25	1,668
Profit before tax	-21,994	20,821	5,673	6,239	5,103	11,199	4,199	735
Tax	-259	-1,246	-604	-575	-146	-273	-748	-182
Net profit/loss for the period	-22,253	19,575	5,069	5,664	4,957	10,925	3,451	553

Balance sheet - condensed

	2020	2019	2019	2019	2019	2018	2018	2018
EUR thousands	31 Mar	31 Dec	30 Sep	30 Jun	31 Mar	31 Dec	30 Sep	30 Jun
Investment properties	288,020	290,256	203,276	199,882	195,972	158,862	156,102	122,843
Long-term securities holdings	67,426	88,709	101,881	98,117	97,357	92,898	85,957	86,932
Other assets	3,831	3,951	2,595	1,628	1,548	887	1,401	28,154
Cash and cash equivalents	43,883	37,406	40,596	42,772	43,794	65,119	58,515	63,558
TOTAL ASSETS	403,160	420,322	348,348	342,399	338,670	317,767	301,976	301,487
Shareholders' equity	245,917	268,192	248,583	243,480	242,300	240,819	232,415	232,305
Long-term liabilities to credit institutions	137,907	132,571	81,628	84,297	84,297	64,474	55,772	54,638
Current liabilities to credit institutions	5,200	5,200	3,560	1,780	2,670	3,076	2,729	1,029
Other liabilities	14,136	14,359	14,577	12,842	9,402	9,398	11,060	13,516
TOTAL EQUITY AND LIABILITIES	403,160	420,322	348,348	342,399	338,670	317,767	301,976	301,487

1 Key figures for the period Q2 2018 are based on pro-forma figures.

Key figures

	100 Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019	Q4 2018	Q3 2018	Q2 20181
Property-related
Leasable area, sq.m. k	99.5	99.5	74.5	74.5	74.9	62.8	62.7	49.4
Number of properties	9	9	6	6	6	5	5	5
Property value, EUR k	288,020	290,256	203,276	199,882	195,972	158,862	156,102	122,843
Surplus ratio, %	90	90	89	88	91	84	90	89
Floor space occupancy rate, %	95.7	92.7	90.2	87.7	92.0	88.8	97.5	99.6
Average rent, EUR/sq.m./month	15.0	14.7	14.7	14.7	14.8	14.5	14.3	14.5
WAULT, years	4.9	5.0	3.0	3.3	2.8	2.8	2.8	1.9
Average yield requirement, %	6.1	6.3	6.3	6.4	6.4	6.7	-	-
Financial
Rental income, EUR k	4,475	4,161	3,142	3,099	2,947	2,516	2,339	2,282
Net operating income, EUR k	4,044	3,751	2,795	2,712	2,689	2,120	2,104	2,034
Profit from property management, EUR k	2,262	1,699	1,370	1,141	1,279	1,085	1,217	727
Loan-to-value ratio (LTV), %	50	47	42	43	44	43	37	37
Debt ratio, multiple	15.0	17.1	13.0	14.1	16.3	15.7	18.7	29.8
Equity/asset ratio, %	61	64	71	71	72	76	77	77
Interest coverage ratio, multiple	3.6	3.2	3.8	3.2	4.1	4.1	5.6	3.3
Average interest rate, %	2.3	2.3	2.3	2.3	2.4	2.5	2.4	2.4
Return on equity Real Estate Direct, %	-0.4	20.3	15.7	16.7	6.2	9.8	24.1	9.9
Return on equity, %	-34.6	30.3	8.2	9.3	8.2	18.5	5.9	0.9
Share-related
Equity, EUR k	245,917	268,192	248,583	243,480	242,300	240,819	232,415	232,305
Long-term net asset value (LT-NAV), EUR k	254,689	276,470	256,316	250,298	247,804	245,521	236,226	235,711
Market capitalisation, EUR k	212,439	276,546	225,322	213,772	229,466	197,085	194,321	198,618
Market capitalisation, SEK k	2,309,477	2,905,881	2,415,223	2,258,720	2,389,844	1,997,452	2,007,332	2,074,547
Number of shares issued at period end, thousand	22,370	22,370	22,370	22,370	22,370	22,370	22,370	22,370
Number of shares issued at period end, adjusted for repurchased shares, thousand	21,149	21,149	21,149	21,149	21,149	21,501	21,795	22,164
Weighted average number of shares, adjusted for
repurchased shares, thousand	21,149	21,187	21,200	21,227	21,305	22,128	22,290	22,454
Profit from property management per share, EUR	0.11	0.08	0.06	0.05	0.06	0.05	0.05	0.03
Earnings per share, EUR	-1.05	0.93	0.24	0.27	0.23	0.50	0.16	0.02
Equity per share, EUR2	11.6	12.7	11.8	11.5	11.5	11.2	10.7	10.5
Equity per share, SEK2	126	133	126	122	119	114	110	109
Long-term net asset value per share, EUR	12.0	13.1	12.1	11.8	11.7	11.4	10.8	10.6
Long-term net asset value per share, SEK	131	137	130	125	122	116	112	111
Share price, EUR	10.0	13.1	10.7	10.1	10.8	9.2	8.9	9.0
Share price, SEK	109.20	137.40	114.20	106.80	113.00	92.90	92.10	93.60
Other
SEK/EUR	10.87	10.51	10.72	10.57	10.41	10.14	10.33	10.44
								Q2 20181
Interpretation for key figures	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019	Q4 2018	Q3 2018
Rental income	4,475	4,161	3,142	3,099	2,947	2,516	2,339	2,282
Net operating income	4,044	3,751	2,795	2,712	2,689	2,120	2,104	2,034
Surplus ratio, %	90	90	89	88	91	84	90	89
Property value	288,020	290,256	203,276	199,882	195,972	158,862	156,102	149,564
Liabilities to credit institutions	143,107	137,771	85,187	86,077	86,967	67,550	58,501	55,666
Loan-to-value ratio, %	50	47	42	43	44	43	37	37
Equity	245,917	268,192	248,583	243,480	242,300	240,819	232,415	232,305
Add back derivatives	2,198	1,963	2,665	2,353	1,614	957	339	682
Add back recognised deferred tax	6,574	6,315	5,069	4,465	3,891	3,745	3,472	2,724
Long-term net asset value (LT-NAV), EUR k	254,689	276,470	256,316	250,298	247,804	245,521	236,226	235,711
Profit from property management	2,262	1,699	1,370	1,141	1,279	1,085	1,217	727
Interest expenses	863	790	498	526	411	350	266	319
Profit before interest expenses	3,125	2,489	1,868	1,667	1,690	1,434	1,483	1,046
Interest coverage ratio, multiple	3.6	3.2	3.8	3.2	4.1	4.1	5.6	3.3
Net profit Real Estate Direct, annualised	-586	25,129	16,376	17,003	5,673	8,343	20,462	8,428
Weighted equity Real Estate Direct	138,342	124,092	104,349	101,870	91,975	85,372	84,879	85,336
Return on equity Real Estate Direct, %	-0.4	20.3	15.7	16.7	6.2	9.8	24.1	9.9

1 Key figures for the period Q2 2018 are based on pro-forma figures.

2 Proposed dividend for 2020, SEK 2.70 per share corresponding to EUR 0.26 per share.

Definitions and glossary

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 rental income Average rent at the end of the period.

Lettable area Total area available for letting.

Net letting

Annual rent income from contracts signed, less that of contracts terminated, during the period.

Net operating income Rental income less property expenses.

Occupancy rate, by area Occupied area in relation to lettable area.

Occupancy rate, financial

Contracted annual rent at the end of the period in relation to the rent value.

This indicator is used to facilitate the estimation of rental income for vacant premises and other financial vacancies.

Profit from property management

Earnings before value changes, dividends received and taxes.

Rental income

Debited rents, rental accruals, and rental guarantees less rental discounts.

Rent value

Contracted annual rents which are current at the end of the period with supplements for discounts and estimated market rent for vacant premises.

Triple-net rent

Lease agreements where the tenant, in addition to the base rent, also pays costs related to the leased area. These costs include operational and maintenance costs, property taxes, site leasehold fees, insurance and property upkeep.

Occupancy rate, by area

Occupancy rate in relation to lettable area.

Surplus ratio Net operating income in relation to rental income.

Triple-net lease

Lease agreements where the tenant, in addition to the base rent, also pays costs related to the leased area. These costs include operational and maintenance costs, property taxes, site leasehold fees, insurance and property caretaking.

Yield requirement, investment properties

The yield requirement is used in valuations and are based on yield rate at end of the period. The yield requirement are estimations of the market return requirement for similar investment objects, with the addition of risks related to real estate, such as geographical location, the condition of the property, and future vacancy risk

Vacancy rate, by area

Vacant area in relation to lettable area.

Vacancy rate, financial

Annual rent for vacant premises at the end of the period in relation to the rent value at the end of the period.

WAULT

Average remaining lease term of lease agreements weighted according to contracted rental income (weighted average unexpired lease term).

The indicator shows the weighted risk of future vacancies.

Financial key figures

Average capital tie-up period

Average remaining term for liabilities to credit institutions by the end of the period.

Average interest rate

Average interest rate on the Group's liabilities to credit institutions at the end of the period.

Debt coverage ratio

Liabilities to credit institutions at the end of the period in relation to net operating income after deduction of central administration expenses.

EBITDA

Profit before depreciation, amortisation and impairment (earnings before interest, tax, depreciation and amortisation).

Equity/asset ratio

Equity in relation to total assets.

Interest coverage ratio

Profit from property management, with reversal of interest expenses, in relation to interest expenses.

LTV (loan-to-value) ratio

Liabilities to credit institutions in relation to property value.

Return on equity

Net profit/loss for the quarter, recalculated on a 12-month basis, in relation to average equity.

Return on equity, Real Estate Direct

Net profit/loss for the quarter, recalculated on a 12-month basis, in the Real Estate Direct segment in relation to average equity attributable to the segment.

Share-related key figures

Earnings per share

Period earnings attributable to equity holders of the Parent Company in relation to the average number of issued shares.

Equity

Total equity.

Equity per share

Equity in relation to the total number of issued shares (excluding shares held in treasury).

Long-term net asset value (LT-NAV)

Total equity with reversal of derivatives and deferred tax liabilities according to the balance sheet.

Long-term net asset value per share

LT-NAV in relation to the number of outstanding shares (excluding shares held in treasury).

Profit from property management per share

Profit from property management divided by the average number of shares during the period.

Glossary

Break option

Unilateral option allowing the tenant to terminate the lease agreement prematurely. The clause usually refers to a right on the part of the tenant to terminate a lease without additional rent payments.

Fair value

Fair value is the price at which a property transfer may take place between independent and informed parties which have an interest in the transaction taking place. Fair value is considered to be equal to the acquisition value at the acquisition date, after which the fair value may change over time.

Gross area

Gross area is the sum of the area of all the floors up to the exterior of the surrounding building sections. The term is used e.g. with regards to property valuations.

IFRS

Abbreviation for International Financing Reporting Standard. IFRS is an international reporting standard for the preparation of group statements.

Interest derivatives

Agreements for the purchase and sale of interest, the price and conditions of which depend on factors such as time, inflation rates, and market. Derivative agreements are usually entered into in order to ensure predictable interest rate levels for some part or the entirey of interest-bearing loans. Interest rate swaps are a type of derivative where the value on balance day is zero and which expires without further payment flows.

Property

Relates to real estate in possession through ownership or site leaseholds.

Share buy-back

Purchasing of own shares on the stock market. Swedish companies have the option to own up to 10 per cent of their own outstanding shares, given approval from the AGM.

Zero-interest floor

Clause in credit agreements meaning that a negative Euribor interest rate is considered as zero.

Financial calendar

Annual General Meeting 2020: 12 May 2020 Interim report January - June 2020: 17 July 2020 Interim report January - September 2020: 11 November 2020 Year-end report 2020: 24 February 2021

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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 on 12 May 2020.

This is a translation of the original Swedish language interim report. In the event of discrepancies, the original Swedish wording shall prevail.

EASTNINE AB 25 Interim Report JAN-JUN 2018

Contact information

Kestutis Sasnauskas, CEO, +46 8 505 977 00 Britt-Marie Nyman, CFO and deputy CEO, +46 70 224 29 35

Eastnine AB

Kungsgatan 30, Box 7214 SE-103 88 Stockholm, Sweden Tel: +46 8 505 977 00

www.eastnine.com