Entra

Quarterly Report • Oct 17, 2019

Central, flexible and environment friendly office properties

Financial highlights

• Rental income of 577 million (570 million) in the quarter
• Net income from property management of 360 million (369 million)
• Net value changes of 471 million (204 million)
• Profit before tax of 900 million (660 million)
• Net letting of 6 million

Rental income

• 7 mill.

Property management

• 9 mill.

EPRA NAV

• 7 %

^{137 140 144 145 147} 100 120 140 160 Q3 18 Q4 18 Q1 19* Q2 19 Q3 19 EPRA NAV (NOK per share) * See section "Alternative performance measures"

Key figures

All amounts in NOK million	Q3-19	Q3-18	YTD Q3-19	YTD Q3-18	2018	2017	2016
Rental income	577	570	1 743	1 673	2 243	2 075	1 899
Change period-on-period	1 %	13 %	4 %	8 %	8 %	9 %	8 %
Net operating income	530	525	1 602	1 543	2 058	1 913	1 740
Change period-on-period	1 %	12 %	4 %	8 %	8 %	10 %	11 %
Net income from property management*	360	369	1 087	1 082	1 434	1 259	1 070
Change period-on-period	-2 %	20 %	0 %	15 %	14 %	18 %	34 %
Profit before tax	900	660	2 694	2 359	3 073	5 030	3 306
Change period-on-period	36 %	-36 %	14 %	-38 %	-39 %	52 %	8 %
Profit after tax	723	528	2 194	1 956	2 735	4 514	2 722
Change period-on-period	37 %	-36 %	12 %	-37 %	-39 %	66 %	0 %
Market value of the property portfolio*	48 071	44 891	48 071	44 891	45 630	40 036	35 785
Net nominal interest bearing debt*	19 071	18 596	19 071	18 596	18 941	17 852	17 454
Loan to value*	39.9 %	41.2 %	39.9 %	41. 2%	41.3 %	43.3 %	47.6 %
Interest coverage ratio*	3.2	3.6	3.3	3.6	3.6	3.0	2.7
Average outstanding shares (million)	182.1	183.7	182.4	183.7	183.6	183.7	183.7
All amounts in NOK per share*	Q3-19	Q3-18	YTD Q3-19	YTD Q3-18	2018	2017	2016
EPRA NAV*	147	137	147	137	141	127	101
Change period-on-period	7 %	14 %	7 %	14 %	11%	26 %	14%
EPRA NNNAV*	137	127	137	127	131	118	93
Change period-on-period	7 %	14 %	7 %	14 %	11%	26 %	15%
EPRA Earnings*	1.43	1.44	4.28	4.26	5.59	5.23	4.27
Change period-on-period	-1 %	17 %	0 %	10 %	7 %	22%	31%
Cash earnings*	1.96	1.99	5.91	5.85	7.74	6.81	5.80
Change period-on-period	-2 %	20 %	1 %	14 %	14%	17 %	17%
Dividend per share**	0.00	0.00	2.30	2.20	4.50	4.10	3.45
Change period-on-period	0 %	0 %	5 %	10 %	10 %	19 %	15 %

Reference

* Refer to section "Alternative performance measures" for calculation of the key figure

** Entra pays semi-annual dividends. Dividend year to date Q3-19 relates to dividend approved on 10 July and paid on 10 October

Financial developments

Results

Rental income

Rental income was up by 1 per cent from 570 million in Q3 2018 to 577 million in Q3 2019. The increased rental income can be explained by the factors in the below income bridge.

All amounts in NOK million	Q3-18 Q3-19	YTD-18 YTD-19
Rental income previous period	570	1 673
Development projects	-8	-12
Acquisitions	0	19
Divestments	-5	-15
Other*	-4	7
Like-for-like growth	25	71
Rental income	577	1 743

*YTD-19 includes extraordinary lease buy-out of net 7 million

The increase in rental income in the quarter, compared to the same quarter last year, is mainly driven by an underlying likefor-like growth of 4.8 per cent (25 million), compared to an annual CPI of 3.5 per cent. Also, the rental income is negatively affected by changes in the project portfolio, hereunder reduced income in Universitetsgata 2 as the property was vacated awaiting the refurbishment project to begin, partly offset by an increase in rental income due to the completion of two newbuild projects in Trondheim; Brattørkaia 16 and Powerhouse Brattørkaia.

In addition, the divestment of two properties in Oslo in January 2019 has reduced the rental income in the third quarter of 2019 by 5 million compared to the same quarter last year.

On a year to date basis, the increased rental income is mainly related to the acquisition of the Bryn portfolio in second half of 2018 and underlying like-for-like growth of 71 million (4.8 per cent).

Average 12 months rolling rent per square meter was 2,007 (2,024) as of 30.09.19. The decrease is related to reduced rents in properties that are in the process of being vacated over the next 12 months for redevelopment.

Compared to the previous quarter, the occupancy rate went slightly up, from 96.0 per cent to 96.1 per cent. The market rental income of vacant space as of 30.09.19 was approximately 95 million on an annualised basis.

QUARTERLY NET LETTING

Gross letting, including re-negotiated contracts, was 43 million in the quarter of which 10 million is attributable to letting in the project portfolio. Lease contracts with an annual lease of 10 million were terminated in the quarter. Net letting defined as new lease contracts plus lease-up on renegotiated contracts less terminated contracts came in at 6 million (1 million) in the

quarter. The timing difference between net letting in the management portfolio in the quarter and its effect on the financial results is normally 6-12 months, while new contracts signed in the project portfolio tend to have a later impact on the results.

RENTAL INCOME DEVELOPMENT

The graph above shows the estimated development of contracted rental income based on all reported events, including income effect from divestments and acquisitions, development projects, net letting based on new and terminated contracts in the management portfolio, and other effects such as estimated CPI adjustments. It does not reflect any letting targets on the vacant areas in the portfolio or on contracts that will expire, but where the outcome of any renegotiation process is not known, i.e. not yet reported in "Net letting". The graph therefore does not constitute a forecast, but rather aims to demonstrate the rental income trend in the existing contract portfolio on the balance sheet date based on all reported events. See also note 5 for further information on potential development of rental income.

Operating costs

All amounts in NOK			YTD	YTD
million	Q3-19	Q3-18	Q3-19	Q3-18
Maintenance	8	8	24	25
Tax, leasehold, insurance	15	20	45	56
Letting and prop. adm.	16	9	41	26
Direct property costs	8	9	31	23
Operating costs	47	45	140	131

The 5 million reduction from tax, leasehold and insurance since the third quarter of 2018 is mainly related to reduced leasehold cost as future fixed lease payments under IFRS 16 from Q1 2019 are recognised as lease liabilities, while previously being recognised as operating costs on a straightline basis. The increase in the letting and property administrative costs is mainly related to the acquisition of the Bryn portfolio in the second half of 2018 and increased cost due to vacancy in the management portfolio.

Net operating income

As a consequence of the effects explained above, net operating income came in at 530 million (525 million) in the quarter.

Other revenues and other costs

Other revenues were 100 million (22 million) in the quarter and other costs were 90 million (19 million). 71 million of other revenues and 60 million of other costs are related to the development of Tollbugata 1A in Oslo, which is forward-sold and expected to be delivered to the buyer in the fourth quarter of 2019.

All of the income and costs related to assets in the Bryn portfolio which is expected to be zoned for residential development and subsequently sold to a third party, is recognised as other revenues and other cost. The net effect of this is 5 million in the third quarter of 2019.

In addition to the effects explained above, the net effect from other revenues and other costs in the quarter mainly consists of income and cost from services provided to tenants.

Administrative costs

Administrative costs amounted to 41 million (33 million) in the quarter. The increase is primarily related to Entra's technology and digitization initiatives.

Share of profit from associates and JVs

All amounts in NOK million	Q3-19	Q3-18	YTD Q3-19	YTD Q3-18
Income from property management	0	1	3	3
Other income and costs	68	88	222	121
Share of profit from associates and JVs	69	89	224	125

Other income and costs from associates and JVs in the quarter mainly relates to the net gains from the completion and delivery of residential apartments and the recognition of income and cost related to the completion and sale of forwardsold commercial assets in Bjørvika. For a detailed breakdown of the results from associates and JVs, see the section Partly owned companies.

Net realised financials	-139	-127	-410	-358
finance expense	-143	-129	-419	-373
Interest and other
finance income	3	2	8	16
Interest and other
All amounts in NOK million	Q3-19	Q3-18	YTD Q3-19	YTD Q3-18
Net realised financials

Net realised financials have increased in 2019 compared to 2018 mainly due to higher net nominal interest bearing debt.

Net income and net income from property management

Net income came in at 429 million (457 million) in the quarter. When including only the income from property management in the results from JVs, net income from property management for the Group was 360 million (369 million). This represents a decrease of 2 per cent. For calculation of Net income from property management, see the section Alternative performance measures.

NET INCOME FROM PROPERTY MANAGEMENT PER SHARE

(Annualised, rolling 4 quarters)

Value changes

Net value changes amounted to 471 million (204 million) in the quarter.

The valuation of the property portfolio resulted in a net positive value change of 483 million (137 million) in the quarter. About 281 million of the total value changes is attributable to increased market rent, primarily in central Oslo, about 32 million is a net result of new contracts signed in the quarter partly offset by effects from terminated contracts. About 41 million is related to transactions in the quarter, mainly from the divestment of Kristian August gate 23 in Oslo, and 7 million is related to yield compression on a few properties. About 156 million relates to ongoing projects, mainly explained by new lease contracts signed in the period, reduced risk as each project is moving towards completion in combination with improved market conditions. The remaining negative value changes of 34 million relates to various property related changes.

Net changes in value of financial instruments was -12 million (67 million) in the quarter. The negative development in the quarter is mainly explained by lower long-term interest rates.

Tax

Tax payable of 3 million (3 million) in the quarter is related to the partly owned entity Papirbredden in Drammen. The change in deferred tax was -174 million (-130 million) in the quarter. The effective tax rate is less than the corporate income tax mainly due to divestment of properties without tax effect.

The Group, except for certain partly owned companies with marginal tax effect, is currently not in a tax payable position due to tax loss carry forward. At year-end 2018, the tax loss carry forward for the Group's wholly-owned subsidiaries was 321 million (810 million).

Profit

Profit before tax was 900 million (660 million) in the quarter. Profit after tax was 723 million (528 million), which also equals the comprehensive income for the period.

EPRA Earnings

EPRA Earnings amounted to 261 million (265 million) in the third quarter of 2019. Further information about the EPRA Earnings calculations can be found on pages 29–30.

Balance sheet

The Group's assets amounted to 50,420 million (46,915 million) as at 30.09.19. Of this, investment properties amounted to 46,944 million (44,969 million). Two (no) properties were classified as held for sale as at 30.09.19.

Housing-units for sale of 413 million (407 million) at the end of the quarter relates to the properties in the Bryn portfolio expected to be zoned for residential development and subsequently sold to a third party.

Other receivables and other current assets was 826 million (199 million) at the end of the quarter. The 2019 amount includes capitalised construction costs related to the forwardsold asset Tollbugata 1A.

Other non-current liabilities was 597 million (457 million) at the end of the quarter. The increase is mainly related to the capitalisation of lease liabilities of 235 million following the implementation of IFRS 16.

Book equity totalled 23,555 million (21,605 million). Equity per share was 147 (137) based on the EPRA NAV standard and 137 (127) based on EPRA NNNAV.

Cash flow statement

Net cash flow from operating activities came in at 392 million (395 million) in the quarter.

The net cash flow from investments was -235 million (-1,278 million) in the quarter. Proceeds from property transactions of 50 million (nil) in the quarter was related to the sale of the land plot Sorgenfriveien 11 in Trondheim. No investment properties were purchased in the quarter. The cash effect from investment in and upgrades of investment properties amounted to -252 million (-230 million) in the quarter. Investment in property and housing-units for sale in the quarter of -27 million (-328 million) mainly relates to construction costs related to the forward-sold asset Tollbugata 1A.

Net cash flow from financing acitivites was -20 million (875 million) in the quarter. During the quarter, Entra has had a net increase in bank financing of 1,080 million and a net decrease in bond and commercial paper financing of 1,000 million and 100 million, respectively.

The net change in cash and cash equivalents was 137 million (-8 million) in the quarter.

Financing

During the third quarter, Entra's gross interest-bearing nominal debt decreased by 20 million to 19,421 million. The change in interest bearing debt comprised an increase in bank financing of 1,080 million and a decrease in bond and commercial paper financing of 1,000 million and 100 million, respectively.

In the quarter, Entra has refinanced commercial paper loans of 600 million.

As of 30.09.19, net nominal interest bearing debt after deduction of liquid assets of 350 million (175 million) was 19,071 million (18,596 million).

The average remaining term for the Group's debt portfolio was 5.1 years at 30.09.19 (4.2 years). The calculation takes into account that available long-term credit facilities can replace short-term debt.

Entra's financing is mainly based on negative pledge of the Group's assets, which enables a broad and flexible financing mix. Entra's financing structure includes bank loans, bonds and commercial papers. At the end of the period, 70 per cent (72 per cent) of the Group's financing came from the debt capital markets.

Maturity profile and composition interest bearing debt

Maturity profile	0-1 yrs	1-2 yrs	2-3 yrs	3-4 yrs	4+ yrs	Total	%
Commercial papers (NOKm)	2 200	0	0	0	0	2 200	11
Bonds (NOKm)	1 200	1 300	1 200	3 900	3 700	11 300	58
Bank loans (NOKm)	0	731	0	2 970	2 220	5 921	30
Total (NOKm)	3 400	2 031	1 200	6 870	5 920	19 421	100
Unutilised credit facilities (NOKm)	0	750	1 000	1 530	3 500	6 780
Unutilised credit facilities (%)	0	11	15	23	52	100

Financing policy and status

All amounts in NOK million	30.09.2019	Target
Loan-to-value (LTV)	39.9%	Below 50 per cent over time
Interest coverage ratio (ICR)	3.2	Min. 1.8x
Debt maturities <12 months	18%	Max 30%
Maturity of hedges <12 months	43%	Max 50%
Average time to maturity (hedges)	3.2	2-6 years
Back-stop of short-term interest bearing debt*	199%	Min. 100%
Average time to maturity (debt)	5.1	Min. 3 years

* See the section "Definitions"

Interest rates and maturity structure

The average interest rate1 of the debt portfolio was 2.87 per cent (2.81 per cent) as at 30.09.19. The change in average interest rate stems mainly from higher Nibor interest rates and increased share of fixed interest rates in the debt portfolio, as part of the forward start swap portfolio has become fixed rate payer swaps.

57 per cent (51 per cent) of the Group's financing was hedged at a fixed interest rate as at 30.09.19 with a weighted average maturity of 3.2 years (3.6 years).

The Group manages interest rate risk through floating-to-fixed interest rate swaps and fixed rate bonds. The table below shows the maturity profile and contribution from these fixed rate instruments, as well as the maturity profile for credit margins on debt.

	Fixed rate instruments²			Forward starting swaps³	Average credit margin
	Amount (NOKm)	Interest rate (%)	Amount	Interest rate (%)	Tenor (years)	Amount (NOKm)	Credit margin (%)
<1 year	100	2.3	2 450	2.09	6.8	6 351	0.90
1-2 years	1 050	3.4	600	2.22	5.3	1 300	0.96
2-3 years	1 350	1.8				1 200	0.78
3-4 years	1 450	2.2				5 370	0.98
4-5 years	1 000	2.6				1 000	0.88
5-6 years	900	2.3				700	0.86
6-7 years	2 300	2.0				900	0.86
7-8 years	110	4.4				1 500	0.83
8-9 years	0	0.0				0	0.00
9-10 years	0	0.0				0	0.00
>10 years	500	4.9				1 100	0.39
Total	8 760	2.5	3 050	2.12	6.5	19 421	0.88

¹Average reference rate (Nibor) is 1.60 per cent as of the reporting date.

²Excluding forward starting swaps and credit margins on fixed rate bonds (credit margins are displayed in the table to the right).

³The table displays future starting point, notional principle amount, average fixed rate and tenor for forward starting swaps.

The property portfolio

Entra's management portfolio consists of 76 buildings with a total area of approximately 1.1 million square meters. As of 30.09.19, the management portfolio had a market value of around 43 billion. The occupancy rate was 96.1 per cent (96.6 per cent). The weighted average unexpired lease term for the Group's leases was 6.2 years (6.4) for the management portfolio and 6.9 years (7.4) when the project portfolio is included. The public sector represents approximately 62 per cent of the total customer portfolio. The entire property portfolio consists of 89 properties with a market value of about 48 billion.

Entra's properties are valued by two external appraisers (Akershus Eiendom and Cushman & Wakefield) on a quarterly basis. The market value of the portfolio in Entra's balance sheet is based on the average of the appraisers' valuation. Valuation of the management portfolio is performed on a property by

property basis, using individual DCF models and taking into account the property's current characteristics combined with the external appraiser's estimated return requirements and expectations on future market development. The market value is defined as the external appraiser's estimated transaction value of the individual properties on valuation date. The project portfolio is valued based on the same principles, but with deduction for remaining investments and perceived risk as of valuation date. The land and development portfolio is valued based on actually zoned land.

Year-on-year, the portfolio net yield is reduced from 5.0 to 4.8 per cent. 12 months rolling rent has decreased by 1 % from 2,024 to 2,007 per square meter during the last year, whereas the market rent has increased by 4 %, from 2,110 to 2,196 per square meter.

	Properties	Area	Occupancy	Wault		Market value		12 months rolling rent	Net yield		Market rent
	(#)	(sqm)	(%)	(year)	(NOKm)	(NOK/sqm)	(NOKm)	(NOK/sqm)	(%)	(NOKm)	(NOK/sqm)
Oslo	37	602 093	95.9	5.5	27 231	45 228	1 333	2 214	4.5	1 516	2 517
Trondheim	10	153 399	94.5	7.3	4 436	28 920	239	1 558	5.0	268	1 745
Bergen	7	105 041	94.6	6.6	4 182	39 816	214	2 040	4.7	249	2 373
Sandvika	9	98 961	99.7	8.5	2 906	29 366	172	1 736	5.5	150	1 515
Stavanger	5	78 334	99.4	7.6	2 268	28 957	140	1 786	5.7	133	1 693
Drammen	8	71 029	98.3	6.2	2 053	28 899	128	1 797	5.8	120	1 695
Management portfolio	76	1 108 858	96.1	6.2	43 077	38 848	2 225	2 007	4.8	2 435	2 196
Project portfolio	7	100 377		17.3	4 183	41 672
Development sites	6	114 859		0.3	811	7 061
Property portfolio	89	1 324 094		6.9	48 071	36 305

The calculation of net yield is based on the valuers' assumption of ownership costs, which at 30.09 corresponds to 7.1 per cent of market rent.

Letting activity

During the third quarter, Entra signed new and renegotiated leases with an annual rent totalling 43 million (19,000 square metres) and received notices of termination on leases with an annual rent of 10 million (4,700 square metres). Net letting was 6 million in the quarter. Net letting is calculated as the annualised rent of new lease contracts plus lease-up on renegotiated contracts less terminated contracts.

Significant contracts signed in the quarter:

• New 15-year lease contract for 1,000 sqm in Universitetsgata 7-9 in Oslo with The Norwegian Bar Association
• New 5-year lease contract for 2,200 sqm in Holtermanns veg 1-13 in Trondheim with The Norwegian Hospital Construction Agency
• Renegotiated lease contract for 5 years and 5,100 sqm in Dronningens gate 2 in Trondheim with The Norwegian Courts Administration
• Renegotiated lease contract for 5 years and 1,200 sqm in Verkstedveien 1 in Oslo with PA Consulting

MATURITY PROFILE OF THE MANAGEMENT PORTFOLIO:

Investments and divestments

Entra has invested a total of 256 million (1,081 million) in the portfolio of investment properties in the third quarter and 1,023 million (1,777 million) year to date 2019. The decomposition of the investments is as follows:

All amounts in NOK million	Q3-19	Q3-18	YTD Q3-19	YTD Q3-18	2018
Aquisitions	0	791	23	914	914
Developments	226	278	894	805	1131
- Newbuild projects	165	213	654	591	812
- Redevelopment projects	61	65	240	213	319
Like-for-like portfolio	20	2	78	32	30
- Tenant alterations	18	3	71	27	24
- Maintenance capex	2	-1	7	5	6
Other	10	10	28	26	35
- Capitalised borrowing cost	10	10	28	26	35
Capital Expenditure	256	1 081	1 023	1 777	2 110

Project development

The portfolio of ongoing project with a total investment exceeding 50 million is presented below.

	Ownership (%)	Location	Expected completion	Project area (sqm)	Occupancy (%)	Estimated total project cost 1) (NOKm)	Of which accrued1) (NOKm)	Yield on cost2)(%)
Tollbugata 1 A	100	Oslo	Oct-19	9 000	100	446	430	5.4
Tullinkvartalet (UIO)	100	Oslo	Oct-19	23 000	94	1 435	1 220	5.9
Holtermanns veg 1-13	100	Trondheim	Jan-20	11 700	80	340	268	6.0
Brattørkaia 12	100	Trondheim	Jan-20	1 900	100	86	74	5.4
Kristian Augusts gate 13	100	Oslo	Aug-20	4 300	100	304	162	5.0
Universitetsgata 7-9	100	Oslo	Sep-21	21 900	49	1 235	492	6.0
Universitetsgata 2 - Rebel	100	Oslo	Sep-21	28 100	13	1 650	795	5.6
Total				99 900		5 495	3 443

1) Total project cost (including book value at date of investment decision, including cost of land)

2) Estimated net rent (fully let) at completion/total project cost (including cost of land)

Status ongoing projects

In Tullinkvartalet in Oslo, Entra has in the fourth quarter of 2019 completed construction of a new 23,000 sqm campus building for the University of Oslo's Faculty of Law. 82 per cent of the property is let to the university on a 25-year lease. Committed occupancy is currently 94 per cent. The new-build involves Entra's properties in Kristian Augusts gate 15-19, and parts of Kristian Augusts gate 21. The development has high

environmental ambitions and aims for a BREEAM-NOR Excellent classification. It was completed on schedule, with handover on 1 October 2019.

Also, in Tullinkvartalet, Entra is building a new 21,900 sqm office property in Universitetsgata 7-9 in Oslo. The pre-let ratio has increased to 49 per cent during the quarter. Estimated

total investment is increased with NOK 24 million in the quarter in connection with new rental contracts. The yield-oncost remains unchanged. The property is expected to be finalised in Q3 2021. The project has high environmental ambitions and aims for a BREEAM-NOR Excellent classification.

The third ongoing project in Tullinkvartalet is the 4,300 sqm office property in Kristian Augusts gate 13. The project will demonstrate Entra's strong commitment to work for more sustainable solutions by incorporating a target of more than 60 per cent re-use of building materials. Occupancy is already at 100 per cent as the property will be let to the coworking operator IWG/Spaces. The construction project is expected to be completed in August 2020.

Entra has started up the redevelopment project the Rebel U2 in Universitetsgata 2, next to Tullinkvartalet. Rebel U2 will be a technology and knowledge hub for large and small tech companies and will be managed 50/50 by Entra and an external partner. The 28,100 sqm building will consist of office space, co-working areas, conference centre and restaurants. Rebel U2 will offer a full-service concept through flexible short term contracts with access to meeting rooms, complimentary beverages, wi-fi and more through memberships. The project is expected to be completed in Q3 2021.

Entra is also refurbishing Tollbugata 1A in Oslo. The property consists of two buildings totalling 9,000 sqm adjacent to Oslo Central Station. The refurbishment project is expected to be completed in October 2019. The property is fully let on a 15 year lease to The Directorate of Norwegian Customs. The property is forward sold as part of the property swap transaction announced in December 2018. The transaction will close upon project completion. During the quarter, the cost estimate was reduced from 450 million to 446 million, increasing the yield on cost from 5.3 per cent to 5.4 per cent.

At Brattørkaia 12 in Trondheim, Entra is building a 2,000 sqm new office property which is fully let to The Norwegian State Educational Loan Fund ("Lånekassen"). The property will be finalised in January 2020, and the project aims for Energy class A.

In Holtermanns veg 1-13 in Trondheim, Entra has ongoing construction of a new office building. This is the first of three planned buildings. The approved zoning allows total construction of approximately 48,000 sqm, where the first building is 11,700 sqm. This new-build includes a 2,000 sqm basement with parking facilities. Expected completion is in the first quarter of 2020. The property is currently 60 per cent prelet to the Norwegian Tax Administration. The project has high environmental ambitions and aims for a BREEAM-NOR Excellent classification.

Transactions

Entra actively seeks to improve the quality of its property portfolio through a disciplined strategy of acquisitions and divestments. Entra focuses on acquisitions of large properties and projects in specific areas within its four core markets; Oslo and the surrounding region, Bergen, Trondheim and Stavanger. Target areas include both areas in the city centers and selected clusters and public transportation hubs outside the city centers, allowing Entra to offer rental opportunities at a price range that fits its customer base. Entra's experience, financial strength and knowledge of its tenants makes the company well positioned to make acquisitions that meets these acquisition criteria. The acquisition and divestment strategy is flexible, allowing Entra to adapt to feedback from customers and market changes, and to create and respond to market opportunities as they arise.

Transactions in 2018 and YTD 2019

Purchased properties	Area	Transaction quarter	No of sqm	Transaction value	Closing date
Section of Kristian Augusts gate 11	Oslo	Q1 2019	-	23	Q1 2020
St. Olavs plass 5	Oslo	Q4 2018	16 530	850	Q4 2019
Bryn portfolio	Oslo	Q2 2018	57 000	1 400	Q3 2018
Johannes Bruns gate 16/16A, Nygårdsgaten 91/93	Bergen	Q2 2018	-	135	Q2/Q4 2018
Nils Hansens vei 20	Oslo	Q1 2018	3 150	50	Q2 2018
Sum			76 680	2 458

Sold properties		Transaction quarter	No of sqm	Transaction value	Closing date
Kristian Augusts gate 23	Oslo	Q3 2019	8 750	450	Q4 2019
Sorgenfriveien 11	Trondheim	Q3 2019	-	50	Q3 2019
Section of Karoline Kristiansens vei 2	Oslo	Q2 2019	450	23	Q2 2019
Aasta Hansens vei 10	Oslo	Q4 2018	5 390	80	Q1 2019
Tollbugt 1, Pilestredet 19-23, Pilestredet 28	Oslo	Q4 2018	19 650	1 150	Q1/Q4 2019
Sum			34 240	1 753

Partly owned companies

Papirbredden Eiendom AS (60 %)

Entra and Drammen Municipality own Papirbredden Eiendom AS. The company owns six office properties totalling 59,000 sqm and a future development potential of 60,000 sqm in Drammen.

Hinna Park Eiendom AS (50 %)

Entra and Camar Eiendom own Hinna Park Eiendom AS. The company owns three office properties totalling 28,000 sqm and development potential for two new office properties of 37,000 sqm. Hinna Park Eiendom AS is consolidated in the Group's financial statements as Entra has a controlling vote on the Board of Directors.

Entra OPF Utvikling AS (50 %)

Entra and Oslo Pensjonsforsikring (OPF) own Entra OPF Utvikling AS. The company owns two properties in Bergen, the property Lars Hilles gate 30 (Media City Bergen) and Allehelgensgate 6. Entra OPF Utvikling AS is consolidated in the Group's financial statements as Entra has a controlling vote on the Board of Directors.

Oslo S Utvikling AS "OSU" (33.33 %)

OSU is a property development company that is undertaking primarily residential development in the city district Bjørvika, Oslo's CBD East. In the second quarter of 2019, OSU completed the development and sale of the forward-sold office building Eufemia and handed to the buyer the majority of the ground-level commercial assets in Bjørvika.

Financial figures for partly owned entities and JVs (based on 100 % ownership)

All amounts in NOK million	Papirbredden Eiendom AS	Hinna Park Eiendom AS	Entra OPF Utvikling AS	Total consolidated companies	Oslo S Utvikling AS	Other	Total associated companies & JVs
Share of ownership (%)	60	50	50		33
Rental income	28	15	34	77	1	1	2
Net operating income	27	14	31	72	1	1	2
Net income	21	6	31	57	239	1	240
Changes in value of investment properties	24	26	64	115	0	0	0
Changes in value of financial instruments	0	2	0	2	2	0	2
Profit before tax	45	34	95	173	241	1	242
Tax	-10	-8	-21	-39	-35	0	-35
Profit for the period	35	26	74	135	205	1	206
Non-controlling interests	14	13	37	64
Entra's share of profit*					68	0	69
Book value					450	10	460
Market value properties	1 829	1 186	2 729	5 744	4 774		4 774
Entra's share:
Market value properties	1 097	593	1 364	3 055	1 591		1 550
EPRA NAV	687	220	1 431	2 337	990	10	1 000
EPRA NNNAV	646	201	1 394	2 240	897	10	907

* Recognised as Share of profit from associates and JVs

** From Q1 2019, earnings from the associated company OSU are excluded from EPRA Earnings as the business of this company is development of properties for sale and is not considered relevant for measurement of the operating performance of the underlying property portfolio under management.

Market development

The total transaction volume in Norway year to date sums up to around 50 billion and 160 transactions. This is comparable with last year which had 51 billion and 164 transactions at the same time. The expected total transaction volume for 2019 is 87 billion, according to Entra's consensus report. The financing market continue to be well functioning and the outlook for the Norwegian economy is solid. The overall high demand for Norwegian real estate has caused prime yield to remain stable at around 3.7 per cent. Prime yields are expected to remain stable for some time yet,

Source: Entra Consensus report

The office vacancy in the Oslo area has decreased during the last three years and is expected to level out at 5,6 per cent by the end of this year according to Entra's Consensus report. The drop is primarily driven by increasing employment and

Market data Oslo

moderate net new capacity to the market, stemming from limited construction activity and continued office-to-residential conversion. Vacancy is lowest in the city centre, estimated to around 3.5 per cent. Consequently, the uplift in rent levels in Central Oslo is expected to continue. Modern, centrally located office premises are especially attractive and are expected to see continued growth in rent levels over the next two years.

In Bergen, the office vacancy is around 9 per cent due to low construction activity, office-to-residential conversion, slightly increased employment and new optimism in the oil and gas industry. Rents in the city centre of Bergen has increased due to low vacancy and low supply of modern, centrally located office premises.

The Stavanger area is experiencing increasing employment and optimism due to higher activity in the oil and gas sector. As a result of this, combined with low construction activity, office vacancies are stable at around 10 per cent. Rents appear to have levelled out in the main oil and gas intensive areas. In Stavanger city centre, the vacancy is low and there is an increasing demand for modern, flexible and centrally located office premises. Rent levels appears to increase slightly.

In Trondheim, the overall office vacancy has levelled out at around 9 per cent. Vacancy is highest in the fringe areas of the city. The volume of new office space will increase during 2019. The market has shown ability to absorb the new capacity and most of the premises that will be completed in 2019 are prelet. Rent levels in the city centre have increased, while there is a downward pressure on rents in the fringe areas.

	2017	2018	2019e	2020e	2021e	2022e
Vacancy Oslo, incl. Fornebu and Lysaker (%)	7.1	6.1	5.6	5.9	6.2	6.3
Rent per sqm, high standard Oslo office	3 145	3 345	3 582	3 736	3 822	3 881
Prime yield (%)	3.7	3.7	3.7	3.7	3.8	3.8

Source: Entra consensus report, October 2019

Other information

Organisation and HSE

At 30.09.19 the Group had 176 (161) employees.

In Q3 2019, Entra had no injuries with long term absence from work in the ongoing projects. Entra has a continuous HSE focus both in on-going projects and in the operations and works continually to avoid injuries. The Group had an LTIF rate (number of accidents with lost time per million hours worked in last 12 months) on ongoing projects of 2.0 at the end of the third quarter 2019 vs 7.6 at the end of the third quarter 2018.

Risk management

Entra assesses risk on an ongoing basis, primarily through semiannually comprehensive reviews of the Group's risk maps, which includes assessments of all risk factors in collaboration with all levels of the organization. Each risk factor is described and presented with the possible negative outcome given an increased probability of a situation to occur. The risk assessment also includes a broad description on how we monitor and work to minimize the risks, as well as a statement on how we assess the changes in the last period on each risk factor.

Entra's main risk factors consist of both financial and nonfinancial risk. A thorough description and analysis is included on pages 28-33 in the 2018 annual report.

Share and shareholder information

Entra's share capital is NOK 182,132,055 divided into 182,132,055 shares, each with a par value of NOK 1 per share. Entra has one class of shares and all shares provide equal rights, including the right to any dividends.

As of 8 October 2019, Entra had 5,571 shareholders. Norwegian investors held 46 per cent of the share capital. The 10 largest shareholders as registered in VPS on 8 October 2019 were:

Shareholder	% holding
Norwegian Ministry of Trade, Industry and Fisheries	22.3
Folketrygdfondet	8.1
State Street Bank (Nominee)	4.0
State Street Bank (Nominee)	3.3
The Bank of New York (Nominee)	3.2
Danske Invest Norske	1.5
BNP Paribas Securities (Nominee)	1.3
JP Morgan Chase Bank (Nominee)	1.3
Morgan Stanley & Co (Nominee)	1.1
State Street Bank (Nominee)	1.0
SUM 10 LARGEST SHAREHOLDERS	47.1

Events after the balance sheet date

On 10 October, Entra paid out a semi-annual dividend of NOK 2.30 per share. The share traded ex right to receive the dividend from 2 October 2019.

Outlook

Entra continues to deliver on its core strategic pillars; profitable growth, customer satisfaction, and environmental leadership.

Deliberate and targeted project development of newbuilds and refurbishments is an important source to profitable growth. Emerging trends like co-working, employee wellbeing and increased flexibility demands from tenants will impact Entra's priorities, making technology development and being close to the tenants even more important. Entra has in recent years had the most satisfied customers amongst the major Norwegian real estate companies. , and a priority is to further develop end-user focus with product and service offerings to realize the vision of owning buildings where the most satisfied people work.

Environmental leadership and sustainability has been a key priority for Entra during the last decade and is an integral part of all business operations in the company. There is a continued growing interest from all stakeholders on this topic, and the financial benefits are also materialising through increasing appreciation from tenants, lower cost of funding through green bond and bank financing, and higher valuations of environmentally friendly properties.

The Norwegian economy is seeing a moderate upturn with GDP growth and increasing employment. Nevertheless, there is still general uncertainty about the future stemming primarily from geopolitical and financial macro factors that could impact the Norwegian economy.

Modern, environmentally friendly offices located near public transportation hubs are attractive and obtain solid rents compared to premises located in less central areas. Entra's

portfolio in Oslo constitutes around 65 per cent of the market value of the management portfolio, and the Oslo office market is expected to continue favourably in the coming years with low vacancy levels and higher rental prices. The office markets in Bergen and Trondheim are expected to maintain stable, and there are positive signs in Stavanger where one expects a moderate recovery in the coming years.

Interest rates bottomed out on historically low levels in 2018, and short-term interest rates have since then trended upwards. This could potentially lead to increased cost of funding. However, the longer-term interest rates remain low, reflecting the overall uncertainty in the global economy.

The Norwegian transaction market is very active and driven by strong demand supported by a well-functioning debt market. The yield compression has levelled out, and one expects a flat to moderate increase over the coming years. However, Entra's portfolio with a healthy mix of attractive yielding properties and value enhancing development project combined with a positive rental market outlook should provide a continued positive portfolio value development, albeit at a significantly slower pace than in recent years.

With Entra's flexible properties in attractive locations and clusters, strong tenant base with long lease contracts, exciting project pipeline and solid financial position, the Board believe that the company is well positioned for the future.

Oslo, 16 October 2019

The Board of Entra ASA

Financial statements

Statement of comprehensive income

All amounts in NOK million	Q3-19	Q3-18	YTD Q3-19	YTD Q3-18	2018
Rental income	577	570	1 743	1 673	2 243
Operating costs	-47	-45	-140	-131	-184
Net operating income	530	525	1 602	1 543	2 058
Other revenue	100	22	241	66	521
Other costs	-90	-19	-217	-58	-500
Administrative costs	-41	-33	-131	-113	-157
Share of profit from associates and JVs	69	89	224	125	156
Net realised financials	-139	-127	-410	-358	-491
Net income	429	457	1 309	1 204	1 587
- of which net income from property management	360	369	1 087	1 082	1 434
Changes in value of investment properties	483	137	1 439	983	1 387
Changes in value of financial instruments	-12	67	-53	172	99
Profit before tax	900	660	2 694	2 359	3 073
Tax payable	-3	-3	-9	-8	-13
Change in deferred tax	-174	-130	-492	-396	-325
Profit for period/year	723	528	2 194	1 956	2 735
Actuarial gains and losses	0	0	0	0	-7
Change in deferred tax on comprehensive income	0	0	0	0	2
Total comprehensive income for the period/year	723	528	2 194	1 956	2 729
Profit attributable to:
Equity holders of the Company	659	495	2 017	1 801	2 537
Non-controlling interest	64	34	177	155	198
Total comprehensive income attributable to:
Equity holders of the Company	659	495	2 017	1 801	2 532
Non-controlling interest	64	34	177	155	198

Balance sheet

All amounts in NOK million	30.09.2019	30.09.2018	31.12.2018
Intangible assets	143	128	127
Investment properties	46 944	44 969	44 714
Other operating assets	21	24	23
Investments in associates and JVs	460	480	367
Financial derivatives	318	233	321
Long-term receivables	229	247	236
Total non-current assets	48 116	46 082	45 788
Housing-units for sale	413	407	407
Investment properties held for sale	665	0	565
Trade receivables	49	51	47
Other receivables and other current assets	826	199	671
Cash and bank deposits	350	175	230
Total current assets	2 304	833	1 921
Total assets	50 420	46 915	47 709
Shareholders' equity	21 636	19 903	20 524
Non-controlling interests	1 919	1 703	1 746
Total equity	23 555	21 605	22 269
Interest bearing debt	15 982	14 946	14 931
Deferred tax liability	5 350	4 934	4 861
Financial derivatives	484	319	481
Other non-current liabilities	597	457	456
Total non-current liabilities	22 413	20 656	20 730
Interest bearing debt	3 439	3 824	4 239
Trade payables	299	179	190
Other current liabilities	714	650	281
Total current liabilities	4 452	4 653	4 710
Total liabilities	26 865	25 310	25 439
Total equity and liabilities	50 420	46 915	47 709

Changes in equity

		Other		Non
Share	Treasury	paid-in	Retained	controlling	Total
					equity
184	0	3 556	15 159	433	19 331
			2 537	198	2 735
			-6		-6
				1 123	1 123
			-790	-8	-798
			-1		-1
	-1	-20	-94		-115
184	-1	3 535	16 806	1 746	22 269
			-6	-4	-10
184	-1	3 535	16 800	1 742	22 260
			2 017	177	2 194
			11		11
			-840		-840
	0	0	-2		-2
	-1	-12	-54		-66
-2	2				0
182	0	3 523	17 930	1 919	23 555
	capital	shares	capital	earnings	interest

* In Q1-19, one of the subsidiaries of OSU merged with an unrelated party. The transaction was executed at fair value, with a total equity effect of 32 million attributable to the equity holders of OSU. Entra's share of the equity effect is 11 million.

Statement of cash flows

All amounts in NOK million	Q3-19	Q3-18	YTD Q3-19	YTD Q3-18	2018
Profit before tax	900	660	2 694	2 359	3 073
Income tax paid	0	0	-8	-4	-9
Net expensed interest and fees on loans	139	127	410	358	491
Net interest and fees paid on loans	-108	-106	-457	-376	-504
Share of profit from associates and jointly controlled entities	-69	-89	-224	-125	-156
Depreciation and amortisation	2	2	7	7	15
Changes in value of investment properties	-483	-137	-1 439	-983	-1 387
Changes in value of financial instruments	12	-67	53	-172	-99
Change in working capital	-2	5	-23	-103	-35
Net cash flow from operating activities	392	395	1 013	961	1 389
Proceeds from property transactions	50	0	362	618	618
Purchase of investment properties	0	-800	-23	-924	-925
Investment in and upgrades of investment properties	-252	-230	-947	-809	-1 201
Investment in property and housing-units for sale	-27	-328	-140	-361	-362
Purchase of intangible and other operating assets	-15	-3	-30	-9	-15
Net payment financial assets	7	-1	-19	-1	9
Net payment of loans to associates and JVs	1	0	1	0	0
Dividends from associates and JVs	1	85	141	85	231
Net cash flow from investment activities	-235	-1 278	-655	-1 402	-1 645
Proceeds interest bearing debt	2 570	3 856	13 300	8 696	13 209
Repayment interest bearing debt	-2 590	-2 976	-13 050	-7 878	-11 998
Proceeds from issue of shares/repurchase of shares	0	-6	-69	-7	-116
Dividends paid	0	0	-420	-386	-798
Net cash flow from financing activities	-20	875	-238	426	297
Change in cash and cash equivalents	137	-8	120	-15	41
Cash and cash equivalents at beginning of period	213	182	230	189	189
Cash and cash equivalents at end of period	350	175	350	175	230

NOTE 1 – ACCOUNTING PRINCIPLES

The results for the period have been prepared in accordance with IAS 34 Interim Financial Reporting. The financial reporting covers Entra ASA, subsidiaries, associated companies and jointly controlled entities. The interim financial statements have not been audited.

Except for the implementation of the standards IFRS 16, the accounting principles that have been used in the preparation of the interim financial statements are in conformity with the principles used in preparation of the annual financial statements for 2018. IFRS 16 is effective for accounting periods beginning on or after 1 January 2019.

IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard substantially carries forward the lessor accounting requirements in IAS 17, and continues to require a lessor to classify a lease either as an operating lease or a finance lease. For leases with at lease term of 12 months or less and leases of low‑value assets, the Group will recognise a lease expense on a straight‑line basis as permitted by IFRS 16.

The effect of the implementation of IFRS 16 on the opening balance sheet as of 1 January 2019 was the following:

All amounts in NOK million	Effect 01.01.19
Investment properties	231
Total assets	231
Total equity	-10
Deferred tax liability	-3
Other non-current liabilities	235
Other current liabilities	9
Total equity and liabilities	231

Property lease contracts

The Group has analysed all its lease contracts for the lease of ground, parking lots and buildings to evaluate if they fulfil the criteria to qualify as leases according to IFRS 16. Only fixed payments are included in the initial measurement of the lease liability, excluding the Group's turnover based lease contracts. Based on this analysis, the Group has identified a limited number of lease contracts according to the standard concerning leased ground, parking lots and buildings.

The lease term corresponds to the non-terminable period. The discount rate used to calculate the lease liability is determined, for each asset, based on the Group's incremental borrowing rate for leases with under 15 years until maturity. For leases with over 15 years until maturity, the discount rate is based on the properties' net yields, adjusted for company-specific features that affect Entra's incremental borrowing rate, such as tenant-specific factors and the length of the lease.

Entra applies the fair value model in IAS 40 to its investment properties, where the rental expenses under the property lease contracts until the implementation of IFRS 16 were included in the individual property's assumed future cash flows. The leased properties meet the definition of investment properties in IAS 40 and Entra also applies the fair value model to right-of-use assets associated with the property lease contracts. By separating the rental expenses from the other cash flows of the property, the discounted cash flows of the property increase by an amount equal to the value of the right-of-use asset. The discount rate used to calculate the right-of-use asset in accordance with IAS 40 is different from the discount rate used to calculate the lease liability. Further, the value of the right-ofuse asset include expected CPI adjustments, while expected CPI adjustments cannot be factored in when determining the lease liability. The value of the right-of-use assets is consequently different from the value of the lease liability.

The impacts on the statement of comprehensive income was the following:

• Reduction of the rents included in Operating costs involving an increase in Net operating income;
• Financial costs on the lease debt is included in Net realised financials; and
• Changes in the value of the right-of-use assets is included in Changes in value of investment properties.

If the Group had early implemented IFRS 16 from 1 January 2018, Net income for first nine months of 2018 would have increased by 7 million compared to reported numbers.

NOTE 2 – SEGMENT INFORMATION

The Group has one main operational unit, led by the EVP of the property portfolio. The property portfolio is divided into six different geographic areas in Oslo, Sandvika, Drammen, Stavanger, Bergen and Trondheim, with management teams monitoring and following upon each area. The geographic units are supported by a Letting and Property Development division, Project Development division and a Digital and Business Development division. In addition, Entra has group and support functions within accounting and finance, legal, investment, procurement, communication and HR.

The geographic areas do not have their own profit responsibility. The geographical areas are instead followed up on economical and non-economical key figures ("key performance indicators"). These key figures are analysed and reported by geographic area to the chief operating decision maker, that is the board and CEO, for the purpose of resource allocation and assessment of segment performance. Hence, the Group report the segment information based upon these six geographic areas.

Operating segments Q3–19

	Properties	Area	Occupancy	Wault			Market value				12 months rolling rent		Market rent
	(#)	(sqm)	(%)	(year)	(NOKm)	(NOK/sqm)	(NOKm)	(NOK/sqm)	(%)	(NOKm)	(NOK/sqm)
Oslo	37	602 093	95.9	5.5	27 231	45 228	1 333	2 214	4.5	1 516	2 517
Trondheim	10	153 399	94.5	7.3	4 436	28 920	239	1 558	5.0	268	1 745
Bergen	7	105 041	94.6	6.6	4 182	39 816	214	2 040	4.7	249	2 373
Sandvika	9	98 961	99.7	8.5	2 906	29 366	172	1 736	5.5	150	1 515
Stavanger	5	78 334	99.4	7.6	2 268	28 957	140	1 786	5.7	133	1 693
Drammen	8	71 029	98.3	6.2	2 053	28 899	128	1 797	5.8	120	1 695
Management portfolio	76	1 108 858	96.1	6.2	43 077	38 848	2 225	2 007	4.8	2 435	2 196
Project portfolio	7	100 377		17.3	4 183	41 672
Development sites	6	114 859		0.3	811	7 061
Property portfolio	89	1 324 094		6.9	48 071	36 305

The calculation of net yield is based on the valuers' assumption of ownership costs, which at 30.09 corresponds to 7.1 per cent of market rent.

Operating segments Q3–18

	Properties	Area	Occupancy	Wault	Market value 12 months rolling rent		Net yield Market rent
	(#)	(sqm)	(%)	(year)	(NOKm)	(NOK/sqm)	(NOKm)	(NOK/sqm)	(%)	(NOKm)	(NOK/sqm)
Oslo	42	632 717	96.3	5.5	27 012	42 692	1 403	2 218	4.8	1 514	2 392
Trondheim	9	131 548	98.6	7.5	3 732	28 373	223	1 699	5.4	228	1 732
Bergen	7	104 816	93.4	7.5	3 888	37 094	204	1 949	4.8	234	2 233
Sandvika	9	95 112	99.5	9.4	2 672	28 096	157	1 652	5.4	134	1 411
Stavanger	5	78 612	97.9	8.6	2 125	27 037	139	1 764	6.1	126	1 602
Drammen	8	70 504	97.7	7.1	2 016	28 598	126	1 791	5.9	114	1 612
Management portfolio	80	1 113 309	96.6	6.4	41 447	37 228	2 253	2 024	5.0	2 349	2 110
Project portfolio	5	81 809		17.6	2 753	33 650
Development sites	7	93 309		0.5	692	7 412
Property portfolio	92	1 288 426		7.4	44 891	34 842

The calculation of net yield is based on the valuers' assumption of ownership costs, which at 30.09 corresponds to 8.0 per cent of market rent.

NOTE 3 – INVESTMENT PROPERTIES

All amounts in NOK million	Q3-19	Q3-18	YTD Q3-19	YTD Q3-18	2018
Closing balance previous period	46 920	43 751	45 279	40 055	40 055
Implementation of IFRS 16			231
Purchase of investment properties	0	791	23	914	914
Investment in the property portfolio	245	280	971	837	1 161
Reclassified due to change of control	0	0	0	2 326	2 326
Capitalised borrowing costs	10	10	28	26	35
Sale of investment properties	-50	0	-362	-172	-171
Reclassified to construction contracts	0	0	0	0	-429
Changes in value of investment properties	483	137	1 439	983	1 387
Closing balance	47 609	44 969	47 609	44 969	45 279
Investment properties held for sale	665	0	665	0	565
Investment properties	46 944	44 969	46 944	44 969	44 714

During the third quarter of 2019, Entra handed to the buyer the land plot Sorgenfriveien 11 in Trondheim. During the first half of 2019, the properties Aasta Hansteens vei 10, Pilestredet 28 and Karoline Kristiansens vei 2 in Oslo was handed to the buyers.

Investment properties held for sale at 30 September 2019 include the properties Pilestredet 19-21 and Kristian Augusts gate 23 in Oslo.

NOTE 4 – INFORMATION ON THE FAIR VALUE OF ASSETS AND LIABILITIES

All amounts in NOK million	Fair value level	30.09.2019	30.09.2018	31.12.2018
Assets measured at fair value:
Assets measured at fair value through profit or loss
- Investment properties	Level 3	46 944	44 969	44 714
- Investment properties held for sale	Level 3	665	0	565
- Derivatives	Level 2	318	233	321
Financial assets held for sale
- Equity instruments	Level 3	31	5	5
Total		47 958	45 208	45 605
Liabilities measured at fair value:
Financial liabilities measured at fair value through profit or loss
- Derivatives	Level 2	484	319	481
Total		484	319	481

NOTE 5 – LEGAL DISPUTES

The Norwegian Ministry of Local Government and Modernisation has had an option to buy the property Munchs gate 4/Keysers gate 13, which is let to the Norwegian Ministry of Justice and Public Security. In 2013, the Ministry of Local Government and Modernisation gave notice to Entra that they intended to exercise the purchase option on the property in April 2014. Near closing, the Ministry of Local Government and Modernisation gave notice that they would not close the transaction as they were not granted funding to the purchase in the National Budget for 2014.

From that time, Entra has been of the opinion that the purchase option was voided. The Ministry of Local Government and Modernisation had a conflicting view and applied for a ruling by the Oslo District Court, which ruled in favour of the Ministry of Local Government and Modernisation in September 2019. According to the ruling, the Ministry of Local Government and Modernisation has the right to purchase the property as of June 2018 for 486 million. The estimated settlement according to the ruling is reflected in the measurement of the fair value of the property as at 30 September 2019. Entra disagrees with, and has appealed, the ruling, and we expect a ruling by the higher court during 2020 or 2021.

The current annual rental income is 39 million and the remaining lease term is 15 years. If it, in the end, is not ruled in favour of Entra, the property will be derecognized when Entra ceases to control of the property.

ALTERNATIVE PERFORMANCE MEASURES

Entra's financial information is prepared in accordance with the international financial reporting standards (IFRS). In addition, the company reports alternative performance measures (APMs) that are regularly reviewed by management to enhance the understanding of Entra's performance as a supplement, but not as a substitute, to the financial statements prepared in accordance with IFRS. Financial APMs are intended to enhance comparability of the results and cash flows from period to period, and it is Entra's experience that these are frequently used by analysts, investors and other parties. The financial APMs reported by Entra are the APMs that, in management's view, provide the most relevant supplemental information of a real estate company's financial position and performance. These measures are adjusted IFRS measures defined, calculated and used in a consistent and transparent manner over the years. Operational measures such as, but not limited to, net letting, vacancy and WAULT are not defined as financial APMs according to ESMA's guidelines.

ENTRA'S FINANCIAL APMS:

• Net Income from property management
• Cash earnings
• Market value of the property portfolio
• Net nominal interest bearing debt
• Debt ratio Loan-to-value (LTV)
• Interest coverage ratio (ICR)
• EPRA Earnings
• Net Asset Value EPRA NAV and EPRA NNNAV
• EPRA net initial yield
• EPRA cost ratio

NET INCOME FROM PROPERTY MANAGEMENT & CASH EARNINGS

All amounts in NOK million	Q3-19	Q3-18	YTD Q3-19	YTD Q3-18	2018
Net income	429	457	1 309	1 204	1 587
Less:
Other income and costs in associates and JVs	68	88	222	122	153
Tax from associates and JVs	0	0	0	-1	-1
Net income from property management	360	369	1 087	1 083	1 434
Tax payable	-3	-3	-9	-8	-13
Cash earnings	357	366	1 078	1 075	1 422

MARKET VALUE OF THE PROPERTY PORTFOLIO

All amounts in NOK million	30.09.2019	30.09.2018	31.12.2018
Investment properties	46 944	44 969	44 714
Investment properties held for sale	665	0	565
Other	462	-78	352
Market value of the property portfolio	48 071	44 891	45 630

NET NOMINAL INTEREST BEARING DEBT

All amounts in NOK million	30.09.2019	30.09.2018	31.12.2018
Nominal value of interest bearing debt	19 421	18 771	19 171
Cash and bank deposits	-350	-175	-230
Net nominal interest bearing debt	19 071	18 596	18 941

DEBT RATIO (LTV)

All amounts in NOK million except ratio	30.09.2019	30.09.2018	31.12.2018
Total net nominal interest bearing debt	19 330	18 674	19 019
- Net nominal interest bearing debt	19 071	18 596	18 941
- Other interest bearing liabilities	259	78	78
Total market value of the property portfolio	48 484	45 298	46 037
- Market value of the property portfolio	48 071	44 891	45 630
- Housing-units for sale	413	407	407

INTEREST COVERAGE RATIO (ICR)

All amounts in NOK million	Q3-19	Q3-18	YTD Q3-19	YTD Q3-18	2018
Net income	429	457	1 309	1 204	1 587
Depreciation	2	2	7	7	15
Results from associates and joint ventures	-69	-89	-224	-125	-156
Net realised financials	139	127	410	358	491
EBITDA adjusted	502	497	1 501	1 444	1 937
Interest cost	142	130	427	379	517
Other finance expense	13	9	23	20	27
Applicable net interest cost	155	139	450	400	544
Interest Coverage Ratio (ICR)	3.2	3.6	3.3	3.6	3.6

EPRA REPORTING

The following performance indicators have been prepared in accordance with best practices as defined by EPRA (European Public Real Estate Association) in its Best Practices Recommendations guide. The EPRA Best Practices Recommendations Guidelines focus on making the financial statements of public real estate companies clearer and more comparable across Europe.

	Summary table EPRA performance measures	Unit	Q3-19 / 30.09.2019	Q3-18 / 30.09.2018
A	EPRA earnings per share (EPS)	NOK	1.43	1.44
B	EPRA NAV per share	NOK	147	137
	EPRA triple net asset value per share (NNNAV)	NOK	137	127
C	EPRA net initial yield	%	4.7	4.9
	EPRA, "topped-up" net initial yield	%	4.7	4.9
D	EPRA vacancy rate	%	3.8	3.3
E	EPRA cost ratio (including direct vacancy costs	%	15.0	12.8
	EPRA cost ratio (excluding direct vacancy costs)	%	13.7	11.4

The details for the calculation of the key figures are shown in the following tables:

A. EPRA EARNINGS

EPRA Earnings is a measure of the operational performance of the property portfolio. EPRA Earnings is calculated based on the income statement, adjusted for non-controlling interests, value changes on investment properties, changes in the market value of financial instruments and gains/losses on the sale of properties and the associated tax effects.

EPRA Earnings – Quarterly

All amounts in NOK million	Q3-19 IFRS reported	Q3-19 EPRA adjustments	Q3-19 Non controlling interests*	Q3-19 EPRA Earnings	Q3-18 IFRS reported	Q3-18 EPRA adjustments	Q3-18 Non controlling interests*	Q3-18 EPRA Earnings
Rental income	577	0	36	542	570	0	34	536
Operating costs	-47	0	-2	-45	-45	0	-3	-42
Net operating income	530	0	33	497	525	0	31	494
Other revenues	100	0	0	100	22	0	1	20
Other costs	-90	0	0	-89	-19	0	-1	-17
Administrative costs	-41	0	-1	-40	-33	0	-2	-32
Share of profit from associates and JVs**	69	68	0	0	89	80	0	9
Net realised financials	-139	0	-5	-134	-127	0	-6	-121
Net income	429	68	26	334	457	80	23	354
Changes in value of investment properties	483	483	0	0	137	137	0	0
Changes in value of financial instruments	-12	-12	0	0	67	67	0	0
Profit before tax//EPRA Earnings before tax	900	539	26	334	660	284	23	354
Tax payable***	-3	0	-1	-2	-3	0	-1	-2
Change in deferred tax***	-174	-97	-5	-72	-130	-39	-4	-87
Profit for period/EPRA Earnings	723	442	20	261	528	245	18	265

* Excluding non-controlling interests in relation to EPRA adjustments.

** From Q1 2019, earnings from the associated company OSU are excluded from EPRA Earnings as the business of this company is development of properties for sale and is not considered relevant for measurement of the operating performance of the underlying property portfolio under management.

*** The corporate income tax rate is 22 per cent from Q1 2019 and 23 per cent in previous periods.

EPRA Earnings – Year to date

All amounts in NOK million	YTD Q3-19	YTD Q3-19	YTD Q3-19 Non	YTD Q3-19		YTD Q3-18 YTD Q3-18	YTD Q3-18 Non	YTD Q3-18
	IFRS	EPRA	controlling	EPRA	IFRS	EPRA	controlling	EPRA
	reported	adjustments	interests*	Earnings	reported	adjustments	interests*	Earnings
Rental income	1 743	0	116	1 626	1 673	0	100	1 573
Operating costs	-140	0	-7	-133	-131	0	-7	-123
Net operating income	1 602	0	109	1 493	1 543	0	93	1 450
Other revenues	241	0	1	240	66	0	3	63
Other costs	-217	0	-1	-217	-58	0	-3	-55
Administrative costs	-131	0	-5	-126	-113	0	-5	-108
Share of profit from associates and JVs**	224	222	0	2	125	132	0	-7
Net realised financials	-410	0	-18	-392	-358	0	-20	-338
Net income	1 309	222	86	1 001	1 204	132	68	1 005
Changes in value of investment properties	1 439	1 439	0	0	983	983	0	0
Changes in value of financial instruments	-53	-53	0	0	172	172	0	0
Profit before tax//EPRA Earnings before tax	2 694	1 608	86	1 001	2 359	1 287	68	1 005
Tax payable***	-9	0	-4	-5	-8	0	-3	-5
Change in deferred tax***	-492	-262	-15	-215	-396	-167	-12	-217
Profit for period/EPRA Earnings	2 194	1 346	67	781	1 956	1 119	53	783

* Excluding non-controlling interests in relation to EPRA adjustments.

** From Q1 2019, earnings from the associated company OSU are excluded from EPRA Earnings as the business of this company is development of properties for sale and is not considered relevant for measurement of the operating performance of the underlying property portfolio under management.

*** The corporate income tax rate is 22 per cent from Q1 2019 and 23 per cent in previous periods.

B. NET ASSET VALUE – EPRA NAV AND EPRA NNNAV

The objective with EPRA NAV is to demonstrate the fair value of net assets given a long-term investment horizon. EPRA NAV is calculated as net asset value adjusted to include market value of all properties in the portfolio, and to exclude certain items not expected to crystallise in a long-term investment property business model such as e.g. financial derivatives and deferred tax on the market value of investment properties.

The objective with EPRA NNNAV is to report the fair value of net assets in the Group on the basis that these are immediately realised. EPRA NNNAV is EPRA NAV adjusted to reflect the fair value of debt and derivatives and in order to include deferred tax on value changes.

EPRA NNNAV	24 863	23 408	23 931
Less: MV of tax on gain on sale (5% tax rate) & realisation of financial derivatives in JVs	93	141	142
Less: Net result from realisation of interest bearing debt	249	194	140
Market value of tax on realisation*	70	58	40
Basis for calculation of tax on realisation of interest bearing debt	319	252	180
Nominal value of interest bearing debt	19 421	18 771	19 171
Market value of interest bearing debt	19 740	19 023	19 351
Less: Net result from realisation of financial derivatives	130	66	124
Tax expense on realised financial derivatives*	37	20	35
Net market value on financial derivatives	167	86	159
Less: Market value of tax on gain on sale (5% tax rate)	1 481	1 371	1 391
Basis for calculation of tax on gain on sale	29 622	27 414	27 830
Tax value on property portfolio	18 449	17 477	17 800
Market value on property portfolio	48 071	44 891	45 630
EPRA NAV	26 816	25 180	25 729
Add: Deferred tax arising on revaluation moments	4 474	4 144	4 065
Add: Net market value on financial derivatives	167	86	159
Add: Revaluation of investments made in JVs	539	1 046	981
Add: Adjustment to property portfolio	0	1	1
NAV per financial statement	21 636	19 903	20 524
Less: Non-controlling interests	1 919	1 703	1 746
Total equity	23 555	21 605	22 269
All amounts in NOK million	30.09.2019	30.09.2018	31.12.2018

* 22 per cent from 31.12.2018, 23 per cent from 31.12.2017

Note to EPRA NAV development graph on page 2:

The revaluation of investments made in JVs was in the first quarter of 2019 reported as 1,108 million. The correct revaluation should however have been 756 million, resulting in EPRA NAV and EPRA NNNAV of 26,233 million (NOK 144 per share) and 24,323 million (NOK 133 per share), respectively. Comparative figures are updated in the EPRA NAV development graph.

C. EPRA NET INTIAL YIELD

EPRA Net initial yield measures the annualised rental income based on the cash rents passing at the balance sheet date, less nonrecoverable property operating expenses, divided by the market value of the property, increased with (estimated) purchasers' costs.

EPRA "topped-up" net initial yield incorporates an adjustment to the EPRA NIY in respect of the expiration of rent-free periods (or other unexpired lease incentives such as discounted rent periods and step rents).

All amounts in NOK million	Oslo	Trondheim	Sandvika	Stavanger	Drammen	Bergen	Total
Investment property - wholly owned	31 253	4 894	2 936	1 321	224	1 699	42 327
Investment property - share of JVs/Funds	0	0	0	593	1 097	1 364	3 055
Total property portfolio	31 253	4 894	2 936	1 914	1 321	3 063	45 382
Less projects and land and developments	-4 022	-458	-30	-119	0	-245	-4 875
Completed management portfolio	27 231	4 436	2 906	1 795	1 321	2 818	40 507
Allowance for estimated purchasers' cost	54	16	10	4	5	7	95
Gross up completed management portfolio valuation	27 285	4 452	2 916	1 799	1 326	2 825	40 603
12 months rolling rent	1 333	239	172	109	85	143	2 081
Estimated ownership cost	109	18	12	8	5	14	166
Annualised net rents	1 224	221	160	101	80	130	1 915
Add: Notional rent expiration of rent free periods or other lease incentives	0	0	0	0	0	0	0
Topped up net annualised net rents	1 224	221	160	101	80	130	1 915
EPRA NIY (net initial yield)	4.5%	5.0%	5.5%	5.6%	6.0%	4.6%	4.7%
EPRA "topped-up" NIY (net initial yield)	4.5%	5.0%	5.5%	5.6%	6.0%	4.6%	4.7%

D. EPRA VACANCY

Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio.

All amounts in NOK million	Oslo	Trondheim	Sandvika	Stavanger	Drammen	Bergen	Total
Market rent vacant areas	64	15	0	1	2	8	89
Total market rent	1 553	268	150	101	79	176	2 326
Vacancy	4.1%	5.5%	0.3%	0.6%	2.0%	4.5%	3.8%

E. EPRA COST RATIO

Administrative & operating costs (including & excluding costs of direct vacancy) divided by gross rental income.

All amounts in NOK million	Q3-19	Q3-18	YTD Q3-19	YTD Q3-18	2018
Operating costs	-47	-45	-140	-131	-184
Administrative costs	-41	-33	-131	-113	-157
Share of joint ventures expences	0	0	0	0	0
Less: Ground rent cost	2	5	6	16	18
EPRA Cost (including direct vacancy cost)	-86	-73	-265	-228	-324
Direct vacancy cost	-7	-8	-29	-21	-34
EPRA Cost (excluding direct vacancy cost)	-79	-65	-236	-207	-290
Gross rental income less ground rent	577	570	1 743	1 673	2 243
Share of joint ventures and fund (GRI)	0	0	0	0	0
Total gross rental income less ground rent	577	570	1 743	1 673	2 243
Epra cost ratio (including direct vacancy cost)	15.0%	12.8%	15.2%	13.6%	14.4%
Epra cost ratio (excluding direct vacancy cost)	13.7%	11.4%	13.6%	12.4%	12.9%

For further information about EPRA, go to www.epra.com.

DEFINITIONS

12 months rolling rent	- The contractual rent of the management properties of the Group for the next 12 months as of a certain date, adjusted for (i) signed new contracts and contracts expiring during such period, (ii) contract based CPI adjustments based on Independent Appraisers' CPI
	estimates and (iii) the Independent Appraisers' estimates of letting of current and future vacant areas.
Capital expenditure	- Property related capital expenditure, split into four components: (i) Acquisition, (ii) Development, (iii) Like-for-like portfolio and (iv)
	Other. The components Development and Like-for-like portfolio combined ties to the line item Investment in the property portfolio in
	the investment properties rollforward, while the two other categories ties to separate line items in the rollforward.
Back-stop of short-term interest	- Unutilised credit facilities divided by short-term interest bearing debt.
bearing debt
Cash Earnings	- Net income from property management less tax payable
Contractual rent	- Annual cash rental income being received as of relevant date
Gross yield	- 12 months rolling rent divided by the market value of the management portfolio
Interest Coverage Ratio ("ICR")	- Net income from property management excluding depreciation and amortisation for the Group, divided by net interest on interest
	bearing nominal debt and fees and commitment fees related to investment activities
Independent Appraisers	- Akershus Eiendom and Cushman & Wakefield Realkapital
Land and dev. properties	- Property / plots of land with planning permission for development
Like-for-like	- The percentage change in rental income from one period to another given the same income generating property portfolio in the
	portfolio. The figure is thus adjusted for purchases and divestments of properties and active projects
Loan-to-value ("LTV")	- Total net nominal value of interest bearing debt divided by the total market value of the property portfolio.
Management properties	- Properties that are actively managed by the company
Market rent	- The annualised market rent of the management properties, fully let as of the relevant date, expressed as the average of market rents
	estimated by the Independent Appraisers
Market value of portfolio	- The market value of all properties owned by the parent company and subsidiaries. From Q3-18, the figure does not include Property
	and housing-units for sale. Does not include the market value of properties in associates and jointly controlled entities.
Net income from property	- Net income from property management is calculated as Net Income less value changes, tax effects and other income and other cost
management	from associates and JVs
Net letting	- Net letting is calculated as the annualised rent of new lease contracts plus lease-up on renegotiated contracts less terminated
	contracts
Net nominal interest bearing debt	- Nominal interest bearing debt less cash and bank deposits
Net rent	- 12 months rolling rent less the Independent Appraisers' estimate of ownership costs of the management properties of the Group
Net yield	- Net rent divided by the market value of the management properties of the Group
Occupancy	- Estimated market rent of occupied space of the management properties, divided by the market rent of the total space of the
	management portfolio.
Outstanding shares	- The number of shares registered with a deduction for the company's own repurchased shares at a given point in time. EPRA Earnings
	and Cash Earnings per share amounts are calculated using the weighted average number of ordinary shares outstanding during the
	period. All other per share amounts are calculated using the number of ordinary shares outstanding at period end.
Period-on-period	- Comparison between one period and the equivalent period the previous year
Property portfolio	- Properties owned by the parent company and subsidiaries, regardless of their classification for accounting purposes. Does not
	include the market value of properties in associates and jointly controlled entities
Project properties	- Properties where it has been decided to start construction of a new building and/or renovation
Total area	- Total area including the area of management properties, project properties and land / development properties
Total net nominal interest bearing	- Net nominal interest bearing debt and other interest bearing liabilities, including seller's credits and lease liabilities for land and
debt	parking lots in connection with the property portfolio
WAULT	- Weighted Average Unexpired Lease Term measured as the remaining contractual rent amounts of the current lease contracts of the
	management properties of the Group, including areas that have been re-let and signed new contracts, adjusted for termination rights
	and excluding any renewal options, divided by Contractual rent, including renewed and signed new contracts

Contact info

Sonja Horn CEO Phone: + 47 905 68 456 sh@entra.no

Anders Olstad CFO Phone: + 47 900 22 559 ao@entra.no

Tone K. Omsted Head of IR Phone: + 47 982 28 510 tom@entra.no

Entra ASA Post box 52 Økern 0508 Oslo, Norway

Phone: + 47 21 60 51 00 post@entra.no

Financial calendar

Fourth quarter 2019	07.02.2020
First quarter 2020	30.04.2020
Second quarter 2020	10.07.2020
Third quarter 2020	16.10.2020
Fourth quarter 2020	12.02.2021

36 Entra third quarter 2019

Head office Biskop Gunnerus' gate 14 A 0185 Oslo, Norway

Postal address Post box 52 Økern 0508 Oslo, Norway

Phone: +47 21 60 51 00 post@entra.no

Customer service centre Phone: +47 800 36 872 service@entra.no

www.entra.no