AB Sagax

Quarterly Report • Oct 27, 2020

INTERIM REPORT JANUARY-SEPTEMBER 2020

AB Sagax is a property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industry segment

JANUARY-SEPTEMBER 2020

• Rental revenue increased 12% to SEK 2,152 M (SEK 1,917 M in the year-earlier period).
• Profit from property management increased 21% to SEK 1,795 M (1,483).
• Profit from property management per Class A and B share after dilution rose 22% to SEK 4.98 (4.08).
• Revaluation of properties impacted profit by a total of SEK 787 M (808), of which joint ventures accounted for SEK 348 M (300).
• Revaluation of financial instruments impacted profit by a total of SEK 102 M (692), of which joint ventures accounted for SEK –19 M (−51).
• Profit after tax for the period was SEK 2,179 M (2,582).
• Cash flow from operating activities before changes in working capital rose 30% to SEK 1,778 M (1,370), corresponding to SEK 5.15 (3.72) per Class A and B share after dilution.
• Net investments amounted to SEK 5,246 M (1,497), of which property acquisitions accounted for SEK 4,838 M (1,916).

THIRD QUARTER OF 2020

• Rental revenue increased 12% to SEK 735 M (657 for the year-earlier period).
• Profit from property management increased 18% to SEK 618 M (523).
• Profit from property management per Class A and B share after dilution rose 19% to SEK 1.72 (1.44).
• Revaluation of properties impacted profit by a total of SEK 504 M (175), of which joint ventures accounted for SEK 103 M (126).
• Revaluation of financial instruments impacted profit by a total of SEK 186 M (249), of which joint ventures accounted for SEK 49 M (−15).
• Profit after tax for the period was SEK 1,069 M (812).
• Cash flow from operating activities before changes in working capital rose 17% to SEK 482 M (412), corresponding to SEK 1.29 (1.10) per Class A and B share after dilution.
• Net investments amounted to SEK 1,723 M (936), of which property acquisitions accounted for SEK 1,621 M (968).
• In light of the fact that COVID-19 has had a limited impact on Sagax's operations, the Board has decided to propose a supplementary dividend of SEK 0.65 per Class A and B common shares. Sagax has given notice of an Extraordinary General Meeting to be held on 10 November 2020.

ADJUSTED FORECAST FOR 2020

Profit from property management for 2020, meaning profit before revaluations and tax, based on the current property portfolio, announced acquisitions and divestments and current exchange rates, is expected to amount to SEK 2,380 M. The previously submitted forecast was for profit of SEK 2,300 M and was presented when the January-June 2020 interim report was published.

Selected key performance indicators
	2020 Jan-Sep	2019 Jan-Sep	2019 Jan-Dec	2018 Jan-Dec	2017 Jan-Dec	2016 Jan-Dec	2015 Jan-Dec
Profit from property management per Class A and B share after dilution, SEK Change compared with preceding year, %	4.98 22	4.08 26	5.51 28	4.31 16	3.70 24	2.98 22	2.45 31
Earnings per Class A and B share after dilution, SEK	6.19	7.53	12.13	9.24	8.85	7.25	4.93
Dividend per Class A and B share, SEK	–	–	0.65	1.00	0.90	0.72	0.58
Net debt/EBITDA, multiple	7.0	6.9	6.6	7.4	8.1	8.7	9.3
Interest coverage ratio, multiple	6.0	4.9	4.9	4.2	3.7	3.4	2.9
Debt ratio, %	45	45	44	47	50	54	59
Properties' market value, SEK M	38,390	31,825	32,625	29,024	23,771	20,628	16,189
Property yield, %	6.5	6.8	6.4	6.8	6.9	7.1	7.4

A property portfolio comprising 37 properties in Sweden was acquired during the third quarter. These properties encompass a total of 203,000 square metres of lettable area and 560,000 square metres of land. The annual rental value amounts to SEK 85 M. The terms of the leases vary between three and 15 years, with an average term of seven years.

Business concept, goals and strategies

BUSINESS CONCEPT

AB Sagax is a property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industry segment.

COMPANY GOALS

The overriding objective is the long-term generation of the maximum possible risk-adjusted return to the company's owners. To achieve this objective, Sagax has set the following business targets:

• Operations must generate a long-term sustainable return and strong cash flows.
• The company will continue to grow through property acquisitions after taking into account the risk-adjusted return.
• Cash flows from the existing property portfolio are to rise more than inflation.

FINANCIAL TARGETS

The table and charts below illustrate the outcome for the past five years in relation to the financial targets.

STRATEGIES

Investment strategy

Sagax invests primarily in warehouse and industrial properties. Properties designed as warehouses and for light industries are

attractive investment opportunities, since they generate a high yield combined with a low rate of new production and stable occupancy rates. Sagax invests in add-on acquisitions and in existing properties. Property acquisitions and investments in the existing portfolio aim to increase cash flow and diversify rental revenue, thereby reducing the company's operational and financial risks.

Financing strategy

Sagax's financial structure is designed with a clear focus on operating cash flow and interest coverage ratio. This is expected to create both excellent prerequisites for expansion and an attractive return on equity.

The company has four classes of shares: Class A, B and D common shares, and preference shares. The aim of the Class D shares, like the preference shares, is to attract investor categories that value steady ongoing dividends.

Management strategy

Sagax pursues efficiency and sustainability in its management strategy. The management strategy includes clearly prioritising reputable customers with high credit ratings and obtaining long leases. This is regarded as being advantageous since it reduces the risk of vacancies, while leading to lower costs for letting premises and adapting premises to tenant needs. The

Financial targets

	Outcome rolling 12 months	Five-year average
Return on equity, measured over a five-year period, should not fall below 15% per year	19%	27%
Profit from property management per Class A and B share should increase by a minimum of 15% per year	25%	24%

Profit from property management per Class A and B share

Return on equity

company mainly enters into triple net leases and is thus only affected to a limited extent by changes in consumption or changed rates for such utilities as heating, electricity, property tax, water and sewage.

SUSTAINABILITY ACTIVITIES

The aim of Sagax's sustainability activities is to avoid shortterm gains arising at the expense of negative longer-term consequences, such as in the form of externalities. The company's investing activities, management and funding are conducted to achieve the best possible long-term – meaning sustainable – outcome. The planning, governance and monitoring of sustainability activities follow Sagax's organisational structure with well-defined delegation of responsibilities and authorities. This sustainability work is supported by internal policies, guidelines, overall objectives, external laws, rules and regulations.

Sagax has identified the following focus areas:

Financial sustainability

Sagax's business model is characterised in all areas by a longterm approach. Short-term gains are subordinate to the company's long-term value creation. Accordingly, sustainability work is integrated into the business model.

Business ethics

Sagax works actively to combat all forms of corruption, and has a whistle-blower function available on the Sagax website and a Code of Conduct for Suppliers.

Environmental and resource efficiency

Heating premises and the use of electricity account for the largest share of properties' energy use. Sagax takes regular measures to reduce consumption in a bid to continuously enhance the efficiency of the properties' energy use.

Employees

The development of the company is dependent on highly skilled employees. For this reason, it is important that the company is an attractive employer that can attract and has the ability to retain highly skilled personnel. In exchange, employees are expected to assume responsibility of their work duties and also serve as good representatives of the company's values and culture.

Market value and area of properties

Profit from property management and cash flow

Earnings, revenue and expenses

The profit/loss and cash flow items below refer to the January to September 2020 period. The comparative items refer to the year-earlier period. Amounts for the balance-sheet items and comparative figures refer to the position at the end of the current period and end of the year-earlier period.

EARNINGS

Profit from property management rose 21% to 1,795 M (1,483), of which joint ventures and associated companies accounted for SEK 419 M (314). The increase in profit from property management was attributable to property acquisitions and higher profit from property management in joint ventures and associated companies. Profit from property management per Class A and B share after dilution rose 22% to SEK 4.99 (4.08).

Changes in the value of properties increased profit by SEK 787 M (808).

Revaluation of financial instruments had an impact of SEK 102 M (692). The revaluation of listed shares resulted in an unrealised change in value of SEK 52 M (525). The revaluation of financial instruments regarding joint ventures amounted to SEK 72 M (269) in accordance with IFRS 9, while fixed-income derivatives accounted for SEK –22 M (–103).

Profit after tax for the period was SEK 2,179 M (2,582).

REVENUE

Rental revenue rose 12% to SEK 2,152 M (1,917). Revenue was primarily positively affected by property acquisitions.

Other revenue amounted to SEK 7 M (25). The previous period was primarily impacted by compensation from tenants who prematurely vacated premises, damages due to inadequate maintenance and insurance compensation.

During the period, rental revenue in comparable portfolios increased 1.8% (2.7) excluding currency effects. The largest increase was found in the market segments of Helsinki (3.7%) and the Netherlands (3.1%). In the market segment Finland, university cities, rental revenue decreased 2.1%. Other market segments reported minor revenue increases of an average of 1.7% in comparable portfolio.

CHANGE IN THE ECONOMIC OCCUPANCY RATE

The economic occupancy rate amounted to 95% (96). During the period, the vacancy value rose SEK 80 M (54) due to tenants vacating premises and declined SEK 74 M (80) due to new lettings. Fixed-term rent discounts for new tenants increased SEK 5 M (–1) to SEK 27 M (18) on an annual basis at the end of the period. Acquisitions and property divestments during the period increased the vacancy value by SEK 9 (13) M. In total, the vacancy value increased SEK 22 M (–9) to SEK 157 M (123) at the end of the period.

Economic leasing rate

FUTURE VACANCY CHANGES

At the end of the period, notice of termination had been served for leases with a rental value of SEK 102 M (87), of which leases with notice of vacating the premises accounted for SEK 102 M (77) and there were no leases with notice of renegotiation (SEK 10 M for the preceding year). Of the leases for which notice had been received, vacancies corresponding to SEK 17 M will occur in 2020. Leases for premises that have not yet been occupied reduced the adjusted vacancy value by SEK 17 M (12).

PROPERTY EXPENSES

Operating and maintenance costs amounted to a total of SEK 227 M (223). Expenses for property tax increased to SEK 103 M (89). Other property expenses rose to SEK 43 M (34). The increase was due primarily to property acquisitions.

CENTRAL ADMINISTRATION

Costs for central administration amounted to SEK 86 M (78), corresponding to 4.0% (4.1) of the period's rental revenue.

At the end of the period, Sagax had 75 (66) employees. Functions such as property care-taking and on-call operations are outsourced. Sagax has offices in Stockholm, Helsinki, Rotterdam, Paris and Barcelona.

Number of employees

Country	Total
Sweden	34
Finland	23
France	8
Netherlands	7
Spain	3
Total	75

Vacancy changes

Amounts in SEK M	2020 Jan-Sep	2019 Jan-Dec
Opening vacancy for each year	135	132
Vacancies	80	93
New lettings	–74	–98
Change in discounts provided	5	4
Vacancy value, acquired properties	10	23
Vacancy value, sold properties	–1	–7
Adjustment of vacancy value		–14
Change in exchange rates	1	1
Closing vacancy value	157	135
Terminated for renegotiation	–	4
Terminated lease, not vacated	102	81
Letting, not occupied	–17	–14
Adjusted closing vacancy value	242	205

Leases terminated for vacancy

Year of vacancy	No. of leases	Rental value, SEK M
2020	32	17
2021	38	70
2022	7	11
2024	4	4
>2024	–	–
Total	81	102

Vacancies on 1 October 2020

Area	Rental value, SEK M	Vacancy value, SEK M1)	Economic vacancy rate1)	Lettable area, sqm	Vacant area, sqm	Vacancy rate by area
Stockholm	715	38	5%	665,000	30,000	5%
Helsinki	645	51	8%	577,000	62,000	11%
Netherlands	316	15	5%	392,000	13,000	3%
Paris	342	17	5%	295,000	16,000	5%
Finland, university cities	338	12	4%	356,000	11,000	3%
Madrid & Barcelona2)	125	15	12%	235,000	26,000	11%
Rest of Sweden	218	–	–	431,000	–	–
Rest of Finland	227	2	1%	327,000	6,000	2%
Rest of Europe	245	7	3%	285,000	6,000	2%
Total	3,171	157	5%	3,565,000	170,000	5%

1) The vacancy value and economic vacancy rate take into account both vacancies and discounts provided.

2) Madrid & Barcelona, which was previously reported under Rest of Europe, is reported as a separate segment from 1 January.

PROFIT FROM JOINT VENTURES AND ASSOCIATED COMPANIES

Profit of joint ventures and associated companies for the period amounted to SEK 588 M (455), of which profit from property management accounted for SEK 419 M (314), changes in the value of fixed-income derivatives for SEK –19 M (–51) and changes in the value of properties for SEK 348 M (300). Profit was charged with deferred tax of SEK 160 M (109). Refer also to page 11 for more information.

NET FINANCIAL ITEMS

Interest-bearing liabilities increased to SEK 21,092 M (17,288) due to financing of property acquisitions.

Financial expenses declined to SEK 354 M (368), despite higher interest-bearing liabilities as a result of lower average interest rate. The average interest rate was 1.8% (2.0) on 30 September 2020 due to refinancing and new borrowing at lower interest rates.

Financial income of SEK 30 M (18) pertained to interest on bonds and other financial investments.

REVALUATION OF PROPERTIES

Sagax values most of its property portfolio every quarter by obtaining value assessments from independent valuation companies.

The value growth for the properties amounted to SEK 439 M (508), of which unrealised changes in value accounted for SEK 450 M (526).

Unrealised changes in value

Amounts in SEK M	Jan-Sep 2020
New lettings/Renegotiations	279
Vacancies/Renegotiations	–291
General change in market value	462
Total	450

REVALUATION OF FINANCIAL INSTRUMENTS

The change in the value of financial instruments amounted to SEK 102 M (692), of which SEK –19 M (–51) referred to joint ventures.

The change in value attributable to fixed-income derivatives amounted to SEK –22 M (–103), of which SEK –19 M (–51) referred to joint ventures.

Revaluation of listed shares resulted in an unrealised change in value of SEK 52 M (525).

Revaluation of financial instruments regarding joint ventures amounted to SEK 72 M (269) in accordance with IFRS 9.

TAX

Sagax recognised a current tax expense of SEK 84 M (174). The deferred tax expense amounted to SEK 261 M (118). The Group's deferred tax liabilities at the end of the period amounted to SEK 2,290 M (1,752).

Revaluation of financial instruments regarding joint ventures amounted to SEK 72 M (269) in accordance with IFRS 9.

CASH FLOW

Cash flow from operating activities before changes in working capital amounted to SEK 1,778 M (1,370). Changes in working capital had a positive impact of SEK 160 M (51) on cash flow. Investing activities had an impact of SEK –5,536 M (–1,736) on cash flow, while cash flow from financing activities amounted to SEK 3,689 M (708). In total, cash and cash equivalents changed SEK 91 M (395) during the period.

PARENT COMPANY

The Parent Company, AB Sagax, is responsible for stock market issues, such as financial reporting and stock market information. Services between Group companies are charged on commercial terms and conditions and in accordance with market-based pricing. Intra-Group services comprise management services and internal interest charging. The Parent Company's management fees from Group companies amounted to SEK 42 M (40).

ADJUSTED FORECAST FOR 2020

Profit from property management for 2020, meaning profit before revaluations and tax, based on the current property portfolio, announced acquisitions and divestments and current exchange rates, is expected to amount to SEK 2,380 M. The previously submitted forecast was for profit of SEK 2,300 M and was presented when the January-June 2020 interim report was published.

CURRENT EARNINGS CAPACITY

Current earnings capacity is reported in conjunction with interim reports and year-end reports.

The table below shows the company's earnings capacity on a 12-month basis at 1 October 2020. It is important to note that this capacity cannot be compared with a forecast for the forthcoming 12 months because it does not contain assessments about, for example, future vacancies, the interest rate scenario, currency effects, rent trends or changes in value.

The rental value is based on contractual rental revenue on an annual basis, with supplements for estimated market rents

Current earnings capacity

Amounts in SEK M	1 Oct 2020	1 Jan 2020
Rental value	3,171	2,735
Vacancy	–157	–135
Rental revenue	3,014	2,600
Property expenses	–508	–466
Net operating income	2,506	2,134
Central administration	–130	–122
Joint ventures and associated
companies	597	539
Net financial items	–401	–352
Lease expenses	–25	–22
Profit from property management	2,547	2,178
Tax	–484	–414
Profit after tax	2,063	1,764
– of which, holders of preference shares	34	34
– of which, holders of Class D shares	252	216
– of which, holders of Class A and B shares	1,778	1,515
Run rate yield, %	6.5	6.5
Net debt/run rate EBITDA, multiple	6.6	6.6

Yield and interest rate

for vacant premises. Property expenses are based on actual outcomes over the past 12 months adjusted for the holding period, less expenses for site leasehold fees. Central administration costs are based on actual outcomes over the past 12 months. Net financial items are calculated based on interestbearing liabilities and assets on the balance sheet date. Expenses for interest-bearing liabilities are based on the Group's estimated average interest rate, plus financing costs allocated over time and costs attributable to credit facilities that were unutilised on the balance sheet date. Lease expenses essentially pertain to site leasehold fees that are based on actual outcomes over the past 12 months adjusted for the holding period. Dividends attributable to the company's holdings of listed shares were not taken into account in the earnings capacity. Tax is calculated at the standard tax rate of 19% (19).

Shares in profit in joint ventures and associated companies are calculated in accordance with the same assumptions as for Sagax, taking into account the size of the participations.

Difference between yield and interest rate

Interim Report January-September 2020 7 This document is an in-house translation of the Swedish Interim report. In the event of discrepancies, the Swedish original will supersede the translation.

Property portfolio

On 30 September 2020, the property portfolio comprised 698 (539) properties with a lettable area of 3,565,000 square metres (3,021,000). At the end of the period, the rental value and contractual annual rent amounted to SEK 3,171 M (2,773) and SEK 3,014 M (2,650), respectively. This corresponds to an economic occupancy rate of 95% (96).

INVESTMENTS

During the period, Sagax invested SEK 5,303 M (2,439), of which property acquisitions accounted for SEK 4,838 M (1,916).

A total of 157 properties were acquired with a total lettable area of 540,000 square metres. The largest investment referred to a portfolio of 37 properties in Sweden encompassing 203,000 square metres of lettable area and 560,000 square metres of land. Sagax and NP3 Fastigheter AB have signed a Letter of Intent entailing that NP3 is offered the opportunity to acquire 50%. A total of SEK 465 M (523) was invested in the existing property portfolio. SEK 27 M of the investments

for the period were made against rent supplements, SEK 31 M was invested in conjunction with new lettings, SEK 290 M in conjunction with new production and SEK 116 M pertained to property maintenance.

The Group has agreed to acquire two properties in France for which possession will be taken after the end of the period. The total investment will amount to SEK 35 M.

DIVESTMENTS

During the period, twelve smaller properties were divested for a total of SEK 58 M. Agreements were signed for the sale of one property in Sweden and two properties in Finland for a total of SEK 288 M which will be vacated after the end of the period.

PROPERTY PORTFOLIO YIELD

The yield for the period in relation to market value amounted to 6.5% (6.8).

Summary of property portfolio 1 October 2020

				Market value		Rental value		Economic		Contractual annual rent
Segment	No. of properties	Lettable area, sqm	Vacant area, sqm	SEK M	SEK per sqm	SEK M	Share	occupancy rate	SEK M	Share
Stockholm	84	665,000	30,000	10,499	15,800	715	22%	95%	677	22%
Helsinki	72	577,000	62,000	6,936	12,000	645	20%	92%	593	20%
Netherlands	77	392,000	13,000	3,702	9,200	316	10%	95%	301	10%
Paris	79	295,000	16,000	3,487	11,800	342	11%	95%	325	11%
Finland, university cities	66	356,000	11,000	3,269	9,400	338	11%	96%	326	11%
Madrid & Barcelona	67	235,000	26,000	1,909	8,100	125	4%	88%	110	4%
Rest of Sweden	63	431,000	–	2,911	6,800	218	7%	100%	218	7%
Rest of Finland	131	327,000	6,000	2,612	8,000	227	7%	99%	225	7%
Rest of Europe	59	285,000	6,000	3,066	10,800	245	8%	97%	237	8%
Total	698	3,565,000	170,000	38,390	10,800	3,171	100%	95%	3,014	100%

Property investments January-September 2020

Amounts in SEK M	Property acquisitions	Existing portfolio	Total	Share of total investments	Divestments	Net investments
Stockholm	325	193	517	10%	–	517
Helsinki	32	193	225	4%	–	225
Netherlands	548	35	583	11%	–27	556
Paris	417	13	431	8%	–	431
Finland, university cities	97	11	108	2%	–3	105
Madrid & Barcelona	839	–	839	16%	–10	829
Rest of Sweden	1,073	7	1,080	20%	–	1,080
Rest of Finland	–	13	13	0%	–17	–5
Rest of Europe	1,508	1	1,509	28%	–	1,509
Total	4,838	465	5,303	100%	–58	5,246

LEASE STRUCTURE

Sagax has a diverse lease structure, which better allows the company to maintain an even occupancy rate. To reduce the risk of lower rental revenue, Sagax endeavours to create longterm relationships with the company's existing tenants and to achieve favourable diversification in terms of the length and size of its leases.

Sagax's annual rent at the end of the period was distributed between 1,801 leases (1,747), with about 1,200 tenants (1,200). The table below presents the size of Sagax's leases in relation to the Group's annual rent at the end of the period. The table shows that 1,790 leases (1,738) each had a rental value of less than 1% of the Group's annual rent. The total rental value for these leases accounted for 81% (83) of Sagax's annual rent. In addition, Sagax is party to eight leases (six) with a rental value corresponding to 1–2% of the Group's annual rent. Combined, these leases total 11% (10) of Sagax's annual rent. Only three (three) of Sagax's leases had an annual rental value that accounted for more than 2% of the

Group's rental revenue. These leases together represented 8% (8) of the Group's contractual annual rent.

Sagax's tenants operate in a variety of sectors. 16% (11) of rental revenue comes from tenants with food-related operations, 15% (19) from companies in the manufacturing industry and 10% (12) in the automotive-related industry, including sales, service and manufacturing. Diverse tenant industries is considered to lower the risk of vacancies and rent losses. The main sectors are presented in the pie chart below.

According to Sagax's management strategy, the company strives to secure long-term leases and an even distribution of contract maturities over the years. This is deemed to reduce the risk of significant variations in the Group's occupancy rate. Leases representing 58% of the annual rent expire in or after 2024. 12-14% of annual rent expires every year between 2021 and 2023.

Distribution of leases

Share of contractual	Annual rent		No. of	Average annual rent,	Lease term,
annual rent	SEK M	Share	leases	SEK M	years
> 2%	253	8%	3	84	10
1–2 %	332	11%	8	42	5
< 1%	2,429	81%	1,790	1	5
Total	3,014	100%	1,801	2	5

Lease terms

		Annual rent
Year of expiry	Area, sqm	SEK M	Share
2020	80,000	88	3%
2021	460,000	401	13%
2022	450,000	428	14%
2023	367,000	353	12%
2024	265,000	289	10%
> 2024	1,773,000	1,455	48%
Total	3,394,000	3,014	100%

Industry exposure

Other, 13%	Food and beverages, 16%
State, municipality, 3% Production properties, 4% Logistics, 4%	Manufacturing industry, 15%
Media, 5%
IT, development, education, 6%	Automotive, 10%
Service for properties, 7%
Medicine, medical technology, 7%	Building products, 10%

Year of maturity of annual rent

Market value of property portfolio

Sagax prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). The company has chosen to recognise its properties at fair value in accordance with the Fair Value Method.

Sagax values most of its property portfolio every quarter by obtaining value assessments from independent valuation companies.

On 30 September 2020, the total market value of Sagax's 698 (539) properties was SEK 38,390 M (31,825). Exchangerate fluctuations during the period resulted in property values abroad increasing by SEK 70 M (777).

The total unrealised change in value recognised during the period was SEK 450 M (526).

VALUATION METHOD AND IMPLEMENTATION

The valuations were carried out in accordance with generally accepted international valuation methods. As of 30 September 2020, 99% of valuation objects were valued by authorised property appraisers from independent valuation companies.

The principle method of appraisal used was cash flow calculations in which the present value of net operating income,

		Change in carrying amount of properties

	SEK M	No.
Property portfolio, 31 December 2019	32,625	553
Acquisition of properties	4,838	157
Investments in the current portfolio	465
Property sales	–58	–12
Translation effect, currencies	70
Unrealised changes in value	450
Property portfolio, 30 September 2020	38,390	698

Group's rental value

investments and residual values was calculated. The calculation period was adjusted to the remaining term of existing leases and varies between five and 20 years. As a rule, the calculation period is ten years. For more information, see Sagax's 2019 Annual Report, page 93.

ANALYSIS AND GENERAL CONDITIONS

The cost of capital for the present value calculation of cash flows (4.7–16.0%), the cost of capital for the present value calculation of residual values (4.7–16.0%) and the yield requirement for the residual value calculations (4.0–14.0%) are based on analyses of transactions carried out and on individual assessments of the risk level and market position of each property.

The weighted cost of capital for the present value calculation of cash flows and residual values for the property portfolio was 7.6% (7.9) and 7.9% (8.4), respectively. The weighted yield requirement was 6.7% (7.0) on 30 September 2020. By comparison, the yield reported by Sagax for the period was 6.5% (6.8). A comparison of the yield reported over time and the yield requirement used in valuations is provided below. A sensitivity analysis is found on page 25.

Market value of properties

Joint ventures and associated companies

Sagax's joint ventures and associated companies contributed a total of SEK 419 M (314) to profit from property management during the period. Sagax's share of changes in the value of properties amounted to SEK 348 M (300) and the share of changes in the value of derivatives was SEK –19 M (–51) for the period. The total value of the commitment related to ownership of joint ventures and associated companies amounted to SEK 6,116 M (5,043).

Sagax owns 50% of Söderport Holding AB, with the remaining share owned by Nyfosa AB. Via Hemsö Intressenter AB, Sagax indirectly owns 15% of Hemsö Fastighets AB, with the remaining share owned by the Third Swedish National Pension Fund. In addition, Sagax owns 20% of the votes and 14% of the capital in NP3 Fastigheter AB and 25% of Fastighetsbolaget Emilshus AB.

SÖDERPORT HOLDING AB

Söderport's operations consist of owning, managing and developing properties in Sweden. Söderport also owns 78.4% of Torslanda Property Investment AB, which is thus included as a subsidiary in Söderport's consolidated financial statements.

On behalf of Söderport, Sagax handles the financial administration and most of the property management of the Söderport Group. Nyfosa is responsible for property management in Gothenburg.

A corresponding 69% of Söderport's rental value of SEK 865 M was located in Stockholm on 30 September 2020. Söderport's economic vacancies amounted to SEK 45 M (37) at the end of the period, corresponding to a vacancy rate of 4% (5). Of the economic vacancies, SEK 12 M (9) comprised fixed-term rent discounts provided for new lettings. At the

end of the period, Stockholm accounted for 94% of the economic vacancies.

HEMSÖ INTRESSENTER AB

Hemsö Fastighets AB conducts operations in Sweden, Germany and Finland. Operations consist of owning, managing and developing public properties. The property portfolio encompasses 381 properties with a total property value of SEK 60 billion on 30 September 2020. 94% of rental revenue derives from taxfinanced operations. More information on Hemsö Fastighets AB is available on the company's website, hemso.se.

NP3 FASTIGHETER AB

NP3 Fastigheter AB is a property company focusing on commercial investment properties with high yields mainly in northern Sweden. The company's property portfolio encompassed 382 properties with a total property value of SEK 12.1 billion and a rental value of SEK 1,198 M on 30 September 2020. NP3 Fastigheter AB is listed on Nasdaq Stockholm, Mid Cap. More information on NP3 Fastigheter AB is available on the company's website, np3fastigheter.se.

FASTIGHETSBOLAGET EMILSHUS AB

Emilshus acquires, develops and manages commercial properties in Småland. The property portfolio is situated in growth regions, with a keen focus on local presence and close partnership with tenants. The property portfolio encompassed 56 properties on 30 September 2020. More information on Fastighetsbolaget Emilshus AB is available on the company's website, emilshus.com.

Sagax's joint ventures

	Söderport		Hemsö
	Jan – Sep 2020	Jan – Sep 2019	Jan – Sep 2020	Jan – Sep 2019
Sagax's participating interest, %	50	50	15	15
Rental revenue, SEK M	607	510	2,432	2,252
Profit from property management, SEK M	346	283	1,370	1,276
Profit for the period, SEK M Sagax's share of profit from property	545	395	1,532	1,996
management, SEK M	161	141	179	166
	30 Sep 2020	30 Sep 2019	30 Sep 2020	30 Sep 2019
No. of properties	80	89	381	364
Carrying amount of properties, SEK M	11,433	9,768	59,658	53,218
Lettable area, sqm	771,000	777,000	1,954,000	1,833,000
Lease term, years	5.0	4.7	9.9	9.7
Economic vacancy rate, %	4	5	2	2
Interest-bearing liabilities, SEK M	6,337	5,712	38,431	36,008
Loan maturity, years	3.77	4.2	7.0	7.2
Fixed interest, years	2.44	2.3	6.6	6.4
Market value of derivatives, SEK M	–229	–272	–293	–366
Carrying amount, SEK M	1,764	1,510	2,085	1,685

EQUITY

Consolidated equity amounted to SEK 21,541 M (17,892) on 30 September 2020. Changes in equity during the period were attributable to comprehensive income of SEK 2,256 M, a new issue of Class D common shares of SEK 508 M after transaction costs, a new issue of Class B common shares linked to the incentive plan of SEK 10 M and a share dividend of SEK 491 M.

INTEREST-BEARING LIABILITIES

Sagax's interest-bearing liabilities at the end of the period amounted to SEK 21,092 M (17,288). An amount corresponding to SEK 15,898 M (13,981) of liabilities was raised in EUR.

Net debt amounted to SEK 18,398 M (15,351). Gross interest-bearing debt to banks totalled SEK 4,957 M (4,338). The remaining gross interest-bearing debt comprised listed bond loans of SEK 15,309 M (11,591) and commercial paper of SEK 826 M (1,358).

On 30 September 2020, secured liabilities comprised 12% (15) of the total assets. Unsecured liabilities corresponded to 33% (30) of the total assets on the same date.

The interest coverage ratio at the end of the period amounted to 600% (489) and the debt ratio to 45% (45). Net interest-bearing debt for the past 12 months was 7.0 (6.9) times EBITDA and 6.6 (6.6) times run rate EBITDA, see page 7 for more information.

A total of SEK 7,655 M (6,235) in loans was raised during the period, of which SEK 3,309 M (4,281) in the form of bond loans under the framework of Sagax's EMTN programme. Repayments during the period totalled SEK 4,085 M (5,252). Exchange-rate fluctuations reduced interest-bearing liabilities by SEK 7 M (increased SEK 504 M for the preceding year).

Allocated borrowing costs of SEK 87 M (84) reduced interest-bearing liabilities in the balance sheet. Interestbearing liabilities of SEK 21,004 M (17,205) were recognized. The average remaining fixed-interest and loan maturity

Fixed-interest period and loan maturity, 30 September 2020

	Fixed interest			Loan maturity		Interest-rate swaps
Year of expiry	SEK M	Interest rate	Share	SEK M	Share	SEK M	Interest rate
2020	2,085	1.6%	10%	147	1%	–	–
2021	1,308	1.6%	6%	676	3%	–	–
2022	1,275	1.9%	6%	1,754	8%	475	0.7%
2023	2,658	1.8%	13%	5,155	24%	712	0.9%
2024	5,497	2.0%	26%	5,271	25%
> 2024	8,267	1.8%	39%	8,089	38%	829	2.2%
Total/average	21,092	1.8%	100%	21,092	100%	2,017	1.4%

Net debt

Amounts in SEK M	30 Sep 2020	30 Sep 2019
Interest-bearing liabilities	21,092	17,288
Interest-bearing assets	–537	–9
Cash and cash equivalents	–177	–467
Listed shares	–1,980	–1,461
Net debt	18,398	15,351

Debt ratio and interest-coverage ratio

Net debt/EBITDA, rolling 12 month

terms were 3.4 years (4.0) and 3.7 years (3.9), respectively, at the end of the period. The average interest rate on the company's interest-bearing liabilities was 1.8% (2.0), including the effect of derivatives. The average interest rate decreased as a consequence of new borrowing at lower interest rates and repayment of loans with higher interest rates.

Sagax has SEK 12,709 M (9,742) in loans at fixed interest rates. The company has interest-rate caps and interest-rate swaps with a total nominal value of SEK 6,047 M (6,507), of which interest-rate swaps with an average interest rate of 1.4% (1.4) accounted for SEK 2,017 M (2,030).

WORKING CAPITAL AND LIQUIDITY

Sagax's working capital, excluding prepaid rental revenue and including listed shares, amounted to SEK –704 M (52) on 30 September 2020. At the same date, unutilised credit facilities amounted to SEK 4,921 M (3,817). No additional collateral needs to be pledged to utilise these credit facilities.

Listed bond loans 30 September 2020

Maturity	SEK M	Current interest	Interest terms	Maturity date	ISIN code
2017-2021	600	2.26%	Stibor 3M+2.25%	1 Feb 2021	SE0010636274
2017-2022	1,250	2.16%	Stibor 3M+2.15%	15 Feb 2022	SE0010324228
2019-2023	500	0.87%	Stibor 3M+0.90%	16 Jun 2023	XS2093119175
2019-20231)	250	1.13%	1.13%	16 Jun 2023	XS2093119845
Total/average	2,600	1.83%
Maturity	EUR M	Current interest	Interest terms	Maturity date	ISIN code
2018-20241)	500	2.00%	2.00%	17 Jan 2024	XS1877540465
2019-20251)	300	2.25%	2.25%	13 Mar 2025	XS1962543820
2019-20251)	1062)	0.87%	2.25%3)	13 Mar 2025	XS1962543820
2020-20271)	300	1.12%	1.12%	30 Jan 2027	XS2112816934
Total/average	1,206	1.75%

2) The nominal value is EUR 100 M.

3) Coupon rate.

Derivative contracts, 30 September 2020

Amounts in SEK M	Nominal amount	Years to maturity	Market value 30 Sep 2020	Market value 31 Dec 2019	Change for the period
Nominal interest-rate swaps	2,017	3.4	–124	–119	–5
Interest-rate caps	4,031	1.9	–	0	–
Total	6,047	2.4	124	–119	–5

Rating and key performance indicators according to EMTN programme

	Financial covenant in EMTN programme	2020 30 Sep	2019 30 Sep	2019 31 Dec
Rating according to Moody's Investor Services			Baa3, Stable outlook Baa3, Stable outlook Baa3, Stable outlook
Net debt/Total assets	< 65%	40%	40%	38%
Interest coverage ratio	>1.8x	6.5x	5.0x	5.3x
Secured liabilities/total assets	< 45%	12%	15%	14%

Distribution between secured and unsecured liabilities

Interim Report January-September 2020 13 This document is an in-house translation of the Swedish Interim report. In the event of discrepancies, the Swedish original will supersede the translation.

Consolidated statement of comprehensive income

Amounts in SEK M	2020 Jan-Sep	2019 Jan-Sep	2020 Jul-Sep	2019 Jul-Sep	2019 Jan-Dec	Rolling 12 months
Rental revenue	2,152	1,917	735	657	2,581	2,815
Other revenue	7	25	4	2	27	8
Operating expenses	–170	–164	–52	–43	–222	–227
Maintenance costs	–57	–59	–20	–21	–84	–82
Property tax	–103	–89	–36	–32	–121	–135
Other property expenses	–43	–34	–15	–13	–47	–57
Net operating income	1,786	1,597	616	550	2,133	2,322
Central administration	–86	–78	–29	–28	–122	–130
Profit from joint ventures and associated companies	588	455	198	182	917	1,050
– of which, profit from property management	419	314	137	120	441	545
– of which, changes in value	329	249	114	112	690	770
– of which, tax	–160	–109	–53	–50	–214	–265
Financial income	30	18	10	1	20	32
Financial expenses	–335	–350	–110	–113	–446	–431
Financial expense, interest component of leases	–19	–18	–6	–6	–24	–25
Profit including changes in value of joint ventures and associated companies	1,964	1,623	679	584	2,478	2,818
– of which, profit from property management	1,795	1,483	618	523	2,001	2,313
Changes in value:
Properties, realised	–11	–18	–11	–15	–40	–33
Properties, unrealised	450	526	413	63	1,301	1,225
Financial instruments, unrealised	122	743	136	263	889	267
Profit before tax	2,524	2,874	1,217	896	4,627	4,277
Deferred tax	–261	–118	–165	28	–416	–559
Current tax	–84	–174	17	–112	–100	–10
Profit for the period	2,179	2,582	1,069	812	4,111	3,708
Other comprehensive income – items that may be reversed to profit or loss:
Translation differences for foreign operations	151	560	112	190	217	–192
Share of other comprehensive income for joint ventures	8	23	0	2	13	–2
Translation differences pertaining to hedge accounting	–79	–324	–62	–112	–143	102
Tax on items that may be reversed to profit or loss	–3	–4	–2	–5	3	4
Comprehensive income for the period	2,256	2,837	1,117	887	4,201	3,620
Earnings per Class A and B share, SEK	6.20	7.54	3.37	2.35	12.15	10.84
Earnings per Class A and B share after dilution, SEK	6.19	7.53	3.36	2.35	12.13	10.82
Earnings per Class D share, SEK	1.50	1.50	1.00	0.50	2.00	2.00
Average no. of Class A and B shares, millions	317.1	317.5	317.3	317.0	316.9	317.1
Average no. of Class A and B shares after dilution, millions	317.7	317.9	317.8	317.3	317.3	317.6
Average number of Class D shares, millions	115.9	105.0	125.8	107.8	105.7	113.8

Condensed consolidated statement of financial position

Amounts in SEK M	2020 30 Sep	2019 30 Sep	2019 31 Dec
Investment properties	38,102	31,385	32,333
Investment properties for sale	288	440	292
Leases, right-of-use assets	383	352	346
Joint ventures and associated companies	6,117	5,043	5,693
Interest-bearing non-current receivables	537	9	511
Other fixed assets	61	33	58
Total fixed assets	45,488	37,262	39,233
Cash and bank balances	177	467	86
Listed shares	559	338	405
Other current assets	554	581	429
Total current assets	1,290	1,387	921
Total assets	46,778	38,649	40,154
Equity	21,541	17,892	19,257
Non-current interest-bearing liabilities	19,315	15,701	16,052
Deferred tax liabilities	2,290	1,752	2,018
Fixed-income derivatives	124	160	119
Lease liability, right-of-use assets	407	374	370
Other non-current liabilities	120	90	94
Total non-current liabilities	22,256	18,076	18,653
Commercial paper	826	1,358	1,192
Other current interest-bearing liabilities	864	144	193
Other current liabilities	1,291	1,178	858
Total current liabilities	2,981	2,681	2,243
Total equity and liabilities	46,778	38,649	40,154

Consolidated statement of cash flows

Amounts in SEK M	2020 Jan-Sep	2019 Jan-Sep	2020 Jul-Sep	2019 Jul-Sep	2019 Jan-Dec	Rolling 12 months
Profit before tax	2,524	2,874	1,217	896	4,627	4,277
Changes in value of financial instruments	–122	–743	–136	–263	–889	–267
Change in value of properties	–439	–506	–402	–47	–1,261	–1,194
Result from ownership of joint ventures and associated companies	–587	–455	–198	–182	–917	–1,050
Dividend from joint ventures and associated companies	405	264	–	–	281	422
Dissolution of allocated borrowing costs	29	34	8	12	42	37
Tax paid	–28	–72	–5	–1	–74	–30
Other items not included in cash flow	–3	–27	–1	–3	–14	9
Cash flow from operating activities before changes in working capital	1,778	1,370	482	412	1,795	2,204
Cash flow from changes in current receivables	28	–111	18	–45	–4	136
Cash flow from changes in current liabilities	132	162	55	65	20	–11
Cash flow from operating activities	1,938	1,421	556	432	1,811	2,329
Acquisition of properties	–4,838	–1,916	–1,621	–968	–2,836	–5,759
Property sales	46	921	30	190	1,413	538
Investments in existing properties	–457	–521	–134	–175	–707	–642
Acquisition of listed shares	–101	–64	–19	–41	–64	–101
Acquisition of financial instruments	–7	–	–	–	–503	–509
Acquisition of joint ventures and associated companies	–14	–	–	–	–178	–193
Capital contribution to joint ventures and associated companies	–150	–150	–150	–	–150	–150
Increase in other fixed assets	–21	–4	–14	–	–25	–42
Decrease in other fixed assets	6	–	6	2	–	6
Cash flow from investing activities	–5,536	–1,736	–1,902	–992	–3,051	–6,851
Issue of Class D and B shares	528	198	–1	–	209	527
Dividend paid to shareholders	–402	–498	–71	–62	–560	–464
Incentive plan	–9	9	–	–	–2	–8
Borrowings	7,631	6,235	1,991	1,890	7,322	8,718
Repayment of loans	–4,085	–5,252	–440	–919	–5,734	–4,567
Deposits from tenants	26	24	4	11	28	31
Decrease in other non-current liabilities	–	–7	–	–5	–11	–3
Cash flow from financing activities	3,689	708	1,483	915	1,252	4,233
Cash flow for the period	91	393	137	355	12	–289
Exchange rate differences in cash and cash equivalents	–	2	2	1	1	–1
Change in cash and cash equivalents	91	395	139	356	13	–290
Cash and cash equivalents at beginning of period	86	73	38	112	73	467
Cash and cash equivalents at end of period	177	467	177	467	86	177

Consolidated statement of changes in equity

Amounts in SEK M	Share capital	Other contributed capital	Reserves, translation differences	Profit earned incl. net profit for the period	Total equity1)
Equity, 31 December 2018	487	3,126	585	11,218	15,416
Issue of Class D shares	10	191	–	–	201
Transaction costs	–	–3	–	–	–3
Bonus issue	279	–279	–	–	–
Issue of Class B shares, incentive plan	0	11	–	–	11
Dividends	–	–	–	–566	–566
Redemption of incentive plan	–	–	–	–7	–7
Incentive plan	–	–	–	4	4
Comprehensive income, January-September 2019	–	–	254	2,582	2,837
Equity, 30 September 2019	776	3,046	839	13,231	17,893
Comprehensive income, October-De cember 2019	–	–	–164	1,529	1,364
Equity, 31 December 2019	776	3,046	675	14,760	19,257
Issue of Class D shares	32	481	–	–	513
Transaction costs	–	–4	–	–	–4
Issue of Class B shares, incentive plan	1	19	–	–	19
Dividends	–	–	–	–491	–491
Redemption of incentive plan	–	–	–	–14	–14
Incentive plan	–	–	–	5	5
Comprehensive income, January-September 2020	–	–	77	2,179	2,256
Equity, 30 September 2020	808	3,542	752	16,439	21,541

1) Equity is attributable in its entirety to the Parent Company's shareholders.

Segment information

Profit items			Net operating		Changes in value, properties
per segment		Rental revenue1)	income		Unrealised		Realised		Total yield
Amounts in SEK M	2020 Jan-Sep	2019 Jan-Sep	2020 Jan-Sep	2019 Jan-Sep	2020 Jan-Sep	2019 Jan-Sep	2020 Jan-Sep	2019 Jan-Sep	2020 Jan-Sep	2019 Jan-Sep
Stockholm	488	496	411	412	141	260	–	–	552	673
Helsinki	449	429	357	350	–63	–15	–	–	294	335
Netherlands	215	150	212	136	148	187	–2	–	359	323
Paris	223	175	179	132	125	32	–	–1	304	163
Finland, university cities	251	234	198	186	–12	22	2	–1	188	205
Madrid & Barcelona2)	71	3	62	2	243	–	–1	–	305	2
Rest of Sweden	114	157	109	150	3	27	–	–14	111	163
Rest of Finland	174	173	157	156	–44	63	–10	–3	103	217
Rest of Europe	167	100	155	92	–92	–50	–	1	63	42
Non-specified	–	–	–53	–18	–	–	–	–	–53	–18
Total	2,152	1,917	1,787	1,597	450	526	–11	–18	2,226	2,105

Asset items per segment	Market value properties			Investment properties		Acquisition properties	Divestment properties
Amounts in SEK M	2020 30 Sep	2019 30 Sep	2020 Jan-Sep	2019 Jan-Sep	2020 Jan-Sep	2019 Jan-Sep	2020 Jan-Sep	2019 Jan-Sep
Stockholm	10,499	9,680	193	247	325	27	–	–672
Helsinki	6,936	6,768	193	114	32	53	–	–
Netherlands	3,702	2,722	35	11	548	615	–27	–
Paris	3,487	2,786	13	102	417	612	–	–54
Finland, university cities	3,269	3,122	11	19	97	228	–3	–4
Madrid & Barcelona2)	1,909	316	–	–	839	311	–10	–
Rest of Sweden	2,911	2,225	7	–	1,073	–	–	–196
Rest of Finland	2,612	2,610	13	26	–	43	–17	–4
Rest of Europe	3,066	1,596	1	2	1,508	25	–	–10
Total	38,390	31,825	465	523	4,838	1,915	–58	–939

1) All rental revenue pertains to external tenants.

2) Madrid & Barcelona, which was previously reported under Rest of Europe, is reported as a separate segment from 1 January.

Key performance indicators

	2020 Jan-Sep	2019 Jan-Sep	2019 Jan-Dec	2018 Jan-Dec	2017 Jan-Dec	2016 Jan-Dec	2015 Jan-Dec
Property-related key figures
Yield, %	6.5	6.8	6.4	6.8	6.9	7.1	7.4
Surplus ratio, %	82	83	83	83	83	85	86
Occupancy rate by area, %	95	96	95	95	95	93	97
Economic occupancy rate, %	95	96	95	95	94	94	96
Lettable area at the end of the period, 000 sqm	3,565	3,021	3,022	2,850	2,489	2,312	1,860
No. of properties at the end of the period	698	539	553	512	495	440	225
Financial key figures
Return on total capital, %	7	7	7	7	7	7	8
Return on equity, %	14	21	24	24	30	33	32
Average interest rate, %	1.8	2.0	1.9	2.2	3.0	3.1	3.3
Fixed-interest period incl. derivatives, years	3.4	4.0	3.5	3.0	2.1	2.7	3.0
Loan maturity, years	3.7	3.9	3.8	3.6	3.1	3.6	4.2
Equity/assets ratio, %	46	46	48	46	42	38	34
Debt ratio, %	45	45	44	47	50	54	59
Net debt/run rate EBITDA, multiple	6.6	6.6	6.6	7.1	7.7	7.8	8.3
Net debt/EBITDA, multiple	7.0	6.9	6.6	7.4	8.1	8.7	9.3
Interest coverage ratio, multiple	6.0	4.9	4.9	4.2	3.7	3.4	2.9
Interest coverage ratio, EMTN programme, multiple	6.5	5.0	5.3	4.3	4.0	3.7	3.3
Data per Class A and B share1)
Price of Class B share at the end of the period, SEK	156.80	113.00	136.20	65.70	49.10	40.87	35.87
Net asset value, SEK	63.06	51.80	56.77	44.22	35.04	26.89	17.76
Equity, SEK	52.27	42.61	46.86	35.70	27.15	19.61	13.01
Equity after dilution, SEK	52.17	42.55	46.78	35.67	27.13	19.57	12.96
Earnings, SEK	6.20	7.54	12.15	9.24	8.86	7.27	4.94
Earnings after dilution, SEK	6.19	7.53	12.13	9.24	8.85	7.25	4.93
Profit from property management, SEK	4.99	4.08	5.51	4.31	3.71	2.99	2.46
Profit from property management after dilution, SEK	4.98	4.08	5.51	4.31	3.70	2.98	2.45
Cash flow, SEK	4.93	3.73	4.86	3.95	3.27	2.57	2.00
Cash flow after dilution, SEK	4.92	3.72	4.86	3.95	3.26	2.56	2.00
Dividend per share, SEK	–	–	0.652)	1.00	0.90	0.72	0.58
No. at end of period, millions	317.3	317.0	317.1	316.8	316.5	316.5	316.5
No. at end of period after dilution, millions	317.9	317.4	317.5	317.1	316.7	317.1	317.5
Average no., millions	317.1	317.5	316.9	316.7	316.5	316.5	316.5
Average no. after dilution, millions	317.7	317.9	317.3	316.9	317.0	317.2	317.6
Data per Class D share
Share price at the end of period, SEK	32.75	37.70	36.35	31.70	29.92	28.30	–
Equity, SEK	35.00	35.00	35.00	35.00	35.00	35.00	–
Earnings, SEK	1.50	1.50	2.00	2.00	2.00	2.00	–
Dividend per share, SEK	–	–	2.00	2.00	2.00	2.00	–
No. at end of period, millions	125.8	107.8	107.8	101.9	63.6	18.2	–
Average no., millions	115.9	105.0	105.7	83.0	43.1	2.9	–
Data per preference share
Share price at the end of period, SEK	37.10	38.30	38.40	34.85	33.40	30.40	31.30
Equity, SEK	33.00	31.50	32.00	32.00	32.00	32.00	32.00
Earnings, SEK	1.50	1.50	2.00	2.00	2.00	2.00	2.00
Dividend per share, SEK	–	–	2.00	2.00	2.00	2.00	2.00
No. at end of period, millions	16.8	16.8	16.8	16.8	16.8	58.2	58.2
Average no., millions	16.8	16.8	16.8	16.8	35.5	58.2	57.8

1) Excluding 2,000,000 Class B shares bought back.

2) Additional payment of SEK 0.65 proposed. Sagax has given notice of an Extraordinary General Meeting to be held on 10 November 2020.

Parent Company income statement

Amounts in SEK M	2020 Jan-Sep	2019 Jan-Sep	2019 Jan-Dec
Net sales	57	53	73
Administration costs	–67	–62	–89
Loss before financial income and expenses	–10	–9	–16
Profit from participations in Group companies	208	254	258
Profit from participations in joint ventures	90	64	64
Financial income	334	576	616
Financial expenses	–312	–603	–673
Profit before tax and appropriations	311	282	249
Appropriations	–	4	98
Tax	0	–61	–4
Profit for the period	310	225	343
Other comprehensive income
Other comprehensive income	–	–	–
Comprehensive income for the period	310	225	343

Condensed Parent Company balance sheet

Amounts in SEK M	2020 30 Sep	2019 30 Sep	2019 31 Dec
Receivables from Group companies	1,524	1,665	1,627
Other financial fixed assets	7,327	6,409	6,778
Total fixed assets	8,851	8,074	8,404
Cash and bank balances	8	186	1
Receivables from Group companies	13,650	11,905	11,497
Other current assets	1,397	62	58
Total current assets	15,055	12,154	11,556
Total assets	23,906	20,228	19,961
Equity	4,154	3,764	3,821
Untaxed reserves	30	19	30
Non-current interest-bearing liabilities	11,199	7,267	7,868
Liabilities to Group companies	3,834	3,430	3,423
Deferred tax liabilities	3	3	3
Total non-current liabilities	15,036	10,700	11,294
Current interest-bearing liabilities	826	1,358	1,295
Liabilities to Group companies	3,336	4,068	3,223
Other current liabilities	524	319	298
Total current liabilities	4,686	5,745	4,815
Total equity, untaxed reserves and liabilities	23,906	20,228	19,961

The Sagax share and shareholders

At the end of the period, Sagax had 19,914 (13,786) shareholders. Sagax's market capitalisation amounted to SEK 54,511 M (40,822). Sagax has four classes of shares: Class A, B and D common shares, and preference shares. The shares are listed on Nasdaq Stockholm, Large Cap.

A total of 461,863,558 shares were outstanding at the end of the period, of which 2,000,000 were Class B treasury shares.

In June, Sagax completed a private placement of 18,000,000 Class D common shares. Moreover, 288,119 Class B common shares were issued due to the exercise of warrants under the 2017/2020 Incentive Plan. In total, the issues generated equity of SEK 532 M for the company.

According to the Articles of Association, each preference share confers a preferential right to SEK 2.00 in annual dividends. Class D shares are entitled to five times the total dividend on Class A and B shares, although not more than SEK 2.00 per share annually.

WARRANTS

Sagax has three warrant plans for the company's employees. In total, Sagax's employees hold warrants corresponding to 0.6% of the number of Class A and B shares outstanding. The company's CEO and Board Members do not participate in the plans. These plans are valid for three years, and encompass the

periods 2018-2021, 2019-2022 and 2020-2023. The subscription price corresponds to the price paid for the Class B share at the start of the warrant plan, converted using the average share price trend for the listed property companies in accordance with Carnegie's property index (CREX) during the corresponding period. Accordingly, the warrants will have a value on condition that the price performance of the Sagax share exceeds the average for the listed property companies during each three-year period.

PROFIT FROM PROPERTY MANAGEMENT PER COMMON SHARE

Profit from property management per Class B share after dilution on a rolling 12-month basis amounted to SEK 6.38 (5.15), which, compared with the share price of the Class B share at the end of the period, corresponded to a multiple of 24.6 (21.9).

EQUITY PER CLASS A AND B SHARE

Equity per Class A and B share after dilution amounted to SEK 52.17 (42.55). Net asset value per Class A and B share amounted to SEK 63.08 (51.80). The share price for the Class B share at the end of the period was 301% (266) of equity per Class B share and 249% (218) of net asset value per Class B share.

Trade in the shares on the Nasdaq Stockholm

	Price paid, SEK		Turnover rate on an annual basis, %		Average trading volume per trading day, SEK M
	Sep 30, 2020	30 Sep 2019	Jan-Sep 2020	Jan-Sep 2019	Jan-Sep 2020	Jan-Sep 2019
Class A shares	157.50	124.00	4	4	0.5	0.4
Class B shares	156.80	113.00	22	10	31.8	8.4
Class D shares	32.75	37.70	60	57	9.2	8.4
Preference shares	37.10	38.30	31	37	0.7	0.9

Key performance indicators per Class B share

	2020 30 Sep	2019 30 Sep	2019 31 Dec	2018 31 Dec	2017 31 Dec	2016 31 Dec	2015 31 Dec
Price of Class B share at the end of the period, SEK	156.80	113.00	136.20	64.70	49.10	40.87	35.87
Profit from property management after dilution, SEK 1)	6.38	5.15	5.51	4.30	3.70	2.98	2.45
Cash flow after dilution, SEK 1) 2)	6.04	4.52	4.86	3.94	3.26	2.56	2.00
Equity after dilution, SEK	52.17	42.55	46.78	35.67	27.13	19.57	12.96
Net asset value, SEK	63.08	51.80	56.77	44.22	35.04	26.89	17.76
Price of Class B share/Profit from property management, multiple1)	24.6	21.9	24.7	15.0	13.3	13.7	14.6
Price of Class B share/Cash flow, multiple 1) 2)	26.0	25.0	28.0	16.4	15.1	16.0	18.0
Price of Class B share/Equity, %	301	266	292	182	181	209	277
Price of Class B share/Net asset value, %	249	218	240	147	140	152	202

1) Profit from property management and cash flow pertain to a rolling 12 months.

2) Cash flow pertains to cash flow from operating activities before changes in working capital.

Share price/profit from property management per common share

Share price in relation to equity and Net asset value

Share price/Net asset value per Class B share

	Ownership structure, 30 September 20201)
No. of shares	No. of shareholders	Shareholder category	No. of shareholders	Share of voting power	Shareholders by country	No. of shareholders	Share of voting power
1–500	13,010	Private individuals			Sweden	18,706	89%
501–1,000	1,818	residing in Sweden	17,919	9%	Switzerland	22	3%
1,001–2,000	1,450	Private individuals			Finland	106	2%
2,001–5,000	1,532	residing abroad	116	0%
5,001–10,000	779	Companies/ institutions in Sweden	787	80%	USA	41	2%
10,001–50,000	921				Ireland	34	1%
50,001–	404	Companies /institutions abroad	1,092	11%	Other	1,005	3%
Total	19,914	Total	19,914	100%	Total	19,914	100%

1) Including shares held by AB Sagax.

Largest shareholders 30 September 20201)

	No. of shares				Percentage of
	Class A shares Class B shares Class D shares Preference shares Share capital				Votes2)
David Mindus and companies	10,648,800	71,032,942	1,192,228	775	17.9%	25.5%
Staffan Salén and companies	4,264,928	34,970,660	95,600	–	8.5%	11.1%
Rutger Arnhult and companies	5,778,141	24,836,508	6,652,150	–	8.1%	12.7%
Fourth Swedish National Pension Fund	5,716	16,771,757	9,180,775	–	5.6%	3.7%
Third Swedish National Pension Fund	–	24,227,658	–	–	5.2%	3.5%
Länsförsäkringar Fonder	–	16,476,423	–	-	3.6%	2.3%
Avanza Pension	48,061	1,100,124	11,950,500	1,409,812	3.1%	2.1%
SEB Fonder	–	13,603,374	144,804	–	3.0%	2.0%
Swedbank Robur Fonder	500,000	9,491,255	–	–	2.2%	2.1%
Johan Thorell and companies	203,254	7,290,648	–	–	1.6%	1.3%
Erik Selin and companies	1,160,000	4,480,000	1,818,239	–	1.6%	2.6%
ODIN Fonder	–	6,595,031	–	–	1.4%	0.9%
Filip Engelbert and companies	241,000	2,119,784	4,200,000	–	1.4%	1.2%
Swedish Foundation for Strategic Research	–	–	5,576,376	–	1.2%	0.8%
Handelsbanken Fonder	–	4,604,505	–	–	1.0%	0.7%
ICA-Handlarnas Förbund	–	–	4,500,000	–	1.0%	0.6%
Second Swedish National Pension Fund	–	4,391,801	–	–	1.0%	0.6%
Vanguard	–	–	3,161,524	515,644	0.8%	0.5%
Patrik Brummer and companies	–	–	166,666	3,440,000	0.8%	0.5%
Lars Ingvarsson and companies	100,000	3,346,410	100,000	–	0.8%	0.6%
Total 20 largest shareholders		22,949,900 245,338,880	48,738,862	5,366,231	69.8%	75.4%
Other shareholders	3,883,384	45,107,366	77,061,138	11,417,797	29.8%	24.6%
Sub-total		26,833,284 290,446,246	125,800,000	16,784,028	99.6%	100.0%
Shares held by AB Sagax	–	2,000,000	–	–	0.4%	0.0%
Total		26,833,284 292,446,246	125,800,000	16,784,028	100.0%	100.0%
– of which, Board and employees	15,533,388	119,403,787	5,907,792	923	30.5%	40.0%

1) Ownership structure at 30 September 2020 is based on information from Euroclear Sweden and Modular Finance.

2) Voting rights for treasury shares held by AB Sagax have been excluded.

Voting rights and proportion of share capital
Class of share	No. of shareholders	Voting rights per share	No. of votes	Proportion of votes	Proportion of share capital
Class A shares	26,833,284	1.00	26,833,284	38%	6%
Class B shares	292,446,246	0.10	29,244,625	42%	63%
Class D shares	125,800,000	0.10	12,580,000	18%	27%
Preference shares	16,784,028	0.10	1,678,403	2%	4%
Total	461,863,558		70,336,311	100%	100%

Risks and uncertainties

To prepare the accounts based on generally accepted accounting policies, company management must make judgements and assumptions that affect asset and liability items, revenue and expense items recognised in the accounts and other information provided. The actual outcome may differ from these judgements. Sagax is also exposed to various risks that may be of significance to the company's future business, earnings and financial position.

PROPERTY-RELATED RISKS

The valuation of investment properties can be significantly affected by the judgments and assumptions made by company management. To reduce the risk of incorrect valuations, Sagax has engaged authorised external valuation companies to assess the market value of the majority of the properties as of 30 September 2020. When valuing properties, the constant existence of uncertainties regarding the assumptions made must be taken into account.

Sagax prioritises leasing to tenants with a high credit rating and long-term leases, despite these entailing slightly lower immediate earnings. The intention is to reduce the risk of rent losses and the risk of vacancies.

The geographic distribution of Sagax's property portfolio and the industries of its tenants are highly diversified. Sagax's lease structure of many small leases help reduce the risks of vacancies and rent losses.

FINANCIAL RISKS

Sagax's financial expenses comprise the single largest expense for the Group. To reduce Sagax's exposure to rising interest rates, the Group has a significant number of its interest expenses from fixed-rate loans. To limit interest-rate risk for loans at floating interest rates, interest-rate swaps and interest-rate caps are used. Sagax's funding primarily comprises equity and interest-bearing liabilities. Sagax endeavours to secure a long, average remaining term of interest-bearing liabilities in a bid to limit its refinancing risk, defined as the risk that refinancing existing debt cannot take place on reasonable terms. The company's long-term funding comprises listed bond loans and bank loans. The complete terms and conditions for the bond loans are available at www.sagax.se.

CURRENCY RISKS

The amounts in the consolidated balance sheet are partly exposed to exchange-rate fluctuations, particularly for the EUR. Net exposure on 30 September 2020, assets less liabilities in EUR, amounted to SEK 8,120 M (5,120). In accordance with IAS 21, the currency effects for foreign operations and hedge accounting are recognised in Other comprehensive income. Other currency effects are recognised in profit or loss.

INCREASED UNCERTAINTY DUE TO THE COVID-19 PANDEMIC

The COVID-19 pandemic has resulted in weaker macroeconomic conditions and increased uncertainty. The effect on the company will depend on how quickly and the level at which the economy will stabilise.

Sagax's exposure to particularly vulnerable sectors, such as the hotel, restaurant and tourism sectors, is low. Rental revenue is distributed between 1,801 leases. 81% of revenue was attributable to 1,790 leases, each with a rental value of less than 1% of the company's rental revenue.

Sagax's average rent losses have amounted to less than 0.1% of rental revenue for the past ten years. However, the impact of the negative macroeconomic trend on Sagax's tenants is unavoidable.

On 30 September 2020, Sagax's cash and cash equivalents and available credit facilities amounted to SEK 4,272 M, of which SEK 177 M in cash and cash equivalents. Sagax's cash flow from operating activities amounted to SEK 1,778 M in the first three quarters of 2020. Rolling 12 months cash flow from operating activities amounted to SEK 2,204 M.

Sensitivity analysis for property values

	–20%	–10%	0%	+10%	+20%
Value change, SEK M	–7,755	–3,877	–	7,755	3,877
Debt ratio, %	54	49	45	41	38

Sensitivity analysis for changes in the occupancy rate

	–10%	–5%	0%	+5%	+10%
Occupancy rate, % Interest coverage	86	90	95	100	N/A
ratio, %	542	572	603	633	N/A

Sensitivity analysis for property values

		Value change,
	Change	SEK M
Yield requirement	+/– 0.25% points	–979/+1,053
Cost of capital	+/– 0.25% points	–896/+921
Rental revenue	+/– 5%	+1,432/–1,427
Property expenses	+/– 5%	–234/+235

OTHER RISKS

In a decision of 7 December 2017 pertaining to the 2015 income year, the Tax Agency denied the group company Firethorne AB deductions for loss carryforwards of SEK 1,166 M. In a ruling on 7 February 2019, the Administrative Court upheld the Tax Agency's decision. Sagax is of the opinion that the Tax Agency's decisions are incorrect and

the companies concerned have appealed the decision. If the Tax Agency's decisions were to be upheld, Sagax estimates that the negative effect recognised in earnings for the Group would be SEK 156 M.

Sagax's other risks are described in the 2019 Annual Report, on pages 46-48.

SENSITIVITY ANALYSIS

Sagax's exposure to material risks in the company's operations is presented below.

Sensitivity analysis at 30 September 20201)

Amounts in SEK M	Change	Effect on profit from property management, annual basis	Effect on profit after tax, annual basis	Effect on equity
Economic occupancy rate	+/–1%	+/–30	+/–24	+/–24
Rental revenue	+/–1%	+/–30	+/–24	+/–24
Property expenses	+/–1%	+/–5	+/–4	+/–4
Interest expenses for liabilities in SEK including fixed-income derivatives	+/–1%	-21/+10	-17/+8	-17/+8
Interest expenses for liabilities in EUR including fixed-income derivatives	+/–1%	–9/–4	–7/–3	–7/–3
Interest expenses for liabilities in SEK excluding fixed-income derivatives	+/–1%	-34/+23	-27/+19	-27/+19
Interest expenses for liabilities in EUR excluding fixed-income derivatives	+/–1%	–16/–3	–13/–3	–13/–3
Change in SEK/EUR exchange rate2)	+/–10%	+/-139	+/-109	+/-812
Changed rent level for contract maturity in 2020	+/–10%	+/-9	+/-7	+/-7

1) Excluding shares in profit of joint ventures and associated companies.

2) Sagax's net exposure to the SEK/EUR exchange rate comprises assets and liabilities recognised in EUR, in addition to revenue and expenses in EUR.

Accounting policies

Sagax complies with the International Financial Reporting Standards (IFRS), as adopted by the EU, and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC). In addition, the consolidated financial statements have been prepared in accordance with Swedish law applying Recommendation RFR 1 Supplementary Accounting Rules for Corporate Groups of the Swedish Financial Reporting Board.

This interim report has been prepared in accordance with International Accounting Standards (IAS) 34. The Parent Company applies the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities.

The company's segment division was changed as of 1 January 2020. The Madrid & Barcelona segment, which was previously reported under Rest of Europe, is reported separately. Comparative figures have been adjusted to include this.

In all other respects, the accounting policies and calculation methods applied are essentially unchanged compared with those applied in the 2019 Annual Report.

Rounding-off differences may occur in this report.

The Board of Directors and CEO give their assurance that this interim report provides a fair overview of the company's and the Group's operations, financial position and earnings and describes significant risks and uncertainties faced by the company and the companies included in the Group.

Stockholm, 27 October 2020 AB SAGAX (publ) Corporate Registration Number 556520-0028

Staffan Salén Johan Cederlund Filip Engelbert Chairman of the Board Board member Board member

David Mindus Johan Thorell Ulrika Werdelin CEO and Board member Board member Board member

This constitutes information that AB Sagax (publ) is legally obliged to publish under the EU's Market Abuse Regulation. The information was released for publication on 27 October 2020 at 3:30 pm, CET.

Review report

TO THE BOARD OF DIRECTORS OF AB SAGAX, CORPORATE IDENTITY NUMBER 556520-0028

INTRODUCTION

We have reviewed the condensed interim report for AB Sagax as at 30 September 2020 and for the nine months period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

SCOPE OF REVIEW

We conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden.

The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

CONCLUSION

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

Stockholm, 27 October 2020 Ernst & Young AB

Oskar Wall Authorised Public Accountant

Financial calendar

Year-end Report 2020	8 February 2021
Interim Report January-March 2021	5 May 2021
Annual General Meeting 2020	5 May 2021
Interim Report January-June 2021	15 July 2021

SCHEDULE OF DIVIDEND PAYMENTS TO HOLDERS OF CLASS D SHARES AND PREFERENCE SHARES

December 2020

■ Final day for trading including dividend rights	28 December 2020
■ First day for trading excluding dividend rights	29 December 2020
■ Record date for dividend payment	30 December 2020
■ Expected payment date by Euroclear1)	7 January 2021
March 2021
■ Final day for trading including dividend rights	29 March 2021
■ First day for trading excluding dividend rights	30 March 2021
■ Record date for dividend payment	31 March 2021
■ Expected payment date by Euroclear1)	7 April 2021

1) Payment is made on the third banking day following the record date for Swedish issuers. Sagax is unable to affect this date.

FOR FURTHER INFORMATION, PLEASE CONTACT:

David Mindus, CEO +46 8 545 83 540, david.mindus@sagax.se

Agneta Segerhammar, CFO +46 8 545 83 540, agneta.segerhammar@sagax.se

Visit us at www.sagax.se.

Definitions

Sagax applies the European Securities and Market Authority's (ESMA) Guidelines on the Alternative Performance Measures. Alternative performance measures refer to financial measures of historical or future earnings trends, financial position, financial results or cash flows that are not defined or stated in the applicable rules for financial reporting, which in Sagax's case is IFRS. The basis of the alternative performance measures provided is that they are used by company management to assess the financial performance and thus are considered to provide valuable information to shareholders and other stakeholders.

The table below presents definitions of Sagax's key performance indicators. The calculation of alternative performance measures is described separately on the following pages.

Key performance indicators	Description	Reason for alternative performance measure
Return on equity	Profit for the period, recalculated to 12 months, as a percentage of average equity (opening and closing balances)/2 for the period.	The key performance indicator shows how share holders' capital yields interest during the period.
Return on total capital	Profit for the period, recalculated to 12 months, after net financial items after reversal of financial expenses as a percentage of average total assets for the period.	The key performance indicator shows the ability to generate earnings on the Group's assets, excluding financing costs.
Occupancy rate by area	Contracted area directly after the end of the period as a percentage of total lettable area directly after the end of the period.	The key performance indicator shows the occupancy situation.
Debt ratio	Interest-bearing liabilities at the end of the period as a percentage of total assets at the end of the period.	The key performance indicator shows financial risk.
Yield	Net operating income for the period (including property administration) with add-back of site leasehold fees, recalculated to 12 months, adjusted for the holding periods of the properties during the period as a percentage of the carrying amounts of the properties at the end of the period.	The key performance indicator shows the earnings generation of the operations before financial expenses and central administration costs are taken into account.
EBITDA	Net operating income less central administration costs plus dividends received from joint ventures and associated companies.	Sagax uses EBITDA so that the EBITDA/Net debt key performance indicator shows financial risk.
Equity per Class A and B share	Equity at the end of the period in relation to the number of Class A and B shares at the end of the period after taking into account equity attributable to Class D shares and preference shares.	The key performance indicator shows the owner's share of equity.
Equity per Class D share	Equity at the end of the period in relation to the number of common shares at the end of the period after taking into account equity attributable to preference shares. Equity is restricted to SEK 35.00 per Class D share.	The key performance indicator shows the owner's share of equity.
Equity per preference share	Equity per preference share corresponds to the preferential right of the pref erence share on liquidation of the company (SEK 30 per preference share) and the share's accumulated preferential right to dividends (SEK 2 per year).	The key performance indicator shows the own er's share of equity.
Economic occupancy rate	Contractual annual rent directly after the end of the period as a percentage of rental value directly after the end of the period.	The key performance indicator shows the economic degree of utilisation of the Group's properties.
EURIBOR	EURIBOR, or the Euro Interbank Offered Rate, is a daily reference rate based on the average of the interest rates at which euro interbank term deposits are being offered by one prime bank to another within the EMU zone.	Not an alternative performance measure.
Property	Pertains to properties held under title or site leasehold.	Not an alternative performance measure.
Run rate yield	Net operating income (including property administration) according to cur rent earnings capacity with add-back of site leasehold fees, as a percentage of the carrying amounts of the properties at the end of the period.	The key performance indicator shows the earnings generation of the operations before financial expenses and central administration costs are taken into account.
Run rate EBITDA	Net operating income according to current earnings capacity less central ad ministration costs plus dividends received from joint ventures and associated companies.	Sagax uses EBITDA so that the EBITDA/Net debt, run rate key performance indicator shows financial risk.
Profit from property management	Profit excluding changes in value and tax.	An indicator of the earnings generation in the operations, excluding changes in value.
Profit from property manage ment per Class A and B share after dilution	Profit from property management for the period reduced by dividends on Class D shares and preference shares, divided by the average number of Class A and B shares after dilution.	An indicator of the earnings generation of the assets, excluding the changes in value accruing to holders of Class A and B shares.
Rental value	The contractual annual rent applicable directly after the end of the period, with supplements for estimated market rents for vacant premises.	The key performance indicator shows the Group's income potential.
IFRS	International Financial Reporting Standards. International Financial Report ing Standards (IFRS), to be applied for consolidated financial statements by companies whose securities are listed on a regulated market.	Not an alternative performance measure.
Joint ventures	Partnership form whereby several owners have a shared controlling influence. Not an alternative performance measure.

Key performance indicators Description		Reason for alternative performance measure
Cash flow per Class A and B share	Profit before tax adjusted for items not included in cash flow less tax paid in relation to the average number of Class A and B shares. Dividends on Class D shares and preference shares for the period have also been deducted from profit before tax. Dividends received from joint ventures and associated com panies have been added to profit before tax.	The key performance indicator shows the amount of cash flow for the period that can be considered to be attributable to owners of Class A and Class B shares.
Net debt	Interest-bearing liabilities less interest-bearing assets, cash and cash equiva lents, and listed shares.	The key performance indicator shows the Group's indebtedness.
Net debt according to EMTN programme	Interest-bearing liabilities less listed securities and cash and cash equivalents.	The key performance indicator shows the Group's indebtedness.
Net debt according to EMTN programme/Total assets	Interest-bearing liabilities less listed securities and cash and cash equivalents in relation to total assets.	The key performance indicator shows financial risk.
Net debt/Total assets	Interest-bearing liabilities less interest-bearing assets, cash and cash equiva lents, and listed shares as a percentage of total assets.	The key performance indicator shows financial risk.
Preference equity	Equity per preference share multiplied by the number of preference shares outstanding.	The key performance indicator shows equity attributable to preference shareholders.
Earnings per Class A and B share	Profit in relation to the average number of Class A and B shares after taking into account the portion of profit for the period represented by dividends on Class D shares and preference shares.	IFRS performance measure.
Earnings per Class D share	Class D shares are entitled to five times the total dividend on Class A and B shares, although not more than SEK 2.00 per share annually.	The key performance indicator shows the shareholders' share of profit.
Earnings per preference share	Each preference share entails a preferential right to SEK 2.00 in annual divi dends.	The key performance indicator shows the preference shareholders' share of profit.
Fixed-income derivatives	Agreements on lending rates that may include the factors of time, inflation and/or maximum interest rates. Usually signed to hedge interest rates for inter est-bearing loans.	Not an alternative performance measure.
Interest-rate swaps	An agreement between two parties to swap interest rate conditions on loans in the same currency. The swap entails that one party exchanges its floating interest rate for a fixed rate, while the other party receives a fixed rate in exchange for a floating rate. The purpose of an interest-rate swap is to reduce interest-rate risk.	Not an alternative performance measure.
Interest coverage ratio	Profit from property management, excluding profit from joint ventures and associated companies but including dividends from joint ventures, after rever sal of financial expenses in relation to financial expenses.	The key performance indicator shows financial risk.
Interest coverage ratio, EMTN programme	Profit from property management after reversal of financial income and expenses as a percentage of net financial items.	The key performance indicator shows financial risk.
Equity/assets ratio	Equity in relation to total assets.	The key performance indicator shows financial risk.
STIBOR	STIBOR, or Stockholm Interbank Offered Rate, a daily reference rate based on the average of the interest rates at which banks offer to lend unsecured funds to other banks in SEK in the Swedish wholesale money market.	Not an alternative performance measure.
Net asset value	Recognised equity according to the balance sheet with reversal of reserves for fixed-income derivatives, deferred tax on temporary differences on property values and deferred tax on reserves for fixed-income derivatives.	An established indicator of the Group's net asset value that facilitates analyses and comparisons.
Secured liabilities/total assets	Liabilities secured with pledged assets as a percentage of total assets.	The key performance indicator shows financial risk for bond holders.
Total return on shares	Total of the change in the share price during the period and the dividend paid during the period as a percentage of the share price at the end of the preceding year.	The key performance indicator shows the total return that accrues to shareholders.
Total yield on property	Total of yield and property revaluations during the period as a percentage of the closing property value adjusted for revaluations for the period.	The key performance indicator shows earnings generation and value growth for the properties for a period.
Triple net lease	A type of lease whereby the tenant pays, in addition to the rent, all costs incurred on the property that would normally have been paid by the property owner. These include operating expenses, maintenance, property tax, site leasehold fees, insurance, property care-taking, etc.	Not an alternative performance measure.
Dilution	Dilution due to outstanding warrants has been calculated, in line with IAS 33, as the number of Class A and B shares to be issued to cover the difference between the strike price and market price for all potential Class A and B shares (warrants) outstanding, insofar as it is probable that they will be utilised.	Not an alternative performance measure.
Surplus ratio	Net operating income for the period as a percentage of rental revenue for the period.	The key performance indicator shows the profitability of the properties.

The calculation of alternative performance measures is presented in the tables below.

Amounts in SEK M unless otherwise stated	2020 Jan-Sep	2019 Jan-Sep	2019 Jan-Dec
Return on equity
Profit after tax	2,179	2,582	4,111
Addition for translation to
annual value	726	861	–
Average equity	20,399	16,654	17,337
Return on equity	14%	21%	24%
Return on total capital
Profit from property
management	1,795	1,483	2,001
Addition for translation to
annual value	598	494	–
Financial expenses	354	368	470
Addition for translation to annual value	118	123	–
Profit before financial expenses	2,865	2,468	2,471
Average total capital	43,466	36,170	36,922
Return on total capital	7%	7%	7%
Occupancy rate by area
Contracted area, 000s of
square metres	3,394	2,897	2,868
Total lettable area, 000s of
square metres	3,565	3,021	3,022
Occupancy rate by area	95%	96%	95%
Debt ratio
Interest-bearing liabilities	21,092	17,288	17,519
Total assets	46,778	38,649	40,154
Debt ratio	45%	45%	44%
Yield
Net operating income	1,786	1,597	2,133
Add-back of site leasehold fees	–19	–18	–24
Addition for translation to
annual value	589	532	–
Holding adjustment, acquisitions/divestments	125	23	10
Currency translation to
closing rate	–3	19	–19
Adjusted net operating income	2,478	2,153	2,100
Carrying amount of properties	38,390	31,825	32,625
Yield	6.5%	6.8%	6.4%
EBITDA rolling 12 months
Net operating income	2,322	2,084	2,133
Central administration	–130	–132	–122
Dividends from joint ventures
and associated companies	422	264	281
EBITDA	2,614	2,216	2,292

Amounts in SEK M unless otherwise stated	2020 Jan-Sep	2019 Jan-Sep	2019 Jan-Dec
Equity per Class A and B share
Equity	21,541	17,892	19,257
Equity attributable to prefer ence and Class D shares	–4,957	–4,302	–4,310
Corrected equity attributable to Class A and B shares	16,584	13,590	14,947
No. of shares	317,279,530	318,991,411	316,991,411
No. of shares after dilution	317,857,610	319,380,698	317,506,353
Equity per Class A and B share, SEK	52.27	42.61	46.86
Equity per Class A and B share after dilution, SEK	52.17	42.55	46.78
Economic occupancy rate
Contractual annual rent	3,014	2,650	2,600
Rental value	3,171	2,773	2,735
Economic occupancy rate	95%	96%	95%
Run rate yield
Net operating income according
to current earnings capacity	2,506	2,185	2,134
Add-back of site leasehold fees	–25	–24	–22
Adjusted net operating income	2,481	2,161	2,112
Carrying amount of properties	38,390	31,825	32,625
Run rate yield	6.5%	6.8%	6.5%
Run rate EBITDA
Net operating income according
to current earnings capacity	2,506	2,185	2,134
Central administration	–130	–132	–122
Dividends from joint ventures
and associated companies	422	264	281
Run rate EBITDA	2,798	2,317	2,292
Profit from property management
Profit after tax	2,179	2,582	4,111
Tax	505	401	730
Changes in value	–889	–1,500	–2,840
Profit from property manage
ment	1,795	1,483	2,001
Profit from property management per Class A and B share after dilution
Profit from property
management	1,795	1,483	2,001
Dividends attributable to
preference and Class D shares	–214	–187	–249
Adjusted profit from property management	1,581	1,296	1,752
Profit from property manage ment per Class A and B share

after dilution, SEK 4.98 4.08 5.51

Calculation of alternative performance measures is presented in the tables below, cont'd.

Amounts in SEK M unless otherwise stated	2020 Jan-Sep	2019 Jan-Sep	2019 Jan-Dec
Cash flow per Class A and B share
Profit before tax	2,524	2,874	4,627
Items not affecting cash flow	–718	–1,431	–2,758
Tax paid	–28	–72	–74
Dividends attributable to
preference and Class D shares	–214	–187	–249
Cash flow Cash flow per Class A and B	1,564	1,184	1,546
share after dilution, SEK	4.92	3.72	4.86
Net debt
Interest-bearing liabilities	21,092	17,288	17,519
Interest-bearing assets	–537	–9	–511
Cash and cash equivalents and
listed shares	–2,157	–1,928	–1,776
Net debt	18,398	15,351	15,232
Net debt according to EMTN programme
Interest-bearing liabilities	21,092	15,288	17,519
Cash and cash equivalents and
listed shares	–2,157	–1,928	–1,776
Net debt according to EMTN
programme	18,935	15,360	15,743
Net debt according to EMTN programme/Total assets
Net debt according to EMTN
programme	18,935	15,360	15,743
Total assets	46,760	38,649	40,154
Net debt according to EMTN
programme/Total assets	40%	40%	39%
Net debt/EBITDA
Net debt	18,398	15,351	15,232
EBITDA rolling 12 months	2,614	2,216	2,292
Net debt/EBITDA	4.1x	6.9x	6.6x
Net debt/run rate EBITDA
Net debt	18,398	15,351	15,232
EBITDA, run rate	2,804	2,317	2,292
Net debt/run rate EBITDA	6.6x	6.6x	6.6x
Net debt/Total assets
Net debt	18,398	15,351	15,232
Total assets	46,778	38,649	40,154
Net debt/Total assets	39%	40%	38%
Preference equity
Equity per preference share, SEK	33.00	31.50	32.00
Number of preference shares
outstanding	16,784,028	16,784,028	16,784,028
Preference equity	554	529	537

Amounts in SEK M unless otherwise stated	2020 Jan-Sep	2019 Jan-Sep	2019 Jan-Dec
Earnings per Class A and B share1)
Profit after tax	2,179	2,582	4,111
Dividends attributable to preference and Class D shares	–214	–187	–249
Adjusted profit after tax	1,965	2,395	3,862
Earnings per Class A and B share after dilution, SEK	6.19	7.53	12.13
Interest coverage ratio
Profit from property
management Reversal of profit from property	1,795	1,483	2,001
management joint ventures and
associated companies	–418	–314	–441
Dividend from joint ventures
and associated companies Financial expenses	405 354	264 368	281 470
Corrected profit from
property management
before financial expenses	2,136	1,801	2,311
Interest coverage ratio	6.0x	4.9x	4.9x
Interest coverage ratio, EMTN programme
Profit from property
management	1,795	1,483	2,001
Net financial items	324	368	470
Profit from property
management before net financial items	2,119	1,851	2,471
Interest coverage ratio	6.5x	5.0x	5.3x
Equity/assets ratio
Equity	21,541	17,892	19,257
Total assets	46,778	38,649	40,154
Equity/assets ratio	46%	46%	48%
Net asset value
Equity	21,541	17,892	19,257
Equity attributable to
preference and Class D shares Reversal of derivatives	–4,957 124	–4,302 159	–4,310 119
Reversal of deferred tax, tem porary differences	2,484	2,082	2,333
Reversals due to joint ventures	853	714	741
Net asset value	20,045	16,545	18,140
Net asset value per Class A and B
share after dilution, SEK	63.06	51.80	56.77
Secured liabilities/total assets
Secured liabilities	5,783	5,697	5,449
Total assets	46,778	38,649	40,154
Secured liabilities/Total assets	12%	15%	14%
Surplus ratio
Net operating income	2,322	2,084	2,133
Rental revenue	2,815	2,509	2,581
Surplus ratio	82%	83%	83%

1) IFRS performance measure.

AB Sagax is a property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industry segment. Sagax's property holdings at 30 September 2020 amounted to 3,565,000 square metres, distributed between 698 properties. AB Sagax (publ) is listed on Nasdaq Stockholm, Large Cap. More information is available at www.sagax.se.

AB Sagax (publ), Engelbrektsplan 1, SE-114 34 Stockholm, Sweden Corp. Reg. No. 556520–0028 Tel: +46 8 545 83 540, fax: +46 8 545 83 549 www.sagax.se