Wallenstam — Annual Report 2020

Feb 9, 2021

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Year-end Report

JANUARY 1–DECEMBER 31, 2020

January 1–December 31, 2020

• » The net asset value per share increased by SEK 7.00 during the period and amounted to SEK 98.30 (91.30).

• » Income from property management amounted to SEK 1,131 million (1,108), after giving Covid-19 discounts of about SEK -21 million net.

• » Rental income increased by 5 percent and amounted to SEK 2,131 million (2,026).

• » Investment in construction of properties amounted to SEK 4,011 million (3,322).

• » On closing day, 2,321 apartments were under construction.

• » Changes in value of investment properties amounted to SEK 1,339 million (2,600), of which 853 million (792) came from value growth in new construction.

• » Profi t before tax amounted to SEK 2,393 million (3,464) and profi t after tax amounted to SEK 1,908 million (2,737), equivalent to SEK 5.9 per share (8.5).

• » The Board of Directors will propose a dividend of SEK 1.20 per share (0.50), spread between two payments of SEK 0.60 each per share.

October 1–December 31, 2020

• » Income from property management amounted to SEK 271 million (257).

• » Rental income increased by almost 8 percent and amounted to SEK 555 million (515).

• » Changes in value of investment properties amounted to SEK 722 million (1,590), of which 236 million (287) came from value growth in new construction.

• » Profi t after tax amounted to SEK 934 million (1,699), equivalent to SEK 2.9 per share (5.3).

Comparisons in brackets refer to the corresponding period of the previous year for performance measures, and the latest year-end for balance sheet measures, unless otherwise stated.

HANS WALLENSTAM, CEO

Wallenstam has a successful business model

“For Wallenstam, I can once again confi rm that we have a business model that I feel very confi dent about, where we as a company create value even in such uncertain times. During the year, we continued to provide apartments and let commercial fl oor space, primarily offi ces, and both of these markets have been stable despite the turbulence in society. We also advanced a bit further on our journey towards the goal of achieving an increase in net asset value of SEK 40 per share through 2023. So far in our fi ve-year business plan, we have generated just over SEK 19, and I am very satisfi ed with this!”

“We have also had the opportunity to further strengthen our project portfolio for future new production, and during 2020 we purchased land for future new production with construction starts planned both in the near future and with a longer planning horizon. The project portfolio now includes around 17,000 future possible apartments.”

Wallenstam in brief

Number of investment properties: 226 Value of investment properties: SEK 58 billion Market capitalization: SEK 43 billion Occupancy rate, lettable area: 98% Lettable area: 1.2 million sq m Number of apartments under construction: 2,321 Number of wind turbines: 66

SEK 853 million

GENERATED SURPLUS VALUE IN OUR NEW PRODUCTION DURING 2020

Read more about Wallenstam on page 23.

Important events fourth quarter

During the fourth quarter, a record number of apartments, 702 units, were completed and occupied. 249 of the completed apartments are in the Gothenburg region, while 453 are in the Stockholm region. 50 of the apartments are in the development property New York at Gärdet in Stockholm, which was vacated on December 15, 2020 in accordance with the agreement signed with the buyer in June.

Construction started of 84 apartments in Bandhagen Centrum in Stockholm during the quarter.

Wallenstam has acquired land for new construction in central Gothenburg. In addition, an agreement has been signed on the acquisition of land for future new production

in Framtidens Stora Sköndal in Stockholm.

In the middle of December, an agreement was signed with SBB on the sale of two public use properties in central Gothenburg.

Wallenstam has also acquired further shares, for SEK 58 million, in Convendum through a new issue. Wallenstam now owns a total of 34.6 percent of the capital and 31.6 percent of the votes in Convendum.

In late December, Wallenstam signed a letter of intent with the City of Stockholm on acquiring the building, which is used for the evacuation of Östermalmshallen.

Goal 2023 – Increase in net asset value of SEK 40 per share

In the business plan 2019–2023, Wallenstam’s goal is to deliver an increase in net asset value of SEK 40 per share. The goal is measured from October 1, 2018 when the net asset value per share was SEK 79.20. On December 31, 2020, the net asset value per share was SEK 98.30, which represents an increase of SEK 7.00 per share during 2020 and SEK 19.10 per share in total to date during the business plan.

Net asset value

Net asset value describes the Group’s total generated value and includes equity and deferred tax liability and amounted to SEK 31,746 million (29,501) on closing day. Deferred tax liability refers mainly to diff erences between carrying amounts and fi scal values of the Group’s properties. A net deferred tax liability of SEK 5,811 million (5,322) is recognized in the balance sheet, which consists of a deferred tax asset of SEK 377 million (387) and a deferred tax liability of SEK 6,188 million (5,709).

INCREASE IN NET ASSET VALUE, SEK/SHARE

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40
30
19.10
20
12.10
10
3.10
0
Q4 2018 2019 2020 2021 2022 2023
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2 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Comments by the CEO

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The year we have now left behind us was a very unusual one. 2020 began in the same fantastic way as most years, with new opportunities, a lot of energy and a strong belief in the future. Quite soon, many of us realized that 2020 would be anything but normal, and in March when Covid-19 was classifi ed as a pandemic, life and conditions changed for us, the business community and for society in a dramatic, almost surreal way.

Successful business model even in a crisis

For Wallenstam, I can once again confi rm that we have a business model that I feel very confi dent about, where we as a company create value even in such uncertain times. During the year, we continued to provide apartments and let commercial fl oor space, primarily offi ces, and both of these markets have been stable despite the turbulence in society. However, businesses that depend on visitors such as restaurants and shops have faced a very tough time. We have done what we could to help them maintain their businesses for when society opens up again. We have given many of our tenants discounts both within the framework of the government rent support, and also helped, for example by purchasing a total of 15,000 lunches from our restaurant tenants, which we delivered to the needy in society.

Income from property management and net asset value are increasing

Despite the pandemic and its eff ects, we have managed to achieve higher income from property management than the previous year. This, I want to suggest, is a result of all the work that my fantastic co-workers have put in, where everyone with great commitment contributed and really battled during these very special circumstances.

We also advanced a bit further on our journey towards the goal of achieving an increase in net asset value of SEK 40 per share through 2023. So far in our fi ve-year business plan, we have generated just over SEK 19, and I am very satisfi ed with this!

Value growth from new construction is increasing

Our business concept involving investments in new construction is generating positive changes in value on an ever-greater scale. In 2020, two thirds of the total change in value came from new production. It is primarily changes in net operating income that have generated the increase in value in the existing holdings.

We have also had the opportunity to further strengthen our project portfolio for future new production, and during 2020 we purchased land for future new production with construc-

tion starts planned both in the near future and with a longer planning horizon. The project portfolio now includes around 17,000 future possible apartments and in total we have around SEK 7 billion in ongoing and future projects and land, which do not generate any cash fl ow today, but will do so in the future. Overall, we expect to invest about SEK 15 billion in construction of new apartments during the business plan.

We have a stable foundation with an equity/assets ratio of 42 percent and a loan-to-value ratio of 46 percent. During the year and especially during the fi rst six months, there was some turbulence in the fi nancial market, which meant that our fi nancing costs increased temporarily during this period. We have chosen to refrain from rating the company and mainly prefer bank fi nancing, which feels particularly reassuring in times like these.

Record electricity production from our wind turbines

Sustainability work is important for Wallenstam, and we want to contribute to a better society in diff erent ways. The fact that we create new apartments every year is perhaps our biggest sustainability initiative as a company. But we are also focusing on the climate issue, among other ways, through the four climate targets that we launched during the year. Since 2013 we have also been self-suffi cient in renewable energy through wind power and we have now set a new record in our own electricity production. Our 66 wind turbines produced a total of 417 GWh during 2020! This is equivalent to the annual consumption of just over 20,000 houses or about 170,000 apartments.

Gold in the Swedish Design Award

During 2020, we carried out a change of our logo, which was launched in connection with our 75th anniversary in November 2019. Stationery, envelopes and printed material have been redone, new signs have been put up on façades and in entrances. A very nice surprise was that our new logo and visual identity won the Swedish Design Award recently in January!

Of course, it feels really great that our logo featuring the ant, which has now gained a modern look, is being recognized in this way! The ant as a symbol has been a natural part of the brand since the 1950s and symbolizes cooperation, endurance, strength and the art of building apartment blocks in carefully selected locations – qualities that are highly valued at Wallenstam.

Looking ahead to continued successful development

A big thank you to all employees, the Board, tenants, suppliers and shareholders who have accompanied us all the way here! Now we are looking ahead, and can detect light at the end of the tunnel. Hopefully, society and all of us can soon return to a more normal life, where we can once again meet colleagues, relatives and friends, shop, travel, socialize and eat in restaurants.

I see a fantastic future for Wallenstam. Our business concept has been shown to work well during the pandemic, and works even better in more normal times. We have a strong base, and we will continue to refi ne our offi ces, develop our ground fl oors and build even more apartments. Our results during 2020 have made it even clearer that our business model and strategy for the future are totally right for a continued successful development of the company.

Hans Wallenstam, CEO

3 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Wallenstam and Covid-19

Property structure, new construction and fi nancing Wallenstam entered the crisis early in the year with a strong position both in terms of fi nancial stability and well-located property holdings in Gothenburg, Stockholm and Uppsala. Approximately half of the holdings consist of residential and half of commercial.

Secured liquidity is particularly important during uncertain times. Our choice to retain a larger proportion of loans in banks, even though the capital market has been cheaper, has provided us with a good platform to stand on when it gets shaky in the capital market. In order to provide security and ensure that we can continue our operations with investments in new construction as planned, we chose early on, already in the fi rst and second quarters, to secure our fi nancing for the rest of the year. Our bond maturities during 2020 were matched with already agreed loans from the European Investment Bank. For the part of the commercial paper which is not refi nanced, we have the possibility of using our backup facility with the bank. Apart from these measures, Hans Wallenstam has waived his salary starting from April and for the rest of year, and the directors’ fees for the members of the Board of Directors are unchanged for 2020. In addition, the Annual General Meeting decided in April not to issue any dividend and wait until the consequences of the pandemic could be better assessed. In September, an Extraordinary General Meeting was called, where a resolution was passed on a dividend of SEK 0.50 per share for the 2019 fi nancial year. Wallenstam has major investment plans for new production of apartments and wants to be prepared for the business opportunities that may arise in the near future. In combination with these opportunities, it is positive to also be able to give the shareholders a balanced dividend in view of the fact that the pandemic is still underway.

that have arisen as a consequence of Covid-19. In the fi rst place, we have provided support through temporary rent discounts but also by purchasing goods and services aimed at helping the tenants to maintain their regular business. Through these support purchases, we have also had the opportunity to support, for example ambulance and hospital staff with food and drinks as well as various aid organizations in our society such as the City Mission and the Rescue Mission, for instance with food deliveries at a time when they are probably needed most. In total, we provided 15,000 lunches and 4 tons of drinks, energy bars and various small snacks in this way. In those cases where we made purchases to support our tenants, and where what we purchased was donated, we equate this for accounting purposes with a temporary discount. During the second half of 2020, we mainly off ered deferrals, and also provided support to some more tenants. In total, the year’s rent discounts and other support related to Covid-19 gave a net eff ect of about SEK -21 million.

Employees

Wallenstam is following the Public Health Agency of Sweden’s recommendations and holds regular pulse meetings with experts within the healthcare system in order to prevent, handle and limit the risk of spread of infection.

Wallenstam is fl exible regarding the possibilities for employees to work from home, depending on the employee’s needs and wishes in relation to both the work situation and commuting possibilities. In principle, all business trips have been replaced by digital forms of meeting.

The digital, virtual viewings prior to letting of our new construction projects that we introduced during the second quarter will continue in the future.

As regards new construction of rental apartments, we have worked to secure material and labor for our projects in progress so that they can be completed on schedule. We hold regular pulse meetings with our contractors in order to handle any disruptions at an early stage so that we do not experience any production stoppages, which has proved to work well to date. However, the municipalities’ processing times, for example for handling building permits, have become longer, which for us has meant that we were unable to start our planned projects at the rate we had wanted. No projects have been cancelled, but some starts have been brought forward as a consequence of this.

Rental income and management

We have evenly distributed property holdings between residential and commercial. Our commercial premises are mainly located in central Gothenburg where there is a continued fl ow of people, even though Covid-19 had a major impact in the short term. During the second half of 2020, we were able to complete a number of new lets, primarily apartments and offi ce space. As a landlord, we always try to work close to our tenants, which also applies in particularly uncertain times and in relation to the challenges

4 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Consolidated income statement

		Jan-Dec Jan-Dec Oct-Dec	Oct-Dec
SEK million	Note	2020 2019 2020	2019
Rental income		2,131 2,026 555	515
Operating expenses		-519 -497 -147	-145
Net operating income, properties		1,613 1,529 408	370
Management costs and administrative expenses		-243 -228 -75	-64
Financial income		4 4 1	0
Financial expenses		-243 -198 -63	-49
Income from property management		1,131 1,108 271	257
Realized changes in value, f nancial instruments		4 - -	-
Participation in prof ts/losses of associated companies		-1 -5 5	-1
Revenue, development property sales		537 324 431	10
Expenses, development property sales		-371 -232 -321	-7
Other income	1	168 298 28	54
Other expenses	1	-195 -299 -61	-44
Financial expenses, other	1	-21 -25 -5	-8
Prof t before changes in value and impairment losses		1,253 1,169 347	261
Changes in value, investment properties		1,339 2,600 722	1,590
New construction		853 792 236	287
Other		486 1,808 486	1,303
Unrealized changes in value, f nancial instruments		-162 -264 77	332
Unrealized changes in value,synthetic options*		-36 -40 7	-5
Prof t before tax		2,393 3,464 1,153	2,178
Current tax		0 0 0	0
Deferred tax		-485 -727 -219	-479
Prof t for the period, after tax		1,908 2,737 934	1,699
OTHER COMPREHENSIVE INCOME
Items that may be transferred to prof t/loss for the period		23 0 21	-2
Items that may not be transferred to prof t/loss for the period		0 60 0	1
Tax attributable to other comprehensive income		-3 -1 -2	0
Comprehensive income		1,927 2,796 953	1,698
DISTRIBUTION OF PROFIT FOR THE PERIOD AFTER TAX
Prof t for the period attributable to parent company shareholders		1,908 2,737 934	1,699
Average number of outstanding shares, thousands		323,000 323,000 323,000	323,000
Prof t after tax per share (SEK), dilution does not occur		5.9 8.5 2.9	5.3

*Includes unrealized expenses connected with the execution of the scheme.

Note 1 – Income from natural energy management operations

As from 2019, Wallenstam has changed the presentation in the income statement due to the fact that Natural energy no longer constitutes a separate segment. All comparative periods have been restated. The previous line items “Income from natural energy management operations” have been replaced by the line items “Other income”, “Other expenses”, and “Financial expenses, other”. Profi t before changes in value and impairment charges were unchanged compared to previous periods.

SEK million Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020	Oct-Dec 2019
Electricity revenue 142 292 26 Electricity expenses -89 -199 -36 Depreciation -76 -76 -19 Management costs and administrative expenses -11 -20 -3	52 -19 -19 -4
Net operating income energy -34 -3 -32 Financial expenses electricity -21 -25 -5	10 -8
Previously Income from natural energy management operations -55 -27 -38	2

5 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Comments on the consolidated income statement

OCTOBER 1–DECEMBER 31

Rental income during the fourth quarter amounted to SEK 555 million (515), an increase of almost 8 percent. New construction generated SEK 25 million in increased revenue. In comparable holdings, revenue increased by SEK 6 million compared to the previous year. In addition, SEK 7 million was added in respect of rent support. This support has been recognized in line with receiving payment and on closing day, no further receivables remained.

Operating expenses increased as a result of additional recently produced properties and higher charges. Net operating income increased by 10 percent to SEK 408 million (370), which corresponds to a surplus ratio of 73.5 percent (71.8).

Net fi nancial items investment properties amounted to SEK -61 million (-49) and were aff ected negatively mainly by higher interest-bearing liabilities.

Income from property management amounted to SEK 271 million (257). Changes in value of properties were positive and amounted to SEK 722 million (1,590), of which SEK 236 million (287) came from our new construction operations.

Swap interest rates increased during the fourth quarter, therefore the defi cit values decreased and the development in the value of interest rate derivatives was thus positive, SEK 77 million (330).

Profi t after tax for the fourth quarter of 2020 amounted to SEK 934 million (1,699), which corresponds to earnings per share of SEK 2.9 (5.3).

ties are situated in central locations in Gothenburg, with offi ces as our single largest type of commercial premises. The surrender rate, which refl ects how large a proportion of the cancellable leases are extended, amounted to 87 percent (87). Our occupancy rate for commercial properties in terms of lettable area amounted to 94 percent on closing day compared to 96 percent at the previous year-end.

Operating expenses & net operating income

Operating expenses for the period amounted to SEK 519 million (497) and increased as a result of additional recently produced properties and increased costs for property operation due to higher charges. Seasonal eff ects at Wallenstam consist mainly of variable operating expenses. These are usually highest during quarters one and four when expenses for heating and property maintenance are generally higher. Climate-related expenses were almost SEK 8 million lower during 2020 than in 2019. Net operating income increased by SEK 83 million or 5.4 percent and amounted to SEK 1,613 million (1,529). Added effi cient new production accounted for most of this growth as the existing holdings were aff ected by temporary discounts. The surplus ratio was 75.7 percent (75.5).

Management costs and administrative expenses

Management costs and administrative expenses totaled SEK 259 million (254) and are distributed among property management, SEK 243 million (228), energy management, SEK 11 million (20) and property transactions, SEK 5 million (6).

JANUARY 1–DECEMBER 31

Rental income

Rental income for the period increased by SEK 105 million, 5 percent, and amounted to SEK 2,131 million (2,026). Rental income growth during the period came mainly from occupations in our recently produced residential apartment buildings. Rental income in the existing holdings also increased, but was aff ected by temporary Covid-19 discounts to commercial customers of about SEK 21 million net.

Wallenstam’s revenue is evenly distributed between residential properties and commercial premises. Our residential property holdings are fully let. Our commercial proper-

Financial income & expenses

Financial income amounted to SEK 4 million (4) and fi nancial expenses totaled SEK 263 million (223), and are distributed among property operations and other, which mainly consists of natural energy. Capitalized interest amounted to SEK 112 million (83).

The average debt for the year was SEK 3.3 billion higher than the previous year, due to continued investments in new construction. The average interest rate on closing day, which refl ects future interest to pay in relation to our loans, was 1.21 percent (1.22). During the year, the average interest rate amounted to 1.29 percent (1.20).

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RENTAL INCOME AND INCOME
FROM PROPERTY MANAGEMENT
Rental income, Income from property
SEK million management, SEK million
2,100 1,200
1,800 1,100
1,500 1,000
1,200 900
900 800
600 700
300 600
16 17 18 19 20
Rental income Income from property management
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NET OPERATING INCOME AND SURPLUS RATIO
Net operating income, SEK million Surplus ratio, %
1,600 80.0
1,200 77.5
800 75.0
400 72.5
0 70.0
16 17 18 19 20
Net operating income Surplus ratio
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6 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Realized changes in value, fi nancial instruments

Realized changes in value of fi nancial instruments during the year consisted of the divestment of the Group’s holding in Eolus Vind AB, which was sold for SEK 36 million during the second quarter of the year. The holding, which was important for the Group’s wind power investments, also generated annual dividends and a realized profi t of SEK 27 million, of which SEK 23 million has been recognized as an unrealized change in value in previous reports.

Income from sales of development properties

A profi t or loss from sales of development properties is recognized when the apartment or property is taken into possession by the purchaser. Apart from the cost, selling and marketing expenses are also included, which are expensed as they arise.

Net profi t from sales during the year amounted to SEK 167 million (92) and included sales of the development property New York, apartments in the Vasagatan 33 project, individual co-op apartments as well as costs.

Other income & Other expenses

The Group’s electricity production as well as additional other income and expenses are recognized as other income and other expenses.

Electricity revenue and electricity expenses for the period were signifi cantly lower than the previous year. This was mainly explained by the divestment of the electricity trading business area. Production of electricity increased, by 13 percent in total compared to the previous year, and amounted to 417 GWh (367). The price of electricity and renewable energy certifi cates decreased, however, which meant that sales from electricity production were lower compared to the previous year.

In the fourth quarter, other expenses were aff ected by SEK 24 million in respect of currency eff ects, which in previous years were recognized in Other comprehensive income and are now transferred to the income statement. Corresponding positive items are found in Other comprehensive income as this is only a presentation issue with no impact on consolidated comprehensive income.

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DISTRIBUTION, RENTAL VALUE
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Cinema, 1%
Industry/Warehouse, 3% Other, 1%
Garage, 3%
Restaurant, 4% Residential, 50%
Education/Care, 5%
Retail, 8%
Office, 25%
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Changes in value, investment properties

Changes in value of investment properties during the period totaled SEK 1,339 million (2,600), of which 853 million (792) came from gradual value growth in our new construction.

Unrealized changes in value, fi nancial instruments

The unrealized change in value of fi nancial instruments in the income statement includes changes in value of interest rate and electricity derivatives and holdings of listed shares.

The value of interest rate derivatives developed negatively during the year, SEK -161 million (-269). On closing day, the 10-year swap rate amounted to 0.37 percent, compared to 0.68 percent at the start of the year.

Unrealized changes in value, synthetic options

The Annual General Meeting on April 24, 2018 resolved to introduce a synthetic options scheme directed to all personnel. The term of the scheme runs until May 31, 2024 and the estimated cost in the event of a maximum outcome is SEK 330 million. At the start of the scheme in May 2018, personnel were invited to acquire the allocated number of options at a market price. The value of the synthetic options, which varies with Wallenstam’s share price, has increased during 2020. The unrealized development in value including costs connected to the scheme, amounted to SEK 36 million (40) during the year. To date, the total recognized obligation for the scheme amounts to SEK 89 million (53).

Taxes

The tax expense for the period, which consists in its entirety of deferred tax, amounted to SEK 485 million (727) net. Tax was calculated at 21.4 percent on current taxable income while deferred tax liabilities and receivables were calculated at the lower tax rate of 20.6 percent that applies starting from 2021. The tax expense for the year was positively impacted by SEK 19 million (28) as a result of remeasurement to the corporate tax rate of 20.6 percent.

THE TEN LARGEST COMMERCIAL TENANTS BY FLOOR SPACE

Tenant	Floor	space, sq m
City of Gothenburg Essity Hygiene and Health AB Filmstaden AB		19,846 15,639 14,508
Academedia AB		11,427
The National Archives of Sweden		11,000
Västra Götaland County Council		10,128
Ica Fastigheter AB		6,906
Sandryds Handels AB		6,730
Folkuniversitetet Frisk Service i Göteborg AB		6,308 6,212
Total		108,704

Our total commercial fl oor space is approximately 510,000 sq m.

7 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Consolidated balance sheet, condensed

SEK million	Dec 31, 2020	Dec 31, 2019
ASSETS
NON-CURRENT ASSETS
Investment properties	57,933	52,354
Wind turbines	1,033	1,109
Participations in associated companies	220	133
Financial assets	529	549
Financial derivative instruments	10	6
Other non-current assets	81	71
Total non-current assets	59,806	54,222
CURRENT ASSETS
Development properties	126	175
Financial derivative instruments	-	2
Other current assets	130	161
Cashand cashequivalents	518	129
Total current assets	774	467
Total assets	60,581	54,689
EQUITY AND LIABILITIES
EQUITY
Equity	25,557	23,792
Equity attributable to non-controlling interests	0	2
Total equity	25,558	23,794
NON-CURRENT LIABILITIES
Deferred tax liability	5,811	5,322
Other provisions	142	188
Interest-bearing liabilities	6,406	3,883
Financial derivative instruments	522	356
Lease liability	492	420
Other non-current liabilities	21	36
Total non-current liabilities	13,394	10,205
CURRENT LIABILITIES
Interest-bearing liabilities	20,885	19,998
Financial derivative instruments	3	2
Lease liability	1	1
Other current liabilities	740	689
Total current liabilities	21,629	20,690
Total equity and liabilities	60,581	54,689

8 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Comments on the consolidated balance sheet

OUR PROPERTIES

Development during the period

During the year, we invested a total of SEK 4,471 million (3,833), of which SEK 4,347 million (3,781) in investment properties and SEK 124 million (52) in development properties. New construction projects in progress involve 2,321 apartments. The total value of rental apartment and development projects in progress amounted to SEK 6.8 billion (5.8) on closing day.

The right of use value for land granted with site leasehold rights has been estimated at SEK 476 million (402) and is recognized as a part of the properties’ value.

Investment properties

Changes in value aff ected the value of investment properties positively by SEK 1,339 million (2,600) in total, of which SEK 853 (792) came from value growth in properties under construction.

The average yield requirements were unchanged from the previous report.

On closing day, the average yield requirement amounted to about 4.5 percent for the commercial holdings and to about 3.1 percent for residential properties in operation. The value of investment properties amounted to SEK 57,933 million (52,354) at the end of the period.

Development properties

Development properties include the co-op apartment project Bandhagen Centrum in Stockholm and three remaining apartments in the Vasagatan 33 project in Gothenburg. The book value of Development properties amounted to SEK 126 million (175) at the end of the period.

Our markets

The cities in which we do business are characterized by growth and heavy demand for housing. Only a minor proportion of our rental apartments become available for rent due to relocation, and demand for fi nished, newly built rental apartments is high.

We build mainly rental apartments, but also cooperative apartments, for example when the land available for rental apartment construction is limited. Our fl exible business model, where co-op apartment sales do not start until the project is approaching completion, makes it possible to

convert a co-op apartment project into a rental apartment project if demand for co-op apartments is uncertain.

We see that demand for central offi ce space in Gothenburg is still stable. Retail and restaurant space has been impacted to a greater extent by the ongoing pandemic, which has accelerated the shift, for example, for commerce.

Valuation

Investment properties

Wallenstam measures all of its investment properties internally at fair value. We enjoy good market and property intelligence through active monitoring, which provides us with a fi rm basis for performing internal valuations of our property holdings. However, we must emphasize that a property’s fair value only becomes a reality when the property is sold, for which reason a valuation is always an estimation.

In its assessments of property values, Wallenstam has used diff erent yield requirements. The yield requirements refl ect market conditions and diff er based on where the property is located and what type of property it is, e.g. housing or offi ces, etc.

A valuation is calculated based on a property’s net operating income including site leasehold rents, set in relation to the yield requirement for each property.

As our properties are valued separately, no consideration is given to the portfolio premium that may exist in the property market.

New constructions of rental properties are measured at fair value, which is determined as cost plus the estimated surplus on the completion date in relation to the degree of completion of the construction. This is in turn based on expenses incurred.

Land rights and building rights for zoned land are measured at market value.

Development properties

Development properties are properties that we intend to construct in order to divest on completion, for example co-op apartment properties. Development properties are recognized at the lower of cost (investments incurred) and the estimated net realizable value. The profi t/loss is recognized when the property or apartment is completed and handed over to the buyer.

TOTAL VALUE, PROJECTS IN PROGRESS

CHANGES IN PROPERTY HOLDINGS, INVESTMENT PROPERTIES

	Book value,SEK million			Book value, SEK million
Land for future new production	939	Property holdings, January 1, 2020		52,354
Projects in progress, rental apartments	5,720	+	Acquisitions	460
Developmentproperties	126	+	Construction	3,887
Total projects in progress	6,784	-	Sales	-
		+	Right-of-use asset site leasehold right	73
		+	Changes in value, properties	1,339
		-	Reclassif cation development properties	-180
		Property holdings, December 31, 2020		57,933

9 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

NEW CONSTRUCTION IN PROGRESS, DECEMBER 31, 2020

Project No. of apts. Occupation Sq m*	Of which completed apts. to date
STOCKHOLM Parkstråket 1, Haninge 154 Q3 2020 13,500 Söra Kvarter, Österåker 305 Q3 2020 15,500 Allén, Tyresö 221 Q4 2020 13,500 Parkstråket 2, Haninge 131 Q4 2020 7,500 Umami Park, phase 2, Sundbyberg 141 Q4 2020 9,500 Umami Park, phase 3, Sundbyberg 133 2021 10,000 Bandhagen Centrum (co-op)i 84 2022 4,500 UPPSALA Flanören, Rosendal 161 2021 7,500 GOTHENBURG Elisedal 336 Q4 2020 24,000 Godhems Backe 138 Q4 2020 6,500 Kv. Rosengången, Mölnlycke Fabriker, Härryda 123 Q4 2020 7,000 Kallebäcks Terrasser Kv. 9 165 2021 9,500 Kallebäcks Terrasser Kv. 11 270 2021 16,000 Kv. Kvarnen, Mölnlycke Fabriker, Härryda 185 2021 10,500 Kallebäcks Terrasser Kv. 8 266 2022 15,000 Kallebäcks Terrasser Kv. 10 85* 2022 8,000 Kv. Väven, Mölnlycke Fabriker, Härryda 116 2022 7,000 Commercial Kallebäcks Terrasser 2021 20,000 Mölnlycke Fabriker 2021 20,000ii	54 167 100 46 106 82 77 61
Total apartments in projects 3,014 225,000 of which in progress on December 31 2,321

• Refers to estimated start of occupation. Occupation will occur gradually, often over several quarters.

• ** Number of sq m includes garage, and is rounded off to the nearest 500.

• *** Of which 17 are co-living apartments with a total of 85 rooms for rent.

**** Of which 12 are co-living apartments with a total of 121 rooms for rent.

i Started during quarter 4, 2020.

i i Relates to two sports centers and a multistorey carpark.

CHANGE, CONSTRUCTION IN PROGRESS

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No. of apts.
New construction in progress,
October 1, 2020 2,939
- Completed -702
Parkstråket 1, Haninge (18)
Söra kvarter, Österåker (58 )
Allén, Tyresö (100)
Parkstråket 2, Haninge (46)
Umami Park, phase 1B, Sundbyberg (75)
Umami Park, phase 2, Sundbyberg (106)
New York, Gärdet (development property) (50)
Elisedal, Gothenburg (82)
Godhems Backe, Gothenburg (77)
Kv. Rosengången, Mölnlycke Fabriker, Härryda (61)
Sten Stures kröningar, Regenten, Gothenburg (29)
+ Started 84
New construction in progress,
December 31, 2020 2,321
----- End of picture text -----

APARTMENTS, CONSTRUCTION IN PROGRESS

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----- Start of picture text -----

No. of apts.
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2018 2019 2020
Total
Stockholm business area
Gothenburg business area
----- End of picture text -----

10 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

COMPLETED NEW CONSTRUCTION, 2020*

		Year of
		construc-	Residen-		Retail/	Industry/
		tion/	tial	Of ce	Restaurant/	warehousing	Education/	Garage	Other	Total	No. of
Name of property	Address	conversion	sq m	sq m	Cinema sq m	sq m	Care sq m	sq m	sq m	sq m	apts.
STOCKHOLM
Järnet 12	Bollmora Gårdsväg	2020	2,376	-	163	-	-	-	-	2,539	54
(Project: Terrassen Elva)	20, 22
Hacksta 1:72	Norrgårdshöjden 1-8	2020	5,633	-	86	-	-	1,195	-	6,914	128
(Project: Norrgårdshusen)
Framkallningen 3	Trollesundsvägen 56	2020	6,766	-	-	11	-	1,868	-	8,645	110
(Project: Trollesunds gårdar)	A-F
Passfotot 2	Trollesundsvägen 58	2020	3,005	-	-	-	-	651	-	3,656	48
(Project: Trollesunds gårdar)	B-C
Freden större 13	Östra Madenvägen 7A,	2019	8,125	176	662	72	-	3,040	-	12,075	147
(Project: Umami Park, phase 1A)	7D / Gesällvägen 7, 7C, 9 / Odlingsgatan
	4 B, C, D
Freden Större 12	Fredens Torg 4 A - E	2020	2,856	-	325	-	-	-	-	3,181	75
(Project: Umami Park,
Phase 1B)
New York 9	Sandhamnsgatan 1A /	2020	3,185		263	-	-	66	-	3,514	50
(Project: New York, Development property)	Värtavägen 68-70
GOTHENBURG
Heden 24:14	Skånegatan 21-23/	2020	1,845	-	-	-	-	-	-	1,845	29
(Project: Sten Stures Kröningar, Regenten**)	Sten Sturegatan 38-44
Total			33,791	176	1,499	83	-	6,820	-	42,369	641

* Refers to fully completed and fully occupied properties

** 1,845 sq m refers to an extension of an already existing property designation

PROPERTY ACQUISITIONS, 2020

		Year of	Residen-		Retail/	Industry/
		construction/	tial	Of ce	Restaurant/	warehousing	Education/	Garage	Other	Total	No. of
Name of property	Address	conversion	sq m	sq m	Cinema sq m	sq m	Care sq m	sq m	sq m	sq m	apts.
STOCKHOLM
Murförbandet 1* (Bandhagen)
Täby Tibble 10:8-9*
Täby Bergkristallen 1*
Österåker Hagby 1:98*
UPPSALA
Kvarngärdet 71:1*
GOTHENBURG
Majorna 721:75	Fiskhamnen 27	1973	-	-	-	1,207	-	-	-	1,207	0
Majorna 721:78, 721:81	Fiskhamnen 23-25	1974	-	-	-	2,416	-	-	-	2,416	0
Lorensberg 21:3*
Total			-	-	-	3,623	-	-	-	3,623	0
* Land

PROPERTY SALES, 2020

		Year of	Residen-		Retail/	Industry/
		construction/	tial	Of ce	Restaurant/	warehousing	Education/	Garage	Other	Total	No. of
Name of property	Address	conversion	sq m	sq m	Cinema sq m	sq m	Care sq m	sq m	sq m	sq m	apts.
STOCKHOLM
New York 9	Sandhamnsgatan 1A /	2020	3,185	-	263	-	-	66	-	3,514	50
(Development property)	Värtavägen 68-70
Total			3,185	-	263	-	-	66	-	3,514	50

11 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

PROPERTY HOLDING STRUCTURE AS OF DECEMBER 31, 2020

Lettable area,sqm	Residential sq m Of ce sq m Retail/ Restaurant/ Cinema sq m Industry/ warehou- sing sq m Education/ Care sq m Garage sq m Other sq m Total Distribu- tion, place No. of apts.
Stockholm Uppsala Gothenburg	315,399 30,870 11,649 9,117 5,957 52,452 15,239 440,683 36% 5,246 27,605 2,138 1,039 101 - 5,732 - 36,615 3% 542 257,364 206,952 93,719 84,681 48,391 59,443 7,346 757,896 61% 4,158
Total Distribution by type of premises	600,368 239,960 106,407 93,899 54,348 117,627 22,585 1,235,194 100% 9,946 49% 19% 9% 8% 4% 10% 1% 100%

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ACQUISITION, CONSTRUCTION AND SALES
OF INVESTMENT PROPERTIES PROPERTY TYPE, FLOOR SPACE
SEK million Residential properties, 58% Public use properties, 4%
5,000
4,000
3,000
2,000
1,000
0
-1,000 Commercial properties,38%
-2,000
16 17 18 19 20
Shows the distribution of our
Acquisition Divested property holdings per category.
New constructions Reclassification
and conversions development properties
----- End of picture text -----

WIND POWER

On closing day, Wallenstam had 66 wind turbines in operation divided among 20 wind farms. The installed output amounted to 143 MW (143).

Wind turbines are recognized at cost less depreciation and impairment losses. Depreciation for the year amounted to SEK 76 million (76). Estimated value in use of land leases, based on minimum rents, amounted on closing day to SEK 16 million (17) and is recognized as part of the wind power value. On closing day, the consolidated book value of wind turbines amounted to SEK 1,033 million (1,109). The renewable energy certifi cate inventory and guarantees of origin amounted to SEK 1 million (14) on closing day.

FINANCING

Equity

Shareholders’ equity, including non-controlling interests amounted to SEK 25,558 million (23,794), equivalent to SEK 79 per share (74). The equity/assets ratio was 42 percent (44).

Interest-bearing liabilities

On closing day, outstanding bond loans amounted to SEK 2,800 million (3,950), the outstanding volume of commercial paper, with a framework amount of SEK 4 billion, amounted to SEK 2,470 million (3,993), loans from the European Investment Bank totaled SEK 2,500 million (-) and total interest-bearing liabilities amounted to SEK 27,785 million (24,302), of which lease liability amounted

12 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

to SEK 493 million (421). Of this liability, SEK 5.35 billion (1.8) consists of green loans, and SEK 1.65 billion (1.0) of green bonds.

All the bond loans of SEK 2,800 million (3,950) are contained within the framework of our MTN program (Medium Term Notes), which has a total framework amount of SEK 5 billion. The terms and conditions of the green bonds are the same as for the other bonds with the addition that the issue proceeds can only be allocated to projects and assets that qualify according to Wallenstam’s green framework. The bond loans are listed on Nasdaq Stockholm.

The average remaining fi xed interest term is 41 months compared to 38 months during the year-earlier period. Of the loan portfolio, 50 percent (41) of the loans have fi xed interest terms longer than one year. On closing day, the average interest rate on our loans was 1.21 percent (1.22).

Financing of the loan portfolio is mainly secured by mortgage deeds for properties. The bond loans, commercial paper and the loan from the EIB are unsecured. The commercial paper program has underlying credit commitments for the outstanding volume of commercial paper at each date. Covenants are issued for the loan from the EIB and for the credit commitment for the commercial paper program.

Lease liability

The recognized lease liability corresponds to the rights of use for land leases and site leasehold rights. The liability on closing day totaled SEK 493 million (421).

Derivative instruments

Wallenstam’s fi nancial derivative instruments consist of interest rate and electricity derivatives. On closing day, Wallenstam had a net indebtedness in respect of derivative instruments of SEK 515 million, compared to a net indebtedness of SEK 349 million on December 31, 2019. Of this, interest rate derivatives accounted for SEK -512 million (-350), electricity derivatives for SEK 0 million (2) and currency derivatives for SEK -3 million (-1).

FIXED TERMS, AVERAGE INTEREST RATES, DECEMBER 31, 2020

Interest maturity	Amount,	Average
structure	SEK million	interest rate, %	Proportion, %
0–1 year	13,518	1.51	49.5
1–2 years	300	0.70	1.1
2–3 years 3–4 years 4–5 years 5–6 years 6–7 years 7–8 years	401 1,000 2,423 1,700 1,700 1,700	1.09 0.64 1.06 0.90 1.05 1.06	1.5 3.7 8.9 6.2 6.2 6.2
8–9 years	1,900	0.87	7.0
> 9 years	2,650	0.73	9.7
Total	27,291	1.21	100.0

During 2020, the Group entered into new interest rate derivative contracts totaling SEK 2.45 billion. The total volume of outstanding interest rate derivatives, where Wallenstam pays fi xed interest, amounts to SEK 12.15 billion compared to SEK 9.7 billion in the previous annual accounts.

Interest rate derivatives are used to obtain a desired interest maturity profi le in a fl exible, cost-effi cient way. They are measured through discounting future cash fl ows at present value based on observable market interest rates and are classifi ed at level 2. The arising defi cit or surplus value for interest rate derivatives, which refl ects how the Group’s hedged interest rates relate to the market rate of interest on closing day, is recognized in the balance sheet and in unrealized changes in value, fi nancial instruments in the income statement.

Currency derivatives are used to a limited extent in order to hedge purchasing from foreign countries. Hedge accounting is applied and therefore translation eff ects are recognized in other comprehensive income.

Available liquid assets

Available liquid assets, including available bank overdraft facilities, amounted to SEK 1,318 million (928). Approved overdraft facilities amounted to SEK 800 million (800), of which no portion was used on closing day. At the end of 2019, the EIB (European Investment Bank) approved a credit facility of SEK 2,500 million for new construction of energy-effi cient rental apartments. During the year, SEK 2,500 million (-) was drawn down from the facility. During the third quarter, we opted to reduce the backup facility for commercial paper from SEK 4,000 million to SEK 3,000 million, since we have a lower volume of outstanding commercial paper. The Group’s approved and unutilized credit facilities totaled SEK 3,000 million (6,500), excluding the overdraft facility.

On December 31, 2020, accessible liquidity totaled SEK 4,318 million (7,428), of which SEK 2,470 million (3,993) represents a credit commitment for issued outstanding commercial paper.

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ACCESSIBLE LIQUIDITY
SEK million
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Q4 Q1 Q2 Q3 Q4
2019 2020
----- End of picture text -----

13 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Consolidated statement of changes in equity

	— Equity attributable to parent company shareholders —	— Equity attributable to parent company shareholders —	— Equity attributable to parent company shareholders —	— Equity attributable to parent company shareholders —
				Prof t	Non-
		Other capital	Other	brought	controlling
SEK million	Share capital	contributed	reserves	forward	interests	Total equity
Opening equity, Jan 1, 2019	165	359	4	21,081	2	21,611
Prof t for the period	-	-	-	2,737	-	2,737
Changes in value, f nancial assets at fair value	-	-	60	-	-	60
Changes in value, owner-occupied properties	-	-	1	-	-	1
Translation dif erence	-	-	1	-	-	1
Changes in value, currency derivatives			-1	-	-	-1
Tax attributable to other comprehensive income	-	-	-1	-	-	-1
TRANSACTIONS WITH SHAREHOLDERS
Dividends	-	-	-	-614	-	-614
Closing equity, Dec 31, 2019	165	359	64	23,204	2	23,794
Opening equity, Jan 1, 2020 Prof t for the period Translation dif erence Changes in value, currency derivatives Tax attributable to other comprehensive income TRANSACTIONS WITH SHAREHOLDERS Dividend non-controlling interests Dividends	165 - - - - -	359 - - - - -	64 - 24 -2 -3 - -	23,204 1,908 - - - - -162	2 - - - - -2 -	23,794 1,908 24 -2 -3 -2 -162
Closing equity, Dec 31, 2020	165	359	83	24,950	0	25,558

Consolidated statement of cash fl ows

Consolidated statement of cash f ows
SEK million Jan-Dec 2020 Jan-Dec 2019	Oct-Dec 2020 Oct-Dec 2019
Prof t before changes in value and impairment losses* 1,253 1,169 Adjustment for items not included or arising in cash f ow -134 10 Taxes paid 0 0	347 261 -88 11 0 0
Cash f ow before change in working capital 1,119 1,179 Change in working capital 96 174	259 272 -93 -15
Cash f ow from operating activities 1,215 1,353 INVESTMENTS/DIVESTMENTS Investment in properties and individual co-op apartments -4,484 -3,812 Investments in intangible assets & property, plant and equipment, and wind turbines -22 -45 Investments in f nancial assets - -10 Investments in associated companies -88 -25 Divestment of properties, development properties & property, plant and equipment 520 628	166 257 -1,124 -998 -7 -13 - -10 -58 - 440 77
Cash f ow from investing activities -4,074 -3,264 FINANCING Raised interest-bearing liabilities 23,402 18,050 Amortization of interest-bearing liabilities -19,994 -15,294 Net change in overdraft facilities - -119 Net change promissory notes 4 -59 Advance payment futures contracts - -8 Divestment of f nancial assets - - Dividend paid to minority owner -2 - Dividends paid -162 -614	-749 -944 12,923 6,450 -12,150 -5,780 - - 0 -2 - - - - - - -162 -307
Cash f ow from f nancing activities 3,248 1,956 Changes to liquid assets 389 46 Cash and cash equivalents at beginning of the period 129 83 Cash f ow for the period 389 46 Cash and cash equivalents at the end of the period 518 129 Unutilized overdraft facilities at the end of the period 800 800 Blocked bank balances - -1 Available liquid assets 1,318 928	612 362 29 -325 489 454 29 -325 518 129 800 800 - -1 1,318 928

• Includes interest paid and received, including gross fl ows from interest rate swap contracts, of SEK -365 million (-296) and SEK 3 million (3) respectively, of which SEK 112 million (83) was capitalized as a non-current asset.

14 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Segments report

Segments report
2020 SEK million Gothenburg Jan-Dec Stockholm Jan-Dec Other Jan-Dec Elimination Jan-Dec	Total Jan-Dec
INCOME STATEMENT Rental income 1,426 732 - -27 Operating expenses -326 -193 - -
	2,131
	-519
Net operating income 1,100 539 - -27 Management costs and administrative expenses -141 -100 -29 27 Net fnancial items -244 -140 145 -	1,613
	-243
	-239
Income from property management 716 299 116 - Unapportioned items Realized changes in value, f nancial instruments Participation in prof ts/losses of associated companies Sales result, development properties Other income Other expenses Financial expenses, other	1,131
	4
	-1
	167
	168
	-195
	-21
Prof t before changes in value and impairment losses Changes in value	1,253
	1,140
Prof t before tax BALANCE SHEET Investment properties 35,291 22,642 - - Wind turbines - - 1,033 - Development properties 13 113 - - Unapportioned assets - - - -	2,393
	57,933
	1,033
	126
	1,489
Total assets Equity - - - - Interest-bearing liabilities and lease liabilities 14,946 10,756 2,083 - Unapportioned liabilities - - - -	60,581
	25,558
	27,785
	7,238
Total equity and liabilities Property investments in progress including land 3,650 3,134 - - 2019 SEK million Gothenburg Jan-Dec Stockholm Jan-Dec Other Jan-Dec Elimination Jan-Dec	60,581
	6,784
	Total Jan-Dec
INCOME STATEMENT Rental income 1,402 648 - -24 Net operating income, properties 1,078 475 - -24 Income from property management 706 257 144 - Unapportioned items Participation in prof ts/losses of associated companies Sales result, development properties Other income Other expenses Financial expenses, other	2,026 1,529 1,108 -5 92 298 -299 -25
Prof t before changes in value and impairment losses Changes in value	1,169 2,295
Prof t before tax BALANCE SHEET Investment properties 32,342 20,011 - - Wind turbines - - 1,109 - Development properties 57 118 - - Unapportioned assets - - - -	3,464 52,354 1,109 175 1,051
Total assets Equity - - - - Interest-bearing liabilities 13,366 9,278 1,658 - Unapportioned liabilities - - - -	54,689 23,794 24,302 6,593
Total equity and liabilities Property investments in progress including land 1,934 3,835 - -	54,689 5,769

15 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

The Wallenstam share

The Wallenstam B share is listed on Nasdaq Stockholm, Large Cap. During 2020, the Wallenstam share price increased by 15.4 percent. The property index OMX Stockholm Real Estate PI fell by 5.7 percent and the OMX Stockholm PI index rose by 12.9 percent during the same period.

At the end of the period, the Wallenstam share price was SEK 130.60 compared to SEK 113.20 at year-end 2019. The market capitalization was SEK 43,098 million (37,356) based on the total number of registered A and B shares. Equity per share amounted to SEK 79 (74). The highest price paid during the year was SEK 138.90 and the lowest was SEK 84.30.

Wallenstam has a mandate from the Annual General Meeting to repurchase so many shares, such that the company’s holding at any one time does not exceed 10 percent of all shares in the company. No shares were repurchased during 2020. On closing day, the company held a total of 7,000,000 treasury shares, repurchased at an average price of SEK 76.16 per share.

Dividend

In October 2020, SEK 162 million was disbursed to the shareholders. In 2019, a total of SEK 614 million was disbursed.

The Board of Directors will propose a dividend of SEK 1.20 per share (0.50) to the Annual General Meeting for the 2020 fi nancial year, spread over two payment dates of SEK 0.60 each per share.

The proposed dividend is equivalent to a yield of 0.9 percent (0.4), based on the share price at the end of the period. The share’s total yield in 2020 calculated on the distributed dividend, was 15.8 percent (40.0).

Turnover

During 2020, the Wallenstam share had an average daily turnover on Nasdaq Stockholm of about SEK 30.4 million (21.6).

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SHARE PRICE TREND Q1 2016–Q4 2020
SEK
160
140
120
100
80
60
2016 2017 2018 2019 2020
Wallenstam B share
OMX Stockholm Real Estate PI OMX Stockholm PI
----- End of picture text -----

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AVERAGE SHARE LIQUIDITY PER DAY
SEK million
35
30
25
20
15
10
5
0
16 17 18 19 20
Refers to trading on Nasdaq Stockholm.
----- End of picture text -----

SHAREHOLDINGS, DECEMBER 31, 2020

SHAREHOLDINGS, DECEMBER 31, 2020
	A shares	B shares	Equity, %	Votes, %
Hans Wallenstam and family, and company	34,500,000	49,110,000	25.34	62.21
AMF - Insurance and funds		32,317,332	9.79	5.10
Anna-Carin B Wallenstam and Anders Berntsson		19,300,000	5.85	3.05
Agneta Wallenstam		18,204,000	5.52	2.87
Henric and Ulrika Wiman		12,037,752	3.65	1.90
Monica and Jonas Brandström		7,072,826	2.14	1.12
Bengt Norman		6,500,000	1.97	1.03
David Wallenstam		5,000,000	1.52	0.79
Elin Wallenstam Sjögren		4,327,240	1.31	0.68
Lisa Liljeqvist		4,279,240	1.30	0.68
Other owners		130,351,610	39.50	20.57
Total number of shares	34,500,000	288,500,000
Repurchased shares*		7,000,000	2.11
Registered shares	34,500,000	295,500,000
Total registered shares	330,000,000		100.00	100.00
Total outstanding shares	323,000,000

The proportion of institutional ownership amounted to around 17 percent of equity and around 9 percent of votes. Foreign ownership amounted to around 10 percent of equity and around 5 percent of the votes. Source: Euroclear Sweden AB *Repurchased own shares lack voting rights.

16 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Parent Company

The parent company’s primary operations are the performance of Group-wide services including fi nancial services as well as trading in renewable energy certifi cates and guarantees of origin. In addition, the parent company owns a small number of properties.

Total revenue during the year amounted to SEK 458 million (456), of which rental income amounted to SEK 122 million (124).

The profi t was impacted by changes in value of fi nancial derivative instruments, SEK -164 million (-323), mainly due to falling swap interest rate levels. Profi t after tax amounted to SEK 471 million (234).

Investments in intangible assets and property, plant and equipment during the year amounted to SEK 29 million (22). Parent company external loans amounted to SEK 13,827 million (13,421) on closing day.

INCOME STATEMENT, PARENT COMPANY

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----- Start of picture text -----

||||
|---|---|---|
|Jan-Dec|Jan-Dec|
|SEK million|2020|2019|
|Management revenue|290|273|
|Rental income|122|124|
|Revenue, sales of renewable energy certifi cates|45|57|
|Other revenue|1|2|
|Total revenue|458|456|
|Management costs and administrative expenses|-367|-359|
|Operating expenses|-36|-36|
|Depreciation and impairment losses properties|-31|-30|
|Expenses, sales of renewable energy certifi cates|-21|-52|
|Change in value, synthetic options scheme|-36|-40|
|Other expenses|-2|-2|
|Total expenses|-493|-519|
|Operating income|-35|-63|
|Profi t/loss from participations in Group companies|473|33|
|Interest income and similar profi t/loss items|533|455|
|Interest expenses and similar profi t/loss items|-308|-223|
|Changes in value, derivative instruments|-164|-323|
|Net fi nancial items|534|-59|
|Profi t/loss after fi nancial items|500|-122|
|Appropriations|-63|373|
|Tax on net profi t/loss|34|-17|
|Profi t/loss after tax|471|234|
|OTHER COMPREHENSIVE INCOME|
|Changes in value, currency derivatives|-2|-1|
|Tax attributable to other comprehensive income|0|0|
|Comprehensive income|470|233|

----- End of picture text -----

BALANCE SHEET, PARENT COMPANY

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||||
|---|---|---|
|Dec 31,|Dec 31,|
|SEK million|2020|2019|
|Assets|
|Properties|1,319|1,340|
|Participations in Group companies|5,932|5,879|
|Financial derivative instruments|10|8|
|Receivables from Group companies|23,632|21,894|
|Other assets|239|206|
|Cash and cash equivalents|518|122|
|Total assets|31,649|29,449|
|Equity and liabilities|
|Equity|10,778|10,470|
|Provisions|122|84|
|Interest-bearing external liabilities|13,827|13,421|
|Liabilities to Group companies|6,272|4,994|
|Financial derivative instruments|524|357|
|Other liabilities|126|123|
|Total equity and liabilities|31,649|29,449|

----- End of picture text -----

17 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Proposed dividend, repurchase and assignment of own shares etc.

The Board of Directors will propose that the Annual General Meeting approve the following:

• » A dividend of SEK 1.20 per share (0.50), spread over two payment dates of SEK 0.60 each per share. The record day for the fi rst payment is proposed to be April 29, 2021 and October 30, 2021 for the second payment. The proposed dividend is equivalent to a yield of 0.9 percent (0.4), based on the share price at the end of the period. According to the company’s dividend policy, the amount available for distribution must not exceed profi t before changes in value and impairment charges less participations in the profi ts of associated companies and after standard tax. When determining the size of the dividend, consideration should be given to the Group’s investment requirements, need to strengthen its balance sheet and its position in general, and the ability of the Group to develop further in the future while maintaining its fi nancial strength and freedom of action.

• » Authorization for the Board until the next AGM, on one or more occasions, to take decisions regarding the purchase of so many B shares on Nasdaq Stockholm, such that the company’s holding at any one time does not exceed 10 percent of all shares in the company.

The work of the Board

Wallenstam’s Board, due to the passing of Christer Villard during fall 2019, was composed of four members until April 28, 2020. From the Annual General Meeting on April 28, 2020, the Board has been composed of fi ve members. In 2020, the Board held 13 recorded meetings in addition to day-to-day contacts.

The Board’s most important task is to make decisions on strategic matters. In general, the Board handles issues of material importance for the Group. The Board work during the year was dominated by the ongoing Covid-19 pandemic and focused in particular on strategy discussions, questions relating to market conditions and fi nancing, sustainability and compliance issues and investments.

The Board conducted an evaluation of its work during 2020. The evaluation was conducted under the leadership of the Chairman of the Board in the form of individual interviews with each of the Board members, and an account of this, followed by an open discussion within the Board. The evaluation found that the Board work is functioning very well.

• » Authorization for the Board to take decisions regarding the assignment of the company’s own shares.

18 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Other information

OPPORTUNITIES & RISKS

Wallenstam’s opportunities and risks, and how we manage them, are presented in the 2019 Annual Report on pages 34–39. No signifi cant changes have taken place since then.

SENSITIVITY ANALYSIS

As of December 31, 2020, the estimated market value of the properties amounted to around SEK 58 billion. A change in value of plus/minus 10 percent is thus equivalent to about plus/minus SEK 5.8 billion. A general change of plus/minus 0.25 percentage points in property yield requirements is equivalent to about SEK -3.3 billion or SEK +3.8 billion, while a general change of revenue of 5 percent is equivalent to about plus/minus 3.0 billion.

A change in the interest rate of plus/minus 50 points is equivalent to about plus/minus SEK 68 million.

A change in the electricity price of 1 öre per kWh is equivalent to about plus/minus SEK 39 million during valuation of wind turbines, while a change in the renewable energy certifi cate price of 1 öre per kWh is equivalent to about SEK +19 million or SEK -3 million during valuation of wind turbines.

agreed property value amounted to approximately SEK 420 million and the property was taken into possession in December 2020. As part of the agreement, Wallenstam will be responsible for the technical management for a period of two years from the date of taking possession.

Wallenstam’s involvement in environmental and social responsibility issues is described in more detail on pages 27–33 of the 2019 Annual Report. As part of its social responsibility work, the Wallenstam Group not only contributes fi nancially to a number of organizations but also gives its time in the form of e.g. board work. As a result of such board positions, related party status arises in the case of the Rescue Mission in Gothenburg, Barn i Nöd (Swedish International Help for Children) and Bethlehem Church. During the year, the Rescue Mission in Gothenburg received contributions and discounts equivalent to SEK 3.4 million, Barn i Nöd received contributions of SEK 1.8 million and Bethlehem Church received contributions of SEK 0.2 million. The Rescue Mission in Gothenburg and Barn i Nöd rent premises from Wallenstam equivalent to annual rental income of about SEK 4.8 million and SEK 0.1 million, respectively.

All transactions take place on market-related terms.

TRANSACTIONS WITH RELATED PARTIES

Wallenstam’s related parties consist chiefl y of Group companies. Board members, company management and their families and the companies they control are also related parties. Transactions with related parties mainly consist of administrative fees and the renting of premises between Group companies. Individuals related to Board members and Group Management rent apartments. Insurance services are purchased from companies where members of Wallenstam’s Board of Directors are Board members, for a total equivalent to about SEK 5 million in net expenditure for the year. The CEO is a joint owner (50 percent) of Aranea Holding AB. Aranea Holding AB owns 48 percent of Renew Group Sweden AB , a fl oorball equipment manufacturer. Aranea is a tenant of Wallenstam with an annual rental value equivalent to SEK 0.6 million.

A member of Wallenstam’s Board, through his own consulting company, sold consulting hours to Wallenstam for SEK 1.2 million.

In June, an agreement was signed on the divestment of Wallenstam’s new construction project New York in Stockholm. The buyer is a company where a member of Wallenstam’s Board of Directors is a board member. The

ROUNDING OFF

As a result of rounding off , fi gures presented in this report do not, in some cases, sum up exactly to the total and percentages may diff er in order for them to correspond to the actual numerical data.

ACCOUNTING PRINCIPLES

This report was prepared in accordance with IAS 34. The accounting principles are unchanged compared to the 2019 Annual Report. The Parent Company’s accounting principles comply with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board’s recommendation RFR 2.

New and amended standards and principles that entered into force on January 1, 2020 or subsequently are not expected to have any material impact on the Wallenstam Group’s fi nancial statements.

EVENTS AFTER THE END OF THE REPORTING PERIOD

No events of material importance for the company’s position have occurred after the end of the reporting period.

19 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Key ratios – multi-year summary

Accumulated during period	Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018
PROPERTY-RELATED KEY RATIOS
Net operating income, properties, SEK million	1,613 1,205 781 386 1,529 1,159 756 364 1,429
Surplus ratio, property management, %	75.7 76.4 75.1 73.8 75.5 76.7 75.6 73.2 74.8
Income from property management, SEK million	1,131 860 549 275 1,108 851 547 260 1,011
Changes in value, new construction, SEK million	853 616 429 254 792 505 307 132 598
Value of investment properties, SEK million	57,933 56,226 55,127 53,619 52,354 49,793 48,757 47,289 45,811
Area, sq m (thousand)	1,235 1,231 1,230 1,210 1,201 1,199 1,188 1,181 1,186
Occupancy rate – lettable area, %	98 97 98 98 98 98 99 99 99
Development properties, net, SEK million	126 291 281 170 175 154 155 156 317
FINANCIAL KEY RATIOS
Prof t after tax, SEK million	1,908 974 631 309 2,737 1,038 575 340 2,998
Return on equity, %	7.8 11.2 12.0 11.9 12.3 10.4 10.6 14.6 14.8
Return on total capital, %	4.6 6.6 7.0 7.0 7.2 6.1 6.2 9.5 9.7
Interest coverage ratio, times	5.8 5.7 5.9 6.1 6.3 7.0 7.4 1.5 1.3
Loan-to-value ratio, %	46 46 46 45 45 45 46 45 45
Average interest rate on closing day, %	1.21 1.27 1.40 1.31 1.22 1.23 1.24 1.25 1.06
Average f xed-interest term, months	41 38 39 38 38 40 41 44 39
Equity/assets ratio, %	42 42 42 43 44 43 43 44 45
Equity, SEK million	25,558 24,766 24,423 24,104 23,794 22,402 21,899 21,951 21,611
Net asset value, SEK million	31,746 30,715 30,295 29,897 29,501 27,666 27,047 27,011 26,574
Market capitalization, SEK million	43,098 45,144 35,607 37,290 37,356 36,828 32,406 30,971 27,126
Repurchase of shares, SEK million	- - - - - - - - 229
Per share data
Prof t after tax, SEK	5.9 3.0 2.0 1.0 8.5 3.2 1.8 1.1 9.3
P/E ratio, times	22.1 16.5 12.5 13.5 13.4 15.9 14.0 10.0 8.9
Cash f ow from operating activities, SEK	3.8 3.2 2.2 1.1 4.2 3.4 2.1 1.1 1.1
Equity, SEK	79 77 76 75 74 69 68 68 67
Net asset value per share, SEK	98.30 95.10 93.80 92.60 91.30 85.70 83.70 83.60 82.30
Share price, SEK	130.60 136.80 107.90 113.00 113.20 111.60 98.20 93.85 82.20
Shares outstanding, average, thousands	323,000 323,000 323,000 323,000 323,000 323,000 323,000 323,000 323,854
Shares outstanding at end of period, thousands	323,000 323,000 323,000 323,000 323,000 323,000 323,000 323,000 323,000

Quarterly overview

	Oct-Dec 2020 Jul-Sep 2020 Apr-Jun 2020 Jan-Mar 2020 Oct-Dec 2019 Jul-Sep 2019 Apr-Jun 2019 Jan-Mar 2019 Oct-Dec 2018
Rental income, SEK million	555 536 518 523 515 510 503 497 488
Net operating income, properties, SEK million	408 424 395 386 370 403 392 364 351
Surplus ratio, property management, %	73.5 79.1 76.3 73.8 71.8 79.0 77.9 73.2 71.9
Income from property management, SEK million	271 310 275 275 257 304 287 260 253
Return on equity, %	7.8 11.2 12.0 11.9 12.3 10.4 10.6 14.6 14.8
Earnings per share after tax, SEK	2.9 1.1 1.0 1.0 5.3 1.4 0.7 1.1 3.8
Cash f ow per share from operating activities, SEK	0.5 1.0 1.1 1.1 0.8 1.3 1.0 1.1 0.9
Equity per share, SEK	79 77 76 75 74 69 68 68 67
Net asset value per share, SEK	98.30 95.10 93.80 92.60 91.30 85.70 83.70 83.60 82.30
Share price, SEK	130.60 136.80 107.90 113.00 113.20 111.60 98.20 93.85 82.20

Earnings-based key ratios are calculated on the average number of outstanding shares; yield fi gures are calculated on rolling twelve-month profi t or loss.

Starting from Q1 2020, EPRA NAV is not reported, as Wallenstam is not a member of EPRA.

20 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Report signatures

The Board and CEO certify that the year-end report provides a fair view of the Parent Company’s and Group’s operations, fi nancial position and results and describes the signifi cant risks and uncertainties to which the Parent Company and Group Companies are exposed.

Gothenburg, February 9, 2021

Lars-Åke Bokenberger Karin Mattsson Chairman of the Board Vice Chairman of the Board Anders Berntsson Agneta Wallenstam Board member Board member Mikael Söderlund Hans Wallenstam Board member CEO

21 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Defi nitions

Share yield The proposed dividend as a percentage of the share price at the end of the period.

Earnings per share after tax

Profi t after tax in relation to the average number of outstanding shares.

Return on equity**

Share total yield

The share price trend during the year including distributed dividend as a percentage of the share price at the start of the period.

Profi t after tax in relation to average equity, calculated on a rolling 12-month basis.

Return on total capital**

Alternative performance measures (APM)

Profi t before tax with reversal of interest expenses and early redeemed derivatives for the latest rolling 12-month period in relation to average total capital employed.

Wallenstam presents a number of fi nancial measures that are outside IFRS defi nitions (Alternative performance measures, according to ESMA’s guidelines) with the aim of enabling eff ective evaluation of the company’s fi nancial position and performance for investors and for the company’s management. This means that these measures are not always comparable with measures used by other companies and shall therefore be considered as a complement to measures defi ned according to IFRS. Wallenstam applies these alternative key ratios consistently over time. The defi nitions describe how Wallenstam’s key ratios are calculated. The key ratios are alternative performance measures according to ESMA guidelines unless otherwise stated.

Interest coverage ratio

Profi t or loss before changes in value and impairment charges with reversal of net fi nancial items and early redeemed interest rate derivatives for the latest rolling 12-month period in relation to net fi nancial items and early redeemed interest rate derivatives for the latest rolling 12-month period.

Public use property

Property, which is predominantly used by tax funded activities and is specifi - cally adapted for community services.

The number of shares

The number of registered shares at any given time. Number of shares outstanding: t he number of registered shares less repurAverage interest chased own shares at any given time. Average number of shares: weighted average number of shares outstanding at any given time. Equity/assets ratio Residential property Property, which predominantly consists of residential space. Net asset value Loan-to-value ratio Equity with the addition of deferred tax liabilities. Interest-bearing liabilities and lease liability less cash and cash equivalents in relation to the Group’s investments in properties, development properties and Net asset value per share wind power at the end of the period.

Interest expenses for the period including profi t or loss on swap agreements realized during the period in relation to interest-bearing liabilities. Equity/assets ratio Equity in relation to total capital employed at the end of the period.

The Group’s net asset value in relation to the number of outstanding shares at the end of the period.

Market capitalization Share price multiplied by the number of registered shares on the closing day. Net operating income Rental income less operating and maintenance expenses, and property tax.

Occupancy rate – lettable area

Let fl oor space in relation to total fl oor space.

Changes in value, investment properties

Gains or losses from sales of investment properties during the period less expenses and the assessed market value of the properties at the previous reporting period and gains or losses from the change in the assessed market value of investment properties compared to the previous reporting period. Changes in value, New construction: The increase in value is gradually recognized during the construction of the property until the fi rst year the property is taken into operation. Change in value new construction recognizes the diff erence between the cost of construction of a new rental apartment and the value it has on completion. Change in value Other: Refers to changes in the value of investment properties, which have been in operation for one calendar year or more.

Development properties Development properties refer to properties constructed with the intention of being sold after completion.

Rental value*

Rental income and the estimated market rent for vacant space.

Cash fl ow per share Cash fl ow for the period in relation to the average number of shares outstanding.

Cash fl ow from operating activities per share Cash fl ow from operating activities for the period in relation to the average number of shares outstanding.

Surrender rate Proportion of leases extended in relation to the proportion of cancellable leases.

Commercial property Property, which predominantly consists of commercial space.

Surplus ratio

Net operating income as a percentage of rental income.

P/E ratio

Share price at the end of the period in relation to profi t after tax for the average number of shares over the latest rolling 12-month period.

For further information, please refer to: www.wallenstam.se/glossary

*Operational key ratios, are not considered alternative key ratios according to ESMA’s guidelines.

**	Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
Bridge alternativeperformance measures	2020 2020 2020 2020 2019 2019 2019 2019 2018
Equity, SEK million	25,557 24,766 24,423 24,102 23,792 22,400 21,897 21,949 21,609
Average equity, SEK million	24,528 23,896 23,323 22,828 22,329 21,708 21,278 20,813 20,305
Total assets, SEK million	60,581 58,977 58,336 55,959 54,689 52,459 51,177 49,945 48,262
Average total assets, SEK million	57,708 56,084 54,524 52,846 51,306 49,700 48,333 46,983 45,728

For average values, add the latest fi ve periods and divide by fi ve.

22 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

This is Wallenstam

BUSINESS PLAN 2023

Goal

To achieve an increase in net asset value of SEK 40 per share starting from October 1, 2018 through December 31, 2023.

Guiding principles

• » We shall exceed customer expectations and improve the overall impression of Wallenstam every year through attractive apartments and premises as well as good service.

• » Through our strong corporate culture, we shall be an attractive employer and improve our Engagement Index score every year.

• » We shall reduce our environmental impacts every year, through initiatives within the focus areas energy, transports and resources.

WALLENSTAM TODAY

Wallenstam was founded in 1944 and the head offi ce is located in Gothenburg. The company’s B share is listed on Nasdaq Stockholm, Large Cap and Wallenstam is one of the larger listed property companies in Sweden.

Our residential properties are located in Stockholm, Uppsala and Gothenburg, while our commercial properties are concentrated towards inner city locations in Gothenburg. All in all, Wallenstam has around 10,000 apartments and 1,000 commercial tenants. Wallenstam is a major producer of homes in the regions where we operate and we mainly build rental apartments for our own property management.

Wallenstam is self-suffi cient in renewable energy through its 66 own wind turbines in operation. Production covers our own properties’ energy needs and those of our tenants.

Operations are conducted in the Stockholm business area and the Gothenburg business area.

Stockholm

Defi ned key ratios

• » The equity/assets ratio should not be less than 30 percent.

VISION

Wallenstam shall be the natural choice of people and companies for housing and premises.

BUSINESS CONCEPT

We develop and manage people’s homes and workplaces based on a high level of service and long-term sustainability in selected metropolitan areas.

The majority of our apartments, about 5,900, are located in the Stockholm business area. Approximately 500 of these apartments are located in Uppsala. The Stockholm business area had around 900 apartments under construction on closing day.

Gothenburg

Our property holdings in the Gothenburg business area consist of just over 4,100 apartments and about 900 commercial tenants that rent offi ce and retail premises, mainly in inner city locations. The Gothenburg business area had around 1,500 apartments under construction on closing day.

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DEMAND
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PROFIT
VALUE GROWTH
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BUSINESS PROCESS

Wallenstam builds, develops and manages properties and areas based on the needs of people and society, and according to the wishes and requirements of customers and shareholders. We create value growth through construction, development and management as well as a high level of service and long-term sustainability. Profi ts are reinvested and used to develop the business further. Shareholders receive a share of the profi ts in the form of dividends.

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Construction and acquisition Management and development
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23 WALLENSTAM | YEAR-END REPORT JAN 1–DEC 31, 2020

Calendar

Publication of Annual report 2020

Publication of Annual report 2020 week commencing March 22, 2021 Interim report Q1, 2021 April 27, 2021 Annual General Meeting 2021, Gothenburg April 27, 2021 Interim report Q2, 2021 July 8, 2021 Interim report Q3, 2021 October 22, 2021

This is information that Wallenstam is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out below, at 15:30 CET on February 9, 2021.

This report has not been subject to review by the company´s auditors.

Contact

For further information, please contact Susann Linde, CFO and Head of IR tel: +46 705-17 11 34 e-mail: susann.linde@wallenstam.se