Wallenstam — Interim / Quarterly Report 2021

Oct 22, 2021

WALLENSTAM

Interim Report

JANUARY 1–SEPTEMBER 30, 2021

January 1–September 30, 2021

• The net asset value per share increased by SEK 8.90 during the period and amounted to SEK 107.20 (98.30).
• Income from property management amounted to SEK 968 million (860).
• Rental income amounted to SEK 1,721 million (1,576).
• Investment in construction of properties amounted to SEK 2,471 million (2,995).
• On closing day, 2,212 apartments were under construction.
• Changes in value of investment properties amounted to SEK 1,496 million (616), of which SEK 599 million (616) came from value growth in new construction.
• Profit before tax amounted to SEK 2,770 million (1,240) and profit after tax amounted to SEK 2,650 million (974), equivalent to SEK 8.1 per share (3.0).

July 1–September 30, 2021

• Income from property management amounted to SEK 358 million (310).
• Rental income amounted to SEK 585 million (536).
• Changes in value of investment properties amounted to SEK 477 million (187), of which SEK 210 million (187) came from value growth in new construction.
• Profit after tax amounted to SEK 828 million (344), corresponding to SEK 2.5 per share (1.1).

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

Business model that generates results

"As I have previously stated, our business model works very well even in tougher times. This is apparent not least in our results, where for example, net operating income increased by 10 percent in the interim period, and income from property management by 13 percent."

"We are continuing to produce new homes – we recently started the construction of our 10,000th apartment since the turn of the millennium. Through all the work we are doing to develop our properties and build new ones, we are creating our own growth, which feels really fantastic!"

---

Wallenstam in brief

Number of investment properties: 227
Value of investment properties: SEK 61 billion
Market capitalization: SEK 43 billion
Occupancy rate, lettable area: 97%
Lettable area: 1.3 million sq m
Number of apartments under construction: 2,212
Number of wind turbines: 66

13%
INCREASE IN NET ASSET VALUE PER SHARE IN 12 MONTHS
Read more about Wallenstam on page 22.

Important events third quarter

During the quarter, Wallenstam acquired one property in Gothenburg, and vacated four properties, of which one was in Partille, one in Härryda and two in Uppsala.

During the quarter, construction started of 185 apartments in the Kompositören project in Rosendal in Uppsala.

152 apartments have been completed, of which 20 in Flanören in Uppsala, 55 in Söra Kvarter in Österåker, and 77 apartments in Kallebäcks Terrasser, Kv. 11 in Gothenburg.

It was also announced that Nordic Wellness will open a training facility early next year of just over 1,000 sq m in Entré Kallebäck, where it is already confirmed that CELLINK will establish its bioprinting operations.

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 September 30, 2021, the net asset value per share was SEK 107.20, which represents an increase of SEK 8.90 per share during the first three quarters of 2021 and SEK 28.00 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 35,388 million (31,746) on closing day. Deferred tax liability refers mainly to differences between carrying amounts and fiscal values of the Group’s properties. A net deferred tax liability of SEK 5,823 million (5,811) is recognized in the balance sheet, which consists of a deferred tax asset of SEK 666 million (377) and a deferred tax liability of SEK 6,489 million (6,188).

INCREASE IN NET ASSET VALUE, SEK/SHARE

WALLENSTAM | INTERIM REPORT JAN 1–SEP 30, 2021

---

Comments by the CEO

Society is finally opening up again! The restrictions are gone and people are getting back to normal. This is very nice for all of us and really means a lot to everyone. As a company, we have worked incredibly hard during the pandemic, with our new construction projects, with our residential tenants, and – not least – with our commercial customers, both existing and new ones. And I can state, that this is apparent in our results, where for example, net operating income increased by 10 percent in the interim period, and income from property management by 13 percent.

The office important as a meeting point

It is too early to draw conclusions about trends, how changed behaviors will persist, or about the market development in detail, but what I am noticing in the office market is that demand is increasing for more social spaces. There is no doubt that the office is needed as a meeting point. Where people can meet and where the corporate culture can be developed. Going forward, many meetings can also be held digitally, but the personal meeting will always remain as an important ingredient, particularly when more complex issues are involved. Therefore the design of offices will most likely change with perhaps more meeting rooms and spaces that encourage contact and creativity.

Many new commercial construction projects in Gothenburg

We currently see many new commercial construction projects in Gothenburg. It is exciting and good that the city is growing and it also symbolizes a belief in the region and its future. How is Wallenstam affected then by additional newly produced office space in Gothenburg? As regards the rental levels in the inner city where we have our office premises, well these are on a par with those now being newly produced, so moving from existing offices in the inner city to newly produced premises does not mean any direct cost savings. Many businesses also want to have their offices in the most central and attractive areas, for example our office premises close to Victoriagården and Magasinsgatan are very much in demand.

However, my wish is to also see investment in more housing in the most central parts of Gothenburg. Unfortunately, Gothenburg has a low proportion of housing in the inner city, which is a pity, since all districts benefit from a good mix of residential and commercial activities.

Strong demand in the property market

There is very strong demand in the property market at present, something that is shown, among other ways, by the fact that very large transactions have recently been completed at attractive levels. Wallenstam has itself carried out a sale in Uppsala, of two newly produced residential properties and a project where the property is under construction. The two properties were vacated during the quarter, and the project will be handed over when the property is completed and the tenants have moved in. The total value of the transaction is just over SEK 1 billion.

Our investment in project development in Uppsala is progressing on as large a scale as possible. The properties that we are now managing in Uppsala are mainly in the Rosendal district, where we in recent days started the construction of our 10,000th apartment since the turn of the millennium.

Climate challenges

In our industry, of course, there are different types of challenges, and a current one relates to cement production at Cementa on Gotland. We use concrete elements in our new construction and we would not like to see a production stoppage. Obviously, all of us in society must strive to reduce our carbon footprint, but time must also be allowed for this shift. One of our climate targets in our business plan is that Wallenstam shall reduce its $\mathrm{CO}_{2}$ emissions from construction operations by 10 percent per square meter. So in each project we are focusing on more climate-smart construction.

High electricity prices

Another challenge for many property owners is that electricity prices are currently shooting upwards. For Wallenstam, the fact that we are self-sufficient in renewable energy is a strength. Naturally, the electricity for our properties costs more – but of course we get this back through our electricity production. All energy that we produce is renewable energy from our own wind turbines. In addition, we are investing in solar energy in the properties that are suitable.

New construction in Ålta soon underway

Something that I touched on before is the negative effect of the pandemic in the form of even more time-consuming permit processes in municipalities and courts – something that we hope and believe should ease with the now removed restrictions. For this reason, we are particularly happy that the zoning plan for Ålta Torg has now finally gone through all the authorities and gained legal force, which has taken 10 years in total. Here, we are planning to build a total of about 900 apartments and a new center. The first block, which we hope to be able to start construction of already in the fall, will involve about 200 apartments and almost 5,000 sq m of commercial floor space. It is gratifying to have this type of urban development area of our own, where it is easier to move forward with construction starts and processes.

Through all the work we are doing to develop our properties and build new ones, we are creating our own growth, which feels really fantastic!

Hans Wallenstam, CEO

3 WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Consolidated income statement

SEK million	Jan-Sep 2021	Jan-Sep 2020	Jul-Sep 2021	Jul-Sep 2020	Oct-Sep 2020/2021	Jan-Dec 2020
Rental income	1,721	1,576	585	536	2,276	2,131
Operating expenses	-399	-372	-123	-112	-546	-519
Net operating income, properties	1,322	1,205	462	424	1,730	1,613
Management costs and administrative expenses	-178	-168	-46	-53	-253	-243
Financial income	2	3	1	1	3	4
Financial expenses	-178	-180	-59	-61	-241	-243
Income from property management	968	860	358	310	1,239	1,131
Realized changes in value, financial instruments	19	4	-	-	19	4
Realized changes in value, synthetic options	-103	-	-	-	-103	-
Participation in profits/losses of associated companies	0	-6	0	-2	5	-1
Revenue, development property sales	57	107	12	14	487	537
Expenses, development property sales	-42	-50	-9	-7	-363	-371
Other income	112	141	44	23	139	168
Other expenses	-107	-134	-36	-35	-168	-195
Financial expenses, other	-16	-16	-5	-5	-21	-21
Profit before changes in value and impairment losses	888	906	364	297	1,235	1,253
Changes in value, investment properties	1,496	616	477	187	2,219	1,339
New construction	599	616	210	187	836	853
Other	897	-	268	-	1,383	486
Unrealized changes in value, financial instruments	372	-239	105	12	449	-162
Unrealized changes in value, synthetic options	13	-44	-	-51	21	-36
Profit before tax	2,770	1,240	946	446	3,923	2,393
Current tax	0	0	0	0	0	0
Deferred tax	-120	-266	-118	-102	-339	-485
Profit for the period, after tax	2,650	974	828	344	3,584	1,908
OTHER COMPREHENSIVE INCOME
Items that may be transferred to profit/loss for the period	3	1	2	0	24	23
Items that may not be transferred to profit/loss for the period	-	0	-	0	-	0
Tax attributable to other comprehensive income	-1	-1	0	0	-3	-3
Comprehensive income	2,652	974	830	343	3,605	1,927
DISTRIBUTION OF PROFIT FOR THE PERIOD AFTER TAX
Profit for the period attributable to parent company shareholders	2,650	974	828	344	3,584	1,908
Average number of outstanding shares, thousands	326,889	323,000	330,000	323,000	325,917	323,000
Profit after tax per share (SEK), dilution does not occur	8.1	3.0	2.5	1.1	11.0	5.9

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Comments on the consolidated income statement

JULY 1-SEPTEMBER 30

Rental income during the third quarter amounted to SEK 585 million (536), an increase of 9 percent or SEK 49 million, of which new construction accounted for SEK 48 million. Discounts provided as a result of Covid-19 amounted to about SEK 1 million (2).

Operating expenses increased as a result of additional recently produced properties, higher ongoing maintenance and increased charges. Net operating income increased by just over 9 percent and amounted to SEK 462 million (424), which corresponds to a surplus ratio of 79.0 percent (79.1).

Net financial items investment properties amounted to SEK -58 million (-60).

Income from property management increased by 16 percent and amounted to SEK 358 million (310). Changes in value of properties were positive and amounted to SEK 477 million (187), of which SEK 210 million (187) came from our new construction.

The swap interest rates were higher compared to the previous quarter, which gave a positive change in value on our interest rate derivatives of SEK 101 million (11).

Profit after tax for the third quarter of 2021 amounted to SEK 828 million (344), which corresponds to earnings per share of SEK 2.5 (1.1).

JANUARY 1-SEPTEMBER 30

Rental income

Rental income for the period increased by SEK 144 million, 9 percent, and amounted to SEK 1,721 million (1,576). Rental income growth during the period came mainly from occupations in our recently produced residential apartment buildings.

Wallenstam's revenue is evenly distributed between residential properties and commercial premises. Our residential property holdings are fully let. Our commercial properties are situated in central locations in Gothenburg, with offices as our largest type of commercial premises. The surrender rate, which reflects how large a proportion of the cancellable leases are extended, amounted to 89 percent (91). Discounts provided as a result of Covid-19 in the first nine months of the year amounted to SEK 10 million (33), of which we received support for SEK 3 million (2) on closing day. This support is recognized in line with us receiving payment.

Our occupancy rate for commercial properties in terms of lettable area amounted to 94 percent on closing day.

Operating expenses & Net operating income

Operating expenses for the period amounted to SEK 399 million (372) and increased as a result of additional recently produced properties and seasonal effects from colder weather and more snow. Weather-related expenses were SEK 10 million higher during the period compared to the same period in 2020. Net operating income increased by SEK 117 million or 9.7 percent and amounted to SEK 1,322 million (1,205). Added efficient new production accounted for most of this growth. The surplus ratio amounted to 76.8 percent (76.4).

Management costs and administrative expenses

Management costs and administrative expenses totaled SEK 201 million (181) and are distributed among property management SEK 178 million (168), energy management SEK 6 million (8) and property transactions SEK 17 million (5).

Financial income & expenses

Financial income amounted to SEK 2 million (3) and financial expenses totaled SEK 194 million (196), and are distributed among property operations and other, which mainly consists of natural energy. Capitalized interest amounted to SEK 75 million (83).

The average debt for the period was SEK 1.9 billion higher than the previous year, due to continued investments in new construction. The average interest rate on closing day, which reflects future interest to pay in relation to our loans, was 1.22 percent (1.27). During the period, the average interest rate amounted to 1.21 percent (1.31).

RENTAL INCOME AND INCOME FROM PROPERTY MANAGEMENT

NET OPERATING INCOME AND SURPLUS RATIO

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Realized changes in value, financial instruments

Realized changes in value of financial instruments during the year consisted of the divestment of the Group's holding in Exeger Sweden AB (publ), which was sold for SEK 119 million during the first quarter of the year. The holding generated a realized profit of SEK 108 million, of which SEK 88 million was recognized as value changes in previous years.

Income from sales of development properties

A profit 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 profit from sales during the year amounted to SEK 14 million (57) and included sales of 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.

Production of electricity decreased, by 23 percent in total compared to the previous year, due to less wind, and amounted to 242 GWh (313). The price of electricity has increased, however, and net operating income strengthened compared to the previous year.

Changes in value, investment properties

Changes in value of investment properties during the period totaled SEK 1,496 million (616), of which SEK 599 million (616) came from gradual value growth in properties under construction and from the newly produced properties that have been in operation for a shorter period than a full calendar year. The remaining SEK 897 million (-) came from value growth in the existing holdings, as a consequence of improved net operating income and changed yield requirements.

Unrealized changes in value, financial instruments

The unrealized change in value of financial 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 positively during the period, SEK 368 million (-238), as a result of rising interest rate levels. On closing day, the 10-year swap rate amounted to 0.89 percent, compared to 0.37 percent at the start of the year.

Changes in value, synthetic options

The Annual General Meeting on April 24, 2018 resolved to introduce a synthetic options scheme directed to all personnel. At the start of the scheme in May 2018, personnel were invited to acquire the allocated number of options at a market price. The term of the scheme was until May 31, 2024 unless the option ceiling of a share price of SEK 140 at the close of trading was reached earlier, which occurred on May 24, 2021 and resulted in the options falling due for redemption. Total costs for the year amounted to SEK 89 million, of which SEK 13 million was recognized as Unrealized changes in value, synthetic options and SEK -103 million was recognized as Realized changes in value, synthetic options. The total cost of the options scheme is estimated to amount to SEK 182 million.

Taxes

The recognized tax expense for the year amounted to SEK 120 million (266) net, of which SEK 120 million (266) was deferred tax and SEK 0 million (0) was current tax. The tax expense on other comprehensive income was SEK 1 million (1). Income tax was impacted, among other things, by sales of properties that were put into companies and the possibility to utilize tax depreciation and make direct deductions for some reconstructions of properties. In the second quarter, deficits from acquired companies were measured for the first time as a result of the Swedish Supreme Administrative Court's ruling (7005--7007-19, 7009--7011-19), which had a positive effect on the Group's tax expense of SEK 321 million (-) in total.

DISTRIBUTION, RENTAL VALUE

THE TEN LARGEST COMMERCIAL TENANTS BY FLOOR SPACE

Tenant	Floor space, sq m
City of Gothenburg	19,846
Essity Hygiene and Health AB	15,639
Filmstaden AB	14,508
The National Archives of Sweden	11,000
Västra Götaland County Council	10,554
Academedia AB	7,486
Ica Fastigheter AB	6,906
Sandryds Handels AB	6,730
Frisk Service i Göteborg AB	6,212
Convendum AB	5,473
Total	104,354

Our total commercial floor space is approximately 515,000 sq m.

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Consolidated balance sheet, condensed

SEK million	Sep 30, 2021	Sep 30, 2020	Dec 31, 2020
ASSETS
NON-CURRENT ASSETS
Investment properties	60,949	56,226	57,933
Wind turbines	976	1,052	1,033
Participations in associated companies	220	158	220
Financial assets	449	498	529
Financial derivative instruments	111	4	10
Other non-current assets	81	77	81
Total non-current assets	62,786	58,016	59,806
CURRENT ASSETS
Development properties	88	291	126
Financial derivative instruments	4	0	-
Other current assets	219	181	130
Cash and cash equivalents	407	489	518
Total current assets	718	961	774
Total assets	63,504	58,977	60,581
EQUITY AND LIABILITIES
EQUITY
Equity	28,899	24,766	25,557
Equity attributable to non-controlling interests	0	0	0
Total equity	28,899	24,766	25,558
NON-CURRENT LIABILITIES
Deferred tax liability	5,823	5,589	5,811
Other provisions	50	141	142
Interest-bearing liabilities	6,906	4,756	6,406
Financial derivative instruments	254	593	522
Lease liability	480	492	492
Other non-current liabilities	9	22	21
Total non-current liabilities	13,523	11,594	13,394
CURRENT LIABILITIES
Interest-bearing liabilities	20,318	21,761	20,885
Financial derivative instruments	0	0	3
Lease liability	1	1	1
Other current liabilities	763	855	740
Total current liabilities	21,082	22,617	21,629
Total equity and liabilities	63,504	58,977	60,581

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Comments on the consolidated balance sheet

OUR PROPERTIES

Development during the period

During the year, we have invested a total of SEK 2,829 million (3,346), of which SEK 2,762 million (3,283) in investment properties and SEK 68 million (63) in development properties. New construction projects in progress involve 2,212 apartments. The total value of rental apartment and development projects in progress amounted to SEK 5.9 (7.3) on closing day.

The right of use value for land granted with site leasehold rights has been estimated at SEK 464 million (476) and is recognized as a part of the properties' value.

Investment properties

Changes in value affected the value of investment properties positively by SEK 1,496 million (616) in total, of which SEK 599 million (616) came from gradual value growth in properties under construction and from the newly produced properties that have been in operation for a shorter period than a full calendar year.

During the year, minor adjustments in yield requirements have occurred for a number of residential properties due to changed market conditions. The changes do not affect the average yield requirements, which are unchanged for the year, and which on closing day, 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 60,949 million (57,933) at the end of the period.

Development properties

Development properties mainly consist of the Bersán project in Uppsala, which by agreement will be handed over to ASPER upon completion in 2023. The previous co-op apartment project Stationshuset in Stockholm, has been reclassified as an investment property during the third quarter. The book value of Development properties amounted to SEK 88 million (126) 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 finished, newly built rental apartments is high. For example, we currently have just over 160,000 people in our housing queue.

We build mainly rental apartments, but also cooperative apartments, for example when the land available for rental apartment construction is limited. Our flexible 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 office space in Gothenburg is still stable and showing a positive trend.

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 firm 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 different yield requirements. The yield requirements reflect market conditions and differ based on where the property is located and what type of property it is, e.g. housing or offices, 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 profit/loss is recognized when the property or apartment is completed and handed over to the buyer.

TOTAL VALUE, PROJECTS IN PROGRESS

	Book value, SEK million
Land for future new production	1,243
Projects in progress, rental apartments	4,600
Development properties	88
Total projects in progress	5,931

CHANGES IN PROPERTY HOLDINGS, INVESTMENT PROPERTIES

	Book value, SEK million
Property holdings, January 1, 2021	57,933
+ Acquisitions	358
+ Construction	2,404
- Sales	-1,297
- Right-of-use asset site leasehold right	-11
+ Reclassification development properties	88
+ Unrealized changes in value, properties	1,475
Property holdings, September 30, 2021	60,949

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

NEW CONSTRUCTION IN PROGRESS, SEPTEMBER 30, 2021

Project	No. of apts.	Occupation*	Sq m**	Of which completed apts. to date
STOCKHOLM
Umami Park, phase 3, Sundbyberg	133	Q4 2021	10,000
Stationshuset, Bandhagen	84	2022	4,500
Söra radhus, Österåker (development property, co-op)	11	2022	1,500
UPPSALA
Flanören, Rosendal	156	Q3 2021	7,500	20
Bersån (development property)	98	2023	6,000
Kompositören	185	2023	9,000
GOTHENBURG
Godhems Backe	138	Q4 2020	6,500	77
Kallebäcks Terrasser Kv. 11	270	Q3 2021	16,000	77
Kallebäcks Terrasser Kv. 9	165	Q4 2021	9,500
Kv. Kvarnen, Mölnlycke Fabriker, Härryda	185	Q4 2021	10,500
Kallebäcks Terrasser Kv. 10	85***	2022	8,000
Kv. Väven, Mölnlycke Fabriker, Härryda	116	2022	7,000
Kallebäcks Terrasser Kv. 5	182	2023	12,000
Kallebäcks Terrasser Kv. 7	189	2023	11,000
Kallebäcks Terrasser Kv. 8	266	2023	15,000
Kv. Skogsvaktaren, Mölnlycke Fabriker, Härryda	123	2023	7,500
Commercial
Mölnlycke Fabriker		2021	18,000‡
Kallebäcks Terrasser		Q1 2022	20,000
Padel hall (Östermalmshallen), Mölnlycke		2022	2,500
Total apartments in projects	2,386		182,000	174
of which in progress on September 30	2,212

• 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 12 are co-living apartments with a total of 121 rooms for rent.
  ‡ Started during quarter 3, 2021
  ‡‡ Relates to one sports center and a multistorey carpark.

CHANGE, CONSTRUCTION IN PROGRESS

	No. of apts.
New construction in progress,
July 1, 2021	2,186
- Completed	-152
Söra Kvarter, Österåker (55)
Flanören, Rosendal, Uppsala (20)
Kallebäcks Terrasser Kv 11, Gothenburg (77)
- Changed apartment disposition (Kv. Skogsvaktaren)	-7
+ Started	185
New construction in progress, September 30, 2021	2,212

APARTMENTS, CONSTRUCTION IN PROGRESS

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

FULLY COMPLETED NEW CONSTRUCTION

Name of property	Address	Year of construction	Residen-tial sq m	Office sq m	Retail/ Restaurant/ Cinema sq m	Industry/ warehousing sq m	Education/ Care sq m	Garage sq m	Other sq m	Total sq m	No. of apts.
GOTHENBURG
Härryda Mölnlycke 1:163 (Project: Kv. Rosengången)	Disponentvägen 2, 4	2021	6,477	-	-	-	-	448	-	6,925	123
Krokslätt 154:7 (Project: Elisedal)	Nordgårdsgatan 2, 6, 8, 10 / Ebbe Lieberathsgatan 2A-D / Fredriksdalsgatan 4C-D	2020	17,195	-	209	-	-	6,382	-	23,786	336
STOCKHOLM
Söderbymalm 3:540 (Project: Parkstråket 1)	Örnens väg 3-5, Ingrid Horns väg 7-9, Nynäsvägen 112-114	2021	10,599	-	-	-	-	2,726	-	13,325	154
Järnet 13 (Project: Allén)	Axel Wennergrens väg 3-15	2021	10,266	-	107	-	-	3,245	-	13,618	221
Söderbymalm 3:539 (Project: Parkstråket 2)	Örnens väg 7-9, Ingrid Horns väg 6-8, Ingrid Horns Torg 4	2021	6,119	-	126	50	-	1,577	-	7,872	131
Freden Större 17 (Project: Umami Park,phase 2)	Rissneleden 20, 22, 24	2020	8,449	-	-	94	-	1,451	-	9,994	141
Berga 6:682 (Project: Söra Kvarter)	Margretelundsvägen 3 A-E	2021	15,674	-	130	-	-	-	-	15,804	305
Total			74,779	-	572	144	-	15,829	-	91,324	1,411

PROPERTY ACQUISITIONS

Name of property	Address	Year of construction/ conversion	Residen-tial sq m	Office sq m	Retail/ Restaurant/ Cinema sq m	Industry/ warehousing sq m	Education/ Care sq m	Garage sq m	Other sq m	Total sq m	No. of apts.
GOTHENBURG
Gamlestaden 740:23	Marieholmsgatan 60-62	1970	-	-	-	4,142	-	-	-	4,142	0
Järnbrot 195:1*
Mölndal Mörten 6*
Mölndal Nejonögat 16, 17*
Majorna 223:4	Fiskhamnen 9, 16	1991	-	300	-	2,327	-	-	-	2,627	0
STOCKHOLM
Sundbyberg Freden större 15*
UPPSALA
Käbo 78:1*
Total			-	300	-	6,469	-	-	-	6,769	0

*Land

PROPERTY SALES

Name of property	Address	Year of construction/ conversion	Residen-tial sq m	Office sq m	Retail/ Restaurant/ Cinema sq m	Industry/ warehousing sq m	Education/ Care sq m	Garage sq m	Other sq m	Total sq m	No. of apts.
GOTHENBURG
Härryda Mölnlycke 1:169*
Nordstaden 24:11	Kronhusgatan 16 / Östra Hamngatan 15	1929			266		3,930			4,196
Inom Vallgraven 64:31	Stora Badhusgatan 16	1949					1,669			1,669
Lorensberg 15:3	Lennart Torstenssonsga-tan 6-8	1929/1993					2,100			2,100
Partille Manered 5:3	Höghallsvägen 1A-1B, 3A-3B, 5A-5B / Jonseredsvägen 4	1994	1,332			60				1,392	24
Härryda Mölnlycke 1:170	Fabriksvägen 1	2021					1,807			1,807
UPPSALA
Gränby 9:6	Bruno Liljeforsgatan 62, 64, 68 / Räbyvägen 63 A-D	2017	5,582	80	226	23		900		6,811	116
Sala Backe 47:1	Johannesbäcksgatan 49-59	2017	7,117	54				2,248		9,419	137
Total			14,031	134	492	83	9,506	3,148	-	27,394	277

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

PROPERTY HOLDING STRUCTURE AS OF SEPTEMBER 30, 2021

Letable area, sq m	Residential sq m	Office sq m	Retail/ Restaurant/ Cinema sq m	Industry/ warehousing sq m	Education/ Care sq m	Garage sq m	Other sq m	Total	Distribution, place	No. of apts.
Stockholm	366,688	30,593	12,188	9,384	5,957	61,378	15,239	501,427	38%	6,198
Uppsala	14,906	2,004	813	78	0	2,584	0	20,385	2%	289
Gothenburg	279,604	208,321	91,904	91,851	40,699	66,273	5,987	784,639	60%	4,593
Total	661,198	240,918	104,905	101,313	46,656	130,235	21,226	1,306,451	100%	11,080
Distribution by type of premises	51%	18%	8%	8%	3%	10%	2%	100%

ACQUISITION, CONSTRUCTION AND SALES OF INVESTMENT PROPERTIES

MARKET VALUE

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 period amounted to SEK 57 million (57). Estimated value in use of land leases, based on minimum rents, amounted on closing day to SEK 15 million (16) and is recognized as part of the wind power value. On closing day, the consolidated book value of wind turbines amounted to SEK 976 million (1,033). The renewable energy certificate inventory and guarantees of origin amounted to SEK 1 million (1) on closing day.

FINANCING

Equity

Shareholders' equity amounted to SEK 28,899 million (25,558), equivalent to SEK 88 per share (79). During the second quarter, Wallenstam sold the 7,000,000 B shares, which were held in treasury. The price amounted to SEK 127 per share, implying a total increase in equity of SEK 883 million, which is SEK 349 million above cost. The equity/assets ratio was 46 percent (42).

Interest-bearing liabilities

On closing day, outstanding bond loans amounted to SEK 2,700 million (2,800), the outstanding volume of commercial paper, with a framework amount of SEK 4 billion, amounted to SEK 2,780 million (2,470), and total interest-bearing liabilities amounted to SEK 27,705 million (27,785), of which lease liability amounted to SEK 481 million (493). Of this liability, SEK 7.4 billion (7.0) consists of green financing, of which SEK 5.5 billion (5.4) of green loans and SEK 2.0 billion (1.7) of green bonds.

All the bond loans of SEK 2,700 million (2,800) are contained within the framework of our MTN program (Medium Term Notes), which has a total framework

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

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 fixed interest term is unchanged compared to year-end and amounts to 41 months. Of the loan portfolio, 53 percent (50) of the loans have fixed interest terms longer than one year. On closing day, the average interest rate on our loans was 1.22 percent compared to 1.27 percent on the same date in the previous year.

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 481 million (493).

Derivative instruments

Wallenstam's financial derivative instruments consist of interest rate and electricity derivatives. On closing day, Wallenstam had a net indebtedness in respect of derivative instruments of SEK 140 million, compared to a net indebtedness of SEK 515 million on December 31, 2020. Of this, interest rate derivatives accounted for SEK -143 million (-512), electricity derivatives for SEK 4 million (0) and currency derivatives for SEK 0 million (-3).

During 2021, the Group has entered into new interest rate derivative contracts totaling SEK 1.0 billion. The total volume of outstanding interest rate derivatives, where Wallenstam pays fixed interest, amounts to SEK 13.15 billion.

Interest rate derivatives are used to obtain a desired interest maturity profile in a flexible, cost-efficient way. They are measured through discounting future cash flows at present value based on observable market interest rates and are classified at level 2. The arising deficit or surplus value for interest rate derivatives, which reflects 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, financial 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 effects are recognized in other comprehensive income.

Available liquid assets

Available liquid assets, including available bank overdraft facilities, amounted to SEK 1,207 million (1,318). Approved overdraft facilities amounted to SEK 800 million (800), of which no portion (-) was used on closing day. The Group's approved and unutilized credit facilities totaled SEK 3,000 million (3,000), excluding the overdraft facility.

On September 30, 2021, accessible liquidity totaled SEK 4,207 million (4,318), of which SEK 2,780 million (2,470) represents a credit commitment for issued outstanding commercial paper.

FIXED TERMS, AVERAGE INTEREST RATES, SEPTEMBER 30, 2021

Interest maturity structure	Amount, SEK million	Average interest rate, %	Proportion, %
0-1 year	12,751	1.57	46.8
1-2 years	401	1.09	1.5
2-3 years	500	0.56	1.8
3-4 years	1,823	1.07	6.7
4-5 years	2,100	0.92	7.7
5-6 years	2,200	1.04	8.1
6-7 years	1,700	1.07	6.2
7-8 years	1,700	0.93	6.2
8-9 years	1,900	0.87	7.0
>9 years	2,150	0.53	7.9
Total	27,224	1.22	100.0

ACCESSIBLE LIQUIDITY

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Consolidated statement of changes in equity

-- Equity attributable to parent company shareholders --

SEK million	Share capital	Other capital contributed	Other reserves	Profit brought forward	Non-controlling interests	Total equity
Opening equity, Jan 1, 2020	165	359	64	23,204	2	23,794
Profit for the period	-	-	-	974	-	974
Translation difference	-	-	0	-	-	0
Changes in value, currency derivatives	-	-	1	-	-	1
Tax attributable to other comprehensive income	-	-	-1	-	-	-1
TRANSACTIONS WITH SHAREHOLDERS
Dividend non-controlling interests	-	-	-	-	-2	-2
Dividends	-	-	-	-	-	-
Closing equity, Sep 30, 2020	165	359	64	24,178	0	24,766
Opening equity, Jan 1, 2021	165	359	83	24,950	0	25,558
Profit for the period	-	-	-	2,650	-	2,650
Changes in value, holdings of unlisted equity instruments	-	-	-88	88	-	-
Changes in value, currency derivatives	-	-	3	-	-	3
Tax attributable to other comprehensive income	-	-	-1	-	-	-1
TRANSACTIONS WITH SHAREHOLDERS
Dividends	-	-	-	-194	-	-194
Sale of treasury shares	-	-	-	883	-	883
Closing equity, Sep 30, 2021	165	359	-3	28,378	0	28,899

Consolidated statement of cash flows

SEK million	Jan-Sep 2021	Jan-Sep 2020	Jul-Sep 2021	Jul-Sep 2020	Oct-Sep 2020/2021	Jan-Dec 2020
Profit before changes in value and impairment losses*	888	906	364	297	1,235	1,253
Adjustment for items not included or arising in cash flow	-79	-46	5	12	-167	-134
Taxes paid	0	0	0	0	0	0
Cash flow before change in working capital	809	860	369	309	1,068	1,119
Change in working capital	-85	189	-45	16	-178	96
Cash flow from operating activities	725	1,049	324	326	891	1,215
INVESTMENTS/DIVESTMENTS
Investment in properties and individual co-op apartments	-2,837	-3,360	-801	-933	-3,961	-4,484
Investments in intangible assets & property, plant and equipment, and wind turbines	-8	-15	-2	-2	-15	-22
Investments in financial assets	-127	-	-	-	-127	-
Investments in associated companies	-	-30	-	-	-58	-88
Divestment of properties, development properties & property, plant and equipment	1,395	80	857	13	1,835	520
Cash flow from investing activities	-1,577	-3,325	54	-922	-2,326	-4,074
FINANCING
Raised interest-bearing liabilities	20,721	10,479	3,386	3,315	33,644	23,402
Amortization of interest-bearing liabilities	-20,788	-7,844	-3,644	-3,156	-32,938	-19,994
Net change in overdraft facilities	-	-	-	-	-	-
Net change promissory notes	-	4	-	4	-	4
Divestment of financial assets	119	-	-	-	119	-
Dividend paid to minority owner	-	-2	-	-	-	-2
Dividends paid	-194	-	-	-	-356	-162
Sale of treasury shares	883	-	-	-	883	-
Cash flow from financing activities	741	2,636	-258	163	1,353	3,248
Changes to liquid assets	-111	360	122	-433	-82	389
Cash and cash equivalents at beginning of the period	518	129	285	922	489	129
Cash flow for the period	-111	360	122	-433	-82	389
Cash and cash equivalents at the end of the period	407	489	407	489	407	518
Unutilized overdraft facilities at the end of the period	800	800	800	800	800	800
Available liquid assets	1,207	1,289	1,207	1,289	1,207	1,318

*Includes interest paid and received, including gross flows from interest rate swap contracts, of SEK-251 million (-267) and SEK 2 million (1) respectively, of which SEK 75 million (83) was capitalized as a non-current asset.

13 WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Segments report

| 2021
Mkr | Gothenburg
Jan-Sep | Stockholm
Jan-Sep | Other
Jan-Sep | Elimination
Jan-Sep | Total
Jan-Sep |
| --- | --- | --- | --- | --- | --- |
| INCOME STATEMENT | | | | | |
| Rental income | 1,104 | 637 | - | -20 | 1,721 |
| Operating expenses | -247 | -152 | - | - | -399 |
| Net operating income | 857 | 484 | - | -20 | 1,322 |
| Management costs and administrative expenses | -104 | -75 | -19 | 20 | -178 |
| Net financial items | -188 | -137 | 149 | - | -176 |
| Income from property management | 565 | 272 | 130 | - | 968 |
| Unapportioned items | | | | | |
| Realized changes in value, financial instruments | | | | | 19 |
| Realized changes in value, synthetic options | | | | | -103 |
| Participation in profits/losses of associated companies | | | | | 0 |
| Sales result, development properties | | | | | 14 |
| Other income and expenses | | | | | 5 |
| Financial expenses, other | | | | | -16 |
| Profit before changes in value and impairment losses | | | | | 888 |
| Changes in value | | | | | 1,882 |
| Profit before tax | | | | | 2,770 |
| BALANCE SHEET | | | | | |
| Investment properties | 37,035 | 23,915 | - | - | 60,949 |
| Wind turbines | - | - | 976 | - | 976 |
| Development properties | - | 88 | - | - | 88 |
| Unapportioned assets | - | - | - | - | 1,491 |
| Total assets | | | | | 63,504 |
| Equity | - | - | - | - | 28,899 |
| Interest-bearing liabilities and lease liabilities | 15,577 | 11,583 | 545 | - | 27,705 |
| Unapportioned liabilities | - | - | - | - | 6,900 |
| Total equity and liabilities | | | | | 63,504 |
| Property investments in progress including land | 4,029 | 1,902 | - | - | 5,931 |
| 2020
Mkr | Gothenburg
Jan-Sep | Stockholm
Jan-Sep | Other
Jan-Sep | Elimination
Jan-Sep | Total
Jan-Sep |
| RESULTATRÄKNING | | | | | |
| Hyresintäkter | 1,056 | 540 | - | -20 | 1,576 |
| Driftnetto fastigheter | 821 | 404 | - | -20 | 1,205 |
| Förvaltningsresultat | 533 | 232 | 95 | - | 860 |
| Unapportioned items | | | | | |
| Realized changes in value, financial instruments | | | | | 4 |
| Participation in profits/losses of associated companies | | | | | -6 |
| Sales result, development properties | | | | | 57 |
| Other income and expenses | | | | | 7 |
| Financial expenses, other | | | | | -16 |
| Profit before changes in value and impairment losses | | | | | 906 |
| Changes in value | | | | | 334 |
| Profit before tax | | | | | 1,240 |
| BALANCE SHEET | | | | | |
| Investment properties | 34,100 | 22,126 | - | - | 56,226 |
| Wind turbines | - | - | 1,052 | - | 1,052 |
| Development properties | 8 | 283 | - | - | 291 |
| Unapportioned assets | - | - | - | - | 1,408 |
| Total assets | | | | | 58,977 |
| Equity | | | | | 24,766 |
| Interest-bearing liabilities | 14,450 | 10,800 | 1,760 | - | 27,011 |
| Unapportioned liabilities | - | - | - | - | 7,200 |
| Total equity and liabilities | | | | | 58,977 |
| Property investments in progress including land | 3,276 | 3,994 | - | - | 7,270 |

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

The Wallenstam share

The Wallenstam B share is listed on Nasdaq Stockholm, Large Cap. During 2021, the Wallenstam share price has decreased by 0.6 percent. The property index OMX Stockholm Real Estate rose by 20.0 percent and the OMX Stockholm PI index rose by 20.7 percent during the same period.

At the end of the period, the Wallenstam share price was SEK 129.80 compared to SEK 130.60 at year-end 2020. The market capitalization was SEK 42,834 million (43,098) based on the total number of registered A and B shares. Equity per share amounted to SEK 88 (79).

Sale of treasury shares

On April 28, the Board of Directors decided to divest the company's 7,000,000 treasury B shares. The 7,000,000 shares were equivalent to 2.12 percent of the total number of registered shares and 1.09 percent of the total number of votes and had been purchased at an average price of SEK 76.16 per share.

The shares were sold through a so-called book building process to Swedish and international institutional investors, including AMF and AMF Fonder, Öhman Fonder and Mertzig Asset Management AB, among others, at a price of SEK 127 per share. After the completed sale, Wallenstam no longer holds any treasury shares.

Dividend

The AGM resolved on a dividend of SEK 1.20 per share (0.50) for the financial year 2020, spread over two payment dates of SEK 0.60 each per share. In May, a total of SEK 194 million was disbursed to the shareholders. The next payment will take place on November 4 with November 1 as the record day. In 2020, a total of SEK 162 million was disbursed.

Turnover

During the period, the Wallenstam share had an average daily turnover on Nasdaq Stockholm of about SEK 39.7 million (30.4).

SHARE PRICE TREND Q4 2016-Q3 2021

AVERAGE SHARE LIQUIDITY PER DAY

SHAREHOLDINGS, SEPTEMBER 30, 2021

	A shares	B shares	Equity, %	Votes, %
Hans Wallenstam and family, and company	34,500,000	49,210,000	25.37	61.55
AMF - Insurance and funds		40,202,956	12.18	6.28
Agneta Wallenstam		18,204,000	5.52	2.84
Henric and Ulrika Wiman		11,977,752	3.63	1.87
Anna-Carin B Wallenstam and Anders Berntsson		10,700,000	3.24	1.67
David Wallenstam		8,520,138	2.58	1.33
Christian Wallenstam		8,050,000	2.44	1.26
Monica and Jonas Brandström		7,072,826	2.14	1.10
Bengt Norman		6,200,000	1.88	0.97
Elin Wallenstam Sjögren		4,327,240	1.31	0.68
Other owners		131,035,088	39.71	20.46
Total number of shares	34,500,000	295,500,000
Total registered and outstanding shares	330,000,000		100.00	100.00

The proportion of institutional ownership amounted to around 19 percent of equity and around 10 percent of votes.
Foreign ownership amounted to around 11 percent of equity and around 5 percent of the votes.
Source: Euroclear Sweden AB

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Parent Company

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

Total revenue during the period amounted to SEK 352 million (380), of which rental income amounted to SEK 96 million (92).

The result was impacted by changes in value of financial derivative instruments, SEK 368 million (-240), mainly due to higher swap interest rate levels. Profit after tax amounted to SEK 463 million (-36).

Investments in intangible assets and property, plant and equipment during the period amounted to SEK 24 million (29). Parent company external loans amounted to SEK 13,851 million (13,827) on closing day.

INCOME STATEMENT, PARENT COMPANY

SEK million	Jan-Sep 2021	Jan-Sep 2020	Jan-Dec 2020
Management revenue	251	245	290
Rental income	96	92	122
Revenue, sales of renewable energy certificates	5	43	45
Other revenue	1	1	1
Total revenue	352	380	458
Management costs and administrative expenses	-278	-263	-367
Operating expenses	-22	-22	-36
Depreciation and impairment losses properties	-20	-23	-31
Expenses, sales of renewable energy certificates	-3	-21	-21
Change in value, synthetic options scheme	-89	-44	-36
Other expenses	-1	-1	-2
Total expenses	-414	-374	-493
Operating income	-62	5	-35
Profit/loss from participations in Group companies	88	34	473
Interest income and similar profit/loss items	474	462	533
Interest expenses and similar profit/loss items	-271	-298	-308
Changes in value, derivative instruments	368	-240	-164
Net financial items	660	-42	534
Profit/loss after financial items	598	-37	500
Appropriations	-	-	-63
Tax on net profit/loss	-135	1	34
Profit/loss after tax	463	-36	471
OTHER COMPREHENSIVE INCOME
Changes in value, currency derivatives	3	1	-2
Tax attributable to other comprehensive income	-1	0	0
Comprehensive income	465	-35	470

CONDENSED BALANCE SHEET, PARENT COMPANY

SEK million	Sep 30, 2021	Sep 30, 2020	Dec 31, 2020
Assets
Properties	1,317	1,331	1,319
Participations in Group companies	7,305	5,518	5,932
Financial derivative instruments	111	5	10
Receivables from Group companies	23,402	24,498	23,632
Other assets	97	202	239
Cash and cash equivalents	403	488	518
Total assets	32,635	32,041	31,649
Equity and liabilities
Equity	11,933	10,435	10,778
Provisions	31	129	122
Interest-bearing external liabilities	13,851	13,032	13,827
Liabilities to Group companies	6,442	7,736	6,272
Financial derivative instruments	254	593	524
Other liabilities	124	117	126
Total equity and liabilities	32,635	32,041	31,649

WALLENSTAM INTERIM REPORT JAN 1-SEP 30,2021

---

Other information

OPPORTUNITIES & RISKS

Wallenstam’s opportunities and risks, and how we manage them, are presented in the 2020 Annual Report on pages 36–41. No significant changes have taken place since then.

SENSITIVITY ANALYSIS

As of September 30, 2021, the estimated market value of the properties amounted to around SEK 61 billion. A change in value of plus/minus 10 percent is thus equivalent to about plus/minus SEK 6.1 billion. A general change of plus/minus 0.25 percentage points in property yield requirements is equivalent to about SEK -3.6 billion or SEK +4.3 billion, while a general change in revenue of 5 percent is equivalent to about plus/minus SEK 3.2 billion.

A change in the interest rate of plus/minus 50 points is equivalent to about plus/minus SEK 63 million.

A change in the electricity price of 1 öre per kWh is equivalent to about SEK +38 million or SEK -36 million during valuation of wind turbines, while a change in the renewable energy certificate price of 1 öre per kWh is equivalent to about SEK +16 million or SEK -2 million during valuation of wind turbines.

TRANSACTIONS WITH RELATED PARTIES

Wallenstam’s related parties consist chiefly 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 and premises. Insurance services are purchased from companies where a member of Wallenstam’s Board of Directors is a Board member, 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 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 1.3 million.

Wallenstam’s involvement in environmental and social responsibility issues is described in more detail on pages 29–35 of the 2020 Annual Report. As part of its social responsibility work, the Wallenstam Group not only contributes financially 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 3.2 million and Barn i Nöd received contributions of SEK 0.1 million. The Rescue Mission in Gothenburg and Barn i Nöd rent premises from Wallenstam equivalent to annual rental income of about SEK 4.9 million and SEK 0.1 million, respectively.

All transactions take place on market-related terms.

ROUNDING OFF

As a result of rounding off, figures presented in this report do not, in some cases, sum up exactly to the total and percentages may differ 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 2020 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, 2021 or subsequently are not expected to have any material impact on the Wallenstam Group’s financial 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.

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Key ratios – multi-year summary

Accumulated during period	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
PROPERTY-RELATED KEY RATIOS
Net operating income, properties, SEK million	1,322	860	414	1,613	1,205	781	386	1,529	1,159
Surplus ratio, property management, %	76.8	75.7	73.8	75.7	76.4	75.1	73.8	75.5	76.7
Income from property management, SEK million	968	609	291	1,131	860	549	275	1,108	851
Changes in value, new construction, SEK million	599	389	145	853	616	429	254	792	505
Value of investment properties, SEK million	60,949	60,441	59,262	57,933	56,226	55,127	53,619	52,354	49,793
Area, sq m (thousand)	1,306	1,307	1,312	1,235	1,231	1,230	1,210	1,201	1,199
Occupancy rate – lettable area, %	97	98	97	98	97	98	98	98	98
Development properties, net, SEK million	88	155	128	126	291	281	170	175	154
FINANCIAL KEY RATIOS
Profit after tax, SEK million	2,650	1,822	723	1,908	974	631	309	2,737	1,038
Return on equity, %	13.4	12.0	9.3	7.8	11.2	12.0	11.9	12.3	10.4
Return on total capital, %	6.8	6.1	5.4	4.6	6.6	7.0	7.0	7.2	6.1
Interest coverage ratio, times	5.8	5.5	5.7	5.8	5.7	5.9	6.1	6.3	7.0
Loan-to-value ratio, %	44	45	46	46	46	46	45	45	45
Average interest rate on closing day, %	1.22	1.20	1.21	1.21	1.27	1.40	1.31	1.22	1.23
Average fixed-interest term, months	41	40	40	41	38	39	38	38	40
Equity/assets ratio, %	46	45	43	42	42	42	43	44	43
Equity, SEK million	28,899	28,069	26,281	25,558	24,766	24,423	24,104	23,794	22,402
Net asset value, SEK million	35,388	34,497	32,577	31,746	30,715	30,295	29,897	29,501	27,666
Market capitalization, SEK million	42,834	44,682	39,369	43,098	45,144	35,607	37,290	37,356	36,828
PER SHARE DATA
Profit after tax, SEK	8.1	5.6	2.2	5.9	3.0	2.0	1.0	8.5	3.2
P/E ratio, times	11.8	14.2	16.6	22.1	16.5	12.5	13.5	13.4	15.9
Cash flow from operating activities, SEK	2.2	1.2	0.7	3.8	3.2	2.2	1.1	4.2	3.4
Equity, SEK	88	85	81	79	77	76	75	74	69
Net asset value per share, SEK	107.20	104.50	100.90	98.30	95.10	93.80	92.60	91.30	85.70
Share price, SEK	129.80	135.40	119.30	130.60	136.80	107.90	113.00	113.20	111.60
Shares outstanding, average, thousands	326,889	325,333	323,000	323,000	323,000	323,000	323,000	323,000	323,000
Shares outstanding at end of period, thousands	330,000	330,000	323,000	323,000	323,000	323,000	323,000	323,000	323,000

Quarterly overview

	Jul-Sep 2021	Apr-Jun 2021	Jan-Mar 2021	Oct-Dec 2020	Jul-Sep 2020	Apr-Jun 2020	Jan-Mar 2020	Oct-Dec 2019	Jul-Sep 2019
Rental income, SEK million	585	574	561	555	536	518	523	515	510
Net operating income, properties, SEK million	462	445	414	408	424	395	386	370	403
Surplus ratio, property management, %	79.0	77.5	73.8	73.5	79.1	76.3	73.8	71.8	79.0
Income from property management, SEK million	358	319	291	271	310	275	275	257	304
Return on equity, %	13.4	12.0	9.3	7.8	11.2	12.0	11.9	12.3	10.4
Earnings per share after tax, SEK	2.5	3.4	2.2	2.9	1.1	1.0	1.0	5.3	1.4
Cash flow per share from operating activities, SEK	1.0	0.5	0.7	0.5	1.0	1.1	1.1	0.8	1.3
Equity per share, SEK	88	85	81	79	77	76	75	74	69
Net asset value per share, SEK	107.20	104.50	100.90	98.30	95.10	93.80	92.60	91.30	85.70
Share price, SEK	129.80	135.40	119.30	130.60	136.80	107.90	113.00	113.20	111.60

Earnings-based key ratios are calculated on the average number of outstanding shares; yield figures are calculated on rolling twelve-month profit or loss.

18 WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Report signatures

The Board and CEO certify that the interim report provides a fair view of the Parent Company's and Group's operations, financial position and results and describes the significant risks and uncertainties to which the Parent Company and Group Companies are exposed.

Gothenburg, October 22, 2021

Lars-Åke Bokenberger
Chairman of the Board

Karin Mattsson
Vice Chairman of the Board

Anders Berntsson
Board member

Agneta Wallenstam
Board member

Mikael Söderlund
Board member

Hans Wallenstam
CEO

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Review report

To the Board of Directors of Wallenstam AB (publ)
Corp. id. 556072-1523

Introduction

We have reviewed the condensed interim financial information (interim report) of Wallenstam AB (publ) as of 30 September 2021 and the nine-month 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 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 International Standard on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing practices and consequently does 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, for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.

Göteborg 22 October 2021

KPMG AB

Mathias Arvidsson
Authorized Public Accountant

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Definitions

Share yield

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

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.

Alternative performance measures (APM)

Wallenstam presents a number of financial measures that are outside IFRS definitions (Alternative performance measures, according to ESMA's guidelines) with the aim of enabling effective evaluation of the company's financial 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 defined according to IFRS. Wallenstam applies these alternative key ratios consistently over time. The definitions describe how Wallenstam's key ratios are calculated. The key ratios are alternative performance measures according to ESMA guidelines unless otherwise stated.

The number of shares

The number of registered shares at any given time.

Number of shares outstanding: the number of registered shares less repurchased own shares at any given time.

Average number of shares: weighted average number of shares outstanding at any given time.

Residential property

Property, which predominantly consists of residential space.

Loan-to-value ratio

Interest-bearing liabilities and lease liability less cash and cash equivalents in relation to the Group's investments in properties, development properties and wind power 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.

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 flow per share

Cash flow for the period in relation to the average number of shares outstanding.

Cash flow from operating activities per share

Cash flow from operating activities for the period in relation to the average number of shares outstanding.

Commercial property

Property, which predominantly consists of commercial space.

P/E ratio

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

Earnings per share after tax

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

Return on equity**

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

Return on total capital**

Profit before tax with reversal of interest expenses for the latest rolling 12-month period in relation to average total capital employed.

Interest coverage ratio

Profit or loss before changes in value and impairment charges with reversal of net financial items for the latest rolling 12-month period in relation to net financial items for the latest rolling 12-month period.

Public use property

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

Average interest

Interest expenses for the period including profit 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.

Net asset value

Equity with the addition of deferred tax liabilities.

Net asset value per share

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

Occupancy rate – lettable area

Let floor space in relation to total floor 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 first year the property is taken into operation. Change in value new construction recognizes the difference 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 a full calendar year or more.

Surrender rate

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

Surplus ratio

Net operating income as a percentage of rental income.

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

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

** Bridge alternative performance measures	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Equity, SEK million	28,899	28,069	26,281	25,557	24,766	24,423	24,102	23,792	22,400
Average equity, SEK million	26,714	25,819	25,026	24,528	23,896	23,323	22,828	22,329	21,708
Total assets, SEK million	63,504	62,927	61,666	60,581	58,977	58,336	55,959	54,689	52,459
Average total assets, SEK million	61,531	60,497	59,104	57,708	56,084	54,524	52,846	51,306	49,700

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

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

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.

Defined 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.

WALLENSTAM TODAY

Wallenstam was founded in 1944 and the head office 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 11,100 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-sufficient 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

The majority of our apartments, about 6,500, are located in the Stockholm business area. Approximately 300 of these apartments are located in Uppsala. The Stockholm business area had around 650 apartments under construction on closing day.

Gothenburg

Our property holdings in the Gothenburg business area consist of around 4,600 apartments and about 900 commercial tenants that rent office and retail premises, mainly in inner city locations. The Gothenburg business area had around 1,550 apartments under construction on closing day.

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. Profits are reinvested and used to develop the business further. Shareholders receive a share of the profits in the form of dividends.

WALLENSTAM | INTERIM REPORT JAN 1-SEP 30, 2021

---

Calendar

Year-end report 2021	February 8, 2022
Publication of Annual report 2021	week commencing March 21, 2022
Interim report Q1, 2022	April 26, 2022
Annual General Meeting 2022, Gothenburg	April 26, 2022
Interim report Q2, 2022	July 14, 2022
Interim report Q3, 2022	October 25, 2022

This is information that Wallenstam is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 08:00 CEST on October 22, 2021.

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

W

in

^{}[]

f

Wallenstam AB (publ.)
SE-401 84 Gothenburg
Visiting address: Kungsportsavenyen 2
Telephone +46 31-20 00 00
www.wallenstam.se
Co reg. no. 556072-1523