Annehem Fastigheter : Year-end-report 2021

Interim report January‐December 2021	Q4
Strong performance
in property portfolio

October‐December

• Rent revenue for the period amounted to SEK 50.2 million (43.2)
• Net operating income amounted to SEK 39.1 million (34.5)
• Income from property management amounted to SEK 17.0 million (‐ 4.3)
• Earnings per share amounted to SEK 1.10 (0.75).
• Investments in existing properties amounted to SEK 9.0 million (26.5)
• Valuations of investment properties yielded an increase in fair value of SEK 66.8 million (69.5)
• Acquisition of the Ledvolten 1 property at an underlying property value amounting to SEK 290.0 million - the property is certified according to BREEAM Very Good with energy class B

January‐December

• Rent revenue for the period amounted to SEK 187.8 million (151.5)
• Net operating income amounted to SEK 155.8 million (115.0)
• Income from property management amounted to SEK 86.2 million (16.0)
• Earnings per share amounted to SEK 3.56 (1.22).
• Long‐term net asset value per share amounted to SEK 40.9 (36.3).
• The fair value of investment properties amounted to SEK 3,994.1 million (3,317.5).
• Investments in existing properties amounted to SEK 52.5 million (137.3)
• Valuations of investment properties yielded an increase in fair value of SEK 172.9 million (85.9)
• Acquisition of the Ledvolten 1 property at an underlying property value amounting to SEK 290.0 million - the property is certified according to BREEAM Very Good with energy class B
• Acquisition of the Jupiter 11 property at an underlying property value amounting to SEK 131.0 million - the property is certified in accordance with Swedish Green Building Council Silver, with energy classification B
• Redemption of leasehold rights in Helsinki at a value of EUR 9.2 million
• Agreement on the acquisition of logistics property in Södertälje with an underlying property value of SEK 96.5 million to be taken into possession in Q2 2022 - the property will be certified in accordance with Swedish Green Building Council Silver, with energy classification B

	Net operating income		Property value	Economic occupancy rate
2021		31 December 2021	31 December 2021
	SEK 156million	SEK3,994million	93%
Summary of the Group's performance
				Oct‐Dec		Full year
	SEK million			2021		2020	2021		2020
	Rent revenue			50.2		43.2	187.8		151.5
	Net operating income			39.1		34.5	155.8		115.0
	Income from property management			17.0		‐4.3	86.2		16.0
	Income from property management excl. Items affecting comparability		17.0		17.0	86.2		45.0
	Income from property management excl. Items affecting comp. per share, SEK		0.29		0.29	1.46		0.76
	Net income for the period			65.1		44.2	209.7		71.8
	Net income for the period per share, SEK			1.10		0.75	3.56		1.22
	Net loan‐to‐value ratio, %			38.3		33.1	38.3		33.1
	Equity/assets ratio, %			53.9		54.4	53.9		54.4
	Interest‐coverage ratio, multiple			2.7		0.5	3.0		1.4
	Interest‐coverage ratio excl. items affecting comparability, multiple		2.7		3.0	3.0		2.0
	Economic occupancy rate, %			93.0		95.5	93.0		95.5
	Return on equity, %			2.9		2.1	9.2		3.5
	Surplus ratio, %			77.9		79.8	83.0		75.9

Q4

CEO's comments

Continued high demand for modern properties with a high degree of flexibility in growth areas provides a solid platform

On 11 December, it was the first anniversary of Annehem's Listing on Nasdaq Stockholm, Mid Cap. It has been an exciting year, in which we commenced our growth journey with a number of acquisitions. During the year, the value of the property portfolio increased from SEK 3,317.5 million to SEK 3,994.1 million. Our high‐quality properties are located in the metropolitan areas of Sweden, Norway and Finland, which are all displaying strong growth.

We are building on a stable foundation in an uncertain world.

The past year has been special for all of us. The pandemic entailed continued uncertainty for many sectors in various ways. It further increased the demand for flexible premises, where security, experience and well‐being are at the core. The fact that it is difficult for tenants to assess how increased remote working will impact the need for office space also affects us as property owners. At the same time, there are employees who have difficulty in working from home due to lack of space, for example. The need to meet co‐workers is important for sharing experiences and understanding, which in turn generates creativity and energy. Annehem's premises are well suited so that, together with our tenants, we will be able to continue to develop the meeting places of the future with flexibility, sustainability and

customised solutions as key concepts. Annehem has relatively long leases with an average of 6.0 years Jörgen Lundgren, CEO and large and reputable customers.

Strong balance sheet supports further growth

We have begun our journey of growth and at year‐end had an unutilised credit framework of SEK 420.0 million and cash of SEK 190.2 million, a total of SEK 610.2 million, at our disposal. During 2021, green financing was secured for the properties that were taken into possession during the year, which entailed a cut in the interest expense by half compared with the terms of the initial financing. Overall, this means that we have not only secured financing for our three agreed acquisitions in the form of a logistics project and two residential projects, but also have the capacity for further acquisitions.

Sustainability action an enormous opportunity for further value generation

Sustainability is now a hygiene factor and must be high on the agenda for property companies and other companies. Tenants, shareholders and creditors require that Annehem works on constant improvements in the area of sustainability. For us, this is stimulating and a self‐evident aspect of the Company's development going forward. For this, Annehem established a number of sustainability goals in 2021. Starting from the 2021 outcome, we will reduce our energy consumption by at least 9.0 percent by 2024, that is, 3.0 percent per year. Moreover, Annehem has a goal for 90.0 percent of its property value to be sustainable by 2024 in accordance with the EU taxonomy regulation.

During the year, CICERO conducted an independent evaluation (Shades of Green) of Annehem from a sustainability perspective, which resulted in 61.0 percent of our income and 79.0 percent of our investments for 2020 being graded as dark green or green. This is a good start, but based on our efforts in 2021 and what we will do in 2022, we foresee the potential for further improvements in our share of green income and investments.

During 2021, we acquired two environmentally certified buildings: Jupiter 11, with Swedish Green Building Council Silver and Ledvolten 1, with BREEAM certification Very Good. Furthermore, we certified two buildings according to BREEAM in Use, Partille Port 11:60 and Sadelplatsen 4, with both buildings achieving the level of Very Good.

In November, Annehem received the satisfying news from the Allbright Foundation that we came in sixth of 339 companies evaluated in its equality ranking of Swedish listed companies. We are very proud of this.

Value‐generating strategic acquisitions and properties taken into possession

Annehem has acquired, but not yet taken into possession, properties with an underlying property value of SEK 481 million. In 2021, properties with a value of SEK 531 million were taken into possession, including the redemption of leasehold rights in Helsinki, Finland. Our strategy entails increased exposure to residential homes, logistics and community service properties, which completed acquisitions are in line with. We are continuing our journey of growth and proceeding with a pipeline of letters of intent, which will enable further strengthening of our geographic position in Stockholm, Helsinki and Malmö.

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Interim report January‐March 2021

Q4

Limited impact of the pandemic

From a results perspective, the impact of the ongoing pandemic during the year was extremely limited. Concessions on rents related to the pandemic amounted to slightly less than SEK 0.2 million. Income from property management excluding items affecting comparability, increased by 91.5 percent year‐on‐ year. At the close of 2021, the economic occupancy rate amounted to 93.0 percent, a decrease of 1.0 percent on the same quarter last year, which was attributable to the expiry of a block lease of parking spaces in Solna. The property value at year‐end amounted to SEK 3,994.1 million, of which capital appreciation comprised SEK 172.9 million or 5.2 percent. The net loan‐to‐value ratio amounted to 38.3 percent.

Market commentary

Low interest rates and very robust monetary and finance policy activities have continued to support the economy. There was a strong increase in the rate of inflation during 2021 and in October, it was 3.1 percent, the highest level in 13 years. It is something that many economic analysts regard as a temporary effect of the pandemic, although increasing numbers of economists are indicating a risk for more sustained price increases. Inflation is expected to amount to 2.6 percent in 2022, according to the OECD forecast, which is slightly above the Riksbanken inflation target of 2.0 percent. The macroeconomic trend in Norway and Finland is expected to track that of Sweden rather well. GDP recovered after the decline in 2021 and unemployment is decreasing.

Annehem's three home markets all experienced very low interest rate levels. In Sweden, which has a variable rate of exchange, the Riksbanken's key policy rate was zero. The market does not expect any interest rate rises before the end of 2022 at the earliest. In Finland, which is part of the Eurozone and thus has the same monetary policy as the remaining Euro countries, the key policy rate was also zero. Finally, in Norway, which has, like Sweden, a variable rate of exchange, the central bank increased the key policy rate to 0.25 percent in the autumn of 2021. The access to financing was excellent in all home markets in 2021.

According to Colliers 2022 Investor Outlook Report, there is a tangible trend that offices are back on the investors' radar, in particular, modern offices of high quality in prime locations and with a clear environmental profile. Following the pandemic, there is a pent‐up need for office space, which cannot be offset by the offering, as new production has been inhibited by rising production costs.

The rent levels for office properties in Stockholm are expected to increase by nearly 3.0 percent per year during the period of 2022-2024. In Solna, where Annehem Fastigheter has a focused portfolio, the economic vacancy rate amounted to 6.0 percent, which is lower than in Stockholm in total. For community service properties, tax‐financed operations, demand is high, which often results in long and stable leases. Continued significant demand for residential properties is being driven by healthy population growth.

In Helsinki and Oslo, the rent levels of office properties is expected to increase at a somewhat slower pace in 2022‐2024 than in Stockholm, according to Jones Lang Lasalle. In Helsinki, rents are expected to increase by an average of 2.0 percent per year, while in Oslo, they are expected to rise by an average of 1.4 percent during the period.

Uncertainty increases with associated opportunities and challenges

For some time now, it has been necessary for premises to function as flexible and sustainable meeting places, although this shift accelerated further during the pandemic. It is becoming increasingly important that our tenants perceive them as places where energy and creativity can come together to create the security and satisfaction that result in companies developing. We continue to monitor the macro‐ economic situation, in which inflation is rising to levels not seen for a long time. The question is whether this rise is temporary, driven by, for example, high energy prices, or if the price increases are more general, which we are seeing signs of in the US. Naturally, this question is very important in determining the stance we take in relation to the risk of interest‐rate increases. We are preparing for a rate increase by extending our fixed‐interest periods, which are currently an average of 3.0 years.

We can see that we are well‐positioned in relation to the expectations that our existing and future tenants have of us as a landlord.

I also want to take this opportunity to thank all of our employees for their commitment and fine work that they carry out every day in a company that continues to be and always will be under development.

Jörgen Lundgren

CEO

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Interim report January‐March 2021

Q4

This is Annehem

Fastigheter

Business concept

Annehem Fastigheter owns and manages high‐quality commercial, community service and residential properties located near good transport links. The properties are located in growth areas in the Nordics and possess a clear environmental profile. Annehem Fastigheter builds lasting relationships and value through management close to customers.

Vision

Annehem Fastigheter is to always be the number one choice for customers and employees wherever we choose to operate.

Mission

Annehem Fastigheter creates attractive and sustainable meeting places and homes. We believe that workplaces, meeting places and homes are tools for nurturing growth and attractiveness. The positive development of our customers in turn creates growth and attractiveness in the cities in which we operate.

Property portfolio

Annehem Fastigheter's current property portfolio has the following geographic range:

• Capital Region: Stockholm, Helsinki and Oslo
• South Region: Malmö, Ljungbyhed, Ängelholm, Gothenburg and Helsingborg

Sadelplatsen 4 I Solna

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Comments on

the Group's performance

Income statement

Fourth quarter

Rent revenue amounted to SEK 50.2 million (43.2), other property income amounted to SEK 9.8 million (7.9), and total property expenses to SEK 20.9 million (16.6), which means that net operating income increased to SEK 39.1 million (34.5). The positive trend for rent revenue was mainly attributable to the additional properties compared with the year‐earlier period.

Other property income amounted to SEK 9.8 million (7.9) and comprised invoiced operating costs, income from short leases and from the rental guarantees issued (by Peab) for the properties Stenekullen 2, Ultimes I&II and Jupiter 11, which amounted to SEK 2.0 million for the quarter. Rental guarantees were issued for 100 percent of the vacant spaces in Stenekullen 2 (from 1 March 2020) and Ultimes I &

1. (from 1 July 2020) and Jupiter 11 (from 1 May 2021) by Peab. These guarantees are valid until the vacant spaces are let, but not longer than for 36 months from the issuing date.

The quarter was charged with higher property expenses, mainly due to planned maintenance completed during the quarter and higher electricity prices. Maintenance costs increased by SEK 1.9 million compared with the preceding quarter and electricity and heating rose by SEK 2.3 million compared with the preceding quarter. The quarter was also impacted by particularly high snow clearance costs, given the heavy snowfall in the South Region. The increased property expenses contributed to a somewhat lower surplus ratio compared with the year‐earlier quarter, amounting to 79.8 percent in the fourth quarter of 2020 and 77.9 percent in the corresponding quarter in 2021.

Income from property management amounted to SEK 17.0 million (‐4.3) in the quarter. Interest expenses amounted to SEK 9.8 million (8.3), which is somewhat higher than the year‐earlier period due to higher borrowing related to a larger property portfolio. Other financial items amounted to SEK ‐2.6 million (‐6.6) and mainly comprised currency effects of SEK 4.0 million and changes in value of currency futures of SEK ‐6.6 million (‐).

The effects of unrealised changes in value of properties amounted to SEK 66.8 million (69.5). The effects of changes in value of fixed‐interest derivatives amounted to SEK 1.3 million (‐).

Tax expense for the period amounted to SEK 20.1 million (21.1). Tax expense is due primarily to deferred tax on the growth in value of the property portfolio and the fair value measurement of fixed‐interest derivatives.

Income for the period amounted to SEK 65.1 million (44.2).

January to December period

Rent revenue amounted to SEK 187.8 million (151.5), other property income amounted to SEK 39.1 million (26.9), and total property expenses to SEK 71.1 million (63.4), which means that net operating income increased to SEK 155.8 million (115.0). The positive trend for rent revenue was mainly attributable to the additional properties compared with the year‐earlier period, but also to increased short‐term leases. The increase in rent revenue contributed to a sharp improvement in the surplus ratio from 75.9 percent for full‐year 2020 to 83.0 percent for full‐year 2021.

Other property income developed positively following the rental guarantees issued (by Peab) for Stenekullen 2, Ultimes I&II and Jupiter 11, which amounted to SEK 9.4 million for the full year. Rental guarantees were issued for 100 percent of the vacant spaces in Stenekullen 2 (from 1 March 2020) and Ultimes I & II (from 1 July 2020) and Jupiter 11 (from 1 May 2021) by Peab. These guarantees are valid until the vacant spaces are let, but not longer than for 36 months from the issuing date.

Income from property management amounted to SEK 86.2 million (16.0) for the full year. Interest expenses amounted to SEK 44.1 million (43.7). Other financial items amounted to SEK 0.0 million (‐6.9) and mainly comprised currency effects of SEK 10.0 million and changes in value of currency futures of SEK ‐10.0 million. Earlier during the year, in the third quarter, SEK 4.5 million was received from the sale of a subdivided property in Valhall park, which had a positive impact on the income from property management.

Q4

Net operating income per quarter

SEK million 45

40

35

30

2020	2021	2021	2021	2021
Q4	Q1	Q2	Q3	Q4

Income from property management per quarter

excl. items affecting comparability

SEK million 30

25

20

15

10

5

2020 2021 2021 2021 2021

Q4 Q1 Q2 Q3 Q4

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