Castellum : Half-year report Jan-June 2021

Nordic platform in office and logistics

Q2 HALF-YEAR REPORT JANUARY-JUNE 2021

CASTELLUM HALF-YEAR REPORT JANUARY-JUNE 2021

A strong half-year and increased pace of investment

Important events during the quarter

During the period, Castellum acquired 18,470,976 shares in Entra at an average price of NOK 207 per share. After the acquisition, Castellum holds 33,470,976 shares, corresponding to 18.4% of shares and votes in Entra.

Castellum signed a declaration of intent with the Port of Gothenburg regarding the joint development of the Halvorsäng district into one of the Nordic region's leading logistics hubs. The project will be conducted in a partner company in which Castellum and the port own equal shares. Castellum will invest approximately SEK 1 billion in the project.

Castellum acquired land in the best logistics location in Malmö for the purpose of building a state-of-the-art warehouse and terminal facility for Budbee. The investment amounts to approximately MSEK 94.

Castellum's 30,000 sq. m. solar cell installation on the roof of the Hisingen Logistics Park received the Solar Energy Award, which is presented by the Solar Energy Association of Sweden. The installation is part of the company's 100% on Solar initiative, which means that one hundred solar cell installations will be constructed on Castellum properties through 2025.

Important events after the close of the period

At the beginning of July, Castellum acquired and occupied

22 properties in Finland with an annual rent of about SEK 0.6 billion for approximately SEK 6.5 billion, of which nine properties with a value corresponding to SEK 2.1 billion were resold.

Furthermore, Castellum has acquired two office properties in Stockholm for SEK 2 billion - one property in Solna Strand comprising approximately 21,500 sq. m. with occupancy at the beginning of September, and one property in the expansive Järva Krog area in Solna comprising approximately 12,600 sq. m. with occupancy at the beginning of July.

• Income for the period January-June 2021 totalled MSEK 2,936 (2,999).
• Income from property management amounted to MSEK 1,615 (1,689), equivalent to SEK 5.88 (6.18) per share - a decrease of -5%.
• Change in value on properties amounted to MSEK 3,122 (418) and on derivatives to MSEK 117 (-209).
• Net income for the period amounted to MSEK 5,550 (1,534), corresponding to SEK 20.20 (5.62) per share.
• Long-termnet reinstatement value (EPRA NRV) amounted to SEK 227 per share (199), an increase of 14%.
• Net investments amounted to MSEK -8,986 (1,378) of which MSEK 335 (292) pertained to acquisitions, MSEK 1,679 (1,205) to new construction, extensions and reconstructions, and MSEK 11,000 (119) to sales.
• Net lettings for the period were MSEK 66 (200).

KEY METRICS

	2021	2020	2021	2020	2020
	Apr-June	Apr-June	Jan-June	Jan-June	Jan-Dec
Income, MSEK	1,434	1,523	2,936	2,999	6,004
Net operating income
(NOI), MSEK	1,015	1,132	2,034	2,170	4,335
Income from property
management, MSEK	836	895	1,615	1,689	3,380
NOI SEK/share	3.06	3.28	5.88	6.18	12.35
NOI growth	-7%	+10%	-5%	+9%	+7%
Net income after tax,
MSEK	1,710	1,052	5,550	1,534	5,615
Net investment, MSEK	0	735	-8,986	1,378	4,267
Net lettings, MSEK	26	101	66	200	239
Loan-to-value ratio1)	38%	41%	38%	41%	41%
Interest coverage ratio	567%	561%	532%	529%	530%
EPRA NRV, SEK/share	227	199	227	199	214
EPRA NTA, SEK/share	219	190	219	190	205
EPRA NDV, SEK/share	185	156	185	156	168

1. The definition of loan-to-value ratio has been amended to adapt the key metric to investment in financial assets (Entra holding). The new definition is net interest-bearing liabilities in relation to total assets. The comparative figures have been restated.

Front page: Castellum's coworking company United Spaces has six facilities in Stockholm, including Torsgatan 26, where this picture was taken. United Spaces also has operations in Uppsala, Gothenburg and Malmö, and has a total of nine facilities.

This is a translation of the Swedish language original. In the events of any differences between this translation and the Swedish original, the latter shall prevail.

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CASTELLUM HALF-YEAR REPORT JANUARY-JUNE 2021

Robust efforts continue

I left the Annual General Meeting of Castellum on 21 March 2013 as the company's newly appointed CEO. As you already know, I will be stepping down from my position at the beginning of October, so this will be my last comments as CEO of Castellum.

And while it is imperative for all companies to look forward, I hope you can indulge me as I take a brief look back at these eight intensive years. In figures, Castellum achieved the ­following during the 2013-2021 period:

Percentage on average per year

Income from property management, SEK/share, growth	+8%
Dividend SEK/share, growth	+9%
Net asset value, SEK/share, growth	+12%
Total return, Castellum share	+17.5%
Total property value	+14%
Number of shareholders	+31%1)

1. During the period Q2 2013-Q2 2021, the number of shareholders increased from 10,100 to approximately 89,000.

The loan-to-value ratio was also reduced from 54% to 39% during this period. It is true that we have not reported the highest total return among all our Nordic colleagues, but our strategy has been based on low risk by comparison with the sector, which has been a promise to - and been appreciated by

- our shareholders.

The promise has, among other things, meant that:

• To grow and consistently deliver a higher dividend in line with growth in income from property management, while ensuring a moderate risk level.
• Increased density and quality in the portfolio.
• Global sustainability leader in the sector - back in my first CEO comment, one of the headings was "Sustainability leads to profitability."
• One of the largest producers of offices and logistics
  properties­ in the Nordic region.

The single largest transaction was the acquisition of

Norrporten,­ which granted us access to the city centres of Stockholm and Copenhagen, for example, as well as adding a new and significant customer segment, public ­sector properties. Furthermore, major positive capital gains were created on the parts of the portfolio that were resold for the purpose of financing the transaction and streamlining the portfolio.

Castellum today - a Nordic platform

To link to the present, the investments made this year - including the transactions completed in July - have consolidated Castellum's position as a Nordic platform for property investments. Over the past six months, nearly SEK 4 billion has been invested in Norway (Entra) and SEK 4.5 billion in Finland, mainly in Helsinki. Of the Finnish acquisition for a gross amount of SEK 6.5 billion, a number of properties have been resold for SEK 2 billion to increase the concentration on Helsinki.

Other investments include two large office properties in Stockholm for approximately SEK 2 billion and a strategically important joint venture with the Port of Gothenburg, which will entail further investments of SEK 1 billion. Other ongoing Castellum projects of approximately SEK 7 billion can be added to this figure. Based on the current market situation, these projects will enable further project gains of approximately SEK 1.8 billion.

Of our property value of approximately SEK 114 billion (including our stake in Entra's property value of approximately SEK 10 billion) after the acquisitions, Sweden accounts for 80%, Norway for 9%, Finland for 6% and Denmark for 5%.

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For investors, Castellum represents a particularly attractive investment option in offices and logistics in the Nordic region. Castellum has both the competence and financial capacity for growth moving forward, and contributes to risk diversification, sustainability and a high degree of liquidity in an international property portfolio.

"We have had one of the strongest half- year earnings in the company's history. Moreover, investments during the year have consolidated Castellum's position as a Nordic platform and made the company an interesting investment option in offices and logistics in the Nordic region.

Increasing net asset value, decreasing loan-to-value

CASTELLUM HALF-YEAR REPORT JANUARY-JUNE 2021

Close to the largest port in the Nordic region and with access to large test areas for fossil-free vehicles of the future on land and in the air, the area around Säve airport has enormous development potential. This is why Castellum has now chosen to call the area Gateway Säve. In addition to sustainable mobility, Gateway Säve is being developed as a leading logistics hub in Scandinavia.

In terms of earnings for the first six months of the year, we can once again confirm that the pandemic had barely any effect on our profit.

Net lettings amounted to a strong MSEK 66. Income from property management declined by 5%, which is due in its entirety to the major divestments totalling SEK 10 billion

Over the course of one year, the net asset value increased by SEK 28 per share to SEK 227 while the loan-to-value ratio fell to 38.6% (41.8) during the same period. Even after the above-mentioned significant investments, the loan-to-value ratio will be comfortably below 45%.

Regardless of how the year ends, both the board and I are convinced that Castellum's financial strength will be able to provide the scope for a continued increase in the dividend for the 24th consecutive­ year.

carried out at the beginning of the year. The newly acquired properties will make a positive contribution during the remainder of the year. The robust property market con­ tributed to major positive value adjustments of approximately SEK 3 billion.

Combined, this yielded one of the strongest half-year ­earnings on record, SEK 5.6 billion.

Better second half of the year

The major investments made during the year will have a positive impact on income from property management and bring us back to the level prior to the divestments - but with a portfolio that will be of a higher quality and a stronger basis for continued growth moving forward.

Many thanks!

In conclusion, I would like to thank all of my dedicated colleagues who I have worked tirelessly with through all these years. I would also like to express my gratitude for the trust placed in me by shareholders, business contacts, customers and municipalities.

Henrik Saxborn

CEO

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CASTELLUM HALF-YEAR REPORT JANUARY-JUNE 2021

Market comments

Swedish, Danish and Finnish economies

Economic performance in the first half of 2021 accelerated

substantially­compared with the negative performance during most of 2020. The majority of financial commentators now feel that the economic recovery will continue in 2021. Nonetheless, unemployment in Sweden is expected to rise slightly (to approximately 8.7% in 2021) to subsequently fall to just over 7% in 2022. Sweden's GDP for full-year 2020 fell nearly 3% but is expected to rise drastically and peak (+4.2%) in 2021, after which growth is predicted to decline somewhat to +3.7% in 2022 (Riksbank, July 2021). Low interest rates and very robust monetary policy and fiscal measures have continued play a part in supporting the financial markets.

The development of the Swedish krona exchange rate has a substantial role in the inflation trend in Sweden - a weak exchange rate normally contributes to higher inflation. In 2021 to date, the krona has traded within a relatively narrow range - 10-10.25 against EUR - after having strengthened in the second half of 2020. According to the Riksbank (July 2021), inflation - expressed in terms of CPIF - was +0.5% in 2020 and is expected to rise to approximately +1.8% in 2021 and +1.7% in 2022.

Following a negative 2020, the Danish and Finnish economies have also recovered substantially as a result of finance policy measures and the favourable effects of a highly expansive monetary policy. The primary scenario for Denmark is that GDP will increase 3.7% in 2021 and 3.7% in 2022 while unemployment will decrease. It is believed that the inflation rate will end up at +1.3% in 2021 and +1.5% in 2022 (Danmarks Nationalbank, June 2021).

In Finland, it is believed that GDP will increase by 2.9% in 2021 and 3.0% in 2022 while unemployment will decrease. It is believed that the inflation rate in 2021 will be +1.7% (Bank of Finland, June 2021).

MACRO INDICATORS - SWEDEN

Unemployment	9.1%	May 2021
Rate of inflation	1.8%	(May 2021 compared with May 2020)
GDP growth	0.8%	Q1 2021 compared with Q4 2020

Source: Statistics Sweden

Rental market

In the locations where Castellum conducts operations, the market has shown resilience to the ongoing pandemic with stable market rents.

In Stockholm and Malmö, office vacancy rates increased somewhat in the respective CBDs. Over the short term, the offering of new construction will remain limited and primarily let in advance.

Some pressure has been noted in the Gothenburg CBD rental market owing to large new production volumes.

In the Helsinki CBD, slightly higher office vacancy rates were noted during the quarter. Strong demand has spread from the CBD to the surrounding areas. However, there is a high vacancy rate in secondary areas and properties.

A slight increase in the office vacancy rate was also noted in the Copenhagen CBD during the quarter. A high level of access to land is a limiting factor for rent potential.

The rental market in Sweden for warehouses/logistics spaces was positive during the period, with stable to rising rents in prime logistics locations, particularly in semi-central locations with good means of transportation and sorting yards (last-mile locations).

Interest and credit market

In December 2019, Sweden's Riksbank raised interest rates from -0.25% to zero. The Riksbank's latest repo-rate path (July 2021) still indicates that the repo rate will remain at zero through at least the end of 2024.

Swedish long-term interest rates (expressed here as a five- year swap rate) have ranged between +0.1% and +0.4% to date this year, which does not differ greatly from the trend in 2020. At the end of the first quarter of 2021, the level was +0.4%, which was approximately 30 basis points higher than at the end of the preceding year. Current levels remain historically very low.

In the first half of 2021, access to financing - primarily in the euro market, but to some extent also in the Swedish capital market - has been excellent despite a tendency in the offering of property-related borrowing to continue to increase. Credit spreads remained relatively stable to date this year and are at historically advantageous levels for borrowers, though lending

conditions in the property sector have not improved to the same extent as for most other sectors.

In Denmark, the CIBOR 3m rate remained in the range of -0.2% to -0.25% during the first half of the year. EURIBOR 3m was also stable during the first half of the year, at -0.55%.

Property market

The volume for transactions over MSEK 40 in the transaction market in Sweden is estimated to have amounted to approximately SEK 150 billion (~81) over 345 transactions (212) in the first half of 2021.

Sentiment among investors in the Swedish property market was strong during the period, and there is a great deal of interest in and plenty of capital for property investments. Several transactions took place at strong levels during the latest quarter.

The share of foreign investors in the first half of 2021 was approximately 14% (29). The Nordic property market remains attractive to international investors.

In Castellum's markets, the required yield for office properties was either stable or fell during the period. The number of comparison transactions since the outbreak of the coronavirus pandemic has been limited for some sub-markets, but most transactions were conducted at strong levels in the latest quarter.

Warehouse and logistics properties continue to attract domestic and international investors, driven by the growth of e-commerce. The short supply of attractive logistics properties, in combination with high demand, has resulted in falling required yields.

In Denmark, the transaction volumes totalled approximately DKK 41 billion (~24) in the first half of 2021. The mood among investors remains strong. The required yield for offices in the CBD is assessed as remaining stable at 3.5%.

In Finland, the transaction volumes totalled approximately EUR

2.2 billion (~2.6) in the first half of 2021. Among investors, there is considerable demand for the most attractive objects, and the required yield for offices in the CBD in Helsinki is estimated at 3.4%, which is roughly on a par with Stockholm.

In all, this shows a strong property market that indicates a great deal of resistance to the negative effects of the pandemic.

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