Castellum : Interim report Q1 2021

High level of activity in the portfolio

Q1 INTERIM REPORT JANUARY-MARCH 2021

CASTELLUM INTERIM REPORT JANUARY-MARCH 2021

High level of activity and stable earnings

Important events during the period

The year began with a high level of activity in the property portfolio for the purpose of streamlining and meeting cus­ tomers' increasing demands, primarily in the warehouse and logistics segment. In the last quarter of 2020, Castellum sold a portfolio to Blackstone, comprising primarily warehouses and logistics properties that were handed over in early February. Subsequently, an additional mature portfolio of 53 properties was sold to Blackstone in the first quarter for net proceeds of SEK 4.8 billion, to be handed over in early May.

After two successful new construction projects in the Brunna logistics hub outside Stockholm, Castellum initiated an addi­ tional new production project for approximately MSEK 218 during the quarter. Occupancy is estimated for the second quarter of 2022.

Castellum has also initiated an investment of approximately MSEK 300 in Castellum Säve in Gothenburg for the Swedish Electric Transport Laboratory (SEEL in Swedish). The invest­ ment, which pertains to new production of approximately 15,000 square metres that is scheduled to be completed in the spring of 2023, comprises Sweden's largest research facility for electric and goods vehicles. Castellum's vision is to continue to develop the former airport district into one of the Nordic region's largest and most modern logistics hubs with a focus on transportation and mobility.

• Income for the period January-March 2021 totalled MSEK 1,502 (1,476).
• Income from property management amounted to
  MSEK 779 (794), equivalent to SEK 2.82 (2.91) per share
  - a change of -3%.
• Change in value on properties amounted to MSEK 1,607
  (3) and on derivatives to MSEK 19 (-167).
• Net income for the period amounted to MSEK 3,840 (482), corresponding to SEK 13.90 (1.76) per share.
• Long-termnet reinstatement value (EPRA NRV)
  amounted­ to SEK 220 per share (193), an increase of 14%.
• Net investments amounted to MSEK -9,014 (643) of which MSEK 177 (75) pertained to acquisitions, MSEK 688 (568) to new construction, extensions and recon- structions, and MSEK -9,879 (0) to sales.
• Net lettings for the period were MSEK 40 (99).

KEY METRICS

	2021	2020	2020
	Jan-Mar	Jan-Mar	Jan-Dec
Income, MSEK	1,502	1,476	6,004
Net operating income
(NOI), MSEK	1,019	1,038	4,335
Income from property
management, MSEK	779	794	3,380
NOI SEK/share	2.82	2.91	12.35
NOI growth	-3%	+9%	+7%
Net income after tax,
MSEK	3,840	482	5,615
Net investment, MSEK	-9,014	643	4,267
Net lettings, MSEK	40	99	239
Loan-to-value ratio	41%	44%	44%
Interest coverage ratio	499%	497%	530%
EPRA NRV, SEK/share	220	193	214
EPRA NTA, SEK/share	211	185	205
EPRA NDV, SEK/share	179	153	168

The Öresund region is one of the areas in which Castellum sees great potential for new warehouse and logistics establish­ ments. In March, building rights in Malmö for a land area of nearly 24,000 square metres were acquired for approximately MSEK 50.

New production in the office segment remains at a high level.

During the quarter, Castellum announced its plans for investing over a half billion Swedish kronor in the Hornsberg property in the Västra Kungsholmen district of Stockholm to create 15,000 square metres of office. The detailed develop­ ment plan is expected to be approved in 2022.

MDKK 778, which is on a par with the latest valuation from the fourth quarter of 2020.

In order to promote increased shareholder value, the Board has decided to repurchase own shares by virtue of the authorisation from the 2021 Annual General Meeting.

In March, plans were presented for the continued development of the district around Torsgatan in Stockholm. The project entails an estimated investment of approximately MSEK 500 in new office buildings with lettable area of approximately 8,000 square metres and attractive inner courtyards. The detailed develop­ ment plan is being revised and will be presented for consultation later this year. Preliminary completion of the project is planned for 2025.

Events after the end of the period

In early April, Henrik Saxborn announced that he would be leaving the position of President and CEO in 2021. In consulta­ tion with Henrik Saxborn, the Board of Directors has initiated a process to appoint a new President and CEO.

Castellum has signed an agreement with Genesta to sell the Sundby Overdrev property in Copenhagen at a value of

Front page: Castellum continues to step up its strategic focus on warehouse and logistics buildings in select premium locations. Mekonomen is one of Castellum's tenants who have chosen to establish themselves in the modern, rapidly growing Brunna logistics hub outside Stockholm. Castellum owns just over 180,000 square metres of developed land and land eligible for development, divided among six properties in the area.

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.

2

CASTELLUM INTERIM REPORT JANUARY-MARCH 2021

Substantial changes - but the same goals

For Castellum, the times have been unusually turbulent lately. A new Board of Directors, a new Chairman of the Board, and I myself have announced that I am stepping down as CEO.

It was gratifying that the shareholders could have their say, and with that we can fully return to normal - meaning a focus on creating shareholder value. I can assure you that I myself will work tirelessly until my last day as CEO to achieve our goals, which will remain unchanged going forward. I also hope to be able to help the new CEO get settled into this fascinating job.

For 2021 in particular, our tough goals entail an extra chal­ lenge. As I announced in the Annual Report in February, the major sales will make it difficult to achieve growth in income from property management in the vicinity of the target of 10%. On the other hand, our financial position is stronger than ever. And the turbulence has not made us passive - on the contrary, we have been extremely active.

Our strategy behind the major sales in logistics has been to benefit from the drastically lowered yields, to sell older prop­ erties for SEK 10 billion in two transactions and to make major valuation gains (23% in total compared with the valuation in the third quarter 2020). We did this to create the resources, through our own projects with greater profitability, to build new, modern and efficient units adapted to today's require­ ments in the logistics sector. These transactions have actively contributed to the 14% increase in Castellum's net asset value over the past year to SEK 220 per share and a reduction in the loan-to-value ratio to 41% (44).

What we are currently involved in on the logistics side is the development of Säve, Brunna and Malmö.

Säve will involve numerous possibilities for our logistics operations going forward, with a long-term investment

perspective of around SEK 10 billion, but at this point we are pleased to have strengthened the research element at Säve. For SEEL, the Swedish state's test bed for electromobility, Castellum is now starting construction of 15,000 square metres that will house Sweden's largest research facility for electric and charging vehicles. The investment is estimated at MSEK 300, and the rental value at MSEK 21 per year. This localisation strengthens Säve as a centre for the development of fossil fuel-free mobility.

In Brunna, north of Stockholm, Castellum is investing MSEK 218 in a third large logistics property. The lettable area is 17,000 square metres, and the annual rent is estimated at MSEK 15. Three of our six properties in this area remain to be constructed.

In the Malmö area, Castellum has acquired a number of logistics properties and land at an attractive location adjacent to Malmö's outer ring road for a total of MSEK 250.

Resilient markets

Net lettings for the period were MSEK 40, which indicates significant resilience in our markets. Especially because let­ tings could still occur without corrections to market rents. In our existing portfolio, rents increased 1%. Owing to the sales, which included more than logistics (e.g., all of the Halmstad portfolio), however, the aggregate income from property management fell 3% during the first quarter.

This is, however, a non-recurring effect in the timing of our strategy of investing in our own major projects that have longer lead times but are considerably more profitable than acquisitions under the current downward pressure on yields. Already from the middle of next year - and on a routine basis going forward - these projects will contribute significant growth.

CONT. NEXT PAGE

3

In 2022, the fully let projects for E.On, the Swedish National Courts Administration (Malmö and Jönköping) and the ­SwedishMigration Agency will be completed; together, they will add rental income of nearly MSEK 250. A number of public sector properties such as police stations will be added to this.

"Our strategy behind the major sales in logistics has been to benefit from the drastically lowered yields, to sell older properties for SEK 10 billion in two transactions and to make major valuation gains."

Apart from the projects already under way, we show (on page 19) the great potential found in our future development portfolio. The major new projects that are now being planned

CASTELLUM INTERIM REPORT JANUARY-MARCH 2021

After the renovation of the historical property at Torsgatan 22-30 in Stockholm, Castellum is gearing up for the next stage in the renewal of the district. Three office buildings are now being planned, as well as attractive inner courtyards that will draw visitors on evenings and weekends as well.

and where construction can start through 2025 comprise a volume of approximately SEK 20 billion.

Another way of increasing income from property manage­ ment expressed in SEK per share is using the strong level of financing to repurchase Castellum shares in the market at what we feel is an advantageous price, which entails a healthy discount on current net asset value. In the first quarter, we repurchased approximately 1.9 million shares at an average price of SEK 201. Our total holdings are now just over 2 million shares, corresponding to 0.75% of the total, with an average investment of SEK 198 per share.

Though we did not succeed in the Entra project, we now own just over 10% of the company. Our total investment was MSEK 3,049 compared with the current value of MSEK 3,536 (12 April). I believe this will be an interesting piece of the puzzle in future structural transactions.

During the year, we also consolidated Castellum's leading position in the field of ESG and technological development through extensive innovations. Some examples:

• Accessy, a digital lock solution that will entail major possi­ bilities for development going forward, was launched.
• We are already reporting preliminary data in accordance with the EU Taxonomy (page 8).
• We have already constructed 41 rooftop solar cell
  installations­ . Castellum's goal is to build a full 100 such installations on our roofs.
• Together with major energy suppliers, Castellum has now initiated a partnership to work out a smart capacity strategy

for the future.

As you may have noticed, I have not commented specifically on the effects of the ongoing pandemic. This is because its direct impact on our earnings is extremely marginal, since the

rents paid in are still as they were during a normal quarter; customer losses and bankruptcies are almost non-existent.

The dividend in Castellum usually follows income from property management. But in my opinion, our strong financial position makes it possible, if the Board of Directors and Annual General Meeting so wish, not to break with our twenty-­three year run of dividend increases regardless of the exact outcome of this individual interim year as regards growth.

Henrik Saxborn

CEO

4

CASTELLUM INTERIM REPORT JANUARY-MARCH 2021

Market comments

Swedish, Danish and Finnish economies

The coronavirus pandemic continued to dominate economic performance both globally and in Sweden in early 2021. Eco­ nomic performance, however, has accelerated substantially compared with performance during most of 2020, when GDP growth declined drastically and unemployment tended to increase. The majority of financial commentators now feel that the economic recovery that began during the latter part of 2020 will continue in 2021. Nonetheless, unemployment in Sweden is expected to rise slightly to approximately 8.5% in 2021. Sweden's GDP for full-year 2020 fell nearly 3% but is expected to rise 3% in 2021, after which growth is predicted to increase a further 4% in 2022 (Riksbank, February 2021). Low interest rates and very robust monetary policy and fiscal measures have continued to support the financial markets. Swedish housing market prices experienced extremely strong performance over the last twelve-month period. The housing market could be negatively impacted, however, if unemploy­ ment rises and economic activity does not perform as favour­ ably as expected, resulting in adverse implications for GDP from slowing private consumption.

The development of the Swedish krona exchange rate has a substantial role in the inflation trend in Sweden, as a weak exchange rate normally contributes to higher inflation. The Swedish krona strengthened in the last half of 2020 and early

MACRO INDICATORS - SWEDEN

Unemployment	8.8%	February 2021
Rate of inflation	1.7%	March 2021 compared to March 2020
GDP growth	-0.2%	Q4 2020 compared with Q3 2020

Source: Statistics Sweden

2021, but once again weakened slightly after the end of the first quarter of 2021. According to the Riksbank (February 2021), inflation - expressed in terms of CPIF - was +0.5% in 2020 and is expected to rise to approximately +1.5% in 2021 and +1.3% in 2022.

Danish and Finnish GDP growth and unemployment respectively were also severely impacted in 2020 as a conse­ quence of the global coronavirus pandemic. In these coun­ tries as well, fiscal measures were implemented with some positive effects in addition to the beneficial effects of a highly expansive monetary policy, though some uncertainty remains as to how positive an effect these will yield on performance over time. The primary scenario for Denmark, however, is that GDP will increase 2.8% in 2021 while unemployment willdecrease slightly but remain at a higher level than it was prior to the pandemic. It is believed that the inflation rate in Denmark will end up at +1.2% in 2021 (Danish Ministry of Finance, December 2020). In Finland, it is believed that the recovery of GDP and the inflation rate will be similar: +2.6% (GDP) and +1.3% (inflation rate) in 2021, while unemploy­ ment will level out in 2021 and decrease again in 2022 to pre-pandemic levels (Bank of Finland, March 2021).

Rental market

The coronavirus crisis continues to fundamentally change society. Vaccinations are under way around the world, and there were troubling signals of a delayed vaccination plan in Europe during the quarter. Despite the delayed vaccination plans, the ­expectation of a return to normality can still be glimpsed in the market.

It is still too early to speak about the long-term effects of COVID-19 on rental and vacancy levels, but we can state that Castellum went into the crisis with historically low vacancy levels and record-high rental levels in all markets, at the same time as the company continues to offer office space at the same rental levels as prior to the pandemic. Despite uncer­ tainty going forward, Castellum is still showing premises and conducting business transactions. This is also demonstrated by the fact that net lettings during the first quarter were positive.

Rental levels remained stable in Stockholm and Malmö as a result of continued low vacancy rates in the CBDs and the most attractive sub-markets. Over the short term, the offering of new construction will be limited and primarily let in advance. A downward pressure in the rental market was noted in the Gothenburg CBD. Office rents in regional cities have remained stable in 2021.

The rents for offices in Helsinki's CBD in the first quarter of 2021 remained stable and consolidated on previous record levels. Strong demand has spread from the CBD in Helsinki to the surrounding areas. However, there is a high vacancy rate in secondary areas, as well as in properties of lower quality.

In Copenhagen, rents in the CBD remained stable as well in the first quarter of 2021. A high level of access to land and building rights in and around the city is a limiting factor for rent potential.

The rental market in Sweden for warehouses/logistics spaces was positive during the quarter, with rising rents

in prime logistics locations, particularly in semi-central loca­ tions with good means of transportation and sorting yards

CONT. NEXT PAGE

5