Diös Fastigheter : Diös Fastigheter’s Interim Report Jan-Sep 2021

Q3

"The right tenant in the right place is essential to business success - for us and for our tenant - and raises the profile of the whole block."

Emma Widegren,

Property Manager Östersund

Interim Report January-September 2021

Cover: Emma Widegren, Property Manager in Östersund, visiting Diös tenant Kiwano Juicebar.

JANUARY-SEPTEMBER 2021

Highlights

Revenue increased by 4 per cent to SEK 1,467 million (1,406)

Property management income increased by 7 per cent to SEK 780 million (729)

Unrealised changes in value of properties were SEK 916 million (-131) and unrealised changes in value of derivatives were SEK 21 million (2)

The profit after tax was SEK 1,359 million (475) Earnings per share were SEK 10.05 (3.55)

36.5	6.6	52.7
Equity ratio, %	Interest coverage ratio, times	Loan-to-value ratio, %

Significant events Q3

Diös completed a new 14,350 sq.m hotel in Sundsvall in an investment totalling SEK 442 million. The property is fully let with a 15 year lease contract and the tenant took occupancy of the premises on 1 September.

Diös leases 1,050 sq.m to the grocery chain ICA in central Gävle.

Diös sold 10,250 sq.m of development rights in central Sundsvall at a value of approximately SEK 42 million. Completion will take place in the fourth quarter of 2021.

Summary of earnings, SEKm

2021	2020	2021	2020	2020
3 months	3 months	9 mths	9 mths	12 mths
Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Jan-Dec

Revenue	480	478	1,467	1,406	1,878
Operating surplus	325	335	968	924	1,219
Property management income	261	271	780	729	958
Profit before tax	510	283	1,723	598	1,152
Profit after tax	402	229	1,359	475	913
Surplus ratio, %	68	72	68	68	66
Occupancy rate, %	89	90	89	88	89
Return on equity, %1			19.1	8.7	10.4
Equity ratio, %			36.5	36.0	36.8
Property loan-to-value ratio, %			52.7	55.2	54.3
Equity per share, SEK			75.1	65.0	68.2
EPRA NRV per share, SEK			88.3	75.7	79.7

For definitions of KPIs, see page 31. 1Rolling 12-month basis

2	Diös Fastigheter AB Interim Report January-September 2021

An active market

The quarter was marked by a high level of activity and strong interest in our market. Net leasing for the period totalled SEK 25 million, our property management income was up by 7 per cent and the surplus ratio was at 68 per cent. Continued increases in the value of our properties were due to successful deals and a strong underlying market.

We increased our revenue by 4 per cent and our operating surplus by 5 per cent compared with the previous year. We have completed 85 apartments in Östersund, a 5,000 sq.m industrial property in Umeå and, most recently, a 270-room hotel in Sundsvall. Our project development business took off around three years ago and since then our investments have increased. Project development contributes with growth, increased values and new net operating income from completion.

The completion of the hotel in Sundsvall, an investment of over SEK 400 million, is a milestone for us and the first in a series of major ­projects that will have a positive impact on our earnings. In the

coming­ quarter we will complete a conversion of a property for Tele2 in central Sundsvall and after that we will be completing a major ­project in every quarter. In early autumn we initiated a new build for the Swedish Pensions Agency in Luleå and we will probably be announcing another two major projects in the coming quarter.

The rental market has really taken off and we are concluding good deals in all our cities and across all segments, which has led to an improvement in net leasing. Net leasing was SEK 29 million for the quarter.

In Skellefteå we have found occupants for the 4,000 sq.m premises that became vacated at the beginning of the year. The tenants include technology consulting firms, accounting firms and architects. The development in the property have raised the rental levels from SEK 1,200 per sq.m to SEK 2,100 per sq.m and increased the value of the property by 40 per cent, which shows how we drive our business and create optimal conditions for growth in the city. Property costs for the quarter were affected by non-recurring effects and higher tariff-related costs.

A continued increase in the value of our properties resulted in an unre- alised change in value of SEK 242 million for the quarter and of over SEK 900 million for the period. We made several good deals during the quarter that reduce vacancies as well as increase value, while required rates of return in the market have continued to decline. Our tenants are daring to invest for the future, which is a sign of confidence.

We have continued to be active in the capital market by issuing green bonds through our own MTN programme, under which there are now SEK 1,250 million in bonds outstanding. The conditions on the capital market are attractive and access to capital remains good. Our loan-to- value ratio is decreasing and now stands at 52.7 per cent.

"Interest in

our market and northern Sweden has never been greater."

Climate change is a fact, as we have experienced first hand in the form of the relentless rain and flooding which hit Gävle during the quarter. The economic consequences remain uncertain and surveys and investigations are underway but it is expected that the majority of the costs will be covered by insurance.

We doing our bit and our business is working towards the goal of limiting the global temperature increase to 1.5°C. As part of this effort our climate target of reducing our CO2 emissions by at least 50 per cent by 2030 has been approved by the Science Based Targets-initiative. We will be increasing the share of certified properties in our portfolio, that will lead to lower climate impact, more efficient property management and I am also convinced that this will be a requirement from tenants in a not too distant future.

Interest in our market and northern Sweden has never been greater than now. The investments that are being made, more people moving to our cities and the rise in demand we are experiencing for both commercial premises and housing will lead to stronger rental growth and a lower vacancy rate. Modern environmentally certified properties in attractive locations that offer a variety of services, the right spaces for offices and homes and that have good transport connections will outperform. I am confident that we are in the right place and have the right offering to create a sustainable future for our cities, for Diös and for our shareholders.

Knut Rost, CEO

Diös Fastigheter AB Interim Report January-September 2021

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Welcome to Diös

Diös is one of Sweden's leading property companies. By building good relationships, using our pool of knowledge and taking responsibility, we are developing our cities and creating sustainable long-term value for our tenants, ourselves and our owners.

Vision:

We want to create Sweden's most inspiring cities.

336 26.6 1,490

No. of properties

Property value, SEKbn

Leasable area, thousand sq.m.

Property value, SEK million			Property value per business unit,
30 000					SEK million
25 000					Dalarna, 4 131 mkr
20 000					Gävle, 2 804 mkr
				Sundsvall, 4 469 mkr
15 000
				Östersund/Åre, 4 383 mkr
10 000					Umeå, 4 525 mkr
5 000					Skellefteå, 1 875 mkr
2011 2012	2013	2014 2015 2016 2017 2018	2019	2020 Q3 2021	Luleå, 4 388 mkr

Property management income, SEK million

Rental value by type of premises, %

1 200
1 000
800
600
400
200
0
2011	2012	2013	2014	2015	2016	2017	2018	2019	2020 Q3 2021

Kontor, 53%

Butik, 17%

Bostad, 8%

Hotell/Restaurang, 7%

Vård/utbildning, 6%

Industri/Lager, 3%

Övrigt, 6%

Rental income, SEK million

Contract value by category, %

2 500
2 000
1 500
1 000
500
0
2011	2012	2013	2014	2015	2016	2017	2018	2019	2020 Q3 2021
Property management income and rental income for Q3 2021 are on a rolling 12-month basis.

Privata, 69% Offentliga, 31%

4	Diös Fastigheter AB Interim Report January-September 2021

Our market:

the 15-minute city

We operate in a fast-growing market, in cities that can best be described as 15-minute cities. In these cities, you can walk, bicycle or take the car to work in 15 minutes - and also buy groceries, go to a café or restaurant, take the children to school, enjoy nature and do everything you want in your everyday life in the same time frame. They are cities marked by good accessibility and an active lifestyle.

A growing population and continued urbanisation give our cities a very good position for continued growth. The challenges of climate change and changes in globalisation also indicate that 15-minute cities will just get more attractive.

Absolutely the right place for us!

The population in our cities is growing, entrepreneurship is strong and demand for staple industries is high. The infrastructure is also constantly developing, city governments are driven and there are attractive universities. All of this indicates that Diös is in the absolutely right place - to create increased growth, improved conditions for moving in and thereby increased value for our tenants, shareholders and ourselves.

Our offering in these cities

We want to create an inspiring, sustainable and accessible city for all. We do this by creating more modern offices in attractive locations, improving the conditions for developed urban service and building more homes in the city centre. We also ensure that the spaces that we develop can be used around the clock by several different actors because we create security, life and motion. By offering the right premises to the right tenants, we develop our business.

Diös Luleå.

Diös Fastigheter AB Interim Report January-September 2021

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