Akelius Residential Property AB (publ) interim reportAkelius Residential Property AB (publ) interim...

Akelius Residential Property AB (publ)

interim reportJanuary to September 2019

summary 2019 2018 2019 2018 2018Jan–Sep Jan–Sep Jul–Sep Jul–Sep Jan–Dec

Rental income, EUR million 373 353 120 120 482Like-for-like growth in rental income, percent 5.1 3.1 7.7 2.4 3.2

Net operating income, EUR million 195 193 64 69 259Like-for-like growth in net operating income, percent 3.3 7.3 1.7 9.0 5.1

Net operating income margin, percent 52.2 54.7 53.1 57.4 53.6Adjusted net operating income margin, percent 65.4 68.6 65.4 68.6 69.3

EBITDA, EUR million 173 177 57 62 236

Profit before tax, EUR million 363 602 101 179 634

Property fair value, EUR million 12,177 11,981 12,177 11,981 12,379

Change in property fair value, percent 2.9 5.0 0.9 1.4 5.2

Number of apartments 45,806 49,370 45,806 49,370 50,407

Real vacancy residential, percent 1.0 1.2 1.0 1.2 1.4

Loan-to-value, percent 40 42 40 42 44Interest coverage ratio excluding realized value growth 12 months 1.8 1.8 1.8 1.8 1.8

See definitions on pages 36–38.

2

Uferstraße 17, Berlin

successful issue of equityI am happy to welcome twelve thousand shareholders.In the beginning of October, Akelius issued EUR 385 million in common equity.This was the first issue of class D-shares in Euro.The issue is another step in our quest for a BBB+ rating.

vacancy down 1.1 percentage pointsWe have to a large extent come to terms with the bottlenecks in construction.

Significantly more apartments have been delivered to letting in 2019, as compared to 2018.

Vacancy rate has decreased with 1.1 percentage points, excluding properties acquired or sold during 2019.We expect the vacancy rate to continue to decrease.

7.7 percent like-for-like growthVacancy reduction and upgrading have yielded a swift growth of rental income.

Like-for-like rental income grew 7.7 percent during quarter three.This is almost seven percentage points higher than for the same quarter in 2018.

loan-to-value 40 percentLoan-to-value has decreased from 44 to 40 percent during 2019.

Besides the EUR 385 million equity issue, we have EUR 564 million of signed property sales, mainly in Germany.Thus, I am confident of an even lower loan-to-value at year end.

Pål Ahlsén, CEO and Managing director

3

interim report, January to September 2019

property portfolio September 30, 2019

fair value properties EUR 12,117 million

Fair value

CityResidential

units Residential Commercial TotalEUR

millionEUR/sqm

Capitalization rate, percent

Berlin 14,028 881 70 951 2,989 3,143 3.39Stockholm 5,916 423 32 455 1,596 3,500 2.69New York 1,723 117 4 121 993 8,186 4.18Hamburg 4,351 242 12 254 965 3,802 3.68Malmö 4,067 266 83 349 943 2,698 3.23

London 2,241 88 15 103 907 8,863 4.13

Toronto 3,506 181 4 185 863 4,656 4.14Montreal 3,859 258 2 260 801 3,083 4.29Boston 974 63 2 65 550 8,459 4.24Washington D.C. 1,238 93 4 97 449 4,620 4.64Paris 1,549 48 5 53 394 7,403 4.06Copenhagen 1,031 83 6 89 318 3,599 2.94Munich 748 41 2 43 256 5,952 3.25Other 575 38 4 42 153 3,727 3.81Total 45,806 2,822 245 3,067 12,177 3,971 3.66

Lettable space thousand sqm

4


Sep 30 2019

Dec 31 2018

upgraded apartments 21,474

property sales EUR 1,181 million contracted sales EUR 564 million

sales price

upgraded apartments 46.9 percent

Dec 31 2018

43.346.9

sales and purchases

-1.0

upgraded like-for-like

4.6

Sep 30 2019

21,809

property purchases EUR 176 million

investments purchase price

Akelius has signed agreements for property sales in Germany and Canada. The closing date is planned to Q4 2019 and 2020.

21,474

changes in the property portfolio

1,745

995

75%

2,498 apartments sold during 2019

Montreal

Berlin

Boston 16

Stockholm 13

Hamburg 5

30

64

42

Toronto 4

Washington D.C.

2Other

5


number of apartments 514 rental income EUR 17.7 million

move inmove out net letting move inmove out net letting

5,463

5,977

51468.8

86.5

17.7

net letting January–September 2019

Oct 1 2018

changesales Oct 1 2018

Oct 1 2019

purchases

467

like-for-like

16472 4423 451

428

increase like-for-like in residential rental value 5.4 percent

Oct 1 2019

5.4%

6


like-for-like growth

rental income 5.1 percent net operating income 3.3 percent

real vacancy 1.0 percent

2014

3.4

2015

4.3

2016

4.1

2017

5.1

3.2

2018 2018

5.1

2014

7.1

2015

4.0

2016

8.0

2017

10.7

Jan–Sep 2019

5.1

Jan–Sep 2019

3.3

2018

1.4

2010

0.6

2011

0.7

2012

0.7

2013

0.7

average

0.9

Oct 1 2019

1.0

2017

0.9

2016

1.1

2015

1.3

2014

1.0

7


PercentCapitalization

rateDiscount

rateJan 1, 2019 3.67 5.65Purchases 0.01 0.01Sales -0.02 -0.01Like-for-like -0.02 -0.02Exchange difference 0.02 0.01Sep 30, 2019 3.66 5.65

EUR million

Return, percent

Cash flow 192 1.55Required rate of return 72 0.58Sales 97 0.79Purchases 4 0.03

Total change in value 365 2.95

capitalization rate 3.66 percent

EUR millionGrowth Jan–Sep

percentFair value, Jan 1, 2019 12,379Revaluations 365 2.9Investments 328 2.6Purchases 176 1.4Sales -1,181 -9.5Exchange difference 110 0.9Fair value, Sep 30, 2019 12,177 -1.6

Net operating income 195 1.6Total property return 560 Per annum: 6.1

annual property return 6.1 percent

201816141210 8 6 4 2 0

2019Jan–Sep

2013Jan–Dec

2014Jan–Dec

2015Jan–Dec

income return value growth average annual property return

2016Jan–Dec

2017Jan–Dec

2018Jan–Dec

percent

change in value EUR 365 million

8


interest expensesliquidity

unsecured loanssecured loans

loan-to-value ratio 40 percent

interest expenses and liquidityEUR million

liquidity

profit before tax and revaluation

cash uses and sources12 months forward, EUR million

short-term loansinvestmentscontracted purchases

equity and hybrid capital ratio 50 percent

preferred equity

cash uses cash sources

563

50

504

9

ordinary equity

contracted sales

Dec 312018

44

19

25

Sep 302019

40

16

24

47

37

5

Dec 312018

Sep 302019

5

Jan–Sep 2018

Sep 30 2018

Jan–Sep 2019

Sep 30 2019

92

688

96

375

financing

1,101

375

169

557

50

41

54

hybrid bond

9


liquidity fixed interest termdebt maturities

interest rate hedges, interest rateEUR million, percent and year

debt maturitiesEUR million, year

interest rate 2.42 percent

fixed interest terms 4.7 years debt maturities 5.5 years

0–1

504

1–2

464

3–4

28

4–5

625

>52–3

834

0–1

4.55

1–2

1881.26

2–3

1.51

857

3–4

200

4–5

650

>5

2.57

2,432

1.68

4.3

5.7

4.55.0

5.35.6

4.5

Dec 31 2015

Dec 31 2016

Dec 31 2017

Dec 31 2018

5.7

4.7

5.5

Sep 302019

2.42

3.44

2.62

Dec 31 2016

2.58

Dec 31 2017

2.64

Dec 31 2018

Dec 31 2015

632

2,504

Sep 302019

financing

1.16

10


EUR millionOct 2018– Sep 2019

Earnings capacity as at Sep 30, 20191

Rental income 503 5402

Operating expenses -211 -199Maintenance -32 -28Net operating income 260 313Central administration -36 -35Other income and expenses 3 4Reversal operational exchange differences -2 -3Reversal depreciation 6 7EBITDA 231 286Other financial income and expenses 1 2Adjusted EBITDA 232 288Net interest expenses -130 -119Interest coverage ratio excluding realized value growth 1.8 2.4Realized value growth 455 -Interest coverage ratio 5.3 -

Net debt as per Sep 30, 2019 4,942 4,942Net debt/EBITDA 21.4 17.3Net debt/EBITDA including realized value growth 7.2 - 1) The earnings capacity is based on the property portfolio as at Sep 30, 2019 and the property portfolio’s gross rent, real vacancy, estimated operating expenses, maintenance costs and central administration during a normal year. 2) Includes EUR 467 million in residential rental value as of Oct 1, 2019, EUR 38 million in rental income for commercial properties and parking, EUR -7 million in real vacancy for apartments and EUR 42 million in other income.

interest coverage ratio 5.3

EBITDArealized value growth

EBITDA EUR 231 million

financing

Oct 2018– Sep 2019

earnings capacity

201820172016 Oct 2018– Sep 2019

1.8

3.5

2.4

2018

5.3

2.4

20172016

1.9

2.6

4.5 4.7

2.8

1.9 1.8

1.0

2.8

236 231

286

231233

earnings capacity

current interest and debt coverage capacity

11


BerlinProperty portfolioFair value, EUR million 2,989Proportion of property fair value, percent 25Capitalization rate, percent 3.39Proportion upgraded apartments, percent 41Average apartment size, sqm 63Walk score 91

Average rent EUR/sqm/monthTotal portfolio Oct 1, 2018 8.51Sales -Like-for-like Oct 1, 2018 8.51Like-for-like increase 0.73– Increase in percent 8.6Like-for-like Oct 1, 2019 9.24Purchases -0.01Total portfolio Oct 1, 2019 9.23New lease level 15.41

Vacancy rate residential percentReal vacancy rate 1.1Apartments being upgraded 4.1Vacancy rate 5.2

Berlin

acquired properties 2019 like-for-like properties sold properties or asset held for sale 2019

12


Hamburg Munich

like-for-like properties

Hamburg

Munich

Property portfolioFair value, EUR million 965 256Proportion of property fair value, percent 8 2Capitalization rate, percent 3.68 3.25Proportion upgraded apartments, percent 54 47Average apartment size, sqm 56 55Walk score 87 85

Average rent EUR/sqm/month EUR/sqm/monthTotal portfolio Oct 1, 2018 11.09 12.99Sales - -Like-for-like Oct 1, 2018 11.09 12.99Like-for-like increase 0.40 0.69– Increase in percent 3.6 5.3Like-for-like Oct 1, 2019 11.49 13.68Purchases -0.02 -Total portfolio Oct 1, 2019 11.47 13.68New lease level 15.30 18.87

Vacancy rate residential percent percentReal vacancy rate 1.2 0.0Apartments being upgraded 5.0 5.3Vacancy rate 6.2 5.3

acquired properties 2019 sold properties or asset held for sale 2019

13


London Paris


London ParisProperty portfolioFair value, EUR million 907 394Proportion of property fair value, percent 7 3Capitalization rate, percent 4.13 4.06Proportion upgraded apartments, percent 60 24Average apartment size 422 sqft 31 sqm Walk score 86 97

Average rent GBP/sqft/month EUR/sqm/monthTotal portfolio Oct 1, 2018 2.77 23.03Sales - -Like-for-like Oct 1, 2018 2.77 23.03Like-for-like increase 0.05 2.82– Increase in percent 1.9 12.3Like-for-like Oct 1, 2019 2.82 25.85Purchases 0.01 -0.52Total portfolio Oct 1, 2019 2.83 25.33New lease level 2.97 40.77


14


Stockholm

Stockholm MalmöProperty portfolioFair value, EUR million 1,596 943Proportion of property fair value, percent 13 8Capitalization rate, percent 2.69 3.23Proportion upgraded apartments, percent 51 56Average apartment size, sqm 72 65Walk score 68 91

Average rent SEK/sqm/year SEK/sqm/yearTotal portfolio Oct 1, 2018 1,293 1,343Sales 8 -Like-for-like Oct 1, 2018 1,301 1,343Like-for-like increase 44 46– Increase in percent 3.4 3.4Like-for-like Oct 1, 2019 1,345 1,389Purchases 1 -Total portfolio Oct 1, 2019 1,346 1,389New lease level 1,596 1,595


Malmö

acquired properties 2019 like-for-like properties

15


Copenhagen


Copenhagen New YorkProperty portfolioFair value, EUR million 318 993Proportion of property fair value, percent 3 8Capitalization rate, percent 2.94 4.18Proportion upgraded apartments, percent 37 35Average apartment size 80 sqm 732 sqftWalk score 95 96

Average rent DKK/sqm/year USD/sqft/monthTotal portfolio Oct 1, 2018 989 2.80Sales - -Like-for-like Oct 1, 2018 989 2.80Like-for-like increase 63 0.20– Increase in percent 6.4 6.9Like-for-like Oct 1, 2019 1,052 3.00Purchases - 0.01Total portfolio Oct 1, 2019 1,052 3.01New lease level 1,633 5.37


New York

16


Washington D.C.Boston


Boston Washington D.C.Property portfolioFair value, EUR million 550 449Proportion of property fair value, percent 5 4Capitalization rate, percent 4.24 4.64Proportion upgraded apartments, percent 71 59Average apartment size, sqft 694 807Walk score 89 87

Average rent USD/sqft/month USD/sqft/monthTotal portfolio Oct 1, 2018 3.60 2.28Sales - -Like-for-like Oct 1, 2018 3.60 2.28Like-for-like increase 0.10 0.18– Increase in percent 2.8 8.1Like-for-like Oct 1, 2019 3.70 2.46Purchases - -0.01Total portfolio Oct 1, 2019 3.70 2.45New lease level 3.97 2.64


17


Toronto Montreal


Toronto MontrealProperty portfolioFair value, EUR million 863 801Proportion of property fair value, percent 7 7Capitalization rate, percent 4.14 4.29Proportion upgraded apartments, percent 45 46Average apartment size, sqft 555 720Walk score 83 92

Average rent CAD/sqft/month CAD/sqft/monthTotal portfolio Oct 1, 2018 2.11 1.69Sales 0.10 -Like-for-like Oct 1, 2018 2.21 1.69Like-for-like increase 0.19 0.05– Increase in percent 8.3 3.0Like-for-like Oct 1, 2019 2.40 1.74Purchases -0.01 -0.02Total portfolio Oct 1, 2019 2.39 1.72New lease level 3.48 1.97


sold properties or asset held for sale 2019

18


result

rental income EUR 373 million Rental income was EUR 373 million (353), an increase of 5.7 percent compared to the same period in 2018.

Like-for-like growth in rental income was EUR 14 million (8) or 5.1 percent (3.1).

During the period, 24,337 rental contracts (21,116) with an annual rent of EUR 327 million (207) were renewed or renegotiated. The new yearly rent is EUR 332 million (211), an increase of 1.8 percent (2.1).

The real vacancy rate decreased by 0.4 percentage points to 1.0 percent (1.2) during 2019. The vacancy rate for residential units was 9.0 percent (9.5). 88 percent (87) was due to upgrades or planned sales of apartments.

net operating income EUR 195 millionNet operating income was EUR 195 million (193). Property expenses totaled EUR 178 million (160). EUR 22 million (19) was attributable to maintenance, corresponding to EUR 9 (8) per square meter and year.

Like-for-like growth in net operating income was 3.3 percent (7.3). Net operating income margin was 52.2 percent (54.7).

Adjusted net operating income margin was 65.4 percent (68.6). Adjusted net operating income excludes income from operating expenses included in the rent invoiced to the tenants, such as utility expenses and property taxes. It highlights the ongoing earning capacity from property management related to rental services only.

increase in property value 2.9 percent The increase in property value was EUR 365 million (529) or 2.9 percent (5). The growth in value is mainly due to increasing cash flow.

net financial items EUR -153 millionInterest expenses were EUR -96 million (-92) and interest income were EUR 1 million (0). The increase of interest expenses is due to an increased average loan volume in 2019 compared with 2018.Interest expenses for the hybrid bond were EUR -14 million (-10). Financial derivatives affected earnings by EUR -45 million (7). Other financial items amounted to EUR 2 million (-3).

profit before tax EUR 363 millionProfit before tax was EUR 363 million (602). The increase in the fair value of properties had a positive impact on the profit.

tax expenses EUR 51 millionTax expenses totaled EUR 51 million (128). EUR 38 million (126) was deferred tax, mainly due to unrealized gains on properties. Sales through share deal in Sweden contributed to positive tax. Akelius has no ongoing tax disputes.

19


property portfolio

fair value EUR 12,177 millionThe fair value was EUR 12,177 million (11,981), which is equivalent to an average of EUR 3,971 (3,573) per square meter. The average capitalization rate for the entire portfolio was 3.66 percent (3.64), which is 0.01 percentage points lower than at the beginning of the year. See table on page 7.

property purchases EUR 176 million Property purchases amounted to EUR 176 million (1,006) during the period. The average capitalization rate for purchased properties was 4.15 percent (3.90).

property investments EUR 328 millionInvestments in properties totaled EUR 328 million (228). On an annual basis, this corresponds to EUR 135 (92) per square meter. 33 percent (44) of the total investments were due to apartment upgrades.

property sales EUR 1,181 million In total, Akelius sold properties for EUR 1,181 million (299). Properties sold in 2019 were located in Germany, Sweden and Canada. Income from the sale of properties totaled EUR 98 million (4) excluding EUR 19 (4) million in transaction costs.

assets and liabilities held for saleAkelius has signed agreements for the sale of properties in Germany and Canada. The closing dates are planned to Q4 2019 and 2020. EUR 554 million relates to investment properties and EUR 92 million to deferred taxes. Well-kept residential properties are attractive investments for many types of investors and provide a liquidity reserve during the entire business cycle.

financing

equity and hybrid capital ratio 50 percent Equity increased by EUR 315 million to EUR 5,685 million (5,349) during the period. The equity and hybrid capital ratio amounted to 50 percent (48).

loan-to-value ratio 40 percent Loans excluding the hybrid bond decreased by EUR 560 million during the period, to EUR 4,959 million (5,113). The loan-to-value ratio decreased by 4 percentage points to 40 percent (42) since last year. Secured loans were EUR 1,957 million (2,151), compared to EUR 2,346 million at the end of 2018. Secured loan-to-value ratio was 16 percent (18), 3 percentage points lower than at the year-end 2018. The secured loans were borrowed from 29 banks (36) in seven countries. Unsecured loans include 9 (9) bonds and loans from large investors and related companies.

debt maturities 5.5 years Loans have an average maturity of 5.5 years (5.1), EUR 504 million (286) matures within one year. The average loan-to-value ratio on short-term loans was 34 percent (36). Short-term loans consist of borrowings from 12 banks (9) and capital market financing.

interest rate hedge 4.7 years EUR 2,432 (2,614) million had a fixed interest rate term of more than five years and EUR 632 million (891) had a fixed interest rate term of less than one year. The average interest rate was 2.42 percent (2.70). On average, the underlying interest rate is secured for 4.7 years (4.6), compared to 4.5 years at the end of 2018.

liquidity EUR 375 million Available funds in the form of liquid assets and credit facilities totaled EUR 375 million (688). The fair value of the unencumbered properties was EUR 5,692 million (5,376).

20


other financial information

cash flowOperating cash flow before change in working capital was EUR 64 million (77).Cash flow from investing activities was EUR 620 million (-851). Cash required for the acquisition of properties is secured before the agreements are signed. Profitable but non-mandatory upgrades can be stopped within a three-month period.Cash flow from financing activities was EUR -661 million (773). Dividends of EUR 27 million (27) were paid to the holders of preference shares.

parent companyDividends of SEK 5 per preference share were or will be paid on the record dates pursuant to the Articles of Association: May 3, 2019, August 5, 2019, November 5, 2019 and February 5, 2020, totaling SEK 377 million, EUR 36 million.

The Parent Company’s profit before tax was EUR 26 million (94). Financial income mainly includes interest income, currency exchange gains on currency derivatives and external and internal receivables in foreign currency.

preference sharesThe total number of preference shares was 18,835,606 (18,835,606), equivalent to EUR 586 million (585) reported in equity. Preference shares represent 0.59 percent (0.59) of the total number of shares in Akelius Residential Property AB. On Sep 30, 2019, the price paid per preference share was SEK 347.5 (341.5).

ratingIn 2019, Standard and Poor’s confirmed the investment grade rating BBB with a stable outlook for Akelius Residential Property AB and its unsecured debt. The rating for Akelius Residential Property AB’s hybrid bond is BB+.

third quarterProfit before tax for the quarter amounted to EUR 101 million (179). Net income from the change in fair value of properties impacted the profit with EUR 56 million (150). Rental income amounted to EUR 120 million (120). Property costs amounted to EUR 56 million (51). Net operating income was EUR 64 million (69). Net financial items totaled EUR -54 million (-33) Cash flow amounted to EUR 7 million (-9). Cash flow generated from operations was EUR 17 million (33). Net cash flow from investing activities amounted to EUR 48 million (-473). Financing activities had a negative effect on cash flow of EUR -58 million (431).

staff1,426 people (1,214) were employed as at September 30 compared to 1,326 at the end of 2018.

related party transactionsNet debt from related parties decreased by EUR 26 million (30).

significant events after the end of the reporting periodIn line with resolution taken at the extraordinary general meeting, Akelius has issued 220,000,000 common shares of class D at EUR 1.75 per share. Akelius Residential Property AB received EUR 385 million before transaction cost. The transaction was settled October 8, 2019. The full press release is found at Akelius homepage.

21


consolidated statement of comprehensive income

EUR million

2019Jan–Sep

9 months

2018Jan–Sep

9 months

2019Jul–Sep

3 months

2018Jul–Sep

3 months

2018 Jan–Dec

12 monthsRental income 373 353 120 120 482Operating expenses -156 -141 -49 -45 -195Maintenance -22 -19 -7 -6 -28Net operating income 195 193 64 69 259Central administration -27 -20 -9 -6 -29Other income and expenses 3 3 - -1 3Net income from the revaluation and disposal of investment properties* 345 524 100 150 546Operating profit 516 700 155 212 779Interest expenses -95 -92 -27 -31 -128Interest expenses hybrid bond -14 -10 -5 -5 -14Other financial income and expenses 1 -3 2 -1 -3Change in fair value of derivative financial instruments -45 7 -24 4 -Profit before tax 363 602 101 179 634Tax -51 -128 -22 -33 -127Profit for the period/year 312 474 79 146 507Items that will be reclassified to profit or loss:- Translation differences 109 58 107 2 35- Change in the hedging of currency risk -66 -125 -45 35 -113- Tax attributable to the hedging of currency risk -6 28 -5 -7 23- Revaluation reserve 1 1 - - 2

Total other comprehensive income 38 -38 57 30 -53Comprehensive income for the period/year 350 436 136 176 454

Profit attributable to: - owners of the Parent Company 308 469 78 143 501 - non-controlling interests 4 5 1 3 6Total comprehensive income attributable to: - owners of the Parent Company 346 431 135 173 448 - non-controlling interests 4 5 1 3 6Earnings per share before and after dilution, EUR 0.09 0.14 0.02 0.04 0.15

*) Net income from the revaluation and disposal for Jan-Sep 2019 include change in fair value of properties of EUR 365 million, minus transaction cost EUR 19 million, minus revaluation reserve for owner-occupied properties of EUR 1 million. Realized gain and loss from the disposal of investment properties amounted to EUR 79 million in Jan–Sep 2019 and EUR 0 million in Jan–Sep 2018. Transaction costs amounted to EUR 19 million in Jan–Sep 2019 and EUR 4 million in Jan–Sep 2018.

22


EUR million2019

Sep 302018

Sep 302018

Dec 31AssetsIntangible assets 16 7 11Investment properties 11,553 11,943 11,891Owner-occupied properties 70 38 39Lease agreement, right-of-use-assets1 16 - -Tangible fixed assets 6 5 6Derivative financial instruments 1 - 2Deferred tax assets 1 1 1Financial assets 15 4 4Total non-current assets 11,678 11,998 11,954Trade and other receivables 103 102 86Derivative financial instruments 1 1 14Cash and cash equivalents 17 13 13Assets held for sale2 554 - 449Total current assets 675 116 562Total assets 12,353 12,114 12,516Equity attributable to the Parent Company’s shareholders 5,602 5,276 5,292Non-controlling interests 83 73 78Total equity 5,685 5,349 5,370Loans 4,455 4 827 5,180Hybrid bond 499 499 499Leasing agreement 14 - -Derivative financial instruments 83 47 46Deferred tax liabilities 847 941 885Provisions 2 1 1Other liabilities 16 14 16Total non-current liabilities 5,916 6,329 6,627Loans 504 286 339Leasing agreement 2 - -Derivative financial instruments 6 10 -Provisions - 2 1Trade and other payables 148 138 121Liabilities held for sale3 92 - 58Total current liabilities 752 436 519Total equity and liabilities 12,353 12,114 12,516Interest-bearing liabilities excluding leasing- unsecured loans 3,002 2,962 3,173- secured loans 1,957 2,151 2,346Subtotal 4,959 5,113 5,519- hybrid bond 499 499 499Total 5,458 5,612 6,0181) EUR 10 million for leased offices and EUR 6 million for site leasehold agreements. 2) EUR 548 million is attributable to investment properties in Germany and EUR 6 is attributable to investment properties in Canada. Sale price is respective EUR 557 million and EUR 7 million. 3) EUR 91 million is attributable to deferred tax in Germany and EUR 1 million in Canada.

consolidated statement of financial position

23


EUR millionShare capital

Sharepremium

Currency transla-

tion reserve

Retained earnings Total

Non con-

trolling interests

Total equity

Opening balance Jan 1, 2018 204 1,504 -154 3,327 4,881 20 4,901Profit for the period - - - 469 469 5 474Other comprehensive income - - -39 1 -38 - -38Total comprehensive income - - -39 470 431 5 436Share issue 7 802 - - 809 - 809Dividend - -846 - - -846 - -846Acquired minority - - - - - 49 49Closing balance Sep 30, 2018 211 1,460 -193 3,797 5,275 74 5,349Profit for the period - - - 32 32 1 33Other comprehensive income - - -16 1 -15 - -15Total comprehensive income - - -16 33 17 1 18Acquired minority - - - - - 3 3Closing balanceDec 31 2018 211 1,460 -209 3,830 5,292 78 5,370EUR conversion1 -24 -145 24 145 - - -Adjusted opening balance, Jan 1 2019 187 1,315 -185 3,975 5,292 78 5,370Profit for the period - - - 308 308 4 312Other comprehensive income - - 36 2 38 - 38Total comprehensive income - - 36 310 346 4 350Dividend - - - -36 -36 - -36Acquired minority - - - - - 1 1Closing balance Sep 30, 2019* 187 1,315 -149 4,249 5,602 83 5,685

*) attributable to preference shareholders 1 585 - - 586 - - 1) The Parent Company, Akelius Residential Property AB,changed functional currency from Swedish kronor to Euro as of 2019.

consolidated statement of changes in equity

Attributable to the owners of the Parent Company

24


consolidated statement of cash flows

EUR million

2019Jan–Sep

9 months

2018Jan–Sep

9 months

2019Jul–Sep

3 months

2018Jul–Sep

3 months

2018Jan–Dec

12 monthsNet operating income 195 193 64 69 259Central administration -27 -20 -9 -7 -29Other income and expenses - 2 - - 3Reversal of depreciation and impairment losses 3 2 1 1 3Interest paid -103 -99 -36 -38 -136Income tax paid -4 -1 -2 - -3Cash flow before changes in working capital 64 77 18 25 97Change in current assets -31 -8 -16 -2 1Change in current liabilities 12 6 15 10 11Cash flow from operating activities 45 75 17 33 109Investments in intangible assets -7 -3 -3 -1 -7Investment in properties -328 -228 -112 -90 -349Acquisition of investment properties -176 -906 -82 -363 -1,186Acquisition of net assets 5 30 5 - 40Proceeds from the sale of investment properties 1,181 299 438 - 300Proceeds from the sale of net assets1 -49 -31 - -3 -31Purchase and sale of other assets2 -6 -12 -198 -16 -8Cash flow from investing activities 620 -851 48 -473 -1,241New share issue - 809 - - 809Acquisition of minority shares 1 1 1 - 5Loans raised 1,172 2,019 283 692 3,650Repayment of loans -1,777 -1,187 -310 -227 -2,438Purchase and sale of derivative instruments -29 -33 -23 -25 -51Amortization IFRS 16 leasing -1 - - - -Dividend ordinary shares - -809 - - -809Dividend preference shares -27 -27 -9 -9 -37Cash flow from financing activities -661 773 -58 431 1,129Cash flow for the period/year 4 -3 7 -9 -3Cash and cash equivalents at the beginning of the period/year 13 16 15 22 16Translation differences in cash and cash equivalents - - -5 - -Cash and cash equivalents at the end of the period/year-end 17 13 17 13 13

For Jan–Sep 2019 1) Mainly related to a discount provided for deferred tax.2) Including EUR 24 million in prepayment for the acquisition and EUR -19 million in transaction costs for sold properties.

25


Duration,years

Interest rate hedge,

EUR million

Interest rate hedgeAverage interest

rate, percentShare,

percentDebt maturities,

EUR millionShare,

percent0–1 632 4.55 13 504 101–2 188 1.26 4 464 92–3 857 1.51 17 834 173–4 200 1.16 4 28 14–5 650 1.68 13 625 135–6 1 182 2.11 24 1 213 246–7 446 2.76 9 467 97–8 368 2.91 7 234 58–9 227 2.75 5 174 49–10 108 3.42 2 108 2> 10 101 4.49 2 308 6Total 4 959 2.42 100 4 959 100

loans

segment information

Jan–Sep 2019, EUR million Europe Scandinavia North America TotalRental income 171 93 109 373Operating expenses -67 -33 -56 -156Maintenance -9 -8 -5 -22Net operating income 95 52 48 195Revaluation of investment properties 218 57 90 365Total property return 313 109 138 560Total property return, percent 7.3 4.3 5.7 6.1Net operating income margin, percent 55.3 55.6 44.3 52.2Property fair value 5,645 2,875 3,657 12,177

Jan–Sep 2018, EUR million Europe Scandinavia North America TotalRental income 160 108 85 353Operating expenses -60 -40 -41 -141Maintenance -8 -8 -3 -19Net operating income 92 60 41 193Revaluation of investment properties 195 198 136 529Total property return 287 258 177 722Total property return, percent 7.8 10.0 11.0 9.2Net operating income margin, percent 57.3 55.5 48.6 54.7Property fair value 5,609 3,407 2,965 11,981

26


key figures2019

Sep 302018

Dec 312017

Dec 312016

Dec 312015

Dec 31

EquityEquity, EUR million 5,685 5,370 4,901 4,279 3,357Equity ratio, percent 46 43 46 46 41Equity and hybrid capital ratio, percent 50 47 46 46 41Return on equity, percent 7 9 19 37 29Net asset value, EUR million 6,710 6,284 5,840 5,127 4,027

Net operating incomeRental income, EUR million 373 482 469 472 464Growth in rental income, percent 5.7 2.8 -0.6 1.8 17.1Like-for-like growth in rental income, percent 5.1 3.2 5.1 4.1 4.3Net operating income, EUR million 195 259 251 244 232Growth in net operating income, percent 0.9 3.3 4.4 6.3 15.6Like-for-like growth in net operating income, percent 3.3 5.1 10.7 8.0 4.0Net operating income margin, percent 52.2 53.6 53.4 51.7 50.1Adjusted net operating income margin, percent 4 65.4 69.3 68.0 66.2 -

FinancingLoan-to-value ratio, secured loans, percent 16 19 18 24 36Loan-to-value ratio, percent 40 44 44 43 48Unencumbered asset ratio 1.97 1.74 1.63 1.18 1.00Interest coverage ratio 12 months 5.3 2.8 4.7 4.5 3.0Interest coverage ratio excluding realized value growth 12 months 1.8 1.8 1.9 1.9 1.6Average interest rate, percent 2.42 2.64 2.58 2.62 3.44Fixed interest term, years 4.7 4.5 5.3 4.5 4.3Debt maturities, years 5.5 5.7 5.6 5.0 5.7

PropertiesNumber of apartments 45,806 50,407 47,177 46,516 51,231Rentable area, thousand sqm 3,067 3,422 3,228 3,236 3,587Real vacancy rate, residential, percent 1.0 1.4 0.9 1.1 1.3Vacancy rate, residential, percent 9.0 9.6 6.6 5.0 4.3Fair value, EUR per sqm 3,971 3,617 3,292 2,834 2,220Capitalization rate, percent 3.66 3.67 3.60 3.82 4.33Change in capitalization rate1, percent -0.02 0.02 -0.22 -0.49 -0.36

Fair value of properties opening balance, EUR million 12,379 10,624 9,171 7,965 6,068Change in fair value, EUR million 365 553 886 1,343 857Investments, EUR million 328 349 288 316 237Purchases, EUR million 176 1,286 1,297 643 1,293Sales, EUR million -1,181 -300 -737 -957 -615Exchange difference, EUR million 110 -133 -281 -139 125Fair value of properties closing balance, EUR million 12,177 12,379 10,624 9,171 7,965

27


key figures2019

Sep 302018

Dec 312017

Dec 312016

Dec 312015

Dec 31

Properties, SwedenAverage residential rent, SEK/sqm/year 1,363 1,316 1,287 1,246 1,184Growth in average residential rent2, percent 3.4 2.3 2.4 2.6 2.6Growth in rental income3, percent 3.7 2.4 3.8 1.9 3.0Growth in net operating income3, percent 4.1 5.0 10.8 2.4 1.8Fair value, EUR per sqm 3,175 2,976 2,821 2,421 1,877Capitalization rate, percent 2.89 3.02 3.00 3.43 4.30Number of apartments 9,984 12,298 13,808 17,381 23,520Vacancy, percent 1.5 2.1 1.1 1.2 1.5Real vacancy, percent 0.0 0.0 0.0 0.1 0.1

Fair value of properties opening balance, EUR million 3,068 3,205 3,382 3,472 3,108Change in fair value, EUR million 43 116 376 712 313Investments, EUR million 54 65 65 104 92Purchases, EUR million 13 103 167 55 114Sales, EUR million -506 -285 -692 -805 -290Translation difference, EUR million -115 -136 -93 -156 135Fair value of properties closing balance, EUR million 2,557 3,068 3,205 3,382 3,472

Properties, GermanyAverage residential rent, EUR/sqm/month 9.84 9.48 8.98 8.56 8.13Growth in average residential rent2, percent 7.0 6.3 5.7 5.0 5.1Growth in rental income3, percent 8.0 4.3 2.6 6.3 6.0Growth in net operating income3, percent 7.5 3.3 2.8 10.3 3.9Fair value, EUR per sqm 3,370 3,201 2,941 2,583 2,078Capitalization rate, percent 3.45 3.52 3.54 3.84 4.35Number of apartments 19,701 21,727 20,463 19,932 20,307Vacancy, percent 5.5 7.4 6.5 4.8 4.9Real vacancy, percent 1.2 1.4 1.3 1.1 2.0

Fair value of properties opening balance, EUR million 4,525 3,924 3,363 2,725 2,225Change in fair value, EUR million 228 249 360 542 399Investments, EUR million 98 132 119 103 80Purchases, EUR million 49 235 127 90 188Sales, EUR million -557 -15 -45 -97 -167Exchange difference, EUR million - - - - -Fair value of propertiesclosing balance, EUR million 4,343 4,525 3,924 3,363 2,725

28


key figures2019

Sep 302018

Dec 312017

Dec 312016

Dec 312015

Dec 31

Properties, CanadaAverage residential rent, CAD/sqm/month 2.01 1.90 1.92 1.89 1.79Growth in average residential rent2, percent 6.5 3.5 4.4 6.7 3.6Growth in rental income3, percent 0.8 3.1 9.5 7.0 4.1Growth in net operating income3, percent -9.6 0.7 28.2 29.0 25.1Fair value, EUR per sqm 3,738 3,147 2,968 2,743 2,345Capitalization rate, percent 4.22 4.26 4.29 4.36 4.37Number of apartments 7,365 7,779 5,500 4,513 3,999Vacancy, percent 14.7 13.0 3.9 7.1 11.1Real vacancy, percent 1.2 2.3 0.6 3.4 3.6

Fair value of properties opening balance, EUR million 1,487 994 737 532 361Change in fair value, EUR million 91 119 83 33 65Investments, EUR million 47 36 30 37 21Purchases, EUR million 34 390 189 90 137Sales, EUR million -118 - - - -12Exchange difference, EUR million 124 -52 -45 45 -40Fair value of propertiesclosing balance, EUR million 1,665 1,487 994 737 532

Properties, United StatesAverage residential rent, USD/sqft/month 2.98 2.88 2.77 2.51 2.26Growth in average residential rent2, percent 5.6 6.5 4.1 4.2 -Growth in rental income3, percent 3.2 1.4 10.7 - -Growth in net operating income3, percent -4.0 11.3 63.6 - -Fair value, EUR per sqm 7,027 6,623 5,758 5,929 5,339Capitalization rate, percent 4.31 4.33 4.36 4.42 4.47Number of apartments 3,935 3,782 3,127 2,309 1,534Vacancy, percent 19.0 21.4 17.3 10.6 9.8Real vacancy, percent 2.9 2.9 2.2 1.7 2.8

Fair value of properties opening balance, EUR million 1,741 1,199 979 597 -Change in fair value, EUR million -1 68 27 41 3Investments, EUR million 80 70 44 30 2Purchases, EUR million 80 341 278 267 582Sales, EUR million - - - - -Exchange difference, EUR million 93 63 -129 44 10Fair value of propertiesclosing balance, EUR million 1,993 1,741 1,199 979 597

29


key figures2019

Sep 302018

Dec 312017

Dec 312016

Dec 312015

Dec 31

Properties, EnglandAverage residential rent, GBP/sqft/month 2.83 2.77 2.75 2.55 2.07Growth in average residential rent2, percent 1.9 0.3 3.3 5.9 11.5Growth in rental income3, percent 3.4 4.2 16.2 7.5 15.1Growth in net operating income3, percent 1.2 5.1 15.4 15.4 23.0Fair value, EUR per sqm 8,863 8,772 8,689 8,274 7,407Capitalization rate, percent 4.13 4.14 4.16 4.11 4.22Number of apartments 2,241 2,244 2,148 1,224 1,404Vacancy, percent 18.0 19.1 14.7 12.4 8.0Real vacancy, percent 1.0 3.0 2.0 3.7 2.8

Fair value of properties opening balance, EUR million 878 780 473 530 357Change in fair value, EUR million -10 -7 11 15 78Investments, EUR million 31 20 13 36 40Purchases, EUR million - 93 301 21 181Sales, EUR million - - - -55 -146Exchange difference, EUR million 8 -8 -18 -74 20Fair value of propertiesclosing balance, EUR million 907 878 780 473 530

Properties, FranceAverage residential rent, EUR/sqm/month 25.33 22.79 23.40 20.99 22.50Growth in average residential rent2, percent 12.3 8.4 14.9 1.7 15.7Growth in rental income3, percent 12.6 6.3 -1.4 11.9 -Growth in net operating income3, percent 42.5 254.1 -7.1 241.1 -Fair value, EUR per sqm 7,403 7,143 6,883 6,411 6,857Capitalization rate, percent 4.06 4.06 4.16 4.20 4.21Number of apartments 1,549 1,546 1,100 941 467Vacancy, percent 40.0 43.8 46.4 46.2 35.3Real vacancy, percent 0.6 1.8 1.3 3.7 1.3

Fair value of properties opening balance, EUR million 380 245 193 109 17Change in fair value, EUR million 1 -8 8 2 -1Investments, EUR million 13 19 13 6 2Purchases, EUR million - 124 31 76 91Sales, EUR million - - - - -Exchange difference, EUR million - - - - -Fair value of propertiesclosing balance, EUR million 394 380 245 193 109

30


key figures

1) Like-for-like capitalization rate. 2) Like-for-like growth on a rolling 12-month period. 3) Like-for-like growth for the period compared to the same period in the previous year. 4) Adjustment for revenue from operating expenses invoiced to the tenants in Germany, France, Canada, United States and Sweden amounted to EUR 76 million for Jan–Sep 2019 and EUR 72 million for Jan–Sep 2018.

2019Sep 30

2018Dec 31

2017Dec 31

2016Dec 31

2015Dec 31

Properties, DenmarkAverage residential rent, DKK/sqm/year 1,052 1,011 936 916 -Growth in average residential rent2, percent 6.4 8.0 5.3 - -Growth in rental income3, percent 13.1 0.9 - - -Growth in net operating income3, percent 37.1 12.1 - - -Fair value, EUR per sqm 3,599 3,385 3,129 2,836 -Capitalization rate, percent 2.94 2.99 3.09 3.42 -Number of apartments 1,031 1,031 1,031 216 -Vacancy, percent 1.7 4.2 6.1 1.9 -Real vacancy, percent 0.3 0.1 0.6 - -

Fair value of properties opening balance, EUR million 300 277 44 - -Change in fair value, EUR million 13 16 22 - -Investments, EUR million 5 7 4 - -Purchases, EUR million - - 204 44 -Sales, EUR million - - - - -Exchange difference, EUR million - - 3 - -Fair value of propertiesclosing balance, EUR million 318 300 277 44 -

31


condensed statement of comprehensive income for the Parent Company

EUR million

2019 Jan–Sep

9 months

2018 Jan–Sep

9 months

2019 Jul–Sep

3 months

2018 Jul–Sep

3 months

2018 Jan–Dec

12 monthsCentral administration -9 -4 -5 -1 -3Financial income 184 206 69 41 311Financial expenses -132 -98 -40 -37 -140Change in the fair value of derivatives -17 -10 -17 8 -21Appropriations - - - - -147Profit before tax 26 94 7 11 0Tax -7 -3 -1 -2 -1Profit for the period/year 19 91 6 9 -1Comprehensive income 19 91 6 9 -1

condensed statement of financial position for the Parent Company

EUR million2019

Sep 302018

Sep 302018

Dec 31Shares in subsidiaries 2,655 1,299 2,655Receivables from Group companies 3,927 4,975 4,056Prepaid expenses and accrued income from Group companies 116 118 2Deferred tax assets 36 41 43Other assets 36 14 17Cash and cash equivalents 9 1 1Total assets 6,779 6,448 6,774Total equity 1,487 1,592 1,504Interest-bearing liabilities 3,914 3,882 4,158Interest-bearing liabilities from Group companies 1,227 887 1,019Derivative financial instruments 59 34 44Other current liabilities 67 53 49Other current liabilities from Group companies 25 - -Total equity and liabilities 6,779 6,448 6,774

32


alternative performance measures

Reconciliation for the purposes of the Guidelines published by the European Securities and Markets Authority is set out below.

EUR million2019

Sep 302018

Sep 302018

Dec 31Equity 5,685 5,349 5,370Deferred tax 846 940 884Deferred taxes reported as liability for sale 92 - -Derivative financial instruments 87 56 30Net asset value 6,710 6,345 6,284

Total interest-bearing liabilities excluding leasing 5,458 5,612 6,018Hybrid bond -499 -499 -499Cash and liquid assets -17 -13 -13Pledged cash assets - -1 -1Net debt 4,942 5,099 5,505Total assets 12,353 12,114 12,516Cash and liquid assets -17 -13 -13Pledged cash assets - -1 -1Net asset 12,336 12,100 12,502Loan-to-value ratio, percent 40 42 44

Net debt 4,942 5,099 5,505Less senior unsecured debt -3,002 -2,962 -3,173Secured debt minus cash, pledged cash and liquid assets 1,940 2,137 2,332Net asset 12,336 12,100 12,502Loan-to-value ratio, secured loan, percent 16 18 19

Equity 5,685 5,349 5,370Hybrid bond 499 499 499Equity and hybrid bond 6,184 5,848 5,869Total asset 12,353 12,114 12,516Equity ratio, percent 46 44 43Equity and hybrid capital ratio, percent 50 48 47

33


alternative performance measures

EUR million2019

Sep 30

Unencumbered assetsIntangible assets 16Unencumbered properties 5,692Lease agreement, right-of-use-assets 16Tangible fixed assets 6Deferred tax 1Financial assets 15Trade and other receivables 103Derivative financial instruments 2Unencumbered assets 5,850

Unsecured loans 3,002Subordinated debt -17Less cash and cash equivalents -17

Net unsecured senior debt 2,968

Unencumbered asset ratio 1.97

EUR million2019

Jan–Sep2018

Jan–SepPercent growth

Rental income 373 353 5.7Exchange differences - 1Purchases and sales -54 -52Service revenue -31 -28Like-for-like rental income 288 274 5.1

Net operating income 195 193 0.9Exchange differences - -Purchases and sales -26 -29Like-for-like net operating income 169 164 3.3

EUR million2019

Jan–Sep2018

Jan–Sep

Proceeds from the sale of properties 1,181 299Costs of sale -19 -4Acquisition costs -498 -111Accumulated investments -208 -54Realized value growth 456 130

34


other information

basis of presentationThe Akelius Residential Property Group’s Interim report has been prepared in accordance with IAS 34, Interim Financial Reporting and the Swedish Annual Accounts Act. The financial statements of the Parent Company, Akelius Residential Property AB, corporate identity number 556156-0383, have been prepared in accordance with the Swedish Annual Accounts Act and the accounting standard RFR 2, Accounting for Legal Entities. Disclosures in accordance with IAS 34 Interim Financial Reporting are submitted both in the notes and in other sections of the interim report. The figures in this interim report have been rounded, while the calculations have been made without rounding. As a result, the figures in certain tables and key figures may appear not to add up correctly.

accounting principles Parent CompanyAs of January 1, 2019, the Parent Company s functional currency is Euro.

IFRS 16 LeasingIFRS 16 “Leases” has been implemented from January 1, 2019. Akelius applied the cumulative catch-up approach in the transition. Akelius’ rental agreements for offices and site leaseholds are reported in the balance sheet from 2019. The cost for site leasehold fees are reported as a financial expense, unlike the previous policy, according to which the fees were reported as operating costs.

The rent cost is allocated between impairments and financial expenses. At the balance sheet date December 31, 2018 the value of Akelius’s leases was EUR 12 million, divided into site leasehold agreements of EUR 6 million and rental agreements of EUR 6 million.

IFRS 9 Financial instrumentDerivative instruments are reported in the balance sheet as of the settlement date and are valued continuously at fair value through profit or loss. The fair value of derivatives not listed in an active market is determined according to valuation techniques, based on a series of methods and assumptions relating to market conditions as of the reporting date. Financial instruments that are not measured at fair value through profit and loss are measured at amortized cost using the effective interest rate method. The fair values of hybrid bond are based on level 1 and the fair values of derivatives and other loans are based on level 2 in the fair value hierarchy. Compared to 2018, no transfers have been made between different levels in the fair value hierarchy for derivatives and borrowings and no significant changes have been made to valuation techniques.

financial instruments recorded at fair value

EUR million2019

30 Sep2018

31 DecAssets 1 16Liabilities 88 46

carrying value and fair value of interest-bearing liabilities excluding leasing

EUR million

2019Sep 30

Carrying value

2019 Sep 30

Fair value

2018Dec 31

Carrying value

2018Dec 31

Fair valueLoans 4,960 4,849 5,519 5,369Hybrid bond 499 537 499 487Total 5,459 5,386 6,018 5,856

35


EUR million2019

30 Sep2018

31 DecAssets 1 16Liabilities 88 46

other information

risks and uncertaintiesOperational risks are limited by concentrating the property portfolio to residential properties in metropolitan areas. Strong residential rental markets in Sweden, Germany, Canada, England, France, the United States and Denmark reduce the risk of long-term vacancies. To reduce risk or variations in cash flow further, interest rates are secured on a long-term basis. Access to capital from a large number of banks and through the capital market mitigates the refinancing risk. Overseas investments are hedged to reduce the impact of currency movements related to the Group s equity-to-assets ratio. There have been no material changes in the company’s assessment of risks since the publication of the 2018 annual report.

Pål Ahlsén,CEO, Managing Director

Stockholm, Sweden, October 21, 2019, Akelius Residential Property AB (publ)

36


definitions

adjusted EBITDAEBITDA plus other financial income and expenses. It highlights current cash flow capacity from property management excluding financial income and expenses.

adjusted net operating income marginNet operating income in relation to rentalincome excluding income from operatingexpenses included in the rent invoiced to thetenants, such as utility and property taxes.It highlights the ongoing earning capacityfrom property management related to rentalservices only.

annual property returnGain from the revaluation of investment properties and net operating income on an annual basis in relation to the fair value of the properties at the beginning of the year. It illustrates the total return on the property portfolio.

capitalization rateRate of return used in assessing the terminal value of property in the fair value assessment. Defined as the expected return when net operating income and property prices remain constant. It is used to assess the properties net operating income.

debt maturities, yearsVolume-weighted remaining term of interest-bearing liabilities and derivatives on the balance sheet date. It illustrates the company’s refinancing risk.

debt coverage capacityProfit before tax and revaluation, including realized value growth. Net operating income and realized value growth are reinvested into existing and new properties. This leads to a growing operating surplus. The earnings capacity is based on the property portfolio at balance sheet date and the portfolio’s gross rent, real vacancy, estimated operating expenses and maintenance costs during a normal year, as well as central administrative expenses.

Interest expenses are based on net debt on the balance sheet date calculated at the currency rate on the balance sheet date. No tax has been calculated as it relates mainly to deferred tax. The earnings capacity is not a forecast for the coming twelve months. It contains no estimates of rent, vacancy, currency exchange, future property purchases and sales or interest rate changes.

discount rateRate of return used in assessing the present value of future cash flow and terminal value in the fair value assessment of properties. Defined as the expected return on the property. Mainly used to estimate properties real value.

EBITDANet operating income plus central administrative expenses, other income and expenses with add-back of depreciation and impairment charges and operating exchange rate differences. It highlights current cash flow capacity from property management.

equity ratioEquity in relation to total assets. It highlights the company’s financial stability.

income returnNet operating income on an annual basis in relation to the fair value of the properties at the beginning of the year. It measures the yield on the property portfolio.

interest rate hedge total loans, yearVolume-weighted remaining term of interest rates on interest-bearing liabilities and derivatives on the balance sheet date. It illustrates the company’s financial risk.

interest coverage ratio Adjusted EBITDA plus realized value growth for the latest rolling 12-month period in relation to net interest expenses for the latest rolling 12-month period. It illustrates the company’s sensitivity to interest rate changes.

37


definitions liquid financial assets Debt securities and equity securities traded on a regulated market and with an investment grade rating. It is used to calculate liquidity. liquidity The liquidity reserve consists of free cash, unused credit lines and assets that can be liquidized within three working days. like-for-like properties Properties owned during the compared periods. This means that properties that were acquired or sold during any of the compared periods are excluded. Facilitates the analysis and the comparison between different periods, when properties that don’t figure in all the periods are excluded. loan-to-value ratio Net debt divided by net assets. This key figure shows financial risk. loan-to-value ratio, secured loans Net debt reduced by unsecured interest-bearing debt divided by net assets. This key figure shows financial risk. net asset Total assets minus pledge cash, cash and liquid assets. It is used to illustrate the Company’s net assets. net asset value Equity, deferred tax and derivatives. It is used to highlight the Company’s long-term capital that is not interest-bearing. net debt Interest-bearing liabilities exclusive leasing less subordinated debt, cash and liquid assets. It is used to facilitate analysis of the Company’s real indebtedness. net financial items The net of interest income, interest expenses, other financial income and expenses and changes in the fair value of derivatives. It measures the net of financial operations.

net lettingThe sum of agreed contracted annual rents for new lets for the period less terminated annual rents. Demonstrates the effect of the vacancy development illustrated in annual rent. net interest expenses Total interest expenses less interest on subordinated debt, one-off financing charges and interest on cash, cash equivalents and liquid financial assets. It is used to facilitate analysis of the Company’s interest results.

net operating income Rental income less property costs. It highlights the ongoing earning capacity from property management.

net operating income marginNet operating income in relation to rental income. It highlights the ongoing earning capacity from property management.

other income and expensesItems from secondary activities such as gains on disposals of fixed assets other than investment properties, income and expenses from temporary services rendered after the sale of properties. Summarizes income and expenses from business operations ancillary to the main business operations.

property costsThis item includes direct property costs such as operating expenses, utility expenses, maintenance costs, leasehold fees and property taxes. Illustrates the direct property expenses.

property portfolioInvestment property, owner-occupied properties, and investment property classified as assets held for sale. Summarizes the different accounting definitions of properties.

38


definitions

realized value growthProceeds from the sale of investment properties minus acquisition costs, accumulated investments and costs of sale. Demonstrates the actual result of sales measured from the acquisition to sale.

real vacancy rateThe total number of vacant apartments less the number of apartments vacant due to renovation work or planned sales, in relation to the total number of apartments. Real vacancy is measured on the first day after the month-end. Facilitates the analysis of longterm vacancy for the Company

renewed and renegotiated rental contracts All changes in rental levels for remaining tenants. Highlights contract change with existing customers

rental incomeRental value less vacancies and rent discounts. It measures the net of financial operations.

rental value12 months rent for apartments including a market rent for vacant apartments. Development of the rental value over the last 12 months, broken down into disposals, acquisitions and comparable portfolio. Illustrates what is accountingly included in the Company’s rental income.

return on equityComprehensive income divided by opening equity. Shows the return offered on the owners’ invested capital.

unencumbered asset ratioUnencumberanced assets less cash equivalents to senior unsecured debt less cash equivalents. It is used to assess unencumbered assets in relation to unsecured senior interest-bearing liabilities.

vacancy rateThe number of vacant apartments in relation to the total number of apartments. Vacancy is measured on the first day after the month-end. It is used to show vacant apartments available for letting. It is used to show vacant apartments available for letting

value growthChanges in value of investment properties excluding investment and change of currency. Demonstrates change in value of properties cleared for currency effects and laid down capital.

walk scoreRating of how easy it is to complete daily errands without a car. Locations are rated on a scale from 0 to 100, where 100 is the best. Walk score is provided by Walkscore.com, and grades the property’s location.

Head officeSvärdvägen 3ABox 104, S-182 12 Danderyd+46 (0) 8 566 130 00akelius.com

SwedenRosenlundsgatan 50Box 38149100 64 Stockholm+46 (0)10-722 31 00akelius.se

GermanyErkelenzdamm 11-13D-10999 Berlin+49 (0) 30 7554 110akelius.de

Canada289 Niagara StreetToronto M6J 0C3+1 (416) 214-2626akelius.ca

England10 Bloomsbury WayLondon WC1A 2SL+44 (0) 800 014 8579akelius.co.uk

France24 rue Cambacérès75008 Paris+33 1 40 06 85 00akelius.fr

United States300 A Street, 5th FloorBoston, MA 02210+1 857 930-3900akelius.us

DenmarkNørre Voldgade 80, 2. floor1358 Copenhagen K+45 88 62 62 78akelius.dk

Akelius in brief

apartments for metropolitansAll apartments are in metropolitan cities, such as Berlin, Hamburg, Munich, Paris, London, Toronto, Montreal, New York, Boston, Washington D.C., Stockholm and Copenhagen.

better livingAkelius’ mission is to provide tenants with better living by continuously upgrading buildings and service.

acquire via cherry-pickingAkelius prefers to make many smaller acquisitions of properties that are exactly right, by cherry-picking, rather than making a few large acquisitions of properties that are not quite right.

strong capital structure, low refinancing risk Akelius has agreements with 32 banks, listed senior unsecured bonds, listed preference shares, and listed common shares of class D. Akelius is Sweden’s largest listed property company and has eighteen thousand preference shareholders and twelve thousand class D shareholders.

first-class personnelMore than two hundred employees have graduated from the Residential Real Estate Management program at Akelius Business School.

financial calendar

year-end report 2019 Feb 3, 2020

annual report 2019 Mar 13, 2020

interim report Jan–Mar 2020 April 27, 2020

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