Akelius Residential Property AB (publ) interim reportupgraded apartments 21,772 property sales EUR...

Akelius Residential Property AB (publ)

interim reportJanuary to June 2019

summary 2019 2018 2019 2018 2018Jan–Jun Jan–Jun Apr–Jun Apr–Jun Jan–Dec

Rental income, EUR million 253 233 124 115 482Like-for-like growth in rental income, percent 3.7 3.4 3.6 2.9 3.2

Net operating income, EUR million 131 124 66 62 259Like-for-like growth in net operating income, percent 3.9 6.2 4.6 6.2 5.1

Net operating income margin, percent 51.7 53.2 52.9 54.4 53.6Adjusted net operating income margin, percent 65.5 67.5 65.5 67.5 69.3

EBITDA, EUR million 116 115 59 59 236

Profit before tax, EUR million 263 423 65 203 634

Property fair value, EUR million 12,199 11,225 12,199 11,225 12,379

Change in property fair value, percent 2.0 3.6 0.5 1.7 5.2

Number of apartments 47,436 47,733 47,436 47,733 50,407

Real vacancy residential, percent 1.3 1.1 1.3 1.1 1.4

Like-for-like rent level increase, percent 3.1 1.7 1.5 1.0 3.6

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

See definitions on pages 37–39.

Hirschgraben 58, Hamburg

2

Akelius strives for a higher ratingAkelius has closed and signed binding agreements to sell properties amounting to EUR 1.74 billion during the year.Reported loan-to-value is 40 percent.The signed but not yet closed property disposals of EUR 1 billion will decrease loan-to-value further.Sales prices have been 15 percent above fair value,indicating significant strength in the balance sheet.

contemplating issue of equityTo further strengthen the company,a potential issue of equity is being prepared.An extraordinary general meeting will be held in the beginning of September.

net letting EUR 11.5 millionThe bottlenecks in construction have been addressed.The company has hired more staff and initiated cooperation with additional construction companies.This means that more apartments are being delivered to letting, as compared to last year.

Real vacancy remained stable at around 1 percent.Like-for-like income grew with roughly 4 percent.

Berlin politicians stop upgradingBerlin politicians aim to introduce a rental freeze for five years.Akelius has, consequently, stopped its upgrading activity in Berlin.

Housing shortage is a major issue in major cities, such as Berlin.The only way to ease the situation is to build more apartments. Freezing rents will not create any additional apartments.The proposed regulation will rather reduce the construction of new apartments.That is a slap in the face to the climate, construction workers and all those struggling to find an apartment in Berlin.

Pål Ahlsén, CEO and Managing director

3

interim report, January to June 2019

property portfolio June 30, 2019

fair value properties EUR 12,199 million

Thousand sqm Fair value

CityResidential

units Residential Commercial TotalEUR

millionEUR/sqm

Capitalization rate, percent

Berlin 13,940 875 70 945 2,930 3,101 3.39Stockholm 5,917 423 32 455 1,598 3,506 2.69Malmö 4,067 266 83 349 944 2,703 3.23New York 1,724 117 4 121 943 7,767 4.18Toronto 4,132 223 5 228 938 4,120 4.19

Hamburg 4,347 242 11 253 932 3,675 3.76

London 2,242 88 15 103 889 8,671 4.13Montreal 3,859 259 1 260 749 2,886 4.29Boston 974 63 0 63 504 8,003 4.25Paris 1,543 48 5 53 389 7,300 4.06Washington D.C. 1,082 81 4 85 374 4,357 4.67Copenhagen 1,031 83 6 89 314 3,554 2.92Munich 748 41 2 43 237 5,522 3.25Other 1,830 114 7 121 458 3,808 3.78Total 47,436 2,923 245 3,168 12,199 3,850 3.66

4


Jun 30 2019

Dec 31 2018

upgraded apartments 21,772

property sales EUR 743 million contracted sales EUR 453 million

sales price

upgraded apartments 45.9 percent

Dec 31 2018

43.345.9

sales and purchases

-0.6

upgraded like-for-like

3.2

Jun 30 2019

21,809

property purchases EUR 94 million

investments purchase price

Akelius has signed an agreement for apartment sales in Germany. The closing date is during the second half of 2019.

21,772

changes in the property portfolio

1,196

69472%

1,588 apartments sold during 2019

Montreal

Berlin

Stockholm 13

Toronto 4

Hamburg 2

20

30

23

Other 2

Washington D.C.

5


number of apartments 277 rental income EUR 11.5 million

move inmove out net letting move inmove out net letting

3,557

3,834

27742.7

54.2

11.5

net letting January–June 2019

Jul 1 2018

changesales Jul 1 2018

Jul 1 2019

purchases

461

like-for-like

30442 28 17 431

414

increase like-for-like in residential rental value 4.1 percent

Jul 1 2019

4.1%

6


like-for-like growth

rental income 3.7 percent net operating income 3.9 percent

real vacancy 1.3 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–Jun 2019

3.7

Jan–Jun 2019

3.9

2018

1.4

2010

0.6

2011

0.7

2012

0.7

2013

0.7

average

1.0

Jul 1 2019

1.3

2017

0.9

2016

1.1

2015

1.3

2014

1.0

7


Jan 1, 2019 3.67 5.66Purchases 0.00 0.00Sales -0.01 -0.01Like-for-like -0.01 -0.01Exchange difference 0.01 0.01Jun 30, 2019 3.66 5.65

Cash flow 159 1.29Required rate of return 52 0.42Sales 43 0.34Purchases - 0.00Total change in value 254 2.05

capitalization rate 3.66 percent

Fair value, Jan 1, 2019 12,379Revaluations 254 2.0Investments 216 1.7Purchases 94 0.8Sales -743 -6.0Exchange difference -1 0.0 Fair value, Jun 30, 2019 12,199 -1.5

Net operating income 131 1.1Total property return 385 Per annum: 6.3

annual property return 6.3 percent

20181614121086420

2019Jan–Jun

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 254 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 49 percent

ordinary equitypreferred equity

cash uses cash sources

395

50

307

38

hybrid bond

sales

Dec 312018

44

19

25

Jun 302019

40

15

25

47

37

5

Dec 312018

Jun 302019

5

Jan–Jun 2018

Jun 30 2018

Jan–Jun 2019

Jun 30 2019

66

650

69

756

financing

1,167

756

146

265

49

40

54

9


liquidity fixed interest termdebt maturities

interest rate hedges, average interest rateEUR million, percent and year

debt maturitiesEUR million, year

average interest rate 2.58 percent

fixed interest term 4.6 years debt maturities 5.7 years

0–1

307

1–2

648

3–4

49

4–5

612

>52–3

799

0–1

6.94

1–2

597

2.71

2–3

1.48

822

3–4

53

4–5

800

>5

2.60

2,295

1.45

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

4.6

5.7

Jun 302019

2.58

3.44

2.62

Dec 31 2016

2.58

Dec 31 2017

2.64

Dec 31 2018

Dec 31 2015

384

2,536

Jun 302019

financing

10


EUR millionJul 2018– Jun 2019

Earnings capacity as at

June 30, 20191

Rental income 502 5322

Operating expenses -206 -199Maintenance -31 -30Net operating income 265 303Central administration and other items3 -28 -29EBITDA 237 274Other financial income and expenses -2 -1Adjusted EBITDA 235 273Net interest expenses -134 -127Interest coverage ratio excluding realized value growth 1.8 2.2

Realized value growth 322 -Interest coverage ratio 4.2 -

Net debt as per June 30, 2019 4,933 4,933Net debt/EBITDA 20.8 18.0Net debt/EBITDA including realized value growth 8.8 - 1) The earnings capacity is based on on the property portfolio as at June 30, 2019 and the property portfolio’s gross rent, real vacancy, estimated operating expenses and maintenance costs and central administration during a normal year. 2) Includes EUR 461 million in residential rental value as of July 1, 2019, EUR 37 million in rental income for commercial properties and parking, EUR -8 million in real vacancy for apartments and EUR 43 million in other income. 3) Excludes operational exchange differences and depreciation.

interest coverage ratio 4.2

EBITDArealized value growth

EBITDA EUR 237 million

financing

Jul 2018– Jun 2019

Earnings capacity

201820172016 Jul 2018– Jun 2019

1.8

2.4

2.2

2018

4.2

2.2

20172016

1.9

2.6

4.5 4.7

2.8

1.9 1.8

1.0

2.8

236 237

274

231233

Earnings capacity

current interest and debt coverage capacity

11


BerlinProperty portfolioFair value, EUR million 2,930Proportion of property fair value, percent 24Capitalization rate, percent 3.39Proportion upgraded apartments, percent 40Average apartment size, sqm 63Walk score 91

Average rent EUR/sqm/monthTotal portfolio Jul 1, 2018 8.30Sales -Like-for-like Jul 1, 2018 8.30Like-for-like increase 0.73– Increase in percent 8.8Like-for-like Jul 1, 2019 9.03Purchases -0.02Total portfolio Jul 1, 2019 9.01New lease level 15.98

Vacancy rate residential percentReal vacancy rate 0.9Apartments being upgraded 5.5Vacancy rate 6.4

Berlin

acquired properties 2019 like-for-like properties

12


Hamburg Munich

like-for-like properties

Hamburg

Munich

Property portfolioFair value, EUR million 932 237Proportion of property fair value, percent 8 2Capitalization rate, percent 3.76 3.25Proportion upgraded apartments, percent 54 47Average apartment size, sqm 56 55Walk score 87 85

Average rent EUR/sqm/month EUR/sqm/monthTotal portfolio Jul 1, 2018 10.91 12.88Sales - -Like-for-like Jul 1, 2018 10.91 12.88Like-for-like increase 0.50 0.72– Increase in percent 4.6 5.6Like-for-like Jul 1, 2019 11.42 13.60Purchases -0.02 -0.02Total portfolio Jul 1, 2019 11.40 13.58New lease level 15.48 19.13

Vacancy rate residential percent percentReal vacancy rate 0.6 3.5Apartments being upgraded 5.8 2.5Vacancy rate 6.4 6.0

acquired properties 2019

13


London Paris


London ParisProperty portfolioFair value, EUR million 889 389Proportion of property fair value, percent 7 3Capitalization rate, percent 4.13 4.06Proportion upgraded apartments, percent 57 22Average apartment size 422 sqft 31 sqm Walk score 86 97

Average rent GBP/sqft/month EUR/sqm/monthTotal portfolio Jul 1, 2018 2.76 23.49Sales - -Like-for-like Jul 1, 2018 2.76 23.49Like-for-like increase 0.03 2.31– Increase in percent 1.2 9.9Like-for-like Jul 1, 2019 2.79 25.80Purchases 0.01 -1.47Total portfolio Jul 1, 2019 2.80 24.33New lease level 2.91 41.32


14


Stockholm

Stockholm MalmöProperty portfolioFair value, EUR million 1,598 944Proportion of property fair value, percent 13 8Capitalization rate, percent 2.69 3.23Proportion upgraded apartments, percent 50 55Average apartment size, sqm 72 65Walk score 68 91

Average rent SEK/sqm/year SEK/sqm/yearTotal portfolio Jul 1, 2018 1,289 1,339Sales 7 -Like-for-like Jul 1, 2018 1,296 1,339Like-for-like increase 44 46– Increase in percent 3.4 3.4Like-for-like Jul 1, 2019 1,340 1,385Purchases 1 -Total portfolio Jul 1, 2019 1,341 1,385New lease level 1,589 1,592


Malmö


15


Copenhagen


Copenhagen New YorkProperty portfolioFair value, EUR million 314 943Proportion of property fair value, percent 3 8Capitalization rate, percent 2.92 4.18Proportion upgraded apartments, percent 36 33Average apartment size 80,sqm 732,sqftWalk score 95 96

Average rent DKK/sqm/year USD/sqft/monthTotal portfolio Jul 1, 2018 960 2.86Sales - -Like-for-like Jul 1, 2018 960 2.86Like-for-like increase 79 0.14– Increase in percent 8.3 4.8Like-for-like Jul 1, 2019 1,039 3.00Purchases - -0.06Total portfolio Jul 1, 2019 1,039 2.94New lease level 1,617 5.23


New York

16


Washington D.C.Boston


Boston Washington D.C.Property portfolioFair value, EUR million 504 374Proportion of property fair value, percent 4 3Capitalization rate, percent 4.25 4.67Proportion upgraded apartments, percent 65 67Average apartment size, sqft 694 810Walk score 89 87

Average rent USD/sqft/month USD/sqft/monthTotal portfolio Jul 1, 2018 3.52 1.92Sales - -Like-for-like Jul 1, 2018 3.52 1.92Like-for-like increase 0.14 0.20– Increase in percent 4.0 10.2Like-for-like Jul 1, 2019 3.66 2.12Purchases -0.01 0.28Total portfolio Jul 1, 2019 3.65 2.40New lease level 3.92 2.55


17


Toronto Montreal


Toronto MontrealProperty portfolioFair value, EUR million 938 749Proportion of property fair value, percent 8 6Capitalization rate, percent 4.19 4.29Proportion upgraded apartments, percent 45 42Average apartment size, sqft 581 720Walk score 82 92

Average rent CAD/sqft/month CAD/sqft/monthTotal portfolio Jul 1, 2018 2.08 1.69Sales - -Like-for-like Jul 1, 2018 2.08 1.69Like-for-like increase 0.12 0.03– Increase in percent 5.9 1.7Like-for-like Jul 1, 2019 2.20 1.72Purchases - -0.02Total portfolio Jul 1, 2019 2.20 1.70New lease level 3.33 1.95


18


result

rental income EUR 253 million Rental income was EUR 253 million (233), an increase of 8.6 percent compared to the same period in 2018.

Like-for-like growth in rental income was EUR 7 million (6), or 3.7 percent (3.4). Service income was EUR 53 million (49).

During the period, 16,217 (13,030) rental contracts with an annual rent of EUR 206 million (122) were renewed or renegotiated. The new yearly rent is EUR 209 million (125), an increase of 1.7 percent (1.9).

The real vacancy rate decreased by 0.1 percentage points to 1.3 percent (1.1). The vacancy rate for residential units was 9.5 percent (8.5). 86 percent (87) was due to upgrades or planned sales of apartments.

net operating income EUR 131 millionNet operating income was EUR 131 million (124). Property expenses totaled EUR 122 million (109). EUR 15 million (14) was attributable to maintenance, corresponding to EUR 9 (8) per square meter and year.

Like-for-like growth in net operating income was 3.9 percent (6.2). Net operating income margin was 51.7 percent (53.2).

Adjusted net operating income margin was 65.5 percent (67.5). 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 percent The increase in property value was EUR 254 million (379), 2 percent (3.6). The growth in value is mainly due to increasing cash flow. Higher net operating income and profitable acquisitions and sales contributed as well.See table on page 7. net financial items EUR -98 millionInterest expenses were EUR -69 million (-66). The increase is mainly due to the higher cost of borrowings and increased debt due to net acquisitions.Interest expenses for the hybrid bond were EUR -10 million (-5). Financial derivatives affected earnings by EUR -20 million (3). Other financial items amounted to EUR 1 million (-2).

profit before tax EUR 263 millionProfit before tax was EUR 263 million (423). The increase in the fair value of properties had a positive impact on the profit.

tax expenses EUR 30 millionTax expenses totaled EUR 30 million (95). EUR 18 million (94) was deferred tax, mainly due to unrealized gains on properties. Sales through share deal in Sweden contributed to positive tax in Q2.

Akelius has no ongoing tax disputes.

19


property portfolio

fair value EUR 12,199 millionThe fair value was EUR 12,199 million (11,225), which is equivalent to EUR 3,850 (3,463) per square meter. The average capitalization rate for the entire portfolio was 3.66 percent (3.61), which is 0.01 percentage points lower than at the beginning of the year. See table on page 7.

property purchases EUR 94 million Property purchases amounted to EUR 94 million (543) during the period. The average capitalization rate for purchased properties was 3.97 percent (3.76).

property investments EUR 216 millionInvestments in properties totaled EUR 216 million (138). On an annual basis, this corresponds to EUR 131 (86) per square meter. 36 percent (42) of the total investments were due to apartment upgrades.

property sales EUR 743 million In total, Akelius sold properties for EUR 743 million (299). Properties sold in 2019 were located in Germany and Sweden. Income from the sale of properties totaled EUR 42 million (4) excluding EUR 7 (7) million in transaction costs.

assets and liabilities held for saleAkelius has signed agreements for the sale of apartments in Germany. The closing date is planned to the second half of 2019. EUR 440 million was reported in investment properties and EUR 64 million was reported in 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 49 percent Equity increased by EUR 178 million to EUR 5,548 million (5,125) during the period. The equity and hybrid capital ratio amounted to 49 percent (50).

loan-to-value ratio 40 percent Loans excluding the hybrid bond decreased by EUR 568 million during the period, to EUR 4,951 million (4,605). The loan-to-value ratio decreased by 4 percentage points to 40 percent (40) since last year. Secured loans were EUR 1,899 million (1,890), compared to EUR 2,346 million at the end of 2018. Secured loan-to-value ratio was 15 percent (16), 4 percentage points lower than at the year-end 2018. The secured loans were borrowed from 31 banks (36) in seven countries. Unsecured loans include 9 (8) bonds and loans from large investors and related companies.

debt maturities 5.7 years Loans have an average maturity of 5.7 years (5.5), and has remained unchanged since the end of last year. EUR 307 million (245) matures within one year. The average loan-to-value ratio on short-term loans was 37 percent (37). Short-term loans consist of borrowings from 16 banks (13) and capital market financing.

interest rate hedge 4.6 years EUR 2,295 (2,519) million had a fixed interest rate term of more than five years and EUR 384 million (453) had a fixed interest rate term of less than one year. The average interest rate was 2.58 percent (2.64). On average, the underlying interest rate is secured for 4.6 years (5.2), compared to 4.5 years at the end of 2018.

liquidity EUR 756 million Available funds in the form of liquid assets and credit facilities totaled EUR 756 million (650). The fair value of the unencumbered properties was EUR 5,526 million (4,928).

20


other financial information

cash flowOperating cash flow before change in working capital was EUR 46 million (52).Cash flow from investing activities was EUR 572 million (-378). 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 -603 million (342). Dividends of EUR 18 million (18) 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 19 million (83). 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 570 million (578) reported in equity. Preference shares represent 0.59 percent (0,59) of the total number of shares in Akelius Residential Property AB. On June 30, 2019, the price paid per preference share was SEK 349 (341).

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+.

second quarterProfit before tax for the quarter amounted to EUR 65 million (203). Change in the fair value of properties impacted the profit with EUR 62 million (179). Rental income increased to EUR 124 million (115). Property costs amounted to EUR 58 million (53). Net operating income increased to EUR 66 million (62). Net financial items totaled EUR -49 million (-34) and included the change in the fair value of derivatives of EUR -12 million (2).

Cash flow amounted to EUR -3 million (-1). Cash flow generated from operations was EUR 44 million (32). Net cash flow from investing activities amounted to EUR 724 million (-54). Financing activities had a negative effect on cash flow of EUR -771 million (21).

staff1,403 people (1,100) were employed as at June 30 compared to 1,326 at the end of 2018.

related party transactionsNet debt from related parties decreased by EUR 24 million (43).

significant events after the end of the reporting periodAkelius sells 1,492 apartments in Germany. Half in Hamburg and half in Munich. Sales price EUR 420 million. Planned closing is end of 2019. Akelius sells 664 apartments in Toronto. Sales price EUR 123 million. Planned closing is September. Inclusive assets held for sale, total contracted sales are EUR 996 million.

21


consolidated statement of comprehensive income

EUR million

2019Jan–Jun

6 months

2018Jan–Jun

6 months

2019Apr–Jun

3 months

2018Apr–Jun

3 months

2018 Jan–Dec

12 monthsRental income 253 233 124 115 482Operating expenses -107 -95 -50 -46 -195Maintenance -15 -14 -8 -7 -28Net operating income 131 124 66 62 259Central administration -18 -13 -9 -7 -29Other income and expenses 3 3 2 3 3Net income from the revaluation and disposal of investment properties* 245 374 55 179 546Operating profit 361 488 114 237 779Interest expenses -68 -66 -30 -35 -128Interest expenses hybrid bond -10 - -5 - -14Other financial income and expenses - -2 -2 -1 -3Change in fair value of derivative financial instruments -20 3 -12 2 -Profit before tax 263 423 65 203 634Tax -30 -95 16 -35 -127Profit for the period/year 233 328 81 168 507Items that will be reclassified to profit or loss:- Translation differences 2 57 -89 95 35- Change in the hedging of currency risk -20 -161 39 -79 -113- Tax attributable to the hedging of currency risk -2 35 -2 18 23- Revaluation reserve 1 2 - - 2

Total other comprehensive income -19 -67 -52 34 -53Comprehensive income for the period/year 214 261 29 202 454

Profit attributable to: - owners of the Parent Company 231 326 81 167 501 - non-controlling interests 2 2 - 1 6Total comprehensive income attributable to: - owners of the Parent Company 212 259 29 201 448 - non-controlling interests 2 2 - 1 6Earnings per share before and after dilution, EUR 0.13 0.10 0.05 0.05 0.15

*) EUR 35 million is related to the realized gain/loss from the disposal of investment properties in Jan–Jun 2019 and EUR 0 million in Jan–Jun 2018. Transaction costs amounted to EUR 7 million in Jan–Jun 2019 and EUR 4 million in Jan–Jun 2018. Net income from the revaluation and disposal include change in fair value of properties EUR 254 million, minus transaction cost EUR 7 million, and minus revaluation reserve for owner-occupied properties of EUR 1 million.

22


EUR million2019

Jun 302018

Jun 302018

Dec 31AssetsIntangible assets 14 7 11Investment properties 11,707 11,187 11,891Owner-occupied properties 52 38 39Lease agreement, right-of-use-assets1 15 - -Tangible fixed assets 6 4 6Derivative financial instruments - - 2Deferred tax assets 1 - 1Financial assets 5 4 4Total non-current assets 11,800 11,240 11,954Trade and other receivables 98 83 86Derivative financial instruments - - 14Cash and cash equivalents 15 22 13Assets held for sale2 440 - 449Total current assets 553 105 562Total assets 12,353 11,345 12,516Equity attributable to the Parent Company’s shareholders 5,468 5,103 5,292Non-controlling interests 80 22 78Total equity 5,548 5,125 5,370Loans 4,644 4,360 5,180Hybrid bond 499 499 499Leasing agreement 13 - -Derivative financial instruments 58 69 46Deferred tax liabilities 852 894 885Provisions 1 1 1Other liabilities 17 14 16Total non-current liabilities 6,084 5,837 6,627Loans 307 245 339Leasing agreement 2 - -Derivative financial instruments 5 13 -Provisions - 2 1Trade and other payables3 343 123 121Liabilities held for sale4 64 - 58Total current liabilities 721 383 519Total equity and liabilities 12,353 11,345 12,516Interest-bearing liabilities excluding leasing- unsecured loans 3,052 2,715 3,173- secured loans 1,899 1,890 2,346Subtotal 4,951 4,605 5,519- hybrid bond 499 499 499Total 5,450 5,104 6,0181) EUR 9 million for leased offices and EUR 6 million for site leasehold agreements. 2) EUR 440 million is attributable to investment properties in Germany,sale price EUR 453 million. 3) EUR 197 million is prepayment received for property sales in Germany. 4) EUR 64 million is attributable to deferred tax in Germany

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 - - - 326 326 2 328Other comprehensive income - - -68 1 -67 - -67Total comprehensive income - - -68 327 259 2 261Share issue 7 802 - - 809 - 809Dividend - -846 - - -846 - -846Closing balance Jun 30 2018 211 1,460 -222 3,654 5,103 22 5,125Profit for the period - - - 175 175 4 179Other comprehensive income - - 13 1 14 - 14Total comprehensive income - - 13 176 189 4 193Acquired minority - - - - - 52 52Closing 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 - - - 231 231 2 233Other comprehensive income - - -20 1 -19 - -19Total comprehensive income - - -20 232 212 2 214Dividend - - - -36 -36 - -36Closing balance Jun 30, 2019* 187 1,315 -205 4,171 5,468 80 5,548

*) attributable to preference shareholders 1 652 -83 - 570 - 570 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–Jun

6 months

2018Jan–Jun

6 months

2019Apr–Jun

3 months

2018Apr–Jun

3 months

2018Jan–Dec

12 monthsNet operating income 131 124 66 62 259Central administration -18 -13 -9 -7 -29Other income and expenses - 2 - 2 3Reversal of depreciation and impairment losses 2 1 1 - 3Interest paid -67 -61 -18 -21 -136Income tax paid -2 -1 -2 -1 -3Cash flow before changes in working capital 46 52 38 35 97Change in current assets -15 -6 8 -3 1Change in current liabilities -3 -4 -2 - 11Cash flow from operating activities 28 42 44 32 109Investments in intangible assets -4 -2 -2 -2 -7Investment in properties -216 -138 -126 -84 -349Acquisition of investment properties -94 -543 -20 -260 -1,186Acquisition of net assets - 30 - 18 40Proceeds from the sale of investment properties 743 299 742 293 300Proceeds from the sale of net assets1 -49 -28 -49 -28 -31Purchase and sale of other assets2 192 4 179 9 -8Cash flow from investing activities 572 -378 724 -54 -1,241New share issue - 809 - 809 809Acquisition of minority shares - 1 - 1 5Loans raised 889 1,327 236 790 3,650Repayment of loans -1,467 -960 -999 -713 -2,438Purchase and sale of derivative instruments -6 -8 2 -48 -51Amortization IFRS leasing 16 -1 - -1 - -Dividend ordinary shares - -809 - -809 -809Dividend preference shares -18 -18 -9 -9 -37Cash flow from financing activities -603 342 -771 21 1,129Cash flow for the period/year -3 6 -3 -1 -3Cash and cash equivalents at the beginning of the period/year 13 16 17 22 16Translation differences in cash and cash equivalents 5 - 1 1 -Cash and cash equivalents at the end of the period/year-end 15 22 15 22 13

For Jan–Jun 2019 1) Mainly related to a discount provided for deferred tax.2) Including EUR 197 million in prepayment received for property sales in Germany and EUR -7 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,

percent0–1 384 6.94 8 307 61–2 597 2.71 12 648 132–3 822 1.48 17 799 163–4 53 2.41 1 49 14–5 800 1.45 16 612 125–6 720 2.00 15 752 156–7 786 2.67 16 769 167–8 369 2.78 7 304 68–9 222 2.59 4 277 69–10 97 3.74 2 127 3> 10 101 4.44 2 307 6Total 4,951 2.58 100 4,951 100

loans

segment information

Jan–Jun 2019, EUR million Europe Scandinavia North America TotalRental income 117 64 72 253Operating expenses -46 -24 -37 -107Maintenance -6 -5 -4 -15Net operating income 65 35 31 131Revaluation of investment properties 148 41 65 254Total property return 213 76 96 385Total property return, percent 7.5 4.6 6.0 6.3Net operating income margin, percent 55.8 53.7 43.2 51.7Property fair value 5,816 2,875 3,508 12,199

Jan–Jun 2018, EUR million Europe Scandinavia North America TotalRental income 104 74 55 233Operating expenses -38 -30 -27 -95Maintenance -6 -6 -2 -14Net operating income 60 38 26 124Revaluation of investment properties 143 140 96 379Total property return 203 178 122 503Total property return, percent 8.4 10.5 11.4 9.7Net operating income margin, percent 57.8 51.5 46.9 53.2Property fair value 5,360 3,283 2,582 11,225

26


key figures2019

Jun 302018

Dec 312017

Dec 312016

Dec 312015

Dec 31

EquityEquity, EUR million 5,548 5,370 4,901 4,279 3,357Equity ratio, percent 45 43 46 46 41Equity and hybrid capital ratio, percent 49 47 46 46 41Return on equity, percent 4 9 19 37 29Net asset value, EUR million 6,526 6,284 5,840 5,127 4,027

Net operating incomeRental income, EUR million 253 482 469 472 464Growth in rental income, percent 8.6 2.8 -0.6 1.8 17.1Like-for-like growth in rental income, percent 3.7 3.2 5.1 4.1 4.3Net operating income, EUR million 131 259 251 244 232Growth in net operating income, percent 5.4 3.3 4.4 6.3 15.6Like-for-like growth in net operating income, percent 3.9 5.1 10.7 8.0 4.0Net operating income margin, percent 51.7 53.6 53.4 51.7 50.1Adjusted net operating income margin, percent 4 65.5 69.3 68.0 66.2 -

FinancingLoan-to-value ratio, secured loans, percent 15 19 18 24 36Loan-to-value ratio, percent 40 44 44 43 48Unencumbered asset ratio 1.87 1.74 1.63 1.18 1.00Interest coverage ratio 12 months 4.2 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 2.58 2.64 2.58 2.62 3.44Fixed interest term, years 4.6 4.5 5.3 4.5 4.3Debt maturities, years 5.7 5.7 5.6 5.0 5.7

PropertiesNumber of apartments 47,436 50,407 47,177 46,516 51,231Rentable area, thousand sqm 3,168 3,422 3,228 3,236 3,587Real vacancy rate, residential, percent 1.3 1.4 0.9 1.1 1.3Vacancy rate, residential, percent 9.5 9.6 6.6 5.0 4.3Fair value, EUR per sqm 3,850 3,617 3,292 2,834 2,220Capitalization rate, percent 3.66 3.67 3.60 3.82 4.33Change in capitalization rate1, percent -0.01 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 254 553 886 1,343 857Investments, EUR million 216 349 288 316 237Purchases, EUR million 94 1,286 1,297 643 1,293Sales, EUR million -743 -300 -737 -957 -615Exchange difference, EUR million -1 -133 -281 -139 125Fair value of properties closing balance, EUR million 12,199 12,379 10,624 9,171 7,965

27


key figures2019

Jun 302018

Dec 312017

Dec 312016

Dec 312015

Dec 31

Properties, SwedenAverage residential rent, SEK/sqm/year 1,358 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 3.6 2.4 3.8 1.9 3.0Growth in net operating income3, percent 9.1 5.0 10.8 2.4 1.8Fair value, EUR per sqm 3,181 2,976 2,821 2,421 1,877Capitalization rate, percent 2.89 3.02 3.00 3.43 4.30Number of apartments 9,985 12,298 13,808 17,381 23,520Vacancy, percent 1.6 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 31 116 376 712 313Investments, EUR million 39 65 65 104 92Purchases, EUR million 13 103 167 55 114Sales, EUR million -509 -285 -692 -805 -290Translation difference, EUR million -81 -136 -93 -156 135Fair value of properties closing balance, EUR million 2,561 3,068 3,205 3,382 3,472

Properties, GermanyAverage residential rent, EUR/sqm/month 9.69 9.48 8.98 8.56 8.13Growth in average residential rent2, percent 7.2 6.3 5.7 5.0 5.1Growth in rental income3, percent 6.4 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 3,333 3,201 2,941 2,583 2,078Capitalization rate, percent 3.49 3.52 3.54 3.84 4.35Number of apartments 20,864 21,727 20,463 19,932 20,307Vacancy, percent 6.5 7.4 6.5 4.8 4.9Real vacancy, percent 1.1 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 153 249 360 542 399Investments, EUR million 68 132 119 103 80Purchases, EUR million 26 235 127 90 188Sales, EUR million -234 -15 -45 -97 -167Exchange difference, EUR million - - - - -Fair value of propertiesclosing balance, EUR million 4,538 4,525 3,924 3,363 2,725

28


key figures2019

Jun 302018

Dec 312017

Dec 312016

Dec 312015

Dec 31

Properties, CanadaAverage residential rent, CAD/sqm/month 1.94 1.90 1.92 1.89 1.79Growth in average residential rent2, percent 4.6 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 -11.3 0.7 28.2 29.0 25.1Fair value, EUR per sqm 3,462 3,147 2,968 2,743 2,345Capitalization rate, percent 4.24 4.26 4.29 4.36 4.37Number of apartments 7,991 7,779 5,500 4,513 3,999Vacancy, percent 14.5 13.0 3.9 7.1 11.1Real vacancy, percent 2.9 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 65 119 83 33 65Investments, EUR million 27 36 30 37 21Purchases, EUR million 35 390 189 90 137Sales, EUR million - - - - -12Exchange difference, EUR million 73 -52 -45 45 -40Fair value of propertiesclosing balance, EUR million 1,687 1,487 994 737 532

Properties, United StatesAverage residential rent, USD/sqft/month 2.96 2.88 2.77 2.51 2.26Growth in average residential rent2, percent 5.2 6.5 4.1 4.2 -Growth in rental income3, percent 0.4 1.4 10.7 - -Growth in net operating income3, percent -5.0 11.3 63.6 - -Fair value, EUR per sqm 6,740 6,623 5,758 5,929 5,339Capitalization rate, percent 4.30 4.33 4.36 4.42 4.47Number of apartments 3,780 3,782 3,127 2,309 1,534Vacancy, percent 19.4 21.4 17.3 10.6 9.8Real vacancy, percent 2.7 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 50 70 44 30 2Purchases, EUR million 20 341 278 267 582Sales, EUR million - - - - -Exchange difference, EUR million 11 63 -129 44 10Fair value of propertiesclosing balance, EUR million 1,821 1,741 1,199 979 597

29


key figures2019

Jun 302018

Dec 312017

Dec 312016

Dec 312015

Dec 31

Properties, EnglandAverage residential rent, GBP/sqft/month 2.80 2.77 2.75 2.55 2.07Growth in average residential rent2, percent 1.2 0.3 3.3 5.9 11.5Growth in rental income3, percent 2.2 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 8,671 8,772 8,689 8,274 7,407Capitalization rate, percent 4.13 4.14 4.16 4.11 4.22Number of apartments 2,242 2,244 2,148 1,224 1,404Vacancy, percent 18.4 19.1 14.7 12.4 8.0Real vacancy, percent 1.9 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 -6 -7 11 15 78Investments, EUR million 20 20 13 36 40Purchases, EUR million - 93 301 21 181Sales, EUR million - - - -55 -146Exchange difference, EUR million -3 -8 -18 -74 20Fair value of propertiesclosing balance, EUR million 889 878 780 473 530

Properties, FranceAverage residential rent, EUR/sqm/month 24.33 22.79 23.40 20.99 22.50Growth in average residential rent2, percent 9.9 8.4 14.9 1.7 15.7Growth in rental income3, percent 9.1 6.3 -1.4 11.9 -Growth in net operating income3, percent 124 254.1 -7.1 241.1 -Fair value, EUR per sqm 7,300 7,143 6,883 6,411 6,857Capitalization rate, percent 4.06 4.06 4.16 4.20 4.21Number of apartments 1,543 1,546 1,100 941 467Vacancy, percent 41.8 43.8 46.4 46.2 35.3Real vacancy, percent 0.9 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 8 19 13 6 2Purchases, EUR million - 124 31 76 91Sales, EUR million - - - - -Exchange difference, EUR million - - - - -Fair value of propertiesclosing balance, EUR million 389 380 245 193 109

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 53 million for Jan–Jun 2019 and EUR 49 million for Jan–Jun 2018.

2019Jun 30

2018Dec 31

2017Dec 31

2016Dec 31

2015Dec 31

Properties, DenmarkAverage residential rent, DKK/sqm/year 1,039 1,011 936 916 -Growth in average residential rent2, percent 8.3 8.0 5.3 - -Growth in rental income3, percent 13.7 0.9 - - -Growth in net operating income3, percent 50.2 12.1 - - -Fair value, EUR per sqm 3,554 3,385 3,129 2,836 -Capitalization rate, percent 2.92 2.99 3.09 3.42 -Number of apartments 1,031 1,031 1,031 216 -Vacancy, percent 5.6 4.2 6.1 1.9 -Real vacancy, percent 0.2 0.1 0.6 - -

Fair value of properties opening balance, EUR million 300 277 44 - -Change in fair value, EUR million 11 16 22 - -Investments, EUR million 4 7 4 - -Purchases, EUR million - - 204 44 -Sales, EUR million - - - - -Exchange difference, EUR million -1 - 3 - -Fair value of propertiesclosing balance, EUR million 314 300 277 44 -

31


condensed statement of comprehensive income for the Parent Company

EUR million

2019 Jan–Jun

6 months

2018 Jan–Jun

6 months

2019 Apr–Jun

3 months

2018 Apr–Jun

3 months

2018 Jan–Dec

12 monthsCentral administration -4 -3 -1 -1 -3Financial income 115 165 56 122 311Financial expenses -92 -61 -45 -49 -140Change in the fair value of derivatives - -18 15 -17 -21Appropriations - - - - -147Profit before tax 19 83 25 55 0Tax -6 -1 -9 -2 -1Profit for the period/year 13 82 16 53 -1Comprehensive income 13 82 16 53 -1

condensed statement of financial position for the Parent Company

EUR million2019

Jun 302018

Jun 302018

Dec 31Shares in subsidiaries 2,655 1,283 2,655Receivables from Group companies 3,918 5,579 4,056Prepaid expenses and accrued income from Group companies 79 81 2Deferred tax assets 37 43 43Other assets 29 14 17Cash and cash equivalents 9 - 1Total assets 6,727 7,000 6,774Total equity 1,481 1,563 1,504Interest-bearing liabilities 3,799 3,508 4,158Interest-bearing liabilities from Group companies 1,313 1,824 1,019Derivative financial instruments 42 42 44Other current liabilities 76 61 49Other current liabilities from Group companies 16 2 -Total equity and liabilities 6,727 7,000 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

Jun 302018

Jun 302018

Dec 31Equity 5,548 5,125 5,370Deferred tax 851 894 884Deferred taxes reported as liability for sale 64 - -Derivative financial instruments 63 82 30Net asset value 6,526 6,101 6,284

Total interest-bearing liabilities excluding leasing 5,450 5,104 6,018Hybrid bond -499 -499 -499Cash and liquid assets -15 -22 -13Pledged cash assets -3 -1 -1Net debt 4,933 4,582 5,505Total assets 12,353 11,345 12,516Cash and liquid assets -15 -22 -13Pledged cash assets -3 -1 -1Net asset 12,335 11,322 12,502Loan-to-value ratio, percent 40 40 44

Net debt 4,933 4,582 5,505Less senior unsecured debt -3,052 -2,715 -3,173Secured debt minus cash, pledged cash and liquid assets 1,881 1,867 2,332Net asset 12,335 11,322 12,502Loan-to-value ratio, secured loan, percent 15 16 19

Equity 5,548 5,125 5,370Hybrid bond 499 499 499Equity and hybrid bond 6,047 5,624 5,869Total asset 12,353 11,345 12,516Equity ratio, percent 45 45 43Equity and hybrid capital ratio, percent 49 50 47

33


alternative performance measures

EUR million2019

Jun 30

Unencumbered assetsIntangible assets 14Unencumbered properties 5,526Lease agreement, right-of-use-assets 15Tangible fixed assets 6Deferred tax 1Financial assets 5Trade and other receivables 98Derivative financial instruments -Unencumbered assets 5,665

Unsecured loans 3,052less debt from Akelius Apartment and Akelius Spar, up-front fees and repurchased SEK bond -12less cash and cash equivalents -15

Net unsecured senior debt 3,025

Unencumbered asset ratio 1.87

EUR million2019

Jan–Jun2018

Jan–JunPercent growth

Rental income 253 233 8.6Exchange differences - -Service revenue -21 -17Purchases and sales -33 -24Like-for-like rental income 199 192 3.7

Net operating income 131 124 5.4Exchange differences - -Purchases and sales -15 -12Like-for-like net operating income 116 112 3.9

EUR million2019

Jan–Jun2018

Jan–Jun

Proceeds from the sale of properties 743 299Costs of sale -7 -4Acquisition costs -288 -108Accumulated investments -116 -48Realized value growth 332 139

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 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 Jun2018

31 DecAssets - 16Liabilities 63 46

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

EUR million

2019Jun 30

Carrying value

2019 Jun 30

Fair value

2018Dec 31

Carrying value

2018Dec 31

Fair value

Loans 4,951 4,826 5,519 5,369Hybrid bond 499 524 499 487Total 5,450 5,350 6,018 5,856

35


other information

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.

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, August 23, 2019, Akelius Residential Property AB (publ)

36


review report

introductionWe have reviewed the condensed interim report Akelius Residential Property AB as at June 30, 2019 and for the six months period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

scope of reviewWe conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

conclusionBased on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group, and in accordance with the Swedish Annual Accounts Act regarding the Parent Company.

Stockholm, 23 August 2019 Ernst & Young AB

Ingemar Rindstig Authorized Public Accountant

Jonas Svensson Authorized Public Accountant

37


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.

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.

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.

38


definitions

liquid financial assets Debt securities and equity securities traded on a regulated market and with an investment grade rating. 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.

loan-to-value ratioNet debt divided by net assets.

loan-to-value ratio, secured loans Net debt reduced by unsecured interest-bearing debt divided by net assets.

net asset Total assets minus pledge cash, cash and liquid assets.

net asset value Equity, deferred tax and derivatives.

net debt Interest-bearing liabilities exclusive leasing less subordinated debt, cash and liquid assets.

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.

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.

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.

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

property portfolioInvestment property, owner-occupied properties, and investment property classified as assets held for sale.

realized value growthProceeds from the sale of investment properties minus acquisition costs, accumulated investments and costs of sale. It illustrates realized value growth of properties sold.

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.

39


definitions

renewed and renegotiated rental contracts All changes in rental levels for remaining tenants.

rental incomeRental value less vacancies and rent discounts.

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.

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.

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.

value growthChanges in value of investment properties excluding investment and change of currency.

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

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 our buildings and our 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 36 banks, listed preference shares and listed senior unsecured bonds. Akelius is Sweden’s largest listed property company and has eighteen thousand shareholders.

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

financial calendar

interim report Jan–Sep 2019 Oct 21, 2019

year-end report 2019 Feb 3, 2020

annual report 2019 Mar 13, 2020

Akelius Residential Property AB (publ) interim reportupgraded apartments 21,772 property sales EUR...

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