Klövern AB (publ)

Interim Report January - September 2018 - Seite 2

The positive changes in value of properties amounted to SEK 271 million during the third quarter, mainly driven by investments made in connection with new letting, rising market rents, lower yield requirements and development of the building rights portfolio. Profit before tax was again strong and totalled SEK 644 million for the quarter.

GOOD RENTAL MARKET
All of our geographic markets have continued to develop well. We experience the rental market in Stockholm and Uppsala as being particularly strong. It is gratifying that Kista continues to have a positive development. Letting has continued at a high pace. The latest in a series of major lettings was a contract with Samsung for establishment of their new Swedish head office at the property Kista Gate in Kista Science City. In Kista Gate, during 2017 and 2018, rental contracts have also been signed with among others Baxter Medical, Climeon, Celgene and Novartis.

STREAMLINING AND INTERNATIONAL EXPANSION
During the year, we have continued to streamline and focus the property portfolio in Sweden. During 2016-2018, Klövern has divested over 80 properties and left some ten smaller cities completely. The most recent of a series of divestments was the property portfolios in Härnösand, Sollefteå and Falun which were handed over on 31 August. Klövern now operates at 14 locations. As much as 95 per cent of the total portfolio is located in larger cities, i.e. with over 100,000 inhabitants. Metropolitan regions, i.e. with over a million inhabitants - in Klövern's case Stockholm/Uppsala, Gothenburg, Copenhagen/Malmö and New York - make up almost 70 per cent of the property portfolio.

In 2018, we have decisively become established in Copenhagen. During the third quarter, Klövern took possession of an additional four properties in the Danish capital for a total of just over SEK 1 billion. At the end of the quarter, the value of our property portfolio in Copenhagen totalled SEK 3.7 billion making it Klövern's third largest city in terms of value. During the year, Klövern has also taken a couple of steps into the US market by acquisition of two project properties in Manhattan in New York. We aim to develop a total of around 20,000 sq.m. of high-quality offices.