2 quarter 2 - coremcorem interim report january–june 2016 . comments by the ceo . important events...

2ND QUARTER INTERIM REPORT JANUARY–JUNE 2016

2

2 | COREM INTERIM REPORT JANUARY–JUNE 2016

INTERIM REPORT JANUARY–JUNE 2016 • Income from property management increased by

14 per cent to SEK 128 million (112).

• Rental income increased by 7 per cent to SEK 326 million (305), and other income amounted to SEK 15 million (16).

• Operating surplus increased by 8 per cent to SEK 264 million (245).

• Net profit amounted to SEK 193 million (472), equivalent to SEK 2,17 per ordinary share (5,98).

• The change in value of properties amounted to SEK 100 million (147), and change in value of derivatives affected profit by SEK -207 million (92).

• After acquisitions of 27 properties with a total of 190 521 sq.m. lettable area for SEK 1 530 million, and investments of SEK 103 million, the fair value of the property portfolio is now SEK 9 517 million (7 776), an increase by 22 per cent.

PROPERTY VALUE, SEKM

RENTAL VALUE, SEKM

LETTABLE AREA, TSQM

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COREM INTERIM REPORT JANUARY–JUNE 2016 | 3

COREM IN BRIEF

2016 2015 2016 2015 2015 Rolling3 mon 3 mon 6 mon 6 mon 12 mon 12 mon

Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec Jul-Jun

Rental income, SEKm 170 154 326 305 607 628Other income, SEKm 15 0 15 16 19 18Operating surplus, SEKm 149 120 264 245 481 500Profit from property management, SEKm 79 54 128 112 201 217Net profit, SEKm 97 362 193 472 800 521

Operating margin, % 81 78 78 76 77 77Occupancy rate, economic, % 92 89 92 89 92 92Equity ratio, adjusted, % 33 34 33 34 37 33Earnings per ordinary share, % 1,10 4,71 2,17 5,98 10,00 6,14EPRA NAV per ordinary share, SEK 36,41 24,52 36,41 24,52 33,50 36,41

1 207 559 LETTABLE AREA, SQ.M

160 NO. OF

PROPERTIES

9 517 PROPERTY VALUE,

SEKM


COMMENTS BY THE CEO

IMPORTANT EVENTS • Corem acquires Estancia Logistik

with a warehouse and logistics portfolio of 21 properties, a lettable area of 168 500 sq.m. and a property value of SEK 1 315 million.

• Acquisition of Revisorn 2 and Ringpärmen 2, of 11 600 sq.m. lettable area and a property value of SEK 113 million, in Bredden industrial area, Sollentuna.

• Acquisition of Backa 25:6 in Gothenburg, property value of SEK 29 million, increasing the portfolio in that area by 3 360 sq.m.

• Bond loan of SEK 300 million emitted on 18 May.

During the first half of the year, we acquired properties valued at over SEK 1.5 billion. Earning capacity and profit from property management have both increased. Corem has achieved strong growth by combining long-term management and development with successful property deals. Strong growth during Q2 It has been an eventful quarter for us. Our earning capacity increased by acquisitions of SEK 1.5 bn, mainly located in Stockholm, Malmö, Gothenburg and Jönköping, strong cities prioritized by Corem due to their good locations for logistics. The positive development during the quarter has confirmed our belief that we are making the right investments; that these additional properties provide us with a clear reinforcement and complement the existing portfolio well. We achieve higher earnings and reduced risk with a portfolio of 160 properties and almost 700 tenants. With these acquisitions, we exceeded SEK 4 bn of property value in Stockholm. An increased potential for synergies and ability to expand together make our offering to tenants broader and more flexible. The economic effect from acquiring Estancia is so far limited, as the portfolio only contributed during one month out of the six months covered by the report. The positive effects on earnings will become more visible during the remaining part of the year.

Continued focus on optimization and development of the portfolio Our clear focus on stable cash flows and our position as a well-reputed and expert counterparty in the warehouse and logistics property segment continues to serve as a good platform for acquisitions and further growth in today’s competitive transaction market. We have 160 properties of varying sizes today and maintain focus on growth by both acquisition and development, while we simultaneously work with optimization of our portfolio in terms of maintenance, long term sustainable property management, and our local and geographic positioning. It is particularly gratifying when we are able to further develop our properties working together with our tenants, for example the new 30,000 sq.m. facility being built for Svenska Retursystem at Hacksta, Västerås and our new collaboration with ST Aerospace, which are relocating to us at Arlandastad. We see big potential for adding long term value through project development Letting and financing Corem has a good and stable portfolio, with properties located to strategically important logistics- and storage locations, where demand is continuously high. Paired with our active work in letting, this is illustrated by the improved financial occupancy rate, which was at 92 per cent at the end of the period. Net letting, which measures areas contracted but not yet occupied, remained positive during the second quarter and amounted to SEK 10 million for the six month period. It is also very gratifying to see that income for a comparable portfolio rose by 3 per cent and that operating surplus increased by 5 per cent for a comparable portfolio. On the financing side, in May we emitted a new bond loan of SEK 300 million and 3,5 years and the interest from investors was high. Our possession in Klövern has also during the second quarter shown a positive development. With the strong financial position of the company and good financing options that we have, we see continued growth and possibilities of further expansion. Stockholm 13 July 2016 Eva Landén, CEO


INCOME, EXPENSES, AND PROFIT

QUARTERLY COMPARISON

The income statement items below, like the comparative amounts for last year, refer to the period January–June unless otherwise stated. The balance sheet items and comparative amounts refer to the position at the end of the period, and the end of last year.

RESULT The operating surplus increased by 8 per cent to SEK 264 million (245) with an operating margin at 78 per cent (76). Profit from property management amounted to SEK 128 million (112 ), an increase by 14 per cent. Operating surplus and profit from property management have both been positively affected by net acquisitions and net occupancy. In a comparable portfolio, the operating surplus increased by 5 per cent. Profit before tax amounted to SEK 200 million (533). INCOME Rental income for the period increased by 7 per cent to SEK 326 million (305). The positive change relates to net acquisitions as well as net occupancy. The economic occupancy rate was 92 per cent (89). Rental income for the period include anticipated rental losses of SEK -5 million (-3). Other income amounted to SEK 15 million (16), and mainly consists of early redemption of lease contracts, together with rental guarantees of SEK 1 million. Rental income for a comparable portfolio increased by 3 per cent.

PROPERTY COSTS Property costs during the period totalled SEK 77 million (76). Despite a larger property portfolio, the costs are close to unchanged. Costs for a comparable portfolio decreased by 3 per cent. The central administration costs totalled SEK 14 million (14) and consists of costs for group management and group-wide functions.

NET FINANCIAL INCOME Net financial income totalled SEK -122 million (-119) and consists of interest expense and credit fees for the period. At the end of the period, the average interest rate, including margins, was 3,81 per cent (4,12). See page 8 for further information.

EARNINGS FROM ASSOCIATED COMPANIES The share of earnings according to the equity method amounted to SEK 171 million (180) from Klövern AB (publ). Earnings from the sale of shares in Klövern totalled SEK 8 million (2). See page 9 and 17 for further information.

CHANGES IN VALUE Changes in property value during the period totalled SEK 100 million (147), of which unrealized changes in property value amounted to SEK 100 million (138). Unrealized changes in value are due to a combination of reduced required yields, investments and net lease. See page 6 for further information. See page 6 for further information. The value of Corem’s derivatives is affected by changes in the long market rates. Unrealized changes in value of derivatives during the period totalled SEK -207 million (92).

TAX During the period, deferred tax totalled SEK -5 million (-58) and current tax to SEK -2 million (-3). See page 17 for further information.

85

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Q2 Q2 Q2 Q2 Q2

2012 2013 2014 2015 2016

Rental incomeOperating surplusProfit from property managementOccupancy rate, econom ic, %

SEKm %

THE PROPERTY PORTFOLIO Corem’s property value on 30 June 2016 amounted to SEK 9 517 and consisted of 160 properties with a total lettable area of 1 207 559 sq.m. The property portfolio is divided into five geographic areas: Stockholm Region, South Region, West Region, Småland Region and Mälardalen/North Region. Corem’s total rental income, on an annual basis, amounted to SEK 790 million 30 June 2016. Total rental value was assessed to be 860 million, with an economic occupancy rate at 92 per cent. PROPERTY VALUES AND CHANGES IN VALUE A continued high level of demand and a number of major portfolio transactions pushed up the aggregate volume to record levels, despite a limited supply. The aggregate volume of transactions for the first half of the year was almost SEK 100 bn. There continues to be great interest in investing in the market, and the activity during the second quarter has provided a basis for aggregate turnover being at least at the level of 2015. Per 30 June 2016, the market value of Corems property portfolio was SEK 9 517 million (7 776). A continuing slightly lower yield requirement combined with investments and new lettings have led to an increase in value of the property portfolio. The average yield requirement per 30 June 2016 is approximately 6,9 per cent (7,1). In a comparable portfolio, the yield requirement has decreased.

Unrealized changes in property value totaled SEK 100 million (138). Property valuation of the entire portfolio is done each quarter. During the quarter, properties corresponding to around 30 per cent of the aggregate value have been externally valued, while the rest have been valued through internal cash flow valuations. The company has used Savills Sweden AB as valuation institution for the report period. Corem obtains continuous market information from external valuation institutions in support of the internal valuation process. See Corem’s Annual Report for 2015 for additional information about Corem’s valuation principles. NET LETTING Net letting for the period totalled SEK 10 million. Lettings amounted to SEK 61 million, of which 38 per cent were new tenants. Notices of termination totalled SEK -51 million. Corem has a well-diversified income base with 682 tenants. The company’s goal is to reduce dependence on individual tenants, which is mainly achieved by acquisitions, and the acquisitions during the period has widened the revenue base by approximately 100 tenants. Corems three largest tenant accounts for 14 per cent (19) of the total income. Corems remaining average lease contract term is 4,7 years (5,1).

NET LETTING

RENTAL VALUE

FAIR VALUE

-60

-40

-20

0

20

40

60

Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16

SEKm

Letting Notice of term.

Bankruptcy Net

Stockholm region 44 %

South region 14 %

West region 15 %

Småland region 13 %

Mälardalen/North region 14 %

Stockholm region 44 %

South region 16 %

West region 16 %

Småland region 11 %

Mälardalen/North region 13 %

THE FIVE LARGEST TENANTS ON 30 JUNE 2016

PROPERTY TYPE, AREA

Remaining avg.lease contract

Tenant Share, % Region length, years

Ericsson 5 Mälardalen/North, West 2,6

Bilia 5 Mälardalen/Norh, Stockholm, West 6,5

ELFA 4 Stockholm 2,0

Posten 3 Stockholm, Småland 11,5

NKT Cables 2 Mälardalen/North 8,0

Warehouse/ Industrial 73 %

Office 18 %

Retail 4 %

Other 5 %

CONSTRUCTIONS, EXTENSIONS AND REFURBISHMENT During the period Corem has invested SEK 103 million (67) in constructions, extensions and refurbishments. The investments are mainly tenant adaptations and energy saving measures. In the new construction project in Västerås, Eneberga 3, where 30,000 sq.m. is being built for Svenska Retursystem, project design and earthworks have been carried out during the spring and carcase and roof construction started on during June.

The construction of approximately 5,300 sq.m. for KS Projekt is in process at the property Halmstad 7:109. Earthworks have also taken place here during the spring and carcase construction was started in June. In Mölnlycke, earthworks were started in May for the approximately 1,500 sq.m. extension of Bråta 2:136, for Svenska Retursystem. Please see Corem’s Annual Report for 2015, page 37A for further information about Corem’s project development.

ACQUISITIONS AND DIVESTEMENTS OF PROPERTIES Transactions during Q1 Acquisition of Eneberga 3 in Västerås, encompassing around 66,000 sq.m. of land, from the City of Västerås was done in February. Construction of Svenska Retursystem’s new 30,000 sq.m. facility on this site started in April. The site leasehold for the property Märsta 24:11 at Arlandastad was acquired in March 2016. The property, with a lettable area of 1 345 sq.m. is fully let to, among others, Elektroskandia AB and Rikshem AB. Acquisition of Ulvö 8, located at the entrance to Jönköping and let to Osborn International AB, was done during March 2016. The property has a lettable area of around 6.000 sq.m., of which 4.800 sq.m. warehouse and 1.200 sq.m. office area. Transactions during Q2 The first transaction of the second quarter was the acquisition of Revisorn 2 and Ringpärmen 2, of 11 600 sq.m. lettable area and a property value of SEK 113 million, in Bredden industrial area, Sollentuna. The properties are let to 96 per cent, and also include future potential in the form of a 4.000 sq.m. planning permission. During April acquisition of Backa 25:6 in Gothenburg was made, property value of SEK 29 million, increasing the portfolio in that area by 3 360 sq.m. In March, agreement on the acquisition of Estancia Logistik was entered, with a warehouse and logistics portfolio consisting of 21 properties. On the 31 May taking of possession of the portfolio was made, with a total lettable area of over 168 500 sq.m. and a property value of SEK 1 315 million. The properties are mainly located in Stockholm, Malmö, Gothenburg and Jönköping. The properties are 86 per cent let with a total rental value of SEK 129 million. Largest tenants are Bring, Axfood, Ingram Micro, Pon Equipment and DHL.

TRANSACTIONS 1 JANUARY 30 JUNE 2016

CHANGE IN FAIR VALUE, NUMBER OF PROPERTIES AND LEASABLE AREA

.

Lettable LettableQ Property Municipality Property type area, sq.m. area, sq.m.

1 Eneberga 3 Västerås Warehouse/Industrial - -

1 Märsta 24:11 Sigtuna Warehouse/Industrial 1 345 -

1 Ulvö 8 Jönköping Warehouse/Industrial 5 980 -

2 Revisorn 2 Sollentuna Warehouse/Industrial 4 305 -

2 Ringpärmen 2 Sollentuna Warehouse/Industrial 7 257 -

2 Backa 25:6 Göteborg Warehouse/Office 3 360 -

2 Näringen 4:3 Gävle Warehouse/Industrial 10 865 -

2 Bordet 1 Borlänge Other 4 524 -

2 Årsta 64:2 Uppsala Warehouse/Industrial 25 956 -

2 Rosersberg 11:37 Sigtuna Warehouse/Industrial 11 394 -

2 Törnby 2:2 Upplands Väsby Warehouse/Industrial 19 463 -

2 Skälby 3:674 m. fl. Järfälla Warehouse/Industrial 12 724 -

2 Singeln 13 Stockholm Warehouse/Industrial/O 3 853 -

2 Magasinet 7 Stockholm Warehouse/Industrial 6 469 -

2 Kompassen 7 & 11 Västerås Warehouse/Industrial 4 950 -

2 Backa 25:1 Göteborg Warehouse/Industrial/O 8 211 -

2 Älgskytten 4 Jönköping Warehouse/Industrial 6 357 -

2 Bildhuggaren 1 Vaggeryd Warehouse/Industrial 14 647 -

2 Brämön 4 Malmö Warehouse/Industrial/O 16 543 -

2 Fornminnet 6 Malmö Warehouse/Industrial 4 710 -

2 Svedala 306:9 Svedala Warehouse/Industrial 17 608 -

190 521 –

DivestmentsAcquisitions

Total

SEK million Number Sq.m.

Total on 31 December 2015 7 776 133 1 016 000

Acquisitions¹ 1 530 27 190 521

New construction, extension and refurbishment 103 - 1 038

Divestments¹ - - -

Changes in value 100 - -

Currency translation 8 - - Total on 30 June 2016 9 517 160 1 207 559

Lyckebacken 5, a part of Estancia Logistik AB, was acquired and divested as agreed directly after taking possession

back to the previous owners of Estancia Logistik. The divestment took place with no effect on Corem’s earnings.


FINANCING

INTEREST-BEARING LIABILITIES On 30 June 2016, Corem had interest-bearing liabilities totalling SEK 6 949 million (5 676). Interest-bearing net liabilities, after deduction for liquidity of SEK 39 million (40) and capitalized borrowing costs of SEK 27 million (16), amounted to SEK 6 883 million (5 620). The interest coverage ratio was 2,8 multiples (2,8). At the end of the period 50 per cent (51) of the interest-bearing liabilities had hedged interest rates. 90 per cent (80) of the interest-bearing liabilities were hedged for at least 3 years. The company’s average fixed interest rate for the period was 3,5 years and the average interest rate was 3,81 percent compared with 4,1 years and 4,01 per cent on 31 December 2015. An increase in the short market rates of one percentage point would increase Corem’s average borrowing rate by 0,5 percentage points. At the end of the period, Corem had interest rate swaps of SEK 3 302 million (2 700) which expire between 2018 and 2031. On the 30 June 2016 the market value of the interest rate derivative portfolio amounted to SEK -661 million in comparison with SEK -454 million on 31 December 2015.

During the period, Corem has taken over existing bank financing from Estancia Logistik, and also availed loans within existing credit frameworks. In May 2016, Corem issued an uncovered bond loan for SEK 300 million with a term of 3.5 years. The bond loan has a framework amount of SEK 750 million with final maturity in November 2019. The bond loan has been listed on Nasdaq Stockholm. The main purpose was refinancing of a bond loan. As part of the acquisition of Estancia Logistik, Corem has taken over a bond loan of SEK 200 million. New conditions are valid from 1 June 2016, meaning the bond loan is uncovered, has a framework amount of SEK 750 million, and an interest rate of STIBOR 3M +500 räntepunkter. The company’s total credits of SEK 6 949 million (5 676) run with remaining credit terms of 3 months to 97 years. The company’s average fixed credit term at the end of the period was 2,9 years (3,2).

EQUITY, NET WORTH, AND EQUITY RATIO The Group’s equity amounted at the end of the period to SEK 3 059 million (3 011), equivalent to SEK 27,84 per ordinary share

(28,05), SEK 148,50 per preference share (144,00) and EPRA NAV SEK 36,41 per ordinary share (33,50). On 30 June 2016 the adjusted equity ratio was 33 per cent (37) and the equity ratio 28 per cent (32). See page 14 for further information.

CASHFLOW AND LIQUID FUNDS The Group’s cash flow from operations amounted for the period to SEK 249 million (217), which corresponds to SEK 2,94 per ordinary share (2,50) taking into consideration earnings relating to preference shares. The cash flow from investment operations amounted to SEK -1 393 million (62) during the period, and the cash flow from financing operations was SEK 1 143 million (-26). On 30 June 2016 liquid funds amounted to SEK 39 million (40), corresponding to SEK 0,54 per ordinary share (0,52). Available liquidity, including unused credit facilities of SEK 372 million (675), amounted to SEK 411 million compared to SEK 715 million per 31 December 2015.

INTEREST AND LOAN MATURITY STRUCTURE

FIXED INTEREST, TIED-UP CAPITAL, AND INTEREST COVERAGE

Maturity, year SEKm

Average interest, %

Proportion, % SEKm

Proportion, %

Floating 3 486 3,28 50

2015 - - 612 9

2016 57 1,88 1 2 025¹ 29

2017 300 3,81 4 1 841¹ 26

2018 902 1,09 13 1 750¹ 25

2019 238 5,98 4 519 8

2020 300 5,71 4 - -

2021 - - - - -

2022 - - - - -

2023 466 5,34 7 66 1

2024 - - - - -

2025- 1 200 6,00 17 136 2

Total 6 949 3,81 100 6 949 100¹ Of which SEK 400 million referes to bond during 2017, SEK 750 million refers tobond during 2018, and SEK 500 million refers to bond during 2019.

Average interest rate Tied-up capital

0,0

0,5

1,0

1,5

2,0

2,5

3,0

0,00,51,01,5

2,02,53,03,54,04,55,05,56,06,57,07,5

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2012 2013 2014 2015 2016

[•]yrs

Fixed interest, years Tied-up capital, years

Interest coverage


THE SHARE

SHARE FACTS, 30 JUNE 2016 Capitalization, SEK 3,3 billion Number of ordinary shares 75 896 586 Number of preference shares 7 200 000 Number of shareholders 3 452 Closing rate ordinary share SEK 30,00 Closing rate, preference share, SEK 148,50 Marketplace Nasdaq Stockholm, Mid Cap LEI nr 213800CHXQQD7TSS1T59 ISIN, Ordinary share SE0002257402 ISIN, Preference share SE0003208792

Corem is listed on Nasdaq Stockholm Mid Cap and has two classes of shares: ordinary shares and preference shares. Corem has 75 896 586 ordinary shares in total. Each ordinary share entitles its holder to one vote. A dividend of SEK 1,50 per ordinary share (0.80) for 2015 has been paid out per 4 May 2016. In June 2016 Corem issued 588 681 preference shares, as part of the payment of Estancia Logistik. After the emission, there are a total of 7 200 000 preference shares. Each preference share entitles its holder to one-tenth of a vote. A dividend of SEK 10 per preference share (10.00) is paid with SEK 2.50 (2.50) each quarter from July 2016. During the second quarter, Corem has repurchased 1 940 306 ordinary shares, at a total sum of SEK 55 million, equivalent to an average share price of 28,6 SEK. On 30 June 2016 Corem owned 4 445 431 repurchased ordinary shares. See www.corem.se for further information about the share.

LARGEST SHAREHOLDERS ON 30 JUNE 2016

ASSOCIATED COMPANIESAssociated companies refers to holdings reported in accordance to the equity method. Corem’s shareholding in Klövern amounted to 9 500 000 Class A ordinary shares and 139 400 000 Class B ordinary shares on 30 June 2016, corresponding to approximately 14 per cent of the out-standing votes and 16 per cent of the equity in the

company. The holding amounted to SEK 1 342, to be compared with SEK 1 460 million on 31 december 2015. Corem’s share of Klövern’s profit of SEK 171 million has raised the book value of its holding. The sale of Series A and series B ordinary shares of SEK 231 million as well as dividend of SEK 58 million has reduced the book value. The

share accounted consists of Corems share of Klövern's profit after tax, taking into account the dividend to Klövern's preference shareholders. The fair value of Corem’s holding, based on the share price on 30 June 2016, amounted to SEK 1 445 million (1 672). See page 17 for further information.

Preference Share of Share ofShareholder Ordinary shares shares equity, % votes, %

Rutger Arnhult via bolag 28 721 342 1 021 604 37,8% 39,9%

Gårdarike 8 941 787 94 711 11,5% 12,4%

Länsförsäkringar fonder 4 955 473 – 6,3% 6,9%

Swedbank Robur fonder 4 940 464 – 6,3% 6,8%

JP Morgan Bank 4 480 010 – 5,7% 6,2%

Fjärde AP-Fonden 2 260 891 – 2,9% 3,1%

CBNY-NORGES BANK 2 175 813 54 336 2,8% 3,0%

Pomona Gruppen AB 1 993 489 – 2,5% 2,8%

Staffan Rasjö 1 499 998 – 1,9% 2,1%

SEB. Life Intl. Assurance 1 383 363 – 1,8% 1,9%

Livförsäkrings AB Skandia 1 360 197 – 1,7% 1,9%

Patrik Tillman via bolag 1 142 882 80 000 1,6% 1,6%

Humle Småbolagsfond 894 721 – 1,1% 1,2%

Sjunde AP-Fonden 794 094 – 1,0% 1,1%

ALLBA HOLDING AB 538 536 237 400 1,0% 0,8%

Other shareholders 5 368 095 5 711 949 14,09% 8,23%

Total number of outstanding shares 71 451 155 7 200 000 100,0% 100,0%

Repurchased shares 4 445 431 – – –

Total number of shares 75 896 586 7 200 000

http://www.corem.se/

OTHER INFORMATION

OPPORTUNITIES AND RISKS Corem has identified a number of important opportunities and risks in its business operations, which may affect the company’s financial position and earnings. The risks identified are within the following main areas: Properties and property valuation, Sustainable entrepreneurship. Listed holdings, Tax and Finance. A detailed description of all opportunities and risks and how Corem has chosen to deal with them is contained in the Annual Report for 2015 on pages 7B-9B. There have been no major changes in the company’s assessment of opportunities and risks, after publication of the Annual Report for 2015

SEASONAL VARIATIONS Operating and maintenance costs are subject to seasonal variations. Snowy, cold winters entail, for example, higher costs for heating and snow clearance while hot summers entail higher costs for cooling.

TRANSACTIONS WITH RELATED PARTIES Intra-group services are charged for at market prices and on commercial terms. Intra-group services consist of administrative services and charging of group interest rates. The Corem Group has entered into administration agreements for the Group’s properties with Locellus Förvaltning AB which is controlled by board member Rutger Arnhult. All transactions take place at market prices based on commercial terms and totalled SEK 0,8 million (0,7) for the period. Corem has also entered into a construction contract with Logistic Contractor (LC) for construction of a new facility in Västerås. The project started during the first quarter and the project cost is estimated to SEK 200 million. Transactions with LC during the period amounted to SEK 10,6 million (0,0). LC is controlled by board member Rutger Arnhult. Corem has a lease agreement with Wonderful Times Group, at a yearly contract value of SEK 3,1 million. The board member

Christina Tillman has indirect owership in Wonderful Times Group AB. In addition, the Corem Group purchase ongoing legal services from the law firm MAQS Stockholm Advokatbyrå AB in which the Group Chairman Patrik Essehorn is a partner.

EVENTS AFTER THE PERIOD No events after the end of the period.

THE PARENT COMPANY On 30 June 2016, Corem’s parent company owned no properties but deals with issues relating to the stock market and groupwide business functions such as administration, transactions, management, project development, accounting and financing. The parent company’s net profit amounted to SEK 171 million (33) for the year. Sales, the largest part of which consisting of group invoicing, amounted to SEK 32 million (33). The parent company’s assets totalled SEK 3 486 million (3 274). Liquid funds amounted to SEK 7 million (15). Equity amounted to SEK 1 274 million (1 252).

Stockholm 13 Juli 2016, Corem Property Group AB (publ)

The Board of Directors

This report has not been audited by the auditors.


IN MAY 2016, COREM ACQUIRED ESTANCIA LOGISTIK, WITH 21 WAREHOUSE AND LOGISTICS PROPERTIES MAINLY LOCATED IN STOCKHOLM, MALMÖ, GOTHENBURG AND JÖNKÖPING. THE PORTFOLIO CLEARLY COMPLEMENTS AND REINFORCES COREM’S EXISTING HOLDINGS. THE PROPERTIES ARE 86% LET WITH AN AVERAGE LEASE TERM OF 4.9 YEARS. THE LARGEST TENANTS ARE BRING, AXFOOD, INGRAM MICRO, PON EQUIPMENT AND DHL. IN ALL, COREM HAS OBTAINED MORE THAN 100 NEW TENANTS AND OVER 168,500 SQ.M. OF LETTABLE AREA.

ESTANCIA LOGISTIK AB

PROPERTIES: 21

LETTABLE AREA: 168 527 SQ.M.

RENTAL VALUE: SEK 129 million

PROPERTY VALUE: SEK 1 315 million

SKÄLBY, JÄRFÄLLA, STOCKHOLM

MAGASINET 7, STOCKHOLM

BRÄMÖN 4, MALMÖ

BACKA 25:1, GÖTEBORG

KOMPASSEN 11, VÄSTERÅS ÄLGSKYTTEN 4, JÖNKÖPING ÅRSTA 64:2, UPPSALA


THE COREM GROUP

INCOME STATEMENT

2016 2015 2016 2015 2015 Rolling3 mon 3 mon 6 mon 6 mon 12 mon 12 mon

SEK million Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec Jul-Jun

Rental income¹ 170 154 326 305 607 628

Other income¹ 15 0 15 16 19 18

Property costs –36 –34 –77 –76 –145 -146

Operating surplus Note 1 149 120 264 245 481 500

Central administration Note 2 –7 –7 –14 –14 –41 –41

Net financial income –63 –59 –122 –119 –239 –242

Profit from property management 79 54 128 112 201 217

Profit shares according to the equity method Note 3 57 119 171 180 323 314

Earnings from sale of participation rights in associated companies 8 2 8 2 2 8

Realized changes in value, properties 0 9 0 9 10 1

Unrealized changes in value, properties 61 67 100 138 255 217

Unrealized changes in value, derivatives -101 172 –207 92 114 –185

Profit before tax 104 423 200 533 905 572

Tax Note 4 –7 –61 –7 –61 –105 -51

Net profit for the period 97 362 193 472 800 521

Other comprehensive income

Items which can be recognized as profit for the period

Translation difference etc. 2 -1 3 –5 -7 199 361 196 467 793 522

Number of shares and earnings per shareEarning per ordinary share, SEK² 1,10 4,71 2,17 5,98 10,00 6,14Number of oustanding shares at the end of the period 71 451 155 73 391 461 71 451 155 73 391 461 73 391 461 71 451 155Average number of oustanding ordinary shares 71 944 251 73 391 461 72 417 856 73 392 509 73 391 981 73 031 635Number of outstanding preference shares at the end of th 7 200 000 6 611 319 7 200 000 6 611 319 6 611 319 7 200 000

¹ To better reflect the Group’s business, the format for income has been changed as from 1 January 2016. The comparison periods have also been changed² The measure earnings per share is calculated on the basis of the average number of shares taking into account preference shares´dividend rights. There is no dilution effect as no potential shares (for example, convertibles) exists.

Comprehensive income for the period attributable to parent company´s shareholders


THE COREM GROUP

CONSOLIDATED BALANCE SHEET

2016 2015 2015SEK million 30 Jun 30 Jun 31 Dec

ASSETS

Non-current assets

Investment properties Note 1 9 517 7 340 7 776

Holdings reported in accordance with the equity method Note 3 1 342 1 317 1 460

Other tangible assets 1 2 2

Deferred tax asset Note 4 49 98 54

Total non-current assets 10 909 8 757 9 292

Current assets

Other current assets 46 39 38

Liquid funds¹ 39 301 40

Total current assets 85 340 78

TOTAL ASSETS 10 994 9 097 9 370

EQUITY AND LIABILITIES

Total equity attributable to parent company´s shareholders 3 059 2 684 3 011

Long-term liabilities

Interest-bearing long-term liabilities 4 522 4 525 4 783

Derivatives 661 476 454

Other long-term liabilites 4 4 3

Total long-term liabilities 5 187 5 005 5 240

Current liabilities

Interest-bearing current liabilities 2 400 1 164 877

Other current liabilities 348 244 242

Total current liabilities 2 748 1 408 1 119

Total liabilities 7 935 6 413 6 359

TOTAL EQUITY AND LIABILITIES 10 994 9 097 9 370

¹ Avaliable liquidity including unutilized credit facilities on 30 June 2016 and 31 December 2015 at SEK 411 million and SEK 715 million respectively.


THE COREM GROUP

CASH FLOW STATEMENT

THE COREM GROUP

STATEMENT OF CHANGE IN EQUITY

2016 2015 2016 2015 20153 mon 3 mon 6 mon 6 mon 12 mon

SEK million Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec

Current operations

Operating surplus 149 120 264 245 481

Central administration –7 –7 –14 –14 –41

Depreciation 0 0 0 0 1

Interest recieved, etc. 58 53 58 53 54

Interest paid –59 –49 –118 –107 –233

Income tax paid 0 –1 0 –2 –4

Cash flow from changes in working capital 141 116 190 175 258

Change in current receivables 4 –4 4 61 43

Change in current liabilities 75 –18 55 –19 37

Cash flow from operations 220 94 249 217 338

Investment operations

Investment in new construction, extensions and refurbishment –65 –41 –103 –65 –172

Acquisition of properties –1 461 –116 –1 530 –182 –423

Divestment of properties 0 300 0 302 324

Acqusition of subsidiaries, net effect on liquidity 1 0 1 0 0

Change in tangiable assets 147 8 239 7 7

Cash flow from investment operations –1 378 151 –1 393 62 –264

Financing operations

Dividend paid to parent company shareholders –126 –75 –143 –92 –124

Repurchase of own shares –55 – –55 –1 –1

Emission of shares 89 – 89 – –

Loans raised 1 621 685 1 655 739 1 267

Amortized loans –348 –607 –403 –672 –1 224

Cash flow from financing operations 1 181 3 1 143 –26 –82

Cash flow for the period 23 248 –1 253 –8

Liquid funds at beginning of period 16 53 40 48 48

Exchange rate difference in liquid funds 0 0 0 0 0

Liquid funds at end of period 39 301 39 301 40

2016 2015 2015SEK million Jan-Jun jul-dec Jan-Jun

Opening balance equity 3 011 2 684 2 343

Comprehensive income during the period 196 326 467

Dividend to ordinary shareholders¹ –110 1 –59

Dividend to preference shareholders² –72 - –66

Repurchase of own shares –55 - –1

Emission of shares 89 - -

Closing balance equity attributable to parent company´s shareholders 3 059 3 011 2 684

¹ Of which SEK 1,50 per share 2016 and 0,80 per share 2015. ² Thereof SEK 16,5 million paid out quarterly, starting july 2015 and july 2016 respectively.


PARENT COMPANY

INCOME STATEMENT

PARENT COMPANY

BALANCE SHEET

2016 2015 20156 mon 6 mon 12 mon

SEK million Jan-Jun Jan-Jun Jan-Dec

Net income 32 33 65

Cost of service sold –20 –19 –38

Gross profit 12 14 27

Central administration Note 2 –14 –14 –41

Operating profit –2 0 –14

Earnings from sale of participation rights in associated companies 143 5 5

Interest income and similar income items 64 62 107

Interest expense and similar expense items –34 –34 –67

Profit before tax 171 33 31

Tax 0 0 6

Net profit for the period 171 33 37

2016 2015 2015SEK million 30 Jun 30 Jun 31 Dec

ASSETS

Non-current assets

Tangible assets

Machinery and equipment 1 2 2

Total, tangible assets 1 2 2

Financial assets

Shares in group companies 332 212 332

Shares in associated companies 525 620 620

Receivables from group companies 2 587 2 310 2 263

Deferred tax assets 31 25 31

Total financial assets 3 475 3 167 3 246

TOTAL NON-CURRENT ASSETS 3 476 3 169 3 248

Current assets

Other current receivables 3 5 11

Cash and bank deposits 7 243 15

Total current assets 10 248 26

TOTAL ASSETS 3 486 3 417 3 274

EQUITY AND LIABILITIES

Equity 1 274 1 248 1 252

Interest-bearing liabilities 2 113 2 060 1 959

Non-interest bearing liabilities 99 109 63

TOTAL EQUITY AND LIABILITIES 3 486 3 417 3 274


ACCOUNTING POLICIES AND NOTES ACCOUNTING POLICIES This interim report for the Group has been prepared in compliance with the Annual Accounts Act and IAS 34 Interim Financial Reporting and for the parent company in compliance with the Annual Accounts Act and RFR 2 Accounting for legal entities. The properties are valued in compliance with Level 3 in the IFRS value

hierarchy. The fair value of financial instruments agrees essentially with the carrying amounts. No changes of the categorization of financial instruments have taken place during the period. Derivatives are valued in accordance with Level 2 of the valuation hierarchy. No new or changed standards of

interpretations from IASB have had any impact on the interim report and the accounting policies applied are those described in Note 1 of Corem’s Annual Report for 2015.

NOTE 1 – SEGMENTS Corem’s property value amounted on 30 June 2016 to 9 517 million and consisted of 160 properties with a total lettable area of 1 207 559 sq.m.

The property portfolio is divided into five geographical areas: Stockholm, Region, South Region, West Region, Småland Region and Mälardalen/North Region.

DISTRIBUTION PER GEOGRAPHICAL AREA

DISTRIBUTION OF LETTABLE AREA BY TYPE OF PREMISES AND GEOGRAPHICAL AREA

(see www.corem.se for list of properties)

DISTRIBUTION OF PROPERTIES, VACANCIES AND RENTAL INCOME

2016 2015 2016 2015 2016 2015 2016 2015Outcome per geographical area Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun

Stockholm 146 145 –38 –37 108 108 74 74South 43 51 –9 –11 34 40 80 80West 53 50 –8 –8 45 42 84 83Småland 39 29 –13 –11 26 18 68 62Mälardalen/North 60 46 –9 –9 51 37 86 80Total 341 321 -77 -76 264 245 78 76

Income, SEK million Costs, SEK million Op. surplus, SEK million Operating margin, %

2016 2015 2016 2015 2016 2015 2016 2015Key ratios per geographical area 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun

Stockholm 4 204 3 171 390 968 294 694 381 286 93 91South 1 537 1 123 209 418 170 452 123 93 96 96West 1 495 1 324 185 733 173 050 126 109 90 92Småland 1 058 749 197 494 146 591 108 80 90 74Mälardalen/North 1 223 973 223 946 204 428 122 103 88 86Total 9 517 7 340 1 207 559 989 215 860 671 92 89

Economic occupancy, %Rental value, SEK millionLettable area, sq.mFair value, SEK million

2016 2015 2016 2015 2016 2015 2016 2015Lettable area, sq.m. 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun

Stockholm 252 653 181 631 98 411 87 110 15 287 15 287 24 617 10 666South 165 016 131 908 25 785 22 152 8 000 4 011 10 617 12 381West 152 803 146 062 24 356 18 414 6 099 6 099 2 475 2 475Småland 156 925 111 738 23 570 18 763 5 201 5 201 11 798 10 889Mälardalen/North 157 208 142 521 40 233 39 646 12 267 12 547 14 238 9 714Total 884 605 713 860 212 355 186 085 46 854 43 145 63 745 46 125Share, % 73 72 18 19 4 4 5 5

Warehouse/Industrial Office Retail Other

2016 2015 2016 2015 2016 201530 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun

Stockholm 69 53 35 780 35 249 354 262South 25 19 8 799 6 652 118 89West 19 17 25 632 22 551 114 100Småland 27 22 25 733 51 424 98 59Mälardalen/North 20 16 33 640 36 095 106 89Total 160 127 129 584 151 971 790 599¹ Refers to income on an annual basis on 30 June 2016 and 30 June 2015 respectively.

Number of properties Vacancy, sq.m. Income¹, SEK million


NOTE 2 – CENTRAL ADMINISTRATION The central administration consists of costs for group management and group-wide functions.

Expenses per 31 December 2015 include one-off items of around SEK 13 million attributable to Corem’s offer for Tribona AB (publ).

NOTE 3 – PROPERTY SHARES IN ASSOCIATED COMPANIESIn November 2008, Corem acquired 10.5 per cent of the shares in Klövern and thus became the largest owner in the company. Up until the end of 2011, additional shares were acquired and the holding was reclassified as Shares in associated companies.

Corem’s shareholding in Klövern amounted on 30 June 2016 to 9 500 000 Class A ordinary shares and 139 400 000 Class B ordinary shares, corresponding to approximately 14 per cent of the out-standing votes and 16 per cent of the equity in the company.

During 2016 Corem has divested 6,6 million Class A ordinary shares and 20,6 million Class B ordinary shares, at a realized change in value of 8 mkr. On 30 June 2016, the holding amounted to SEK 1 342 million compared with SEK 1 460 million on 31 december 2015.

KLÖVERN IN BRIEF

NOTE 4 - TAX Through the possibility of making depreciations for tax purposes and deduction for certain refurbishments of properties as well as making use of tax loss carryforwards, virtually no paid tax expense arises. However, paid tax occurs in a few subsidiaries where there are no opportunities for making group contributions for tax purposes. Reported deferred tax on changes in value are partly attributable to classification of acquisitions and the form in which divestment takes place. The

effective tax rate is affected by tax-free income in the form of profits from Klövern as well as tax-free sales of companies. The tax loss carryforwards are estimated at approximately SEK 1 468 million (1 499). The tax recoverable is attributable to tax loss carryforwards in the consolidated balance sheet amounting to SEK 271 million (271). In the consolidated balance sheet of the Corem group, deferred tax is reported net at SEK 49 million (54).

On 16 February 2016, the Administrative Court of Appeal consented to the Tax Agency’s petition for an upward adjustment of previous year’s earnings, entailing a tax demand of around SEK 68 million. Corem has decided not to appeal against the judgment to the Supreme Administrative Court, and has already in 2014 expensed and paid the corresponding amount of SEK 68 million.

TAX 30 JUNE 2016

2016 2015 2016 2015 20153 mon 3 mon 6 mon 6 mon 12 mon

Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec

Income, SEKm 716 677 1 430 1 346 2 718Operating surplus, SEKm 480 454 943 873 1 766Profit from property management, SEKm 304 271 597 498 1 043Profit before tax 586 846 1 462 1 374 2 541Net profit for the period 437 702 1 149 1 102 2 008

Key ratiosOperating margin, % 67 67 66 65 65Occupancy rate, economic, % 91 90 91 90 91Leverage, % 60 60 60 60 61Equity ratio, adjusted, % 35,9 35,9 35,9 35,9 35,8Number of properties 414 412 414 412 415Fair property value, SEKm 37 137 31 872 37 137 31 872 35 032

2016 2015 2016 2015 2016 2015SEK million Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun Jan-Jun

Current profit from property management -2 -3 -7 -4 -9 -7Change in value, properties – – -32 -23 -32 -23

Change in value, derivatives – – 45 -20 45 -20

Increased temporary difference properties attributable to depreciation for tax pruposes and direct deductions – – -18 -17 -18 -17Revaluation, tax loss carryforwards – – 7 6 7 6Total -2 -3 -5 -58 -7 -61

Current tax Deferred tax Reported tax


QUARTERLY OVERVIEW

2016 2016 2015 2015 2015 2015 2014 2014Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3

Amounts in SEKm unless otherwise stated Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar Oct-Dec Jul-Sep

Rental income 170 156 156 146 154 151 151 150

Other income 15 0 0 3 0 16 0 7

Property costs -36 -41 -38 -31 -34 -42 -39 -31

Operating surplus 149 115 118 118 120 125 112 126

Profit from property management 79 49 49 40 54 58 42 55

Profit shares according to the equity method 57 114 85 58 121 61 36 32

Changes in value, properties 61 39 98 20 76 71 51 76

Unrealized changes in value, derivatives -101 -106 73 -51 172 -80 -115 -73

Net profit 97 96 269 59 362 110 28 78

Property and finance-related

Fair value of properties 9 517 7 925 7 776 7 530 7 340 7 406 7 259 6 866

Operating margin, % 81 74 75 79 78 75 74 80

Occupancy rate, economic, % 92 91 92 90 89 90 92 92

Return on total assets, % 10,4 11,0 12,7 7,8 13,8 11,3 9,0 10,9

Return on equity, % 12,6 12,6 37,4 8,7 56,4 18,4 4,8 13,5

Adjusted equity ratio, % 33 38 37 35 34 33 32 32

Leverage, % 57 52 51 55 55 51 58 59

Cash flow from operations 220 29 66 55 94 123 -14 -19

Share-related

EPRA NAV per ordinary share, SEK 36,41 35,98 33,50 28,92 24,52 22,46 20,94 20,00

Net profit per ordinary share, SEK 1,10 1,08 3,44 0,58 4,71 1,28 0,16 0,82

Share price at end of period, SEK 30,00 28,50 28,50 26,70 27,20 30,30 28,70 23,90

Cash flow, operations per ordinary share, SEK 2,81 0,17 0,67 0,53 1,05 1,45 -0,41 -0,47


KEY RATIOS

2016 2015 2016 2015 2015 20143 mon 3 mon 6 mon 6 mon 12 mon 12 mon

Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec Jan-Dec

Property related

Fair value properties, SEK million 9 517 7 340 9 517 7 340 7 776 7 259

Required yield, valuation, % 6,9 7,3 6,9 7,3 7,1 7,4

Rental value, SEK million 860 671 860 671 696 683

Lettable area, sq.m. 1 207 559 989 215 1 207 559 989 215 1 016 000 982 895

Occupancy rate, economic, % 92 89 92 89 92 92

Occupancy rate, area-based % 89 85 89 85 88 87

Operating margin, % 81 78 78 76 77 77

Number of properties 160 127 160 127 133 131

Financial

Return on total assets, % 10,4 13,8 10,4 12,6 11,4 9,4

Return on equity, % 12,6 56,4 12,7 37,6 29,9 4,7

Equity ratio, adjusted, % 33 34 33 34 37 32

Equity ratio, % 28 30 28 30 32 27

Net debt, SEK million 6 883 5 389 6 883 5 389 5 620 5 582

Leverage, % 57 55 57 55 51 58

Leverage, properties, % 53 54 53 54 52 59

Interest coverage ratio, multiples 3,0 2,8 2,8 2,8 2,7 2,4

Average interest, % 3,81 4,12 3,81 4,12 4,01 4,32

Average fixed interest period, years 3,5 4,3 3,5 4,3 4,1 4,8

Average tied-up capital, years 2,9 3,5 2,9 3,5 3,2 3,6

Share-related

Earnings per ordinary share, SEK 1,10 4,71 2,17 5,98 10,00 0,61

Earnings per preference share, SEK 2,50 2,50 5,00 5,00 10,00 10,00

EPRA NAV per ordinary share, SEK 36,41 24,52 36,41 24,52 33,50 20,94

Equity per ordinary share, SEK 27,84 19,37 27,84 19,37 28,05 15,35

Equity per preference share, SEK 148,50 191,00 148,50 191,00 144,00 184,00

Cash flow, operations, per ordinary share, SEK 2,81 1,05 2,94 2,50 3,70 0,62

Cash flow, total, per ordinary share, SEK 0,31 3,38 –0,01 3,45 –0,11 –1,10

Dividend per ordinary share, SEK - - - - 1,50 0,80

Dividend per preference share, SEK - - - - 10,00 10,00

Share price per ordinary share, SEK¹ 30,00 27,20 30,00 27,20 28,50 28,70

Share price per preference share, SEK¹ 148,50 191,00 148,50 191,00 144,00 184,00

Number of outstanding ordinary shares² 71 451 155 73 391 461 71 451 155 73 391 461 73 391 461 73 411 661

Average number of outstanding ordinary shares² 71 944 251 73 391 461 72 417 856 73 392 509 73 391 981 75 332 965

Number of outstanding preference shares² 7 200 000 6 611 319 7 200 000 6 611 319 6 611 319 6 611 319

¹ At the end of the period.

² Excluding repurchased shares.


DEFINITIONS

Adjusted equity ratio Equity, adjusted for the value of derivatives including tax, reported deferred tax properties, as well as load deferred tax of 5 per cent attributable to the difference between the properties’ fair value and residual value for tax purposes, and as a percentage of total assets.

Annual rent Rent including supplements and index on an annual basis.

Cash flow per ordinary share Cash flow for the period from operations, adjusted for dividend to preference shares and total cash flow in relation to the average number of ordinary shares.

Earnings per ordinary share Net profit in relation to average number of ordinary shares, taking into account the preference shares’ share of profit for the period.

Earnings per preference share The preference shares’ share of profit corresponding to the period’s accumulated share of annual dividend of SEK 10.00 per preference share.

Occupancy rate, economic Income on an annual basis divided by assessed rental value.

Equity per ordinary share Reported equity, after taking into consideration the preference equity, in relation to the number of outstanding ordinary shares at the end of the period.

Equity per preference share Based on the share price of the preference share at the end of the period.

EPRA The European Public Real Estate Association is an interest organisation for listed real estate companies and investors in Europe. Part of their work is to set standards for

financial reporting and key ratios, including EPRA NAV (Net Asset Value) which can be equated with long-term net worth.

EPRA NAV per ordinary share Reported equity, after taking the preference equity into consideration, adjusted to include derivatives and deferred tax in accordance with the statement of financial position, in relation to the number of outstanding ordinary shares at the end of the period.

Equity ratio Equity as a percentage of total assets.

IFRS Abbreviation of International Financial Reporting Standards. International reporting standards for consolidated accounts, to be applied by listed companies within the EU from 2005 inclusive.

Interest coverage ratio Profit from property management including realized changes in value, as well as the share of associated companies’ profit from property management, including realized changes in value, plus financial expenses, and divided by financial expenses.

Lettable area Total area available for letting.

Leverage Interest-bearing liabilities after deduction for the market value of listed shareholding and liquid funds, in relation to the fair value of the properties at the end of the period.

Leverage, properties Interest-bearing liabilities with collateral in properties, in relation to the fair value of the properties at the end of the period.

Net debt The net of interest-bearing provisions and liabilities, less financial assets including liquid funds.

Net letting Annual rent for the tenancy agreements entered into during the period, reduced for terminated tenancy agreements and bankruptcies.

Operating margin Operating surplus as a percentage of income.

Realized change in value, properties Realized property sales after deduction for the most recently reported fair value of the properties and selling expenses.

Rental value Contracted annual rent as applicable at the end of the period, with a supplement for assessed rent of vacant premises.

Return on equity Net profit on an annual basis, as a percentage of average equity during the period.

Return on total assets Net profit, excluding financial expenses and unrealized changes in value of derivatives, on an annual basis, as a percentage of total assets during the period.

Required yield The required return on the residual value of property valuations.

Triple net contracts Tenancy agreements where the tenant, in addition to rent, pays costs incurred at the property, which would normally have been charged to the property owner. These include, for example, operating and maintenance expenses and property tax.

Unrealized changes in value, properties Change in fair value, after deduction for investments made for the property portfolio at the end of the respective period.

Corem has chosen the above key ratios in accordance with customary practice in the real estate market.


THIS IS COREM Corem Property Group is a real estate company that owns and manages properties in central and southern Sweden as well as in Denmark. Corem’s property portfolio consists primarily of warehouse, logistics, industrial and retail properties.

› BUSINESS STRATEGY To create long-term growth and increase value by managing, acquiring, building and developing properties in the warehouse, logistics, industrial and retail spheres.

› GOALS Corem’s overall goal is to become, in selected regions, the leading real estate company in its segment - as well as providing Corem’s shareholders with a long-term high and stable return on equity. This is to take place alongside continuous efforts to work for sustainable development.

› STRATEGY Corem has four overall strategies to achieve the company’s goals.

INVESTMENT STRATEGY – to actively seek out and carry out transactions which develop and realize value.

BUSINESS STRATEGY – to optimize the property portfolio through long-term commitment.

ORGANIZATION STRATEGY – to create long-term tenant relations by having a market-oriented and expert property management.

SUSTAINABILITY STRATEGY – to work for long-term sustainability for the company and its business environment.

› BUSINESS MODEL Corem’s business model is based on a continuous process of strategic transactions and optimization of the property portfolio, and creates value by always focusing on the tenant.

COREMS PROPERTY PORTFOLIO IS MANAGED IN FIVE REGIONS: • Region Stockholm, • Region South, • Region West,

• Region Småland och • Region Mälardalen/North. The Corem group head

office is located in Stockholm, and regional offices are located in Stockholm,

Malmö, Göteborg, Jönköping and Örebro.

COREM SHALL HAVE A DECENTRALIZED ORGANIZATION to achieve good knowledge of the local market and closeness to tenants. On 30 June 2016, Corem had a total of 46 (46) employees, of which 12 (13) were women and 34 (33) men. SUSTAINABILITY IS A NATURAL AND IMPORTANT PART of Corem’s business operations. Within the framework of Corem’s core activities, sustainability and environmental initiatives shall contribute to a long-term sustainable society, more efficient use of resources and sustainable profitability.

PROPERTY MANAGEMENT – FOCUS ON TENANTS Corem´s properties shall be managed by our own personnel. Priority is given to short decision-making paths and local presence.

TRANSACTION – GROWTH AND CONCENTRATION Careful business analysis are performed in order to identifying potential growth opportunities. Divestment opportunities arise when the geographical location does not fit in the regional structure or the property type.

PROPERTY DEVELOPMENT– CREATING VALUE Corem has a long-term commitment to properties in the portfolio and strives to optimize the properties´ yield and create long-term relationships.


CALENDAR

FINANCIAL REPORTS Interim Report January - September 2016 26 October 2016 Year-End Report 2016 February 2017 Annual Report 2016 March 2017

DIVIDEND Last day for trading including right to dividend for preference shareholders 28 September 2016 Record day for dividend for preference shareholders 30 September 2016 Expected day for dividend for preference shareholders 5 October 2016 Last day for trading including right to dividend for preference shareholders 28 December 2016 Record day for dividend for preference shareholders 30 December 2016 Expected day for dividend for preference shareholders 4 January 2017 Last day for trading including right to dividend for preference shareholders 29 March 2017 Record day for dividend for preference shareholders 31 March 2017 Expected day for dividend for preference shareholders 5 April 2017

FURTHER INFORMATION

Further information may be obtained from: Eva Landén, CEO. E-mail: [email protected] Håkan Engstam, Transactions and IR manager. E-mail: [email protected] Information on business operations, the board of directors and executive management, financial reporting and press releases is available on Corem’s website, www.corem.se This is the English language version of Corem’s Interim Report. The Swedish language Interim Report is the binding version that shall prevail in case of

discrepancies.

Corem Property Group AB (publ), Box 56085, SE-102 17 Stockholm (Sweden) Visitors: Riddargatan 13 C. Telephone: +46 8 503 853 33, Fax: +46 8 503 853 34 Corporate ID number: 556463-9440, Registered office: Stockholm E-mail: [email protected], Website: www.corem.se

2 quarter 2 - coremcorem interim report january–june 2016 . comments by the ceo . important events...

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