Interim report January to March 2017 - CisionComparable portfolio 2017-04-01 2.31 3.33 Purchases - -0.03 Total portfolio 2017-04-01 2.31 3.30 Vacancy rate residential Percent Percent

Akelius Residential Property AB (publ)

Interim report January to March 2017

Summary 2017 2016 2016Jan–Mar Jan–Mar Jan–Dec

Rental income, SEK million* 1,016 1,025 4,109

Net operating income, SEK million 572 547 2,311

EBITDA, SEK million 543 528 2,208

Profit before tax, SEK million 2,973 1,444 13,320

Property fair value, SEK million 90,477 75,075 87,739

Number of apartments 45,823 50,022 46,516

Real vacancy residential, percent 0.9 1.0 1.1Rent level increase for comparable properties, percent 1.2 0.7 4.5

Loan-to-value ratio, percent 42 48 43

Interest coverage ratio 6.3 3.7 4.5

*) As of 2017 revenue from operating expenses and other property taxes invoiced to the tenants are netted with expenses reported as operating expenses. Rental income and operating expenses for prior years have been restated accordingly.

• Growth for comparable properties

5.4 percent in rental income

10.8 percent in net operating income

• Change in property value 3.1 percent

• Loan-to-value 42 percent

2

Interim report, January to March 2017

Half the profit, the result of low interest rates

Hornsgatan 104, Stockholm, Sweden

As central banks keep interest rates low, property prices rise. Half of the first quarter profit is due to low interest rates. We know this will change, butcannot predict when. However, we are prepared for tougher times. Vacancy risk is low for housing in metropolitan cities.

Net letting SEK 40 millionDuring the quarter we welcomed 1,570 families and 1,514 families left. The real vacancy rate was 0.9 percent.

Net operating income 11 percent increaseDue to rising rental income and falling expenses, the net operating income for comparable properties increased by 11 percent.

Change in fair value of properties 3 percentThe change in value is due to the lower capitalization rate, which in turn is due to the central banks’ low interest rates.Transactions SEK 6 billionDuring the quarter, we sold properties in Halmstad and Eskilstuna and some properties in Hamburg for SEK 3.0 billion. We bought properties in Stockholm, Copenhagen, London, New York, Hamburg, Washington D.C., Berlin and Paris for SEK 2.8 billion.Interest coverage ratio rising rapidlyAs our interest rate hedges expire, our average interest rates approach today’s low market rates. During the quarter, our average interest rate fell to 2.48 percent. At the same time, our net operating income increased. This rapidly improved our interest coverage ratio. Interest coverage ratio excluding realized gain was 2.2 and including realized gain was 6.3.Loan-to-value ratio 42 percentThe loan-to-value ratio declined by 1 percentage point to 42 percent.

Pål AhlsénCEO, Managing Director

3


Half the profit, the result of low interest rates Property portfolio 2017-03-31

Lettable space, thousand sqm Fair value

CityResidential

units Residential Commercial Total SEK million SEK/sqmBerlin 12,362 778 64 842 20,060 23,811Stockholm 9,194 664 46 710 19,040 26,815Malmö 3,975 260 83 343 8,155 23,800Hamburg 4,143 234 11 245 7,078 28,908Toronto 3,116 163 1 164 5,095 31,127London 1,327 59 2 61 4,920 80,176New York 1,044 77 1 78 4,864 62,638Boston 862 57 - 57 3,692 64,968Montreal 1,397 105 - 105 2,170 20,631Paris 978 28 3 31 1,914 61,181Copenhagen 714 51 - 51 1,315 25,439Washington D.C. 484 36 - 36 1,003 28,044Other 6,227 395 73 468 11,171 23,891Total 45,823 2,907 284 3,191 90,477 28,353

Fair value, SEK million

Stockholm19,040

Berlin20,060

Paris1,914

Washington D.C.1,003

New York4,864

Hamburg7,078

Boston3,692

Toronto5,095

Montreal2,170

Malmö8,155

London4,920

Copenhagen1,315

4


Net letting Jan - Mar 2017Residential unitsNumber of residential units

Rental value, per yearSEK million

Move inMove out Net letting Move inMove out Net letting

1,514

1,570

149

189

5640

Yearly in-place residential rentSEK million

2016

-04-

01

Chan

ge

Dispos

als

Compa

rable

portf

olio

2016

-03-

31

Compa

rable

portf

olio

2017

-03-

31

Acqu

isitio

ns

2017

-04-

01

3,968 493

3,475160

241

3,635

3,876

5


Rental incomePercent

Net operating incomePercent

2012

4.4

2013

5.8

2014

3.4

2015

4.3

2016

4.1

2012

4.1

2013

6.7

2014

7.1

2015

4.0

2016

8.0

Growth comparable properties

Real vacancyPercent

Jan–Mar 2017

5.4

Jan–Mar 2017

10.8

2008 2009 2010 2011 2012 Average1 Apr 2017

2016201520142013

1.21.0

0.60.7 0.7

0.90.91.1

1.3

1.0

0.7

6


Total property return

Change in fair value propertiesSEK million

Growth Jan–Marpercent

Fair value, 2017-01-01 87,739Revaluations 2,695 3.1Investments 508 0.6Purchases 2,825 3.2Sales -3,002 -3.4Translation difference -288 -0.3Fair value, 2017-03-31 90,477 3.1

Net operating income 572 0.7

Total property return 3,267 Per annum: 15.7

Annual property return Percent

PercentCapitalization

rateDiscount

rate2017-01-01 3.82 5.81Purchases -0.02 -0.02Sales 0.00 0.01Comparable -0.11 -0.12Exchange rate differences 0.00 0.002017-03-31 3.69 5.68

SEK million

Return, percent

Cash flow -276 -0.31

Required rates of return 2,712 3.08

Sales 35 0.04

Purchases 224 0.26

Total change in value 2,695 3.07

Required rates of return Change in value properties

2016Jan–Dec

2017Jan–Mar

2220181614121086420

2011Jan–Dec

2012Jan–Dec

2013Jan–Dec

2014Jan–Dec

Income return Value growth Average

2015Jan–Dec

7


Number of upgraded apartmentsComparable portfolio

Share of upgraded apartmentsPercent

Changes in property portfolio

Jan–Mar 2016

Jan–Mar 2017

753679

2016

-12-31

2017

-03-

31

Sales

and

purch

ases

Upgr

aded

compa

rable

portf

olio

40.8 40.6-1.7 1.5

SalesSEK million

Purchases SEK million

Purchase price plus investments

Fair value beginning of year

Sale price

2%

52%

3,0022,952*

1,942New York

Stockholm

Copenhagen

Berlin

Hamburg

Paris

Washington D.C.

London

1,079

862

362

143

139

121

54

65

*) Properties sold in Sweden were reported as assets held for sale at the end of 2016 and valued at sale price already at beginning of year.

8


Loan-to-value ratioPercent

Financing

59

53

56

49

51

47

48

36

43

24

Unsecured loansSecured loans

Fixed interest rates and capital tied upYears

Interest expenses and liquiditySEK million

Fixed interest ratesCapital tied up

Interest expensesLiquidity

Jan–

Mar

2017

334

7,7968,120

248

42

24

Jan–

Mar

2016

2016

-03-

31

2017

-03-

31

5.04.6

4.24.5

2014-12-31

4.3

5.7

4.55.0

4.3

5.0

201212-31

201312-31

201412-31

201512-31

201612-31

201703-31

46

7

12

19 18

5.45.0

2012-12-31 2013-12-31 2015-12-31 2016-12-31 2017-03-31

9


Interest coverage ratioTimes

3.0

4.5

1.71.51.3

6.3

1.2 1.21.5

1.4

1.6

2.6

1.9

Realized gain

Current interest and debt coverage capacity

SEK million Jan–Mar 2017

Apr 2016– Mar 2017

Pro forma, 12 months

Rental income 1,016 4,100 4,232Operating expenses -365 -1,386 -1,317Maintenance -79 -378 -338Net operating income 572 2,336 2,577Central administrative expenses and other* -29 -113 -116EBITDA 543 2,223 2,461Net interest expense -248 -1,048 -952Other financial income and expenses -9 -34 -37Profit before tax and revaluation 286 1,141 1,472Realized value growth 1,034 3,198 -Interest coverage ratio 6.3 5.1 -Interest coverage ratio excluding realized value growth 2.2 2.1 2.5Net debt as per 2017-03-31 38,356 38,356 38,356Net debt/EBITDA 17.7 17.3 15.6Net debt/EBITDA including realized value growth 6.1 7.1 15.6*Other income and expenses exclusive operational exchange differences and depreciation.

EBITDASEK million

2012

1,366

2013

1,507

2014

1,841

2015

2,072

2016

2,208

Jan–Mar 2017

543

2012 2013 2014 2015 2016 Jan-Mar2017

2.2

4.1

EBITDA

10


Stockholm

Stockholm Malmö

Property portfolioCapitalization rate, percent 3.05 3.35Percent of fair value 21 9

Average rent SEK/sqm/year SEK/sqm/yearTotal portfolio 2016-04-01 1,204 1,250Sales 4 -Comparable portfolio 2016-04-01 1,208 1,250Increase in comparable portfolio 29 40- Increase in percent 2.4 3.2Comparable portfolio 2017-04-01 1,237 1,290Purchases 8 -Total portfolio 2017-04-01 1,245 1,290

Vacancy rate residential Percent PercentReal vacancy rate 0.0 0.0Apartments being upgraded 1.3 0.8Vacancy rate 1.3 0.8

Malmö

Acquired properties Comparable properties

11


Sold properties

Berlin

Berlin Hamburg


Average rent EUR/sqm/month EUR/sqm/monthTotal portfolio 2016-04-01 7.34 9.98Sales 0.01 -Comparable portfolio 2016-04-01 7.35 9.98Increase in comparable portfolio 0.39 0.40- Increase in percent 5.3 4.0Comparable portfolio 2017-04-01 7.74 10.38Purchases -0.02 -0.06Total portfolio 2017-04-01 7.72 10.32


Hamburg


12


Toronto

Toronto Montreal


Average rent CAD/sqft/month CAD/sqft/monthTotal portfolio 2016-04-01 1.96 1.48Sales - -Comparable portfolio 2016-04-01 1.96 1.48Increase in comparable portfolio 0.14 0.09- Increase in percent 6.8 6.1Comparable portfolio 2017-04-01 2.10 1.57Purchases - 0.02Total portfolio 2017-04-01 2.10 1.59


Montreal


13


London

London Paris


Average rent GBP/sqft/month EUR/sqm/monthTotal portfolio 2016-04-01 2.14 21.74Sales 0.27 -Comparable portfolio 2016-04-01 2.41 21.74Increase in comparable portfolio 0.15 0.25- Increase in percent 6.5 1.1Comparable portfolio 2017-04-01 2.56 21.99Purchases 0.05 -0.62Total portfolio 2017-04-01 2.61 21.37


Paris


14


New York

New York Boston


Average rent USD/sqft/month USD/sqft/monthTotal portfolio 2016-04-01 1.99 3.16Sales - -Comparable portfolio 2016-04-01 1.99 3.16Increase in comparable portfolio 0.32 0.17- Increase in percent 16.3 5.2Comparable portfolio 2017-04-01 2.31 3.33Purchases - -0.03Total portfolio 2017-04-01 2.31 3.30


Boston


15


Washington D.C.

Washington D.C. Copenhagen


Average rent USD/sqft/month DKK/sqm/yearTotal portfolio 2016-04-01 1.69 -Sales - -Comparable portfolio 2016-04-01 1.69 -Increase in comparable portfolio 0.04 -- Increase in percent 2.0 -Comparable portfolio 2017-04-01 1.73 -Purchases 0.06 896Total portfolio 2017-04-01 1.79 896


Copenhagen


16


ResultRental income SEK 1,016 million Rental income growth for comparable portfolio was 5.4 percent. Rental income totaled SEK 1,016 million, a decrease of SEK 9 million compared to the same period of 2016. Lower rental income is attributable to the sales of properties, SEK 55 million. Comparable properties increased with SEK 46 million.During the period, 3,863 rental contracts with a yearly rent of SEK 351 million have been renewed or renegotiated. The new yearly rent is SEK 360 million, an increase of 2.5 percent.The real vacancy rate decreased by 0.2 percentage points to 0.9 percent. The vacancy rate for residential units was 5.1 percent, of which 82 percent was due to upgrades or planned sales of apartments.

Net operating income SEK 572 millionProperty expenses totaled SEK 444 million, compared to SEK 478 million in the same period of 2016. SEK 79 million was attributable to maintenance, corresponding to an average annual expense of SEK 98 per square meter.The net operating income for comparable properties increased by 10.8 percent. The net operating income margin was 56.3 percent, compared to 53.4 percent in the same period in 2016. Adjusted net operating income margin was 68.2 percent for the period.

Increase in property value 3.1 percent The increase in property value was SEK 2,695 million, or 3.1 percent, compared to SEK 1,565 million, or 2.2 percent, in the same period of 2016. The growth in value is due to a lower capitalization rate, profitable sales and bought properties.

Net financial items SEK -231 millionInterest expenses were SEK 248 million, compared to SEK 334 million in the same period of 2016. The decrease is mainly due to lower cost of borrowings. Financial derivatives affected earnings by SEK 25 million, compared to SEK -250 million. Other financial expenses amounted to SEK 9 million, compared to SEK 7 million in the same period of 2016.

Profit before tax SEK 2,973 millionProfit before tax was SEK 2,973 million, compared to SEK 1,444 million in the same period of 2016, and was positively impacted by an increase in the fair value of properties.

Tax expenses SEK 516 millionTax expenses totaled SEK 516 million, compared to SEK 191 million in the same period of 2016. SEK 506 million is deferred tax, mainly due to unrealized gains on properties. SEK 9 million represents taxes paid. The Group has no ongoing tax disputes.

FinancingEquity to assets ratio 47 percent Equity increased by SEK 2,351 million to SEK 43,288 million during the period and the equity to assets ratio increased from 46 to 47 percent.

Loan-to-value ratio 42 percent Interest-bearing debt increased during the period by SEK 412 million to SEK 38,507 million. The loan-to-value ratio has decreased by one percentage point since 2016-12-31. Secured loans were SEK 22,101 million, compared to SEK 21,482 million at the end of 2016. The secured loan-to-value ratio is 24 percent, unchanged compared to 2016. The goal is a secured loan-to-value ratio lower than 25 percent. The secured loans have been borrowed from 35 banks in seven countries. Unsecured loans include four listed bonds, commercial papers and loans from related companies.

17


Capital tied up 5.0 years Interest-bearing debt was tied up for an average of 5.0 years, unchanged compared to 2016-12-31. Loans maturing within one year totaled SEK 7,952 million, whereof SEK 4,054 million in commercial papers. Outstanding commercial papers are covered with long-term back-up credit facilities. The average loan-to-value ratio on short-term loans was 38 percent. Short-term loans consist partly of borrowings from 23 banks and partly from the capital market.The refinancing risk is mitigated by strong liquidity, diversified funding and a low loan-to-value ratio.

Interest rate hedge 4.3 years SEK 10,345 million had a fixed interest rate term of more than five years and SEK 10,262 million had a fixed interest rate term of less than one year. The average interest rate of 2.48 percent was 0.14 percentage points lower compared to 2016-12-31. On average, the underlying interest rate is secured for 4.3 years, compared to 4.5 years in 2016.

Liquidity SEK 8,120 million Available funds in the form of liquid assets and secured but unutilized credit facilities totaled SEK 8,120 million. The unleveraged share of the properties’ fair value is SEK 68,377 million.

Property portfolioFair value SEK 90 billionThe fair value is SEK 90,477 million, which is equivalent to SEK 28,353 per square meter. The average capitalization rate for the entire portfolio was 3.69 percent, which is 0.13 percentage points lower than at the beginning of the year.

Property purchases SEK 2,825 million Property purchases equalled SEK 2,825 million, compared to SEK 3,142 million in the same period of 2016. The average capitalization rate was 3.39 percent for purchased properties.

Property investments SEK 508 millionInvestments in properties totaled SEK 508 million, compared to SEK 527 million in the same period of 2016. Investments equaled SEK 633 per square meter on annual basis. 42 percent of the total investments were due to apartment upgrades.

Property sales SEK 3,002 million Sales totaled SEK 2,801 million in Sweden and SEK 201 million in Germany. In total, we sold properties for SEK 3,002 million, compared to SEK 2,957 million in the same period of 2016. Sales prices were two percent higher than the fair value at the beginning of the year and generated a net income of SEK 9 million, including SEK 26 million in transaction costs. Properties sold in Sweden were reported as assets held for sale at the end of 2016 valued at sale price already at beginning of year.Well-kept residential properties are attractive investments for many types of investors and provide a liquidity reserve throughout the business cycle.

18


Other financial informationCash flow for the periodOperating cash flow before the change in working capital increased by SEK 128 million to SEK 338 million, compared to the same period of 2016. Cash flow from investments were SEK -539 million, compared to SEK 167 million in the same period of 2016. Cash required for the acquisition of properties is secured before signing acquisition agreements. Profitable but non-mandatory upgrades can, if needed, be stopped within a three-month period. Cash flow from financing was SEK 360 million, compared to SEK -266 million in the same period of 2016. During the period, dividends were paid with SEK 94 million to holders of preference shares.

Parent CompanyThe Parent Company’s profit before tax increased by SEK 300 million to SEK 52 million, which is attributable to SEK 108 million change in fair value of derivative financial instruments, compared to SEK -151 million for the same period of 2016.

Assets and liabilities held for saleDuring 2017 Akelius sold all properties in Eskilstuna and Halmstad, which were reported as assets and liabilities held for sale 2016-12-31.

PersonnelAt the end of the period there were 737 people employed in the Group, compared to 734 at the end of 2016.

Preference sharesThe total number of preference shares totaled 18,835,606, equivalent to SEK 6,020 million reported in equity. Preference shares represent 0.64 percent of the total number of shares in Akelius Residential Property AB. On 2017-03-31, the price paid per preference share was SEK 309.00.

Akelius ratingIn 2017, Standard and Poor s revised the investment grade rating BBB- on Akelius Residential Property AB and its unsecured debt from stable to positive outlook.

Related party transactionsNet debt from related parties has decreased by SEK 201 million. The scope and focus of these operations did not change significantly during the quarter. All transactions were on market terms.

Annual General Meeting, 2017-04-11For resolutions, see the press release and related documents on Akelius website.

Events after the balance sheet dateIssue of new ordinary shares and dividend payment on ordinary shares have been made on 2017-04-21 in accordance with the resolutions from the Annual General Meeting. On the same date we also repurchased the hybrid loans.

Pål Ahlsén,CEO, Managing Director

Stockholm, Sweden, 2017-04-28, Akelius Residential Property AB (publ)

The interim report has not been reviewed by the company’s auditors.

19


Consolidated statement of comprehensive income

SEK million

2017 Jan–Mar

3 months

2016 Jan–Mar

3 months

2016 Jan–Dec

12 monthsRental income 1,016 1,025 4,109Operating expenses -365 -397 -1,418Maintenance -79 -81 -380Net operating income 572 547 2,311Central administration -38 -24 -134Other income and expenses 1 1 26Net income from the disposal of investment properties* 9 29 827Net income from the revaluation of investment properties 2,660 1,482 11,779Operating profit 3,204 2,035 14,809Interest income - 1 4Interest expenses -248 -334 -1,138Other financial income and expenses -9 -8 -33Change in fair value of derivative financial instruments 26 -250 -322Profit before tax 2,973 1,444 13,320Tax -516 -191 -2,958Profit for the year 2,457 1,253 10,362Items that will be reclassified to profit or loss:Translation difference -224 3 1,366Change in the hedging of currency risk 176 - -659Tax attributable to the hedging currency risk -25 - 145Comprehensive income for the year 2,384 1,256 11,214

Profit attributable to: - owners of the Parent Company 2,415 1,218 10,187 - owner of the hybrid loans 34 24 125 - non-controlling interests 8 11 50

Total comprehensive income attributable to: - owners of the Parent Company 2,346 1,205 10,952 - owner of the hybrid loans 30 39 206 - non-controlling interests 8 12 56

Earnings per share before and after dilution, SEK 0.79 0.39 3.37

*) SEK 26 million refer to transaction costs for Jan–Mar 2017, SEK 54 million for Jan–Mar 2016 and SEK 109 million for Jan–Dec 2016.

20


SEK million2017

Mar 312016

Mar 312016

Dec 31AssetsIntangible assets 52 32 49Investment property 90,477 70,128 84,634Tangible fixed assets 38 36 39Deferred tax 1 5 6Financial assets 4 38 9Total non-current assets 90,572 70,239 84,737Trade and other receivables 760 921 447Derivative financial instruments 31 108 9Cash and cash equivalents 136 217 137Assets held for sale* - 4,954 3,108Total current assets 927 6,200 3,701Total assets 91,499 76,439 88,438Equity and liabilitiesShare capital 1,770 1,741 1,770Share premium 12,168 10,456 12,168Currency translation reserve 867 157 935Retained earnings 26,287 18,029 23,872Total equity attributable to owners of the Parent Company 41,092 30,383 38,745Hybrid loan 2,005 1,385 2,009Non-controlling interests 191 139 183Total equity 43,288 31,907 40,937Interest-bearing liabilities 30,555 32,350 29,932Derivative financial instruments 1,318 2,227 1,350Deferred tax 7,339 4,011 6,676Other liabilities 102 55 72Total non-current liabilities 39,314 38,643 38,030Interest-bearing liabilities 7,952 4,468 8,163Derivative financial instruments 32 18 98Trade and other payables 913 942 932Liabilities held for sale - 461 278Total current liabilities 8,897 5,889 9,471Total equity and liabilities 91,499 76,439 88,438

Borrowings-unsecured 16,406 9,787 16,613-secured 22,101 27,031 21,482Total 38,507 36,818 38,095*) SEK 4,947 million was attributable to investment properties on 2016-03-31 and SEK 3,105 million on 2016-12-31.

Consolidated statement of financial position

21


Consolidated statement of cash flows

SEK million

2017 Jan–Mar

3 months

2016 Jan–Mar

3 months

2016 Jan–Dec

12 monthsNet operating income 572 547 2,311Central administration -38 -24 -134Other income and expenses 3 1 23Reversal of depreciation and impairment losses 5 3 14Interest paid -195 -312 -1,226Income tax paid -9 -5 -67Cash flow before changes in working capital 338 210 921Change in current assets -143 -111 -27Change in current liabilities -15 -15 -30Cash flow from operating activities 180 84 864

Investments in intangible assets -5 -6 -28Investment in properties -508 -527 -2,989Acquisition of investment properties -2,825 -3,142 -6,094Acquisition of net assets 30 597 650Proceeds from sales of investment properties 3,002 2,957 9,061Proceeds from sale of net assets -120 -87 -310Purchase and sale of other assets -113 375 405Cash flow from investing activities -539 167 695

New share issue - - 4,036Shareholder contribution 1 8 8Loans raised 3,333 4,053 19,862Repayment of loans -2,914 -4,144 -18,641Purchase and sale of derivative instruments 34 -64 -1,377Dividend -94 -119 -5,546Cash flow from financing activities 360 -266 -1,658

Cash flow for the period/year 1 -15 -99Cash and cash equivalents at beginning of the year 137 238 238Translation difference in cash and cash equivalents -2 -6 -2Cash and cash equivalents at end of period/year 136 217 137

22


Attributable to owners of the Parent Company

SEK millionShare capital

Share pre-

mium

Currency trans-lation

reserveRetained earnings Total

Hybrid loans

Non- control-

ling interests

Total equity

Opening balance at 2016-01-01 1,741 10,456 170 16,811 29,178 1,370 119 30,667Profit for the period - - - 1,218 1,218 24 11 1,253Other comprehensive income - - -13 - -13 15 1 3Total other comprehensive income - - -13 1,218 1,205 39 12 1,256Acquired minority - - - - - - 8 8Dividend - - - - - -24 - -24Closing balance at 2016-03-31 1,741 10,456 157 18,029 30,383 1,385 139 31,907Profit for the period - - - 8,969 8,969 101 39 9,109Other comprehensive income - - 778 - 778 66 5 849Total other comprehensive income - - 778 8,969 9,747 167 44 9,958Hybrid loan - - - - - 558 - 558Dividend - -2,295 - -3,126 -5,421 -101 - -5,522Share issue 29 4,007 - - 4,036 - - 4,036Closing balance at 2016-12-31 1,770 12,168 935 23,872 38,745 2,009 183 40,937Profit for the period - - - 2,415 2,415 34 8 2,457Other comprehensive income - - -68 - -68 -4 - -72Total other comprehensive income - - -68 2,415 2,347 30 8 2,385Dividend - - - - - -34 - -34Closing balance at 2017-03-31 1,770 12,168 867 26,287 41,092 2,005 191 43,288

Consolidated statement of changes in equity

23


Segment information

Jan–Mar 2016, SEK million Sweden Germany Other TotalRental income 515 297 213 1,025Operating expenses -223 -59 -115 -397Maintenance -43 -21 -17 -81Net operating income 249 217 81 547Revaluation of investment properties 1,199 190 176 1,565Total property return 1,448 407 257 2,112Total property return, percent 19.5 6.7 6.6 12.1Property fair value 30,904 25,778 18,393 75,075

Jan–Mar 2017, SEK million Sweden Germany Other TotalRental income 419 310 287 1,016Operating expenses -177 -53 -135 -365Maintenance -45 -17 -17 -79Net operating income 197 240 135 572Revaluation of investment properties 1,496 929 270 2,695Total property return 1,693 1,169 405 3,267Total property return, percent 22.6 15.3 7.2 15.7Property fair value 32,268 33,237 24,972 90,477

Interest-bearing liabilities

Duration,years

Interest rate hedge,

SEK million

Interest rate hedge

Average interest rate, percent

Share, percent

Capital tied up, SEK million

Share, percent

0–1 10,262 0.89 27 7,952 211–2 1,259 1.82 3 3,726 102–3 2,258 3.63 6 2,939 83–4 6,492 3.52 17 8,671 224–5 7,891 2.64 20 5,902 155–6 1,214 3.84 3 413 16–7 517 3.94 1 107 -7–8 1,049 3.63 3 159 -8–9 2,685 2.24 7 2,346 69–10 2,827 2.39 8 3,573 10> 10 2,053 4.42 5 2,719 7Total 38,507 2.48 100 38,507 100

24


Condensed statement of comprehensive income for the Parent Company

SEK million

2017 Jan–Mar

3 months

2016 Jan–Mar 3 months

2016 Jan–Dec

12 monthsCentral administration -18 -18 -35Other income and expenses -1 - -Profit from shares in subsidiaries - - 2,000Financial income 160 187 1,312Financial expenses -197 -266 -878Change in fair value of derivatives 108 -151 -218Appropriations - - -1,065Profit before tax 52 -248 1,116Tax -27 33 192Profit for the period/year 25 -215 1,308Comprehensive income 25 -215 1,308

Condensed statement of financial position for the Parent Company

SEK million2017

Mar 312016

Mar 312016

Dec 31Intangible assets 3 1 3Shares in subsidiaries 13,183 13,165 13,183Receivables from Group companies 37,636 31,619 36,216Deferred tax assets 495 364 522Other assets 357 300 41Cash and cash equivalents 1 947 -Total assets 51,675 46,396 49,965Total equity 14,061 13,899 14,036Interest-bearing liabilities 18,977 30,711 18,301Interest-bearing liabilities from Group companies 18,032 1,068 16,883Derivative financial instruments 469 614 576Other current liabilities 136 104 169Total equity and liabilities 51,675 46,396 49,965

25


Other informationBasis of presentationStatement of complianceThe Akelius Residential Property Group’s Interim report has been prepared in accordance with IAS 34, Interim Financial Reporting. 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 34Interim Financial Reporting are submitted both in the notes and in other sections of the interim report. The accounting policies applied in the preparation of the interim report are consistent with those used in the preparation of the Group’s annual financial statements for the year 2016. The figures in this interim report have been rounded up or down, 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.Estimates and assessmentsEstimates and assessments are evaluated continuously based on empirical factors and other aspects, including the anticipation of future events that are reasonable under the prevailing circumstances. The same principles are followed in the interim reporting as in the previous annual report.Derivative instrumentsDerivative instruments consist mainly of interest rate swaps. Estimates of the fair value of derivatives are based on Level 2 of the fair value hierarchy. Compared to 2016, no transfers have occurred between the different levels of the hierarchy, and no significant changes have been made regarding the valuation method. Cash flow in the derivative contracts is compared to the cash flow that would have been received if the contracts had been concluded at market prices on the closing date.

The difference in cash flow is discounted using an interest rate that takes into account counterparty’s credit risk. The present value obtained is reported in the balance sheet at fair value. Changes in fair value for interest rate swaps are recognized in the income statement without the application of hedge accounting. Currency derivativesAs of 2016-04-01 Akelius has defined currency derivatives as hedging instruments and reported the change in fair value of currency derivatives in other comprehensive income.Valuation of propertiesThe fair value of all properties is assessed by internal valuations on the closing date. The valuations are based on a cash flow model for each individual property, with separate assessments of future earning ability and required rates of return. The cash flow model is based on actual income and expenses adjusted for a normalized future cash flow. Assets held for saleFair value measurement is based on the purchase price stated in the signed purchase agreement between buyers and sellers when agreements have been signed, minus the remaining cost to put the properties in the condition agreed. The purchase price is considered to belong to Level 1 of the fair value hierarchy in IFRS 13. Current earning capacity- Realized value growthAkelius manages and develops residential properties with the ability to generate a stable and growing operating surplus. Higher net operating income leads to positive value development for our properties. Part of the business model is to realize value growth, defined as sales revenue less acquisition value and investments. Profit before tax and revaluation including realized value growth is a good indicator of the ability to generate cash flow.

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- Pro formaNet operating income and realized value growth are reinvested into existing and new properties. This leads to a growing operating surplus. It is therefore more appropriate to analyze the business based on the situation on the balance sheet date. The pro forma is based on the property 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 currency rate for the balance sheet day. No tax has been calculated as it relates mainly to deferred tax, which does not affect cash flow. The pro forma is not a forecast for the coming twelve months as it contains no estimate of rental, vacancy, currency exchange, future property purchases and sales or interest rate changes.

New accounting principlesThe following standards, amendments to standards and interpretations have been issued but are not yet effective for annual periods beginning on 2017-01-01. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these standards early. IFRS 9 – Financial InstrumentsIFRS 9 introduces new requirements for the classification and measurement of financial assets. Under IFRS 9, financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. The IASB is currently engaged in an active project aimed at making limited amendments to the classification and measurement requirements of IFRS 9 and adding new requirements to address the impairment of financial assets and hedge accounting. IFRS 9 will be effective for annual reporting periods beginning on or after 2018-01-01, with early adoption permitted.

IFRS 15 – Revenue from Contracts with CustomersIFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It will replace the current revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programs. IFRS 15 will be effective for annual reporting periods beginning on or after 2018-01-01, with early adoption permitted. At this time, the impact of the above publications is not expected to be material to the Group. IFRS 16 – LeasesIFRS 16 establishes a new accounting model based on the right to use an asset. Subject to EU endorsement, the standard will be effective for reporting periods beginning on or after 2019-01-01. The impact on the financial statements has yet to be evaluated.

Risks and uncertaintiesOperational risks are limited through 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.

In order to further reduce the risk or variations in cash flow, 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. No material changes in the company’s assessment of risks have occurred since the publication of the 2016 annual report.

Other information

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Key figures

2017Mar 31

2016Dec 31

2015Dec 31

2014Dec 31

2013Dec 31

EquityEquity, SEK million 43,288 40,937 30,667 22,583 15,169Equity to assets ratio, percent 47 46 41 38 33Return on equity, percent 6 37 29 9 24Net asset value to assets ratio, percent 57 56 50 47 41Net operating incomeRental income, SEK million 1,016 4,109 3,988 3,323 2,787Growth in rental income, percent -0.9 3.0 20.0 19.2 9.9Growth in rental income for comparable properties, percent 5.4 4.1 4.3 3.4 5.8Net operating income, SEK million 572 2,311 2,175 1,882 1,579Growth in net operating income, percent 4.5 6.3 15.6 19.2 12.1Growth in net operating income for comparable properties, percent 10.8 8.0 4.0 7.1 6.7Net operating income margin, percent 56.3 56.2 54.5 56.6 56.7Adjusted net operating income margin, percent 68.2* 66.2 - - -Interest-bearing liabilitiesLoan-to-value ratio, secured loans, percent 24 24 36 47 49Loan-to-value ratio, percent 42 43 48 51 56Interest coverage ratio 6.3 4.5 3.0 1.7 1.5Interest coverage ratio excluding realized value growth 2.2 1.9 1.6 1.5 1.2Average interest rate, percent 2.48 2.62 3.44 3.94 4.75Fixed interest term, year 4.3 4.5 4.3 4.2 5.0Capital tied up, year 5.0 5.0 5.7 4.5 4.6PropertiesNumber of apartments 45,823 46,516 51,231 47,896 41,319Rentable area, thousand sqm 3,191 3,236 3,587 3,472 2,992Real vacancy rate, residential, percent 0.9 1.1 1.3 1.0 0.7Vacancy rate, residential, percent 5.1 5.0 4.3 3.2 2.6Fair value of properties, SEK millionOpening balance 87,739 72,764 57,736 44,104 35,437Change in fair value 2,695 12,715 8,026 1,412 1,582Investments 508 2,989 2,216 1,881 1,531Purchases 2,825 6,094 12,093 9,678 6,901Sales -3,002 -9,061 -5,755 -1,084 -1,801Exchange difference -288 2,238 -1,552 1,745 454Closing balance 90,477 87,739 72,764 57,736 44,104Fair value, per sqm 28,353 27,116 20,284 16,629 14,736Capitalization rate, percent 3.69 3.82 4.33 4.72 4.75Change in capitalization rate1, percentage -0.11 -0.49 -0.36 0.01 -0.01

*) Adjustments for utility and other operating expenses included in the rent invoiced to the tenants for Canada, Sweden and the United States totaled SEK 176 million.

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Key figures

2017 Mar 31

2016Dec 31

2015Dec 31

2014Dec 31

2013Dec 31

Properties, SwedenAverage residential rent, SEK/sqm/year 1,249 1,246 1,184 1,156 1,114Growth in average residential rent2, percent 0.3 2.6 2.6 3.7 5.8Growth in rental income3, percent 3.8 1.9 3.0 3.5 5.5Growth in net operating income3, percent 0.2 2.4 1.8 8.0 3.3Fair value, SEK million 32,268 32,357 31,727 29,571 26,797Fair value, SEK per sqm 24,758 23,163 17,148 14,899 14,115Capitalization rate, percent 3.23 3.43 4.30 4.78 4.84Number of apartments 15,969 17,381 23,520 24,407 23,867Vacancy, percent 1.1 1.2 1.5 1.5 2.2Real vacancy, percent 0.0 0.1 0.1 0.4 0.6Properties, GermanyAverage residential rent, EUR/sqm/month 8.65 8.56 8.13 7.77 7.71Growth in average residential rent2, percent 1.3 5.0 5.1 5.4 5.6Growth in rental income3, percent 4.1 6.3 6.0 3.1 6.8Growth in net operating income3, percent 8.3 10.3 3.9 5.8 13.7Fair value, SEK million 33,237 32,176 24,892 21,171 15,549Fair value, SEK per sqm 25,483 24,708 18,986 16,752 15,398Capitalization rate, percent 3.69 3.84 4.35 4.72 4.64Number of apartments 19,932 19,932 20,307 19,423 15,769Vacancy, percent 5.2 4.8 4.9 4.5 2.4Real vacancy, percent 0.9 1.1 2.0 1.6 0.9Properties, Canada4

Average residential rent, CAD/sqft/month 1.91 1.89 1.79 1.83 1.94Growth in average residential rent2, percent 1.0 6.7 3.6 6.6 7.7Growth in rental income3, percent 12.0 7.0 4.1 7.0 20.6Growth in net operating income3, percent 55.6 29.0 25.1 -17.8 56.4Fair value, SEK million 7,265 7,055 4,859 3,432 1,758Fair value, SEK per sqm 27,021 26,242 21,424 21,808 20,710Capitalization rate, percent 4.35 4.36 4.37 4.55 4.47Number of apartments 4,513 4,513 3,999 2,823 1,683Vacancy, percent 6.2 7.1 11.1 6.7 4.0Real vacancy, percent 3.3 3.4 3.6 2.7 1.7Properties, England5

Average residential rent, GBP/sqft/month 2.61 2.55 2.07 1.74 1.55Growth in average residential rent2, percent 1.6 5.9 11.5 11.3 0.1Growth in rental income3, percent 9.5 7.5 15.1 5.9 29.0Growth in net operating income3, percent 1.4 15.4 23.0 9.3 31.7Fair value, SEK million 4,920 4,524 4,840 3,395 1,792Fair value, SEK per sqm 80,176 79,157 67,660 53,606 36,430Capitalization rate, percent 4.11 4.11 4.22 4.36 4.64Number of apartments 1,327 1,224 1,404 1,153 870Vacancy, percent 10.3 12.4 8.0 7.8 6.0Real vacancy, percent 2.0 3.7 2.8 2.1 4.1

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2017 Mar 31

2016Dec 31

2015Dec 31

2014Dec 31

2013Dec 31

Properties, FranceAverage residential rent, EUR/sqm/month 21.37 20.99 22.50 21.31 -Growth in average residential rent2, percent 1.4 1.7 15.7 - -Growth in rental income3, percent -13.4 11.9 - - -Growth in net operating income3, percent -76.3 241.1 - - -Fair value, SEK million 1,914 1,848 995 166 -Fair value, SEK per sqm 61,181 61,332 62,640 60,732 -Capitalization rate, percent 4.21 4.20 4.21 4.11 -Number of apartments 978 941 467 90 -Vacancy, percent 44.6 46.2 35.3 34.4 -Real vacancy, percent 2.7 3.7 1.3 - -Properties, United StatesAverage residential rent, USD/sqft/month 2.54 2.51 2.26Growth in average residential rent2, percent 1.3 4.2 -Growth in rental income3, percent 10.9 - -Growth in net operating income3, percent 135.1 - -Fair value, SEK million 9,558 9,362 5,451Fair value, SEK per sqm 56,149 56,725 48,769Capitalization rate, percent 4.42 4.42 4.47Number of apartments 2,390 2,309 1,534Vacancy, percent 10.4 10.6 9.8Real vacancy, percent 0.8 1.7 2.8Properties, DenmarkAverage residential rent, DKK/sqm/year 896 916 -Growth in average residential rent2, percent - - - - -Growth in rental income3, percent - - - - -Growth in net operating income3, percent - - - - -Fair value, SEK million 1,315 417 -Fair value, SEK per sqm 25,439 27,135 -Capitalization rate, percent 3.36 3.42 -Number of apartments 714 216 -Vacancy, percent 1.4 1.9 -Real vacancy, percent 0.3 0.0 -

1) For comparable properties. The property portfolio in England was bought from fellow subsidiaries in March 2014. The tables show the development as if the properties had been owned since 2014-01-01.2) Growth from the start of the period to the end of the period for a comparable portfolio.3) Growth for the period compared to the same period in the previous year for a comparable portfolio.4) The property portfolio in Toronto, Canada, was bought from a fellow subsidiary at the end of 2013. The tables above show the development as if the properties had been owned since 2012.5) The property portfolio in England was bought from fellow subsidiaries in March 2014. The tables above show the development as if the properties had been owned since 2012.

Key figures

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DefinitionsAdjusted net operating income margin

Net operating income in relation to rental income excluding income from operating expenses included in the rent invoiced to the tenants, such as utility and property taxes. It highlights the ongoing earning capacity from property management related to rental services only.

Annual property return Gain 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 rate The expected eternal yield from property portfolio minus the growth rate of net operating income.

Capital tied up, year Volume-weighted remaining term of interest-bearing liabilities and derivatives on the balance sheet date. It Illustrates the company’s refinancing risk.

Change yearly in-place residential rent

The development of the rental value over the last 12 months, broken down to disposals, acquisitions and comparable portfolio. The rental value contains a market rent for vacant apartments.

Comparable portfolio The properties owned during the periods being compared. This means that properties acquired or sold during any of the periods being compared are excluded.

Discount rate The expected eternal yield from the property portfolio including the growth rate of net operating income.

EBITDA Net 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 to assets ratio Equity in relation to total assets. It highlights the company’s financial stability.

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DefinitionsIncome return Net 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, year

Volume-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 Net operating income plus central administrative expenses, other income and expenses, other financial income and expenses, realized value growth with add back of depreciation and impairment charges and operating exchange rate differences, in relation to net interest. It illustrates the company’s sensitivity to interest rate changes.

Interest coverage ratio, excluding realized value growth

Net operating income plus central administrative expenses, other income and expenses, other financial income and expenses with add back of depreciation and impairment charges, in relation to net interest. It illustrates the company’s sensitivity to interest rate changes.

Loan-to-value ratio, total loans Net debt divided by total assets minus cash, pledged cash and liquid assets. It illustrates the company’s financial risk.

Loan-to-value ratio, secured loans

Net debt reduced by unsecured interest-bearing debt divided by total assets minus cash, pledged cash and liquid assets. It illustrates the company’s financial risk.

Net asset value to assets ratio Equity, deferred tax and derivatives in relation to total assets minus cash, pledged cash and liquid assets. It provides an alternative measure of the company’s financial stability.

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 letting The sum of agreed contracted annual rents for new lets for the period less terminated annual rents.

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Net debt Interest-bearing debts minus cash, pledged cash and liquid assets. It illustrates the company’s financial risk.

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

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

Other income and expenses Items from secondary activities such as capital gains on disposals of fixed assets other than investment properties, income and expenses from temporary services rendered after the sale of properties.

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

Property portfolio Investment property and investment property classified as assets held for sale.

Realized value growth Proceeds 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 rate The 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.

Re-newed and re-negotiated rental contracts

All changes in rental levels for remaining tenants.

Rental income Rental value less vacancies, rent discounts.

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

Vacancy rate The number of vacant apartments in relation to the total number of apartments. Vacancy is measured on the first day after the month-end.

Definitions

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Alternative performance measures Reconciliation for the purposes of the Guidelines published by the European Securities and Markets Authority (ESMA) is set out below in SEK million:

Net asset value to asset ratio and loan-to-value ratio 2017-03-31 2016-03-31 2016 -12-31Equity 43,288 31,907 40,937Deferred taxes 7,338 4,006 6,670Derivatives 1,319 2,137 1,439Net asset value 51,945 38,050 49,046Total assets 91,499 76,439 88,438Cash and liquid assets -136 -217 -137Pledged cash assets -15 -81 -16Total assets minus cash, pledged cash and liquid assets 91,348 76,141 88,285Net asset value to assets ratio, percent 57 50 56Total interest-bearing liabilities 38,507 36,818 38,095Cash and liquid assets -136 -217 -137Pledged cash assets -15 -81 -16Net debt 38,356 36,520 37,942Total assets minus cash, pledged cash and liquid assets 91,348 76,141 88,285Loan-to-value ratio, percent 42 48 43Net debt 38,356 36,520 37,942Less unsecured debt -16,406 -9,787 -16,613Secured debt 21,950 26,733 21,329Total assets minus cash, pledged cash and liquid assets 91,348 76,141 88,285Loan-to-value ratio, secured loan, percent 24 35 24

Rental income and net operating income2017

Jan–Mar2016

Jan–MarPercent Growth

Rental income 1,016 1,025 -0.9Exchange differences - 14Purchases and sales -119 -188Rental income for comparable properties 897 851 5.4Net operating income 572 547 4.5Exchange differences - 6Purchases and sales -58 -89Net operating income for comparable properties 514 464 10.8

Realized value growthProceeds from the sale of properties 3,002 2,957Costs of sale -26 -41*Acquisition costs -1,534 -1,658Accumulated investments -408 -545Realized value growth 1,034 713*) excluding SEK 14 million related to assets held for sale.

Akelius in briefHead 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

GermanyLeipziger Platz 14D-10117 Berlin+49 (0) 30 7554 110akelius.de

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

EnglandCoin House2 Gees CourtLondon W1U 1JA+44 (0) 2 078 719 695akelius.co.uk

France67 Boulevard Haussmann75008 Paris+33 1 40 06 85 00akelius.fr

United States3 Post Office Square4th FloorBoston, MA 02109 +1 857 930-3900akelius.us

DenmarkFrederiksborggade 15c/o Regus Business Centre1360 Copenhagen K +45 26888100akelius.dk

Apartments for metropolitans82 percent of the properties are in cities with more than one million inhabitants, such as Berlin, Hamburg, Munich, Cologne, Paris, London, Toronto, Montreal, New York, Boston, Washington, Stockholm and Copenhagen.

Better livingOur mission is to provide current and future tenants with better living by continuously upgrading our buildings and our service.

Acquire via cherry pickingWe prefer to make smaller acquisitions of properties that are just right, by cherry-picking, rather than to make a smaller number of larger acquisitions of properties that are not quite right.

Strong capital structure, low refinancing risk We have agreements with thirty-five banks, listed preference shares and listed senior unsecured bonds. Akelius is Sweden’s largest listed property company and have seventeen thousand shareholders.

First-class personnelMore than two hundred employees have graduated from the Residential Real Estate Management program at Akelius University.

Financial calendar

Interim report Jan-Jun 2017 2017–08-07

Interim report Jan-Sep 2017 2017–10-23

Year-end report 2017 2018-02-05

Interim report January to March 2017 - CisionComparable portfolio 2017-04-01 2.31 3.33 Purchases - -0.03 Total portfolio 2017-04-01 2.31 3.30 Vacancy rate residential Percent Percent

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