Sagax

ANNUAL REPORT 2018
AB Sagax is a property company whose business

concept is to invest in commercial properties, primarily in the
warehouse and light industry segment
Contents
The year in brief 1 Financial statements
Sagax in brief 2 Consolidated statement of comprehensive income 78
Chief Executive Officer’s comments 4 Comments on the consolidated statement of

comprehensive income 79
Consolidated statement of financial position 80

Directors’ Report
Comments on the consolidated statement of
Business concept, goals and strategies 8
financial position and cash flows 81
Sagax’s performance 10
Consolidated statement of cash flows 82
Market overview 11
Consolidated changes in equity 83
Summary of the Sagax property portfolio 18
Parent Company income statement 84
Changes in the property portfolio 22
Parent Company balance sheet 85
Market area Stockholm 26
Parent Company statement of cash flows 86
Market area Helsinki 28
Parent Company changes in equity 87
Market area Finland, university cities 29
Accounting policies and notes 88
Market area Paris 30
Proposed appropriation of profits (Note 33) 121
Market area Netherlands 31
Auditor’s Report 124
Market area Rest of Sweden 32
Market area Rest of Finland 33

Property listing 128
Market area Rest of Europe 34
Articles of Association 146
Market value of property portfolio 36
Notice of the Annual General Meeting 148
Financing 38
Definitions 152
Joint ventures 45
Press releases 155
Current earnings capacity 48
Calendar 155
Risks and risk management 50
The Sagax share and shareholders 54

Sustainability Report 2018 156
Parent Company 56
Organisation and employees 60
Multi-year summary 62
Events after the end of the year 65
Corporate governance
Corporate Governance Report 66
Board of Directors 74
Company management 76
Auditors 76
Other executives 77
This document is an in-house translation of the Swedish Annual Report. In the AB SAGA X AN N UAL REPORT 2018
event of discrepancies, the Swedish original will supersede the translation.
THE YEAR IN BRIEF
The year in brief
Profit from property management increased 20% to SEK 1,603 M.

Cash flow from operating activities before changes in
working capital rose 25% to SEK 1,490 M.
Revenue increased 20% Profit after tax for the year

Rental revenue increased 20% to SEK 2,247 M (1,870 for Profit after tax for the year amounted to SEK 3,166 M
2017). Rental revenue was positively impacted primarily by (2,965), corresponding to SEK 18.47 (17.69) per common
property acquisitions, as well as revenue-increasing invest- share after dilution.
ments in the existing property portfolio.
Sagax’s net investments amounted to SEK 3,437 M
Profit from property management increased 20% During the year, Sagax invested SEK 3,437 M (1,680), of
Profit from property management rose 20% to SEK 1,603 M which net acquisitions accounted for SEK 2,981 M (1,340)
(1,334), of which joint ventures accounted for SEK 312 M and investments in the existing property portfolio for SEK
(278). The increase in profit from property management was 456 M (341). 48 properties were acquired and 31 properties
primarily attributable to property acquisitions. Profit from divested.
property management per Class A and B share after dilution
rose 16% to SEK 8.61 (7.40). Cash flow increased 25%
Cash flow from operating activities before changes in working
Revaluation of properties capital rose 25% to SEK 1,490 M (1,194), corresponding to
In total, property revaluations affected profit by SEK 1,878 M SEK 7.89 (6.52) per Class A and B share after dilution.
(1,656), of which joint ventures accounted for SEK 635 M
(541). The year-end market value of Sagax’s properties was Official rating raised
SEK 29,024 M (23,771). The yield in 2018 was 6.8% (6.9). Moody’s Investors Service raised the company’s rating to Baa3
with a stable outlook. This is an investment grade rating.
Revaluation of financial instruments
Proposed dividend
The changes in value attributable to fixed-income derivatives
The Board of Directors proposes that the dividend per Class
amounted to SEK 103 M (172), of which SEK 42 M (65) was
A and B share be raised 11% to SEK 2.00 (1.80). The Board
due to the revaluation of fixed-income derivatives in joint
also proposes a dividend of SEK 2.00 (2.00) per preference
ventures. The main reason for the revaluation was the time
share and Class D share through a quarterly payment of SEK
factor. Financial instruments attributable to joint ventures
0.50. The dividend is in accordance with the company’s div-
were revalued upwards by SEK 76 M (373). Revaluation of
idend policy and corresponds to 34.6% (33.4) of profit from
listed shares resulted in an unrealised change in value of SEK
property management.
97 M (24).
Selected key performance indicators
2018 2017 2016 2015 2014

Profit from property management per Class A and
8.61 7.40 5.96 4.90 3.73
B share after dilution, SEK
Change compared with preceding year 16% 24% 22% 31% 37%
Earnings per Class A and B share after dilution, SEK 18.47 17.69 14.53 9.88 4.06
Earnings per Class A and B share, SEK (proposed) 2.00 1.80 1.45 1.15 0.80
Interest coverage ratio, multiple 4.3 4.0 3.7 3.3 2.9
Debt ratio 47% 50% 54% 59% 59%
Properties’ market value, SEK M 29,024 23,771 20,628 16,189 13,428

Property yield 6.8% 6.9% 7.1% 7.4% 7.6%
Multi-year summary, see page 62. «READ MORE

Proposed appropriation of retained earnings, see page 119.
AB SAGA X AN N UAL REPORT 2018 This document is an in-house translation of the Swedish Annual Report. In the 1
SAGAX IN BRIEF
Sagax in brief
AB Sagax is a property company whose business concept is to invest in commercial properties,

primarily in the warehouse and light industry segment. Sagax’s property holdings at 31 December 2018
were measured at SEK 29.0 billion, distributed over 512 properties. AB Sagax (publ)
is listed on Nasdaq Stockholm, Large Cap.
PROPERTY PORTFOLIO FINANCING

At 31 December 2018, the property portfolio comprised Interest-bearing liabilities amounted to SEK 15,763 M
512 (495) properties with a lettable area of 2,850,000 (13,691) with an average interest rate of 2.2% (3.0) at year
square m etres (2,489,000). The company owns properties end. The debt ratio amounted to 47% (50) and the interest
in Sweden, Finland, France, Germany, the Netherlands and coverage ratio to 433% (401); refer to the trend chart below.
Denmark. The fixed-interest and debt maturity period amounted to 3.0
The two largest market areas are Stockholm and H elsinki, years (2.3) and 3.6 years (3.1), respectively.
where 56% (58) of the market value and 51% (55) of the Sagax’s financial expenses in 2018 amounted to SEK
rental value is concentrated. At year end, the total rental 481 M (444), corresponding to 47% (53) of the company’s
value and contractual annual rent amounted to SEK 2,510 M total expenses before changes in value and tax.
(2,099) and SEK 2,378 M (1,977), respectively. This corre-
sponds to an economic occupancy rate of 95% (94). THE SAGAX SHARE
Sagax has four classes of shares: Class A, B and D common
LEASE STRUCTURE shares, and preference shares. All four share classes are listed
Sagax’s contractual annual rent at the end of the period was on Nasdaq Stockholm, Large Cap. At the end of the year, the
distributed between 1,545 leases, with about 1,000 tenants. company had 10,867 (9,348) shareholders. Sagax’s market
1,536 leases each had a rental value of less than 1% of the capitalisation amounted to SEK 24,664 M (18,080) on 31
Group’s contractual annual rent. The total rental value for December 2018.
these leases accounted for 82% of Sagax’s contractual annual In 2018, profit from property management per Class
rent. Only three of Sagax’s leases had an annual rental value A and B share after dilution amounted to SEK 8.61 (7.40)
that accounted for more than 2% of the Group’s rental rev- which, compared with the year-end share price of the Class B
enue. These leases together represented 8% of the Group’s common share, corresponded to a multiple of 15.0 (13.3).
contractual annual rent. Sagax’s tenants operate in a variety Equity per Class A and B share after dilution amounted
of industries. 19% of Sagax’s contractual rental revenue comes to SEK 71.34 (54.26) at year end. EPRA NAV per common
from tenants in the manufacturing industry, 12% in the auto- share amounted to SEK 88.45 (70.07). For definitions of key
motive industry, including sales, service and manufacturing performance indicators, see page 150. The share price for
and 12% from companies with food-related operations. the Class B share at year end was SEK 129.60 (98.20), cor-
responding to 182% (181) of equity per common share and
147% (140) of EPRA NAV per common share.
Market value of properties Debt ratio and interest-coverage ratio

Rest of Europe 5% (SEK 1,560 M) Interest-coverage ratio, % Debt ratio, %
600 100
Rest of Finland 8% (SEK 2,373 M)
Stockholm
Rest of Sweden 8% 480 80
34% (SEK 9,821 M)
(SEK 2,392 M)
360 60
Netherlands 6%
(SEK 1,817 M)
Helsinki 22% 240 40
Paris 7% (SEK 1,995 M) (SEK 6,333 M)
120 20
Finland, university cities
9% (SEK 2,732 M) 0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Interest-coverage ratio
Debt ratio
READ MORE » Business concept, goals and strategies, see page 8.

Summary of property portfolio, see page 18.
Financing, see page 38.
2 This document is an in-house translation of the Swedish Annual Report. In the AB SAGA X AN N UAL REPORT 2018
SAGAX IN BRIEF
During the fourth quarter of 2018, the Tikkurilantie 5 property, comprising 62,300 square metres of lettable area and 89,000 square metres of land,
was acquired in Vantaa from IImarinen Mututal Pension Insurance Company. The property, which is located directly south of Helsinki Airport, is fully
leased to a tenant with operations in the non-durables market and it is used as a central warehouse.
CHIEF EXECUTIVE OFFICER’S COMMENTS
To Sagax's shareholders
OPERATIONS of shares, profit from property management per Class A and

As in prior years, no major changes in the operations were im- B share in 2018 rose slightly less (+16%) than consolidated
plemented during the year, either in relation to 2017 or to the profit from property management (+20%). As the company’s
operations conducted a decade ago. I regard the constant view earnings increase, this effect will be reversed. The increase in
of risk, opportunities, cash flow and organisational structure the number of Class D shares also resulted in the dividend on
as a strength for the company. Another is the simplicity of the Class A and B shares (+11%) rising at a lower rate than profit
business model. Sagax invests in properties that generate sta- from property management. From an analytical viewpoint,
ble net operating income and manages them with a long-term the distribution to shareholders may be adjusted to reflect
time perspective. The company focuses on a relatively small the value of the subscription rights that shareholders received
segment of the property market, namely, properties for ware- without consideration as part of the rights issue of Class D
housing and light industry, which has historically had limited shares (SEK 0.55 per Class A and B share), whereby the dis-
leasing potential yet high stability. We have been active in tribution to shareholders totalled SEK 2.55.
this segment for many years and have built up the company The changed capital structure resulted in interest-bearing
from the ground. The operations have shown favourable prof- net debt in relation to operating profit (EBITDA) declining
itability and positive cash flows from the very start. from 8.1x to 7.4x in 2018. Accordingly, at the close of 2018,
In simplified terms, the operations in 2018 can be de- Sagax had one of the lowest gearing in relation to operating
scribed as follows: The properties in which we have invested profit among the publicly traded property companies in
equity generated a yield of 6.8%, of which 0.5 of a percentage Sweden. Viewing the company’s net debt in relation to its
point was used to cover the company’s administration costs. operating profit provides a useful indication of a company’s
47% of the business is financed by interest-bearing liabilities financial position, since this ratio is not affected by (high)
and net interest expense accounts for 1.3 percentage points of property prices (which impact the debt ratio) and (low)
the yield. The remaining 5.0 percentage points of the yield, interest rates (which impact the interest coverage ratio). In
plus our joint ventures’ profit from property management, respect of the latter, Sagax’s interest-coverage and debt ratios
correspond to a 12% return on equity. Value changes and tax reached a multiple of 4.3 and 47%, respectively, in 2018. To
affected the overall return on equity by 12%, whereby the put these ratios in perspective: If Sagax’s vacancy rate were
total return on equity adds up to 24%. to increase from the current level of 5% to 15% (twice as high
Gratifyingly, the operations are no more complex than as the vacancy rate has ever been) at the same time as the
that. Sagax is not dependent on making gains through prop- value of the property portfolio were to decline by 20% and
erty transactions, construction operations or project develop- interest expense were to double, the interest coverage ratio
ment to generate a favourable return on equity. would fall to a multiple of 1.9 and the debt ratio would rise to
57%. Although these levels are weaker than today, they would
CAPITAL STRUCTURE not represent a challenging situation. Our financial position
The simplicity of Sagax’s operations is an advantage in terms would actually be slightly better than in 2007, which I con-
of risk. The company does not need to keep track of multiple sider as a successful year. The deteriorations described above
risk factors and can instead concentrate on just one or a few are improbable but illustrate that a weaker economic climate,
issues that could have a negative impact on the company’s a higher interest rate scenario or similar external factors
earnings capacity or asset value. The probability of an un should not result in financial stress for the company.
intentional oversight occurring is thus low, as are the costs for The risks associated with net operating income, which I
monitoring the risks. Sagax’s greatest risk is that we misjudge have previously brought to you’re attention on in recent years,
access to funding. We therefore focus continuously on e fforts have been reduced thanks to the company’s well-diversified
to limit the refinancing risk. An important part of this work revenue base. I will elaborate on this below.
entails strengthening the company’s attractiveness to bond
investors and banks. Sagax’s rating, which reached Investment SAGAX’S REVENUE DIVERSIFICATION
Grade (Baa3) during the year, facilitates our efforts. In 2018, During Sagax’s build-up phase, long leases were of great im-
we issued a bond equivalent to SEK 5.2 billion with a matu- portance to the company’s supply of capital. Long leases were
rity of 5.4 years (fixed interest rate of 2.00% in EUR), which a cost-effective way of reducing the operational risk in the
was followed up in early 2019 by an issue corresponding to Group and thus of facilitating the supply of capital. I have
SEK 3.2 billion with a maturity of six years (fixed interest expected the average maturity of the company’s leases to
rate of 2.25% in EUR). These transactions would not have approach the rental market’s arithmetic mean value (possibly
been possible without Sagax’s more conservative capital struc- slightly adjusted for Sagax’s preference for long leases and for
ture and the rating that this entails. renegotiating in advance) and that a satisfactory risk profile
In 2018, the company’s equity rose by SEK 1,125 M would instead be achieved through a high degree of revenue
through new issues of Class D shares. As a consequence of the diversification. Over the past five years, the number of leases
changed capital structure and the choice of the issued class has increased from 412 to 1,545 and the number of tenants
from 325 to 1,000. At the end of 2018, 82% of the rental

value was attributable to 1,536 leases whose rental value was
less than 1% of the Group’s annual rent. Only three leases had
an annual rent exceeding 2% of the Group’s annual rent and
these jointly accounted for 8% of annual rent. The revenue
diversification also increased through 15% of the company’s
rental revenue now deriving from Paris and the Netherlands,
new markets in relation to 2014, which add another dimen-
sion to the revenue diversification. Overall, revenue diversi-
fication has increased significantly in recent years, whereby
individual leases have an increasingly lower impact on the
Group. It may also be noted that every acquisition leads to
increased diversification. Accordingly, it is probable that the
already low concentration in the portfolio will continue to
decline.
ORGANISATIONAL RISK
A source of Sagax’s relative success is its organisational struc-
ture and corporate culture, which I would briefly describe as a
combination of high customer and shareholder focus, a lack of
prestige and a considerable focus on execution. The organiza-
tion is growing in line with Sagax leveraging one of the great-
est strengths of its business model – its scalability – which
does entail a certain level of operational risk since the compa-
ny’s original DNA could be changed for the worse. However,
Sagax has a strong corporate culture and low employee turn-
over, which I consider to be a strength in this context. Those
who manage and ultimately shape this culture, the Board and
operational management, have worked at Sagax for a total of
75 and 23 years, respectively. The Board and management
are also collectively by far the company’s largest investor. My interesting since it can be influenced by the company’s prop-
other colleagues too make continuous net investments in the erty management. Sub-component (iii), however, is so con-
company year after year in addition to investments in Sagax’s siderably based on approximations and extrapolations that it
Incentive Plan. The organisation’s focus on the company as a gains a subjective nature. Subjectivity unfortunately increases
whole is unmistakable. That’s why I believe that Sagax will the risk of involuntary error. Changes in the value of Sagax's
retain its DNA despite the organisation constantly evolving. properties in 2018 can be approximatively broken down into
Our growth does not only entail risks. It also reduces the 1.6 percentage points for indexation, 1.8 percentage points for
company’s dependence on individual key employees from year de facto changes in the properties’ cash flow and the remaining
to year. 1.5 percentage points for changed assessments concerning, for
example, rental levels or yield requirements.
RETURNG ON THE PROPERTY PORTFOLIO
The total return on the property portfolio in 2018 was 11.7%, TREND IN PROFIT FROM PROPERTY MANAGEMENT
of which the yield accounted for 6.8 percentage points and Thanks in part to the simplicity of the business model, and
changes in value for 4.9 percentage points. The yield comes in thus its scalability, profit from property management rose
the form of cash and requires no further comments. Changes 20% to SEK 1,603 M. Cash flow from operating activities
in value are a more complex component. They derive from before changes in working capital rose to SEK 1,490 M. Both
changes in the estimated market value of the property portfolio the profit from property management and cash flow are the
and are a consequence of both subjective assessments and ob- highest reported by Sagax (for the fifteenth consecutive year)
jective observations. Changes in value may suitably be analysed and are only surpassed by the forecast for 2019. I am natu-
by the shareholders in three sub-components: (i) changes in rally delighted about this but it is a performance that should
value resulting from indexation, (ii) changes in value resulting be seen in context. Sagax only distributes one-third of profit
from changed cash flows, and (iii) changes in value resulting from property management to the shareholders. Accordingly,
from changed assessments. Sub-component (i) is primarily the shareholders reinvest all profit above this level without
objective. Sub-component (ii) is also primarily objective and is this increasing the number of shares. Sagax’s profit after tax
for the past five years has totalled SEK 11.0 billion at the effort that the entire company contributed to and it demon-
same time as dividend payments have amounted to SEK 1.7 strates the breadth of the company’s capacity to allocate
billion. The shareholders have thus permitted the company capital.
to gradually utilise SEK 9.3 billion more of their capital. For In respect of the risk associated with investing activities,
2018, the shareholders will allow SEK 2.9 billion of profit to a property investment’s risk is a function of price. Risk is not
be retained by the company after the proposed dividend. It a function of a property’s quality, type, location or physical
would be more remarkable if profit and dividend were not to characteristics. (I use "risk" synonymously as the “risk that
rise after capital contributions of that magnitude. That profit the shareholders will incur an irreversible loss of capital”.)
in a property company rises if the owners allow increasing A high price entails a high risk and vice versa. This applies
amounts of their equity to be utilised by the company is regardless of whether the investment is a residential property
something of a truism, a savings account with compounding in central Stockholm, a warehouse property in the Port of
interest would achieve this. The question is not if profit rises, Rotterdam or an office property in La Défense, Paris. The
but by how much? What return is generated on the equity risk is a direct consequence of the price paid by Sagax. My
that the company has not distributed? If Sagax can reinvest impression is that light industrial and warehouse properties,
equity at a return that exceeds the owners’ return require- which have long been overlooked, have become more popular
ment, value is generated by letting the company utilise the investments since 2016-2017, also for institutional capital.
additional equity. Reinvestment capacity is a matter that is This has resulted in higher prices (and thus risk) and port-
seldom discussed despite it being decisive to the creation of folio premiums. The reasons stated for the higher prices, in
shareholders’ wealth. Over the past five years, Sagax has rein- addition to the interest rate environment, are often associated
vested the equity that the owners have allowed to remain in with e-commerce's “last mile” requirements and, naturally,
the company at an average return of 15% based on profit from “the low risk.” I believe that caution is advisable.
property management and 28% including value changes and
tax. Without considering changes in value, the current earn- A NEW MARKET
ings capacity and dividend policy will increase the company's As shown above, growth is subjecting the company to con-
equity by SEK 4.5 billion over the coming five years. This im- tinuously increasing demands. Sagax’s financial capacity for
plies investments of approximately SEK 8–10 billion given the investments has grown in pace with the company, but attrac-
current capital structure, disregarding profit from property tive and available investments have not. And we do not expect
management from these additional investments. In my opin- it to; in fact, we expect the opposite due to the increased
ion, reinvesting equity at a high return year out and year in is i nstitutional interest. This factor, combined with Sagax’s
Sagax’s greatest challenge. slight aversion to large-scale transactions and their rare
occurrence in our market segment, obstruct the company’s
ABOUT INVESTING ACTIVITIES growth. To create the best possible prerequisites for investing
Sagax has no pre-set template for how capital is to be allo- activities, the company has endeavoured to broaden its geo-
cated. Our only objective is to allocate equity on the basis of graphic investment universe. The aim is to capitalise on the
the best possible risk-adjusted return. This could periodically fact that the various markets may be positioned in different
entail many investments in one market segment and few in phases and to gain access to a larger supply of potential invest-
another. If we do not find any attractive investments – Sagax’s ments. Sagax entered the Finnish market in 2004, a venture
target is to generate a 15% return on equity – we will also be that proved to be highly successful. Sagax decided to establish
comfortable managing what we already own while waiting for operations in Paris in 2014 and in Netherlands in 2016. These
new opportunities to arise. two markets now account for 15% of Sagax’s rental value and
In 2018, Sagax invested SEK 3.5 billion, of which SEK 3.0 are important to our growth. We continuously analyse and
billion pertained to property acquisitions and SEK 500 M to visit potential new markets and have now decided to open an
investments in the existing property portfolio. Investing in office in Barcelona to try to build an investment operation
the existing property portfolio tends to generate a somewhat with a focus on Madrid and Barcelona. The reason for our
higher return than acquisitions, reflecting the competition in interest is that Spain was severely impacted by the global fi-
the two investment situations. Unfortunately, there is limited nancial crisis of 2007-2008 and that rents for warehouse and
scope for investments in Sagax’s portfolio. At the same time, light industry premises thus declined by an estimated 70%.
there is intense competition for property acquisitions in all Rents for warehouse and light industry premises bottomed
of the company’s markets. To be able to find investments at out in 2016, in both Madrid and Barcelona, and started to rise
acceptable prices, Sagax executed many small transactions in during 2017. We estimate that nominal rents are currently
2018. A total of 48 properties were acquired in 36 separate approximately 50% lower than they were in 2005, three years
transactions. The average transaction amounted to approxi- before the global financial crisis. At the same time, the occu-
mately SEK 80 M, corresponding to 0.3% of the value of the pancy rate has reached about 95% in both markets. The pop-
company’s property portfolio. The largest transaction corre- ulations of Madrid (6.5 million) and Barcelona (4.8 million)
sponded to only 1.2% and no market segment accounted for increased by 1.2% and 0.8%, respectively, per year during
more than 26% of the transactions. Accordingly, this was an 2000-2018. From a macroe conomic perspective, Spain’s GDP
has risen by an average of 2.9% over the past three years. which is allocated among taxes, creditors, owners (dividends)
The forecast for 2019 is an additional 2.1% of GDP growth. and operating costs (suppliers) together with employees in
Unemployment has declined from 26.1% in 2013 to 13.9% in approximately equal portions. 54% of the economic value
February this year. Low vacancy rates and GDP growth and generated will be retained in the company and be reinvested.
the historically low level of market rents make the Barcelona Ultimately, I hope that this will lead to increased economic
and Madrid markets interesting. Just as in our other markets, value for all of the company’s stakeholders.
we intend to build this operation gradually. The investments
will initially be reported under the “Rest of Europe” segment. OVER-PAPERING
As already stated, reinvesting equity is a significant challenge
SUSTAINABILITY for the company. Another challenge is over-papering (Sw.
Refraining from short-term gains created at the expense of "Förpappring"), a wonderful word that is found in the Swedish
negative longer-term consequences, such as in the form of Language Council’s list of new words in 2018. The number
externalities, is a central theme in Sagax’s work, as is com- of regulations, laws and ordinances that the company has to
pliance with laws, regulations and conventions. Sagax looks follow is constantly increasing. For example, Sagax, whose op-
for investment markets that are adjudged to offer favourable erations can be comprehensively described in 10 minutes and
conditions for developing positively over a period of 10-20 that only has about 60 employees, now has one policy per 6.5
years and thus does not seek short-term gains. The properties employees as a consequence of today’s regulatory situation.
are managed from a long-term ownership perspective. By far While over-papering often stems from good intentions, each
the majority of my colleagues who worked for Sagax ten years policy, each form and each report takes time and energy from
ago have stayed with the company and continuity in terms of the day to day operations. The time that is spent updating,
shareholders, members of the Board and management has also formulating and monitoring policies cannot, for example, be
been clear. Approximately 70% of the company’s customers devoted to business development or strategy issues. The in-
choose to renew their leases with us and customer relation- direct costs incurred by the company and the risk of uninten-
ships are often very long. In my opinion, the trade-off be- tionally failing to comply with one of the newly added rules
tween short-term and long-term interests is managed without that the company must follow are rising continuously. There
difficulty, with priority consistently assigned to Sagax’s long- is also a risk that important policy issues will drown among
term – i.e. sustainable – value creation. less relevant ones. The over-papering trend may also increase
Sagax’s property management occurs primarily in North- the risk that corporate cultures that, like Sagax’s, are based on
ern European markets. The business has low levels of exter- own judgment, initiative and individual responsibility being
nalities. These primarily consist of the environmental impact replaced by cultures that are instead characterised by formal-
resulting from heating of premises. The carbon footprint of ism, bureaucracy and stagnation. I therefore hope that the
Sagax’s organisation was calculated as being 252 tonnes of company will not be subject to additional policies, analyses
carbon dioxide in 2018 (which has been fully compensated) and follow-up work.
and can be evaluated in relation to the relatively considerable
property management conducted by the Group. With respect THE MOST IMPORTANT
to environmental improvement measures, I believe that the I would like to emphasise that the company’s favourable earn-
solar panel projects that the company is studying are partic- ings performance and position for the future are the result of
ularly exciting. Sagax’s properties frequently have large and the many extraordinary efforts of highly skilled and dedicated
flat roofs that should be highly suitable for solar panels. I hope colleagues. Accordingly, on behalf of the Board of Directors
that sufficiently favourable conditions will be in place to en- and shareholders, I would like to express our gratitude to my
able us to start installing the first systems in 2019. colleagues for their hard work over the past year.
Compliance with laws and provisions is naturally a given.
With respect to the company’s regulatory framework, it Stockholm, April 2019
should be noted that Sagax has not stipulated any specific
purpose in its Articles of Association and therefore adheres David Mindus
to the Companies Act’s main rule. The company’s purpose is Chief Executive Officer
thus to generate profits for the shareholders. In my opinion,
the profit objective does not conflict with sustainable enter-
prise: Being a good employer, a good supplier and a well-liked
customer while ensuring that the company conducts itself in
an acceptable manner in society and attempts to limit its en-
vironmental impact are all fundamental conditions for Sagax’s
long-term ability to maximise profits for its shareholders.
The economic value created by the company is Sagax’s
raison d’être and its contribution to society. During 2018,
the economic value generated amounted to SEK 4.8 billion,
DIRECTOR'S REPORT
Business concept, goals and strategies
Sagax invests primarily in warehouse and industrial properties in regions characterised by stable
population growth and a diversified business sector, and focuses on achieving a high continuous yield
and strong cash flows. The company endeavours to enter into long-term leases with reputable and
creditworthy tenants.
BUSINESS CONCEPT FINANCIAL TARGETS

AB Sagax is a property company whose business concept is to The table below illustrates the outcome for the past five years
invest in commercial properties, primarily in the warehouse in relation to the financial targets.
and light industry segment.
STRATEGIES
COMPANY GOALS Investment strategy
The overriding objective is the long-term generation of the Sagax invests primarily in warehouse and industrial prop-
maximum possible risk-adjusted return to the company’s erties. Properties designed as warehouses and for light in-
owners. To achieve this objective, Sagax has set the following dustries are attractive investment opportunities, since they
business targets: generate a high yield combined with a low rate of new pro-
■■ O perations must generate a long-term sustainable return duction and stable occupancy rates. Sagax invests in add-on
and strong cash flows. acquisitions and in existing properties. Property acquisitions
■■ T he company is to continue to grow through property and investments in the existing portfolio aim to increase
acquisitions after taking into account the risk-adjusted cash flow and diversify rental revenue, thereby reducing the
return. company’s operational and financial risks. The chart on page
■■ C ash flows from the existing property portfolio are to rise 9 illustrates the trend in the properties’ market value and
more than inflation. lettable area.
Profit from property management per Class A and B share Financial targets
SEK % Five-year
10 50 Outcome 2018 average
Return on equity, measured over a five-
8 40
year period, should not fall below 15%
6 30 per year 24% 28%
Profit from property management per
4 20 Class A and B share should increase by a
minimum of 15% per year 16% 28%
2 10
0 0
2014 2015 2016 2017 2018
Profit from property management per Class A and B share,
rolling 12 months
Annual percentage growth rate, rolling 12 months
Objective for annual growth rate
READ MORE » Financing, see page 38.

The Sagax share and shareholders, see page 52.
DIRECTOR'S REPORT
Financing strategy Strategy for the rental market

The financial structure of Sagax is designed with a clear focus Sagax invests primarily in regions experiencing stable popula-
on operating cash flow and the interest coverage ratio. This is tion growth and that have diversified business activities. Sagax’s
expected to create both excellent prerequisites for expansion largest markets are Stockholm and Helsinki, which are regarded
and an attractive return on equity. The chart below shows as offering the most favourable conditions in the Nordic region
Sagax’s profit from property management and cash flow from for long-term growth. The risk of a decline in the occupancy
operating activities. As illustrated, cash flow corresponds rate and rent levels due to a weaker rental market is regarded
closely to profit from property management. The difference as relatively low due to the stable demographic growth and the
is due mainly to joint ventures where dividends rather than diversified business operations in these markets.
profit from property management are recognised as cash flow
from operating activities. SUSTAINABILITY ACTIVITIES
Sagax endeavours to have well-balanced fixed-interest and Sagax’s work with sustainability issues is a natural part of
debt maturity profiles to secure its operating cash flow. The operations and helps to achieve the company’s overall goals.
average fixed-interest period was 3.0 years (2.1) at year end. To achieve this goal the company operations are consistently
The average maturity period at year end was 3.6 (3.1) years. conducted with a long-term perspective.
The company has four classes of shares: Class A, B and D Sagax follows the Swedish Companies Act’s main rule as
common shares, and preference shares. The aim of the Class regards purpose and has therefore not stipulated any other
D shares, like the preference shares, is to attract investor cate- purpose in the Articles of Association than to produce a profit
gories that value steady ongoing dividends. for distribution to shareholders, see Chapter 3, Section 3, of
the Swedish Companies Act. In accordance with Chapter 6,
Management strategy Section 11 of the Swedish Annual Accounts Act, Sagax has
Sagax pursues efficiency and sustainability in its management decided to prepare a statutory Sustainability Report as a sepa-
strategy. The management strategy includes working actively rate report to its Annual Report, refer to pages 154–165.
to achieve long leases. This applies equally to new leases and With the aim of improving the quality of Sagax’s sus-
to the management of existing leases. The company’s policy is tainability reporting in terms of comparability, accuracy,
to abstain from maximising rent levels at all points of time in immediacy and clarity, Sagax has chosen to use the guidelines
favour of signing leases of a longer duration with solvent ten- provided by the Global Reporting Initiative (GRI) for inspira-
ants. This is regarded as being advantageous since it reduces tion. The GRI content index is presented on pages 156–157.
the risk of vacancies, while leading to lower costs for letting The sustainability areas that are most significant for Sagax
premises and adapting premises to tenant needs. to focus on, and that are prioritised in Sagax’s sustainability
activities, were evaluated in 2018. The areas deemed to be
Strategy for tenants most relevant from the perspective of both stakeholders and
Sagax endeavours to attract reputable and creditworthy ten- Sagax are compliance with laws and provisions including
ants. The company mainly enters into leases that exclude the rules and regulations for proper market communication and
cost of heating and hot water and that are thus only affected anticorruption, customer satisfaction, energy use and employ-
to a limited extent by changes in consumption or changed ment terms and conditions.
rates for such utilities as heating, electricity, property tax,
water and sewage.
Profit from property management and cash flow Market value and area of properties
SEK M 000s square metres SEK M
1,800 3,000 30,000
1,500 2,400 24,000
1,200
1,800 18,000
900
1,200 12,000
600
600 6,000
300
0 0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Profit from property management, rolling annual value Lettable area
Cash flow from operating activities before change in Market value
working capital, rolling annual value
Summary of property portfolio, see page 18. «READ MORE

The investment market, see page 11.
DIRECTOR'S REPORT
Sagax’s performance
Total yield on Class B Sagax share during the period 2009-20181) 2)
SEK
200
150
100
50
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Sagax B (Total return) Carnegie Real Estate Index

Source:
1) Sagax’s Class B shares were registered for trading on 4 April 2013. The previous share price has been calculated by dividing the previ-
ous share price for the Class A share by 11, corresponding to the bonus issue of Class B shares (10 for 1) that was implemented.
2) Subscription rights pertaining to Class D shares received free of charge were not taken into account.
2009 2010 2011 2012 2013

The financial markets start- 50% of the shares in In January 2011, trading in During 2012, a loan of SEK During 2013, the company
ed their recovery following Sagax’s joint venture, the Sagax share was moved 4.2 billion was refinanced issued its first Class B
the turmoil of 2008. Sagax Söderport, were acquired. to the Mid Cap list on prematurely, in parallel with shares. SEK 1.2 billion was
continued its growth, SEK 1.1 billion was net in- NASDAQ OMX Stockholm. implementation of a new net invested in properties.
with profit from property vested in properties. Sagax Market interest rates again issue of preference shares Sagax acquired 15%
management rising issued its first bond loan, started to fall after having in an amount of SEK 376 of the shares in Hemsö
29% compared with 2008. SEK 250 M. risen during 2010. M. Sagax was positioned Fastighets AB.
for continued growth.
2014 2015 2016 2017 2018

Rental revenue exceeded SEK 2.4 billion was net SEK 2.8 billion was net Net investment in properties SEK 3.4 billion was net
SEK 1 billion. SEK 1.9 billion invested in properties. 43 invested in properties. A amounted to SEK 1.7 billion. invested in properties.
was net invested in proper- properties were acquired total of SEK 3.7 billion was Foreign markets accounted Moody’s Investors Service
ties. Sagax opened offices and two properties divest- invested, of which Finland for 80% of the investments. raised Sagax’s rating to
and acquired its first prop- ed. It was announced in accounted for half. The first The debt ratio declined to Baa3 with a stable outlook.
erty in Paris. Historically low the year-end report that properties in the Nether- 50%. The company was Sagax issued its first bond
interest rates were noted. the forecast profit from lands were acquired. Class awarded a rating of Ba1 loan of EUR 500 M in the
property management for D common shares were with a positive outlook by European capital market
2016 would exceed SEK issued for the first time. Moody’s Investors Service, within the scope of a new
1 billion. one step below the invest- EMTN programme.
ment grade.
Equity Profit from property management and cash flow

SEK M
20,000 SEK M
1,800
15,000 1,500
1,200
10,000
900
600
5,000
300
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Profit from property management, rolling annual value

Cash flow from operating activities before change in
READ MORE » The Sagax share and shareholders, see page 54.
Multi-year summary, see page 62.
DIRECTOR'S REPORT
Market overview
Larger regions have higher economic, population and employment growth than
smaller regions. They also have more developed economies, with a more diversified business sector and
a lower risk of long-term vacancies in the property portfolio. Sagax has identified Stockholm, Helsinki,
Paris and the Randstad area of the Netherlands as regions with these characteristics.
BACKGROUND In 2018, transaction volume in Finland decreased to approx-

As a property company, Sagax is exposed to changes in the imately EUR 9.4 billion (10.2). In France, the transaction
market for the leasing of premises. Because the company has volume was estimated at EUR 32.5 billion (26.4) and in the
a high economic occupancy rate (95%) and an even rate of Netherlands at EUR 20.8 billion (20.3). The total transaction
lease maturity, exposure to changes in the rental market are volume in countries where Sagax has its primary portfolio
balanced in the immediate future. Exposure to the rental amounted to EUR 77.9 billion, corresponding to 28% of
market is the greatest in Stockholm and Helsinki, which are transaction volume in Europe.
among the markets in Europe that have the best potential for
long-term growth. The risk of a decline in the occupancy rate RENTAL MARKET
and rent levels due to a weaker rental market is regarded as Sagax’s primary exposure to the rental market is through
relatively low due to the stable demographic growth and the the properties situated in Stockholm and Helsinki. Com-
diversified business operations in these markets. bined, these markets account for 51% of Sagax’s rental value.
Sagax is also exposed to the investment market, the mar- The average lease term in Stockholm amounts to 4.5 (4.7)
ket for the acquisition and sale of properties. The market for years and in Helsinki to 5.0 (4.7) years. The properties in
property investments is affected to a considerable extent by Stockholm and Helsinki have leases that mean vacating
conditions in the credit market and by the general economic premises, new leases and renegotiations of existing leases
outlook. continuously take place.
The property markets in Stockholm, Helsinki, Paris and
INVESTMENT MARKET Randstad are considered among the European markets that
The market for warehouse and industrial properties consti- offer the best potential for long-term growth. Randstad is
tutes one of the smaller segments of the property market. the closely knit metropolitan region of central Netherlands,
Ownership of warehouse and industrial properties is frag- where the four largest cities – Amsterdam, Rotterdam, the
mented and no single player is dominant in the Nordic region. Hague and Utrecht – are located.
Few investors specialise in warehouse and industrial prop- One of the characteristics of these markets is a limited
erties, although interest in investing in the segment has in- supply of land for development for warehouse and industrial
creased in the past ten years. A large proportion of the s upply properties at the same time as centrally located areas for
usually comprises user properties, properties in which the warehouse and industrial properties are being converted for
operating company also owns the property. other uses to meet increased demand for new housing, offices
Sagax’s strategy is to grow through acquisitions of new and retail premises resulting from the region’s population
properties. The acquisitions are aimed at increasing cash flow growth. This supply and demand situation means that prem-
and diversifying rental revenue. ises in the warehouse and light industry segment are expected
to continue to report stable rent levels and high occupancy
Transaction market rates.
Parameters driving interest in property investments include
the general economic climate, interest rate scenario and access Growth
to equity and loan financing. Larger regions are expected to have higher economic growth,
Sweden and Finland, two markets of interest for inter- stronger employment growth and higher population growth
national property investments, account for 81% of Sagax’s than smaller regions. This applies both nationally and at a
property value. The total transaction volume for commercial European level. Larger regions have more developed econ-
properties in Sweden was estimated at about SEK 155 billion omies with companies in a large number of industries and a
(151) in 2018, which is a continuing high transaction volume. wider range of culture, retail and education. The pattern also
DIRECTOR'S REPORT
shows that larger regions (measured as regional GDP) are ing population growth account for 99% of Sagax’s Swedish
more affluent (measured as GDP). As shown in the chart be- property portfolio, of which the three metropolitan regions
low, Stockholm, Helsinki, Paris and Randstad are among the account for 90 percentage points. The Stockholm region
most prosperous regions in Europe. The chart is based on the accounts for 79% of the Swedish portfolio, corresponding
EU’s subdivisions of countries, where NUTS1 corresponds to to a property value of SEK 9.9 billion.
regions and NUTS2 to national area. The Stockholm region In Finland, regions experiencing population growth
as a national area (NUTS2) corresponds to the County of account for 96% of Sagax’s property value. The Helsinki
Stockholm. Each dot in the chart corresponds to a European region accounts for 86%, and population growth has averaged
region. More recent data than from 2017 is not yet available 1.0% since 2000. Among the regions with populations of be-
from Eurostat. tween 100,000 and 500,000, the Tampere and Turku regions
With EUR 65,000 per capita, Stockholm is the most noted population growth exceeding 0.6% between 1990 and
affluent of Sagax’s market areas, followed by Paris with EUR 2018.
58,000 per capita, Helsinki with EUR 53,000 per capita and In France, the trend is similar to that of Sweden and
Randstad with EUR 48,000. By comparison, it can be stated Finland, with faster population growth in the larger regions.
that the mean value in the 28 EU member countries is EUR In France, however, the smallest local labour markets are sig-
30,000 per capita. nificantly larger than in Sweden and Finland and few regions
The average annual population growth in the three failed to show positive population growth during the period
Swedish metropolitan regions – Stockholm, Gothenburg 2000–2017. Otherwise, the trends resemble those in Sweden
and Malmö – was 1.0% during the period 2000–2017. Of and Finland. Paris, which has grown by just over 1.3 million
Sweden’s 52 regions with a population of less than 100,000, inhabitants since 2000, is one of the fastest growing regions
only nine regions showed population growth compared with in Europe in absolute terms, with population growth of 0.6%
2000. Sagax’s exposure to the underlying rental market varies per year.
between different geographic markets. Regions experienc-
Regional BNP and BNP/capita per region 2017
Regional GDP (EUR M)
250,000
Milano Randstad Paris
Cataluña München Inner
Madrid London
Lyon Düsseldorf
Stuttgart
200,000 Rom
Darmstadt
Köln
Outer
London
Dublin
150,000 Stockholm
Karlsruhe Köpenhamn
Berkshire,
Buckinghamshire
and Oxfordshire Hamburg
100,000
Wien
Helsinki Oslo
Brussels
Bergen
50,000 Luxembourg
0
10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000
0
Regional BNP/Capita (€)
Source: Eurostat and Evidens
READ MORE » Summary of the Sagax property portfolio, see page 18.
DIRECTOR'S REPORT
Annual percentage population growth in Sweden’s Percentage population growth in regions of France
local labor markets 2000–2018 94% (departments) by size category 2000–2018
% % Sagax 100 %
1.0 Sagax 0% Sagax 5% Sagax 1% Sagax 4% Sagax 90% 1.0
0.8
0.5
0.6
0.0
0.4
–0.5
0.2
–1.0 0.0
0–10,000 10,000–50,000 50,000–100,000 100,000–500,000 500,000– –250,000 250,000–500,000 500,000–750,000 750,000–1,000,000 1,000,000–
Size category (number of inhabitants) Size category (number of inhabitants)
Population growth Population growth
Share of Sagax’s rental value Source: Statistics Sweden and Evidens Share of Sagax’s rental value Source: Insee and Evidens
Annual percentage population growth in Finland’s Percentage population growth in regions

local labor markets 2000–2018 of Netherlands 2000–2018
% 93% % Sagax 100%
2.0 1.0
Sagax 0% Sagax 2% Sagax 5% Sagax 30% Sagax 63%
1.5
0.8
1.0
0.5 0.6
0.0
–0.5 0.4
–1.0
0.2
–1.5
–2.0 0.0
−500,000 500,000-1,000,000 1,000,000-1,300,000 1,300,000-2,600,000 2,600,000-
0–10,000 10,000–50,000 50,000–100,000 100,000–500,000 500,000–
Size category (number of inhabitants) Size category (number of inhabitants)
Population growth Population growth
Share of Sagax’s rental value Source: Statistics Finland and Evidens Share of Sagax’s rental value Source: Statistics Netherland
and Evidens
120 largest labor markets in Europe

%
40
Stockholm
30 Paris Randstad
Helsinki
20
10
0
Proportion employed
in the highly productive
service sector
Market area Stockholm, see page 26. «READ MORE

Market area Helsinki, see page 28.
Market area Paris, see page 30.
Market area Netherlands, see page 31.
DIRECTOR'S REPORT
The Netherlands, a densely populated country, does not show sectors, such as finance and corporate services. Stockholm is
the same demographic growth pattern, with lower growth one of the European regions with the largest proportion of
in smaller regions. The reason for this is the relatively short employees in this service sector. As shown by the chart on
distances and extensive commuting within the country, more page 13, Helsinki, Paris and Randstad also have significant
extensive than in Sweden, for example. The country may be proportions in the highly productive service sector, compared
viewed as a single local labour market and it is not possible to with other major labour markets in Europe.
distinguish any smaller local labour markets. What is known as
the Randstad region has accounted for half of the population Market dynamics
growth of 12% since 2000, equal to annual population growth A combination of healthy growth and minor changes in sup-
of 0.6%. ply benefits the demand for premises in the warehouse and
The educational level among the population is an import- light industry segment. Stockholm and Helsinki have histor-
ant factor for a region’s growth. Access to universities and ically shown a strong population trend and healthy economic
colleges influences regional growth and regions with a high growth. Viewed in terms of relative population growth,
educational level also tend to display a more varied industry Stockholm and Helsinki belong to the more affluent regions
structure, with a more distinct focus on knowledge-intensive that have experienced the highest growth since 2000; see the
sectors. According to Eurostat, 62% of people in the 30–34- table below. Paris and Randstad also show significantly higher
year age category in Stockholm had university/college educa- growth than the mean average for all regions in the EU. Pop-
tion in 2016, a rise of more than 50% since 2000. In Helsinki, ulation growth is highly significant for demand for warehouse
the proportion with a university/college education in the same and light industry premises.
age category was 53%, in Paris 60% and in Randstad 52%, Since 2000, the number of inhabitants in the Stockholm
compared with an average of 39% in the EU. region has grown by an annual average of 1.4%. In total, the
A high educational level in a region usually co-varies with number of inhabitants in the Stockholm region has risen by
a strong and growing service sector, which is important for 28% during the period, corresponding to 646,100 people.
economic growth, particularly in highly productive service
Population growth in European regions 2000–2018 Regional BNP per capita 2017
Population Population Population Euro
growth growth growth 70,000
2000–2018 2000–2018 2000–2018
60,000
Region (%) (% per year) (total)
50,000
Luxembourg 39 1.8 233,800
40,000
Oslo 32 1.6 413,500
Stockholm 28 1.4 646,100 30,000
Inner London (since 2002) 24 1.4 872,200 20,000
Brussels 26 1.3 309,300 10,000
Dublin (since 2012) 7 1.2 170,600 0

Stockholm Paris Helsinki Randstad Median EU
Madrid 23 1.2 1,499,100
Vienna 22 1.1 415,000
Outer London (since 2002) 19 1.1 1,009,500
Helsinki 20 1.0 331,100
Copenhagen (since 2007) 11 1.0 207,000
Barcelona 15 0.8 735,100
Lyon 17 0.9 1,098,300 Annual BNP growth 2000–2017
Munich 15 0.8 709,900 %
4.0
Rome 15 0.8 895,400
3.5
Berkshire, Buckinghamshire
3.0
and Oxfordshire 15 0.8 360,600
2.5
Randstad 12 0.6 983,300
2.0
Milan 12 0.6 1,191,600
1.5
Paris 11 0.6 1,286,800
1.0
Hamburg 7 0.4 135,100
0.5
Darmstadt 7 0.4 276,700 0.0
Stuttgart 5 0.3 220,600 Stockholm Helsinki Paris Randstad EU-28
Cologne 4 0.2 199,100 BNP growth Source: Eurostat and Evidens

Karlsruhe 4 0.2 124,900
Düsseldorf –1 –0.1 –64,800
Median, all EU regions 5 0.3 26,415,200
DIRECTOR'S REPORT
The positive trend also applies to economic growth. The The supply of development land in prime locations is lim-
charts below show GDP per capita and annual regional GDP ited, while demand for housing, offices and retail premises
growth in Stockholm, Helsinki, Paris and Randstad from is increasing. These factors lead to incentives for owners of
2000 to 2017. With annual GDP growth of 3.6% and pop- warehouse and industrial properties to convert their premises
ulation growth of 1.2% since 2000, the Stockholm region, for other uses and thus meet demand from stakeholders with
for example, is one of the most successful regions in the EU. high payment capacity. The conversion pressure means that
Helsinki, Paris and Randstad have also outperformed the EU the supply of premises for warehouse and light industry is
average. declining per capita. The occupancy rate for warehouse and
The two map illustrations below show GDP per capital industrial properties is thus expected to remain high in the
in the EU and GDP growth in the EU. They show that Sagax foreseeable future in metropolitan regions with high popula-
invests in mature markets with high GDP per capita. tion growth and stable economic development.
Growth in the largest and most affluent regions has been
favourable since 2000 in terms of both economic performance Supply changes in Stockholm
and population growth. Demand for housing, offices and For Stockholm, growth and thus the consequential conversion
retail premises increases in line with population growth. This pressure has been analysed on the basis of how these factors
is leading to existing warehouse and industrial properties affect the supply of warehouse and light industry premises. In
being used for other purposes. While the supply of existing previous years, an equivalent analysis was also conducted for
industrial and warehouse premises is declining, production of Helsinki, the results of which correspond well with the trend
new premises of this type is limited. in Stockholm.
The tenant categories found in warehouse and light In Stockholm, 24 business zones with a focus on the
industry premises often have relatively low profit margins property taxation categories of warehouses, light industry and
that do not allow the rent level required for newly produced industrial offices were studied during the period 1998–2018.
premises in metropolitan regions. A study commissioned by The studied areas have been divided into three sub-markets:
Sagax showed that the average profit margin was substantially central areas, inner suburbs and outer suburbs (see below).
higher among companies active in dedicated office areas Between 1998 and 2018, the supply of warehouse, light in-
(10–25%), compared with companies in areas dominated by dustry and industrial offices in Stockholm increased by a total
the warehouse and light industry segment (4–7%). As a result, of 3% at the same time as population growth was 30%. The
companies in the latter category look for areas with existing differences in the change of supply have been considerable
and more inexpensive premises. between the various sub-markets.
GDP per capita (EUR) Growth in regional GDP, %

per year
– 15,000 – 1.00
15,000 – 20,000 1.00 – 1.50
20,000 – 25,000 1.50 – 2.00
25,000 – 30,000 2.00 – 2.50
30,000 – 35,000 2.50 – 3.00
35,000 – 40,000 3.00 – 3.50
40,000 – 45,000 3.50 – 4.00
45,000 – 50,000 4.00 –
50,000 – 55,000
55,000 –
DIRECTOR'S REPORT
Centrally located business zones showed a 27% decrease in areas of Jordbro (southern Stockholm) and Rosersberg and
supply during the period. The change in supply is particularly Brunna (northern Stockholm).
clear in Södra Hammarbyhamnen and in Mariehäll, where If the analysis is divided by type of premises, primarily
warehouse, light industry and industrial offices have had to premises for light industry have been divested or converted
make way for homes and office buildings. Similarly, the sup- for other uses. The supply of premises for light industry in
ply of premises in Globen/Johanneshov will decline when Stockholm has declined a total of 28%. The supply of indus-
what is known as Söderstaden is developed. trial offices has declined 5%, while the supply of warehouse
In inner suburbs, the supply of premises for light industry premises has increased 24%.
has declined by 37% at the same time as warehouse premises
have grown by 17%. In total, floor area has declined 7% in Rent trends
Stockholm’s inner suburbs. In the three outer suburbs, supply The combination of healthy growth and minor changes in sup-
has grown 85%. The growth is primarily attributable to newly ply benefits the demand for premises in warehouse and light
produced logistics and warehouses facilities, primarily in the industry segment. The rent trend for warehouse and industrial
ARLANDA
FLYGPLATS
Sigtuna
1 Bredden/InfraCity
12
2 Eriksberg
3 Farsta
4 Globen/Johanneshov
5 Hagalund
6 Jordbro Upplands Väsby
7 Kista/Akalla 1
8 Kungens Kurva 24
9 Lunda
10 Länna
11 Mariehäll Sollentuna
Täby
12 Rosersberg
13 Segeltorp/Sätra Järfälla 17
14 Skärholmen 7
19
15 Solna Station 9
16 Södra Hammarbyhamnen
5
17 Tureberg industrial zone BROMMA 11 15
AIRPORT
18 Ulvsunda 18
20
19 Veddesta
20 Värtan
Stockholm
21 Västberga 16
22 Årsta 21 22 4
14
23 Älvsjö 13
8
24 Brunna 23
Huddinge
3
Central areas Tyresö
2
Inner suburbs
Botkyrka
10
Haninge
Supply change 1998–2018 in Stockholm (area)
Type of premises
Light Industrial
Area Warehouse industry offices Total
Central areas –27% –36% –18% –27%
Inner suburbs 17% –37% –7% –7%
Outer suburbs 127% 12% 37% 85%
Total 24% –28% –5% 3%
The change in the population during the period was +30%.

READ MORE » Market area Stockholm, see page 26. Source: Statistics Sweden
Sagax’s properties in Stockholm, see page 126. and Evidens
DIRECTOR'S REPORT
properties is stable; see chart on page 17 concerning infla- The charts below illustrate that rent trends for warehouse and
tion-indexed rents in Stockholm, Helsinki, Paris and Randstad. industrial properties in the four regions correlate only slightly
In Stockholm, the rent level has been moderately rising, to rent trends for offices and that the rent level for warehouse
with low variation since the mid-1990s and has now recovered and industrial premises has shown low covariance since the
to the level of 1990. In Helsinki, rent levels have been rising start of the measurement period. Also for occupancy rates,
moderately with minor fluctuations since 1994. However, warehouse and industrial properties generally show less vari-
the growth rate in Helsinki has been somewhat more robust ation over time compared with occupancy rates for offices.
than in Stockholm. The reported time series for Paris extends Over the past ten-year period, the occupancy rate for ware-
over the period 2005–2017 and also demonstrates the stable house and industrial premises in the Stockholm region has
rent levels for the warehouse and light industrial properties exceeded 90% and is rising.
segment compared with offices. In Randstad, rent levels have
been stable since 2010 with a moderate rise since 2015.
Rents in Stockholm 1990-2018 in 1990 prices Rents in Helsinki 1994–2018 in 1994 price
SEK per sqm EUR per sqm
3,000 300
2,500 250
2,000 200
1,500 150
1,000 100
500 50
0 0
1990 1995 2000 2005 2010 2015 2018 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Warehouse/industry in Stockholm City Warehouses in Helsinki Source: Strateg, JLL

Offices in Stockholm City Offices in Helsinki CBD Cushman & Wakefield and Evidens
Offices in Stockholm inner city Source: Evidens
Rents in Paris 2005-2018 in 2005 prices Rents in Randstad 2010–2018 in 1990 prices
EUR per sqm EUR per sqm
700 450
600 400
500 350
300
400
250
300 200
200 150
100
100
50
0 0
2006 2008 2010 2012 2014 2016 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018
Offices in Paris CBD Other offices outside southern ring
Offices in La Defense Warehouse/light industry inside first ring Offices in Amsterdam CBD
Other offices inside Warehouse/light industry between Warehouse/light industry Randstad excluding Shiphol
northern ring first and second ring Warehouse/light industry outside Randstad
Source: JLL
Source: Nexity and BNP
DIRECTOR'S REPORT
Summary of the Sagax property portfolio
At 31 December 2018, Sagax’s property portfolio comprised 512 properties with a total lettable area
of 2,850,000 square metres. The two largest market areas are Stockholm and Helsinki, where 56% of
the market value and 51% of the rental value is concentrated. The annual rental value and contractual
annual rent amounted to SEK 2,510 M and SEK 2,378 M, respectively. The economic occupancy rate
and the remaining average lease term were 95% and 6.0 years, respectively.
MARKET AREAS age and defray costs for care-taking and maintenance of the
Sagax’s property portfolio is divided into the market areas properties, under what are known as triple net leases. In the
of Stockholm, Helsinki, Finland, university cities, Paris, the portfolios in Stockholm, Helsinki and Paris, the contractual
Netherlands, Rest of Sweden, Rest of Finland and Rest of party for the supply of utilities, meaning heating, electric-
Europe. Sagax’s largest market area, Stockholm, represents ity and water supply and sewer systems, differs from other
34% of the total market value and 27% of rental value, see the market areas. Most properties outside Stockholm, Helsinki,
following table and charts. Paris and the Netherlands have only one tenant per property.
These properties are usually leased under long-term triple
LEASE STRUCTURE net leases. The percentage of rental revenue related to leases
Sagax mainly enters into leases that exclude the cost of heat- with rent supplements linked to the Consumer Price Index
ing and hot water. This means the tenant accounts for the (CPI) or similar indexes amounted to 99% (99) at year end.
costs of such items as heating, electricity, property tax, wa- Sagax has a diverse lease structure, which better allows
ter and sewage, in addition to the contractual rent. Accord- the company to maintain an even occupancy rate. To further
ingly, Sagax is only affected to a limited extent by changed reduce the risk of lower rental revenue, Sagax endeavours to
costs due to changes in consumption or changed rates for create long-term relationships with the company’s existing
such utilities as heating and electricity. Outside Stockholm, tenants and to achieve favourable diversification in terms of
Helsinki, Paris and the Netherlands, tenants normally man- the length and size of its leases.
Market value of properties Group’s rental value

Rest of Europe 5% (SEK 1,560 M) Rest of Europe 5% (SEK 131 M)
Rest of Finland 8% (SEK 2,373 M) Rest of Finland 9% (SEK 226 M) Stockholm 27%
Stockholm (SEK 689 M)
Rest of Sweden 8% Rest of Sweden 8%
34% (SEK 9,821 M)
(SEK 2,392 M) (SEK 213 M)
Netherlands 6% Netherlands 7%
(SEK 1,817 M) (SEK 168 M) Helsinki 24%
Helsinki 22% (SEK 599 M)
Paris 7% (SEK 1,995 M) (SEK 6,333 M) Paris 8% (SEK 197 M)
11% (SEK 286 M)
9% (SEK 2,732 M)
Summary of property portfolio
31 Dec 2018 2018

Property
Market value Rental value expenses Net
No. of Lettable SEK SEK Economic Rental Other SEK operating
prop- area, per per occupancy revenue, revenue, per income,
Market area erties sqm SEK M sqm SEK M sqm rate SEK M SEK M SEK M sqm1) SEK M1) Yield1)
Stockholm 81 644,000 9,822 15,200 689 1,070 95% 655 7 –131 –204 512 5.2%
Helsinki 71 575,000 6,333 11,000 599 1,042 89% 533 2 –119 –207 395 6.8%
Finland, university cities 62 304,000 2,732 9,000 286 941 97% 277 – –46 –151 204 8.4%
Paris 48 219,000 1,995 9,100 197 900 97% 192 2 –41 –189 129 7.2%
Netherlands 33 222,000 1,817 8,200 168 757 95% 159 4 –7 –30 123 8.5%
Rest of Sweden 47 407,000 2,392 5,900 213 523 99% 211 – –11 –27 195 8.2%
Rest of Finland 150 338,000 2,373 7,000 226 669 98% 221 15 –27 –80 213 8.4%
Rest of Europe 20 140,000 1,560 11,100 131 936 99% 130 – –9 –62 115 7.5%
Sub-total 512 2,850,000 29,024 10,200 2,510 881 95% 2,378 30 –391 –137 1,886 6.8%
Unallocated – – – – – – – – – –17 –6 –17 –

Total 512 2,850,000 29,024 10,200 2,510 881 95% 2,378 30 –408 –143 1,869 6.8%
1) Expenses for property administration are included in recognised property expenses.
READ MORE » Market overview, see page 11.
DIRECTOR'S REPORT
Sagax’s contractual annual rent at the end of the period was TENANTS
distributed between 1,545 leases, with about 1,000 tenants. Sagax’s tenants operate in a variety of industries. 19%
The table below presents the size of Sagax’s leases in relation of Sagax’s contractual rental revenue comes from tenants in
to the Group’s contractual annual rent at the end of the period. the manufacturing industry, 12% in the automotive industry,
The table shows that 1,536 leases each had a rental including sales, service and manufacturing and 12% from
value of less than 1% of the Group’s contractual annual rent. companies with food-related operations.
The total rental value for these leases accounted for 82% of Diverse tenant industries is considered to lower the risk of
Sagax’s contractual annual rent. In addition, Sagax is party vacancies and rent losses. The main industries are presented
to six leases with a rental value corresponding to 1–2% of the in the pie chart below.
Group’s contractual annual rent. Combined, these leases total At year end, the rental value attributable to the ten largest
9% of Sagax’s contractual annual rent. Only three of Sagax’s tenants corresponded to 32% of the total contractual rental
leases had an annual rental value that accounted for more revenue, distributed among 239 separate leases. The average
than 2% of the Group’s rental revenue. These leases together term for these leases was 8.6 years. The single largest tenant is
represented 8% of the Group’s contractual annual rent. the US medical products group Baxter, which has operations
According to Sagax’s management strategy, the company in more than 100 countries. At year end, Baxter accounted for
strives to secure long-term leases and an even distribution of 6.2% of Sagax’s contractual rental revenue. An additional nine
contract maturities over the years. Sagax works actively to tenants each pay annual rent exceeding 2% of the company’s
agree in advance on lease extensions. Company policy is to total annual rents. The five largest tenants in alphabetical
abstain from attempting to maximise rent levels in favour of order are Baxter Group, BE Group, Kesko, Nokia and Sanom-
reaching longer terms. This is deemed to reduce the risk of ala. The largest tenants by market area are presented in the
significant variations in the Group’s occupancy rate. descriptions of market areas on pages 26–34.
Lease terms Specification of leases

Contractual annual rent Average
No. of
Year of expiry leases Area, sqm SEK M Share Share of contractual Lease
contractual Contractual No. annual rent, term,
2019 679 246,000 249 10%
annual rent annual rent Share of leases SEK M years
2020 248 343,000 304 13%
>2% 199 8% 3 66 12
2021 148 277,000 241 10%
1–2% 224 9% 6 37 6
2022 141 296,000 290 12%
<1% 1,954 82% 1,536 1 5
2022 113 213,000 216 9%
2,378 99% 1,545 2 6
>2023 216 1,334,000 1,079 45%
Total 1,545 2,708,000 2,378 100%
Lease term Industry exposure

No. of No. of Lease
Market area properties leases term, years
Other, 12 % Manufacturing
State, municipality, 3 % industry, 19 %
Stockholm 81 386 4.5
Logistics, 4 %
Helsinki 71 358 5.0 Media, 5 % Food and drink, 12 %
Finland, university cities 62 279 5.4 Building products, 5 %
Paris 48 163 5.9 Production properties, 6 %
Netherlands 33 85 6.3 IT, development, Automotive, 12 %
education, 6 %
Rest of Sweden 47 51 9.3 Medicine,
Service for properties, 7 %
Rest of Finland 150 187 5.4 medical technology, 8 %
Rest of Europe 20 36 14.5
Total/average 512 1,545 6.0
Risks and risk management, see page 50. «READ MORE
DIRECTOR'S REPORT
YIELD LEASE ACTIVITIES

The yield reported by Sagax on properties was 6.8% (6.9). The bar chart below shows that Sagax had a low tenant turn-
The following chart illustrates how yield for 2018 was im- over rate of 4.1% (3.2) during 2018. The turnover rate was
pacted by investments, sales, changes in the value and cur- calculated as the contractual annual rent for vacating tenants
rency effects. during the year in relation to average contractual annual rent
for the year.
RENT LOSSES The net tenant occupancy chart below shows that net
Historically, Sagax has reported low rent losses; see table be- occupancy in 2018 was – 0.1% (0.8). Net occupancy was cal-
low. Rent losses in 2018 amounted to SEK 1.6 M (0.1). Losses culated by comparing contractual annual rents for occupying
corresponded to 0.1% (0.0) of sales during the year. and vacating tenants during the year with the average rental
value for the year. The economic occupancy rate rose during
the year to 95% (94), due to changes in the composition of
the property portfolio.
The chart showing rental value and economic occupancy
rate clearly illustrates how the occupancy rate has exceeded
90% between 2009 and 2018.
Rent losses
Rent losses, Percentage of Economic
Year SEK M sales, % occupancy rate, %
2009 0.2 0.0 95
2010 0.1 0.0 94
2011 0.2 0.0 93
2012 2.5 0.3 93
2013 0.0 0.0 92
2014 0.2 0.0 94
2015 0.6 0.0 96
2016 0.1 0.0 94
2017 0.1 0.0 94
2018 1.6 0.1 95
Tenants, net occupancy Tenant turnover rate

% %
4 6
3 5
2 4
1 3
0 2
–1 1
–2 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Performance of property portolfio 2018 Rental value and economic leasing rate
+0.2%
SEK per sqm, bars %, curve
1,000 100
Yield: 6.9% –0.3% 0.2% 0.0% 0.0% 0.0% 6.8%
23,771 1,265 3,026 456 –45 551 29,024 800 90
35,000
30,000 600 80
25,000
400 70
20,000
15,000 200 60
10,000 0 50
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
5,000
0 Rental value, SEK per sqm
Market value Value Acquisitions Investments Divestments Currency Market value Leasing rate, %
of investment changes in existing effect of investment
properties propertiest properties
2017-12-31 2018-12-31
DIRECTOR'S REPORT
VACANCY RATE Future vacancy changes

Change in economic vacancy rate At year end, notice of termination had been served for leases
The economic occupancy rate amounted to 95% (94) at year with a rental value of SEK 49 M (41), of which notice of
end 2018. During the year, the vacancy value rose SEK 89 M renegotiation accounted for SEK 5 M (0) and notice of vacat-
(60) due to tenants vacating premises and declined SEK 86 M ing the premises for SEK 44 M (41). Of the leases for which
(75) due to new lettings. Discounts provided on a fixed-term notice of vacating the premises had been received, vacancies
basis amounted to SEK 19 M (16) on an annual basis at year corresponding to SEK 26 M will occur in 2019, SEK 1 M in
end, up SEK 3 M during 2018. The terms for the discounts 2020 and SEK 18 M in 2021 or thereafter. The rate of va-
are described in the table below. Stockholm and Helsinki cating premises is described in the table below. New lettings
accounted for 75% (80) of the vacancy value. The rental mar- that have not yet been occupied reduced the adjusted vacancy
kets in Stockholm and Helsinki have shorter lease terms and value by SEK 29 M (9).
the turnover of tenants is higher, thus leading to relocation The adjusted closing vacancy value was SEK 152 M (154).
vacancies. SEK 15 M (32) was due to the aforementioned increase in no-
The closing vacancy value was SEK 132 M (122), a net tice of vacating premises, but which have not yet been vacated
increase of SEK 10 M during the year. The properties with and new lettings which remain unoccupied.
vacancies that were acquired in 2018 increased the vacancy
value by SEK 6 M. The closing vacancy value was reduced by
SEK 5 M due to property sales.
At year end, the total vacancy rate in the portfolio in
terms of area was 5% (5).
Vacancies, 1 January 20191)
No. of Lettable area, Rental value, Vacancy value, Economic Vacant Vacancy rate
Area properties sqm SEK M SEK M vacancy rate area, sqm by area
Stockholm 81 645,000 689 33 5% 30,000 5%
Helsinki 71 575,000 599 66 11% 67,000 12%
Finland, university cities 62 304,000 286 10 3% 13,000 4%
Paris 48 219,000 197 6 3% 5,000 2%
Netherlands 33 222,000 168 9 5% 11,000 5%
Rest of Sweden 47 407,000 213 2 1% 2,000 0%
Rest of Finland 150 338,000 226 5 2% 13,000 4%
Rest of Europe 20 140,000 131 1 1% 1,000 1%
Total 512 2,850,000 2,510 132 5% 141,000 5%
1) The vacancy value and vacancy rate take into account vacancies as well as discounts provided to tenants.
Terms for discounts provided Vacancy changes

Year of expiry SEK M SEK M 2018 2017
2019 14 Opening vacancy for each year 122 121
2020 1 Vacancies 89 60
2021 2 New lettings –86 –75
2022 0 Change in discounts provided 2 5
2023 1 Vacancy value, acquired properties 6 22
>2024 1 Vacancy value, sold properties –5 –8
Total 19 Demolition of buildings – –5
Change in exchange rates 4 2
Leases terminated for vacancy Closing vacancy value 132 122
Rental value, Terminated for renegotiation 5 0

Year of vacancy No. of leases SEK M
Terminated lease, not vacated 44 41
2019 37 26
New letting, not occupied –29 –9
2020 3 1
Adjusted closing vacancy value 152 154
2021 2 17
2024 1 1
Total 43 44
Sagax’s market areas, see pages 26–34. «READ MORE
DIRECTOR'S REPORT
Changes in the property portfolio
In 2018, Sagax invested SEK 3,482 M, of which SEK 3,026 M

referred to acquisitions and SEK 456 M to investments in the existing property portfolio.
Properties were divested for a total of SEK 24 M during the year.
Net investments amounted to SEK 3,437 M.
PROPERTY ACQUISITIONS PROPERTY SALES

In 2018, Sagax acquired 48 (91) properties for a total of In 2018, 31 properties with total lettable area of 43,400
SEK 3,026 M (1,382); see below. In Finland, France and the square metres were divested. The total sales price was SEK
Netherlands, properties were acquired for a total of SEK 24 M. The property sales are reported in the table on page 21.
2,736 M, corresponding to 90% of the Group’s property At year end, Sagax had entered into agreements to sell
acquisitions during the year. properties in Sweden and France for a total of SEK 255 M
At the end of the year, agreements were signed for eight which will be vacated after the end of the year.
property acquisitions for a total of SEK 410 M in Finland and
France. Possession of these properties had not yet been taken
at year end.
Property acquisitions January–December 2018
Property Municipality Segment Lettable area, sqm

Murmästare-Ämbetet 2 Stockholm Stockholm 7,937
Konsumenten 1 Stockholm Stockholm 7,896
Klingan 3 Huddinge Stockholm 1,830
Råfilmen 1 Stockholm Stockholm 1,410
Veddesta 2:42 Järfälla Stockholm 4,380
Mänkimiehentie 4 Espoo Helsinki 18,440
63 Grande rue Survilliers Paris 39,753
Rue de la Prairie Villebon-Sur-Yvette Paris 6,300
Chroomstraat 140 Zoetermeer Netherlands 7,240
Huis ter Heideweg 18-56 Zeist Netherlands 20,258
Innovatieweg 12 Terneuzen Netherlands 2,626
Kwartelweg 1 Moerdijk Netherlands 6,458
Hallitie 2 Oulu Finland, university cities 3,578
Lumijoentie 2 Oulu Finland, university cities 6,778
Mittarikuja 5 Oulu Finland, university cities 7,200
Moreenikuja 2 Oulu Finland, university cities 6,018
Vihikari 10 Kempele Finland, university cities 18,087
100 Rue de Reckem Neuville-en-Ferrain Rest of Europe 17,397
First quarter 190,011
Ahjokatu 26 Jyväskylä Finland, university cities 2,252

Het Zuiderkruis 11 Den Bosch Netherlands 4,270
Admiraal de Ruyterstraat 2 Schiedam Netherlands 10,683
Grasbeemd 12 Helmond Netherlands 2,711
Lieudit “La Fosse Montalbot” - 26 Chemin du Port Brun Vigneux-sur-Seine Paris 2,076
56 Boulevard de Beaubourg Emerainville Paris 999
4 rue Galvani Massy Paris 803
Second quarter 27,539
Klinkkerikkari 2 Vantaa Helsinki 6,286

Metsälehmuksentie 6 Jyväskylä Finland, university cities 13,924
Patamäenkatu 7 Tampere Finland, university cities 25,815
9 rue du Buisson aux Fraises Massy Paris 8,481
Groothandelsweg 5 Delfgauw Netherlands 3,713
4 rue des Alpes, Zone d'Activitié Est Lyon Rest of Europe 2,749
Third quarter 65,600
READ MORE » Statement of cash flows, see page 82

Transaction-related risks, see page 50.
DIRECTOR'S REPORT
Property acquisitions January–December 2018

Tikkurilantie 5 Vantaa Helsinki 62,297
Metsäravio 2 Jyväskylä Finland, university cities 1,113
Hautalankatu 19 Tampere Finland, university cities 2,818
ZAC Le Bois Rochefort Cormeilles-en-Parisis Paris –
20-24 rue de Ballon Noisy-Le-Grand Paris 5,831
4 route de Paray Wissous Paris 2,250
Ekkersrijt 7501 Son en Breugel Netherlands 3,499
Esp 100 Eindhoven Netherlands 3,670
Kopersteden 1 Enschede Netherlands 20,713
Proostwetering 30 Utrecht Netherlands 8,503
Fourth quarter 119,343
Total 402,493
Property sales January–December 2018

Hillerstorp 3:106 Gnosjö Rest of Sweden 23,450
Pertuntie 1 Tuusula Helsinki 210
Helsingintie 10 Karkkila Rest of Finland 320
Helsingintie 25 Karkkila Rest of Finland 588
Jousitie 29 Joutsa Rest of Finland 846
Keskustie 7 Lohja Rest of Finland 170
Naarkoskentie 1 Pukkila Rest of Finland 235
Oklaholmankatu 1 Kemi Rest of Finland 658
Perttulantie 5 Ypäja Rest of Finland 450
Savontie 21 Rautavaara Rest of Finland 793
Turuntie 1 Aura Rest of Finland 1,115
Hauhontie 11 Hämeenlinna Rest of Finland 868
Kurkelankatu 2 Forssa Rest of Finland 502
First quarter 30,205
Keskuskatu 7 Mänttä-Vilppula Rest of Finland 1,022

Rautatienkatu 19 Iitti Rest of Finland 780
Iisvedentie 2 Suonenjoki Rest of Finland 680
Jämsänkoskentie 8 Jämsä Rest of Finland 204
Savontie 2 Mäntyharju Rest of Finland 920
Nallenpolku 2 Kotka Rest of Finland 557
Kauppakuja 2 Kolari Rest of Finland 1,108
Rautjärventie 92 Rautjärvi Rest of Finland 585
Tehtaantie 21 Mänttä-Vilppula Rest of Finland 850
Jukolantie 6 Kouvola Rest of Finland 381
Kitkantie 17 Kuusamo Rest of Finland 1,375
Second quarter 8,462
Valtakatu 37-39 Kouvola Rest of Finland 1,704

Särkikuja 1 Kolari Rest of Finland 288
Vanamotie 19 Kotka Rest of Finland 350
Salonaukio 7 Lahti Rest of Finland 700
Third quarter 3,042
Kanakouluntie 15 Hämeenlinna Rest of Finland 261

Laaksotie 2 Ii Rest of Finland 1,221
Siekkilänkatu 2 Mikkeli Rest of Finland 246
Fourth quarter 1,728
Total 43,437
Sagax’s market areas, see pages 26–34. «READ MORE
DIRECTOR'S REPORT
SAGAX’S INVESTMENTS IN EXISTING PORTFOLIO SEK 137 M (185) was invested in new builds during the year
In 2018, Sagax invested SEK 454 M (341) in the existing and SEK 112 M (40) in periodic maintenance of, for exam-
property portfolio, of which SEK 232 M (157) was invested ple, roofs. In addition, the cost of regular maintenance in an
in Stockholm and SEK 177 M (118) in Helsinki. SEK 51 M amount of SEK 59 M (43) was expensed in the consolidated
(29) of the investments pertained to the adaptation of prem- financial statements in 2018.
ises on behalf of existing tenants in return for compensation Sagax has contractual undertakings in a maximum
in the form of an increased rent level and longer leases. SEK amount of SEK 110 M concerning future tenant-specific mod-
155 M (87) was invested in connection with new lettings. ifications.
Properties acquired 2018, acquisition price Stockholm, 10% Properties acquired 2018, lettable area Stockholm, 6%
Rest of Europa, 3% (SEK 105 M) (SEK 290 M) Rest of Europa, 5% (20,146 sqm) (23,453 sqm)
Netherlands, 29%
Helsinki, 18%
Netherlands, 30% (115,853 sqm) Helsinki, 21%
(SEK 541 M)
(895 M) (87,023 sqm)
Finland, university cities,

Paris, 16% (SEK 501 M) 23% (SEK 695 M) Finland, university cities,
Paris, 16% (66,493 sqm)
23% (92,525 sqm)
Investments in current property portfolio per market area Reason for investments in current property portfolio
Netherlands, 1% (SEK 4 M) Rest of Finland, 2% (SEK 10 M)
Paris, 2% (SEK 9 M) Rest of Sweden, 1% (SEK 3 M)
Rest of Europe, 0% (SEK 1 M) Maintenance, 25% (SEK 112 M)
Finland, university cities,
4% (SEK 19 M) New builds, 30%
(SEK 137 M)
Helsinki, 39% Stockholm, 51% Increase in rental

(SEK 177 M) (SEK 232 M) New leasing, 34%
revenue, 11% (SEK 51 M)
(SEK 155 M)
DIRECTOR'S REPORT
SAGAX’S NET INVESTMENTS 2018 Heden 1 in Stockholm, SEK 13 M

Sagax’s net investments in properties in 2018 corresponded to Adjustments for a new tenant who is leasing the entire prop-
14% of the opening property value; see chart below. Net in- erty. The investment was started in 2017 and amounts to SEK
vestments averaged 15% over the most recent five-year period. 14 M.
Net investments have been calculated as the net of property
acquisitions and investments in the current property portfo- Kiitoradantie 14 in Helsinki, SEK 13 M
lio, as well as sales of properties. Adjustments for warehouse and industrial purposes were
made in connection with new lettings totalling 3,300 square
SAGAX’S FIVE LARGEST INVESTMENTS IN THE CURRENT metres to two tenants.
PROPERTY PORTFOLIO DURING 2018
The five largest investments in the current property portfolio ONGOING INVESTMENTS AT YEAR END
during the year are described below. These five investments At year end, Sagax had four ongoing investments with a re-
totalled SEK 173 M, corresponding to 38% of the total invest- maining investment volume exceeding SEK 10 M, see below.
ments in the current property portfolio during the year. At year end, there were ongoing projects with a total
estimated investment of SEK 636 M, of which SEK 200 M
Gjutmästaren 8 in Stockholm, SEK 77 M was invested in 2018.
A new build of warehouse and business premises with offices
and garage. Construction was started in 2018 and is scheduled
to be completed in 2021. In total, the new build encompasses
19,000 square metres of lettable area. The premises are fully
leased.
Sagax’s net investments 2014-2018
Elektra 11 in Stockholm, SEK 37 M SEK M, bars %, curve
Adjustments have been made in connection with new let- 3,500 30
tings totalling 6,200 square metres to K-Rauta and Prodoc. 2,800 24

The i nvestment included renovating windows, earthworks
and laying asphalt. The property was acquired in 2017 with 2,100 18
a v acancy rate of 95%. Following the leases, the economic 1,400 12

vacancy rate is 25%.
700 6
Sähkötie 8 in Helsinki, SEK 33 M 0 0

2014 2015 2016 2017 2018
Alterations for new leases to five tenants totalling 5,000
square metres. Vacancy rate after the alterations decreased Net investments, SEK M
% of opening property values
from 95% to 28%. Average during the period
Ongoing projects
Ongoing projects exceeding SEK 10 M

Estimated Remaining Estimated
Project investment, investment, year of
Property Municipality Regarding area, sqm SEK M SEK M completion
Gjutmästaren 8 Stockholm New builds 19,000 365 287 2021
Muovikatu 4 Hyvinkää Renovations / New builds 6,000 32 27 2019
Olarinluoma 8 Espoo New builds 6,000 51 49 2019
Tuna Äng 3 Botkyrka Extension 2,400 47 36 2019
Sub-total 33,400 495 399
Ongoing projects of less than SEK 10 M 141 37 2019

Total ongoing projects, 31 December 2018 636 436
DIRECTOR'S REPORT
Market area Stockholm
In Stockholm, Sagax’s property portfolio comprised 81 properties with 644,000 square metres
of lettable area. The rental value was SEK 689 M. The average lease term
at year end was 4.5 years.
Data in brief Five largest tenants accounting for 20% of the

market area’s rental value in alphabetical order
2018 2017
No. of properties 81 76 Arvid Nordquist Coffee roasting facility and food imports
Lettable area, sqm 644,000 623,000 Dagab Inköp & Dagab supplies a range of convenience goods to stores
Rental value, SEK M 689 624 Logistik in the Axfood group
Economic vacancy rate, % 5 6 Recipharm Contract-based development and manufacture
Lease term, years 4.5 4.7 of pharmaceuticals
S:t Eriks Manufacturer of land, roofing and water/sewage
Properties’ market value, SEK M 9,822 8,670
systems
Profit from property management, SEK M 330 317
Åhléns Åhlens’s warehouse for department stores operations.
Yield at 31 December, % 5.2 5.3
Share of Sagax Share of Sagax’s property value

%
50
40
30
20
n Rental value 27% n Market value 34% n Lettable area 23%
10
0
2014 2015 2016 2017 2018
Stockholm is one of Sagax’s principal markets. This market PROPERTY MANAGEMENT

accounts for 34% and 27% of the Group’s total market value Rental revenue totalled SEK 636 M (569) and profit from
and rental value, respectively. Sagax’s property portfolio in property management was SEK 330 M (317) for 2018. Net
the Stockholm area comprises 81 properties covering 644,000 operating income increased 11% to SEK 512 M (459), pri-
square metres of lettable area. At year end, the number of marily as a result of property acquisitions and due to lower
leases was 386. vacancies.
Sagax’s properties in Stockholm are located outside cen- The lease term in the Stockholm area at 31 December
tral Stockholm, alongside the major highways such as the E4/ 2018 was 4.5 years (4.7). In 2018, the economic vacancy rate
E20, E18 and Nynäsvägen. Most of the properties are located in Stockholm declined from 6% to 5%.
in established business zones such as Lunda, Ulvsunda and During the year, Sagax signed 35 new leases covering a
Kista in northern Stockholm as well as in Älvsjö, Segeltorp, lettable area totalling 80,000 square metres, while 15 leases
Jordbro and Årsta in southern Stockholm. encompassing a total of 83,000 square metres were extended.
In the Stockholm area, Sagax has shorter leases than in During the year, tenants served notice of terminating 23
the rest of the property portfolio. Vacancy changes, new leases on a total of 51,000 square metres, which means that
leases and renegotiations of existing leases occur continu- net leasing amounted to 29,000 square metres.
ously and the potential to re-lease vacant premises is deemed In 2018, SEK 232 M (157) was invested in the market
favourable. area’s current property portfolio. On page 25, summaries are
READ MORE » Changes in supply in Stockholm, see page 15.
DIRECTOR'S REPORT
Construction is in progress of a new warehouse and business premises totalling 19,000 square metres of lettable area at Stockholm Gjutmästaren 8
in Ulvsunda industrial zone in Bromma. The premises are fully leased. Construction started in 2018 and is scheduled to be completed in early 2021.
presented for three investments that together corresponded to

SEK 127 M, 55% of the market area’s investments in existing
property portfolio.
ACQUISITIONS AND SALES

In 2018, five properties with total lettable area of 23,500
square metres were acquired for SEK 290 M; see also page 22.
The Murmästare-Ämbetet 2 and Konsumenten 1 properties
in Stockholm, with a lettable area of area 7,900 square metres
each, were the largest of these investments. No properties in
Stockholm were divested during the year.
Söderport, see page 46 «READ MORE
DIRECTOR'S REPORT
Market area Helsinki
Sagax’s property portfolio in Helsinki encompassed 71 properties with 575,000 square metres

2018 2017
No. of properties 71 69 Bilia Car sales and servicing. Owned by Volvo Cars
Lettable area, sqm 575,000 489,000
Rental value, SEK M 599 525 DSV Transport and logistics
Economic vacancy rate, % 11 11 Kesko Central warehouse for foodstuffs

Lease term, years 5.0 4.7
Nokia Solutions and Supplier of mobile broadband solutions
Networks
Yield at 31 December, % 6.8 7.5 Sanoma Media and educational company

%
25
20
15
n Rental value 24% n Market value 22% n Lettable area 20% 10
0
2014 2015 2016 2017 2018
At year end, Sagax’s property portfolio in the Helsinki mar- During the year, Sagax signed new leases covering a lettable
ket area consisted of 71 properties, offering 575,000 square area totalling 84,000 square metres, while leases on a total of
metres of lettable area. The market area represents 20% of 78,300 square metres were extended. During the year, ten-
Sagax’s lettable area and 24% of rental value in the Group. ants served notice of termination on a total of 75,700 square
The Helsinki market area consists of the municipalities of metres, resulting in net leasing of 8,300 square metres during
Espoo, Vantaa, Helsinki and Tuusula. Sagax’s properties are 2018.
strategically located along ring roads and other key roadways.
PROPERTY MANAGEMENT In 2018, Sagax acquired three properties in Helsinki for a
At year end, the market area’s rental revenue derived from total of SEK 541 M and 87,000 square metres of lettable area.
358 leases and the average lease term was 5.0 years (4.7). Tikkurilantie 5 in Vantaa was the largest investment with a
Rental revenue totalled SEK 512 M (464) and profit from lettable area of 62,300 square metres. A total of SEK 718 M
property management was SEK 315 M (291) during the year. (305) was invested in the market area, corresponding to 19%
Net operating income increased 7% to SEK 395 M (368), pri- (18) of Sagax’s investments in 2018. Read more about prop-
marily as a result of property acquisitions in 2017 and 2018. erty acquisitions on page 20.
In 2018, Sagax invested SEK 177 M (118) in the existing One property with a total lettable area of 210 square
property portfolio in the market area. The two investments metres was divested during the year.
of a total of SEK 46 M in Helsinki are reported on page 25. In
total, the investments accounted for 26% of the investments
in the market area’s existing property portfolio during 2018.
DIRECTOR'S REPORT
Market area Finland, university cities
Sagax’s property portfolio in Finland, university cities encompassed 62 properties with

304,000 square metres of lettable area. The rental value was SEK 286 M.
The average lease term at year end was 5.4 years.

2018 2017
No. of properties 62 50 BE Group Steel wholesaler
Rental value, SEK M 286 178 Framery Supplier of soundproofed office cubicles
Economic vacancy rate, % 3 2 Lauri Vähälä Transport and logistics
Nokia Solutions and Supplier of mobile broadband solutions
Networks
Yield at 31 December, % 8.4 8.6 Volvo Service facilities for trucks

%
10
n Rental value 11% n Market value 9% n Lettable area 11% 4
0
2014 2015 2016 2017 2018
At year end, Sagax’s property portfolio in the Finland, uni- ants served notice of termination on a total of 11,100 square
versity cities market area consisted of 62 properties, offering metres, which means that net leasing amounted to –100
304,000 square metres of lettable area. The market area rep- square metres for 2018.
resents 11% of Sagax’s lettable area and 11% of rental value in
the Group. ACQUISITIONS AND SALES
The market area consists of the cities of Jyväskylä, In 2018, 12 properties were acquired in the market area with
Tampere, Oulu and Turku. a total of 92,500 square metres of lettable area. A total of
SEK 713 M (359) was invested in the market area, corre-
PROPERTY MANAGEMENT sponding to 20% of Sagax’s investments in 2018. Read more
At year end, the market area’s rental revenue derived from about property acquisitions on page 22.
279 leases and the average lease term was 5.4 years. Rental No properties were divested in the market area during the
revenue totalled SEK 249 M (132) while profit from property year.
management was SEK 150 M (81) during the year. Net oper-
ating income increased 65% to SEK 204 M (124), primarily as
a result of property acquisitions in 2017 and 2018.
In 2018, Sagax invested SEK 19 M (–) in the existing
property portfolio in the market area.
During the year, new leases were signed covering a letta-
ble area totalling 11,000 square metres, while leases on a total
of 7,600 square metres were extended. During the year, ten-
DIRECTOR'S REPORT
Market area Paris
Sagax’s Paris property portfolio comprises 48 properties with 219,000 square metres

2018 2017
No. of properties 48 39 Enedis Electricity grid operator
JPG Staples Office supplies sales
Rental value, SEK M 197 137
Economic vacancy rate, % 3 5 Lyonnaise des Water and water purification services. Owned by Suez
Lease term, years 5.9 9.4 Eaux France
Properties’ market value, SEK M 1,995 1,386 Sego IDF Printing firm
Yield at 31 December, % 7.2 6.2 SUEZ Group Recycling and waste-management company

%
7
6
5
4
n Market value 7% n Lettable area 8% 3

n Rental value 8%
2
1
0
2014 2015 2016 2017 2018
At the end of 2018, Sagax had 48 properties with 219,000 ACQUISITIONS AND SALES
square metres of lettable area in the Paris market area. The Nine properties were acquired in Paris for SEK 501 M in
market area represents 8% of the Group’s lettable area and 8% 2018. The premises comprise 66,500 square metres of
of the rental value. lettable area. Read more about property acquisitions on
page 22.
PROPERTY MANAGEMENT
At year end, the market area’s rental revenue derived from
163 leases and the average lease term was 5.9 years (9.4).
Rental revenue totalled SEK 168 M (104) and profit from
property management totalled SEK 98 M (48) during the
year. Net operating income increased 71% to SEK 129 M (75),
primarily as a result of property acquisitions during 2017 and
2018, but also due to lower vacancies.
In 2018, Sagax invested SEK 8 M (48) in the existing
During the year, Sagax signed 21 new leases encompassing
a lettable area totalling 6,000 square metres, while five leases
on a total of 2,500 square metres were extended. During
the year, tenants served notice of terminating 19 leases on a
total of 4,400 square metres, which means that net leasing
amounted to 1,600 square metres in 2018.
DIRECTOR'S REPORT
Market area Netherlands
Sagax’s property portfolio in the Netherlands comprises 33 properties covering 222,000

square metres of lettable area. The rental value was SEK 168 M.
The average lease term at year end was 6.3 years.

2018 2017
No. of properties 33 16 Engie Services Supplier of technical services
Motrac Intern Transport Sells and leases machinery/accessories for
warehouse operations
Economic vacancy rate, % 5 2
PON Group Retail and service company
Properties’ market value, SEK M 1,817 850 Trinseo Netherlands Global chemical materials solutions provider
Tyco Building Services Installation of fire and security protection
Products

%
6
3
n Rental value 7% n Market value 6 % n Lettable area 8 %
2
0
2014 2015 2016 2017 2018
At year end, Sagax’s property portfolio in the Netherlands ACQUISITIONS AND SALES
market area consisted of 33 properties, offering 222,000 In 2018, 17 properties were acquired in the Netherlands with
square metres of lettable area. The market area represents 8% a total of 116,000 square metres of lettable area. In total,
of Sagax lettable area and 7% of the rental value. properties for SEK 895 M were acquired in the market area,
corresponding to 30% of Sagax’s investments in 2018. Read
PROPERTY MANAGEMENT more about property acquisitions on page 22.
At year end, the market area’s rental value was allocated over
85 leases with an average lease term of 6.3 years (6.4). Rental
revenue totalled SEK 126 M (63) and profit from property
management amounted to SEK 81 M (40) during the year.
Net operating income increased 106% to SEK 123 M (61), as
a result of property acquisitions during 2017 and 2018.
In 2018, Sagax invested SEK 4 M (–) in the existing prop-
erty portfolio in the market area.
During the year, Sagax signed five new leases covering a
lettable area totalling 3,300 square metres, while six leases on
a total of 3,700 square metres were extended. Eight notices of
termination were received during the year on a lettable area
totalling 7,100 square metres, which means that net leasing
amounted to a decline of 3,800 square metres for 2018.
Market overview, see page 11. «READ MORE
DIRECTOR'S REPORT
Market area Rest of Sweden
In the Rest of Sweden market area, Sagax had a property portfolio comprising 47 properties
with 407,000 square metres of lettable area on 31 December 2018. The rental value was
SEK 213 M. The average lease term was 9.3 years.

2018 2017
No. of properties 47 48 Assemblin El Electrical wholesaler and electricity contractor
Rental value, SEK M 213 212 Gambro Lundia Medical technology and accompanying services.
Owned by Baxter
Lease term, years 9.3 10.1 OBOS Sweden Manufacturer of Myresjöhus and Smålandsvillan
Properties’ market value, SEK M 2,392 2,446 prefabricated wooden houses
Profit from property management, SEK M 156 133 Optimera Building products chain owned by Saint-Gobain
Trivselhus Manufacturer of wooden houses

%
25
20
15
10
5
0
2014 2015 2016 2017 2018
At year end, Sagax’s property portfolio in the market area ACQUISITIONS AND SALES
consisted of 47 properties, offering 407,000 square metres of In 2018, no properties were acquired in the market area.
lettable area. The market area represents 14% of Sagax’s total One property with a total lettable area of 23,450 square
lettable area and 8% of rental value. Sagax’s property port- metres was sold during the year; see page 23.
folio in the market area includes Gambro’s headquarters in
Lund and the BE Group’s central warehouse in Norrköping.
PROPERTY MANAGEMENT
At year end, rental revenue for the market area derived from
51 leases. Rental revenue totalled SEK 206 M (206) and profit
from property management was SEK 156 M (133) for 2018.
Net operating income increased 1% to SEK 195 M (193).
Sagax has not signed any new leases and no tenants have
served notice of termination in 2018. Three agreements on a
total of 1,500 square metres were terminated by Sagax and
an agreement on 7,000 square metres were extended during
the year. The average lease term was 9.3 years (10.1). By far
the majority of the market area’s properties are leased under
triple net leases.
In 2018, a total of SEK 3 M (12) was invested in the mar-
ket area’s existing property portfolio.
DIRECTOR'S REPORT
Market area Rest of Finland
The Rest of Finland market area encompasses 150 properties with 338,000 square metres of lettable
area at year end. The rental value was SEK 226 M. The average lease term at year end
was 5.4 years. In 2018, 29 properties were divested.

2018 2017
No. of properties 150 179 BE Group Steel wholesaler
K-Market Retail chain owned by Kesko
Economic vacancy rate, % 2 4 Konecranes Manufacturer of hoisting equipment
Properties’ market value, SEK M 2,373 2,210 Onninen Industrial wholesalers. Owned by Kesko
Parma Precast concrete manufacturer

%
10
4
2
0
2014 2015 2016 2017 2018
Sagax’s property portfolio in the Rest of Finland comprises ACQUISITIONS AND SALES
150 properties with 338,000 square metres of lettable area. No properties were acquired in the market area during the
The market area represents 12% of Sagax’s lettable area and year.
9% of rental value in the Group. In 2018, 29 smaller properties with a lettable area of
19,800 square metres were divested in this market area, see
PROPERTY MANAGEMENT page 23.
At year end, rental revenue for the market area derived from
187 leases. The average lease term was 5.4 years. Triple net
leases account for by far the largest share of leases in the Rest
of Finland.
Rental revenue totalled SEK 226 M (217) and profit from
property management was SEK 161 M (159). Net operating
income for 2018 increased 13% to SEK 214 M (189), primar-
ily as a result of property acquisitions in 2017 and compen-
sation paid in conjunction with tenants prematurely vacating
premises during the year.
In 2018, 200 square metres was leased to tenants while
leases on 26,900 square metres were extended. Notices ter-
minating 2,800 square metres were received. As a result, net
leasing in the market area declined –2,600 square metres.
In 2018, Sagax invested SEK 10 M (1) in the existing
DIRECTOR'S REPORT
Market area Rest of Europe
In Germany, Denmark and France (excluding Paris), Sagax had a property portfolio
comprising 20 properties with 140,000 square metres of lettable area on 31 December 2018.
In 2018, two properties were acquired in France.

2018 2017
No. of properties 20 18 Baxter Medical technology and accompanying services
Rental value, SEK M 131 114 Bernard Office supplies. Owned by Staples
Epalia Water and water purification services
Properties’ market value, SEK M 1,560 1,370 SUEZ Recycling and waste-management company
Yield at 31 December, % 7.5 8.0 Volvo Service facilities for trucks
Market area Rest of Europe’s property portfolio Share of Sagax’s property value
%
No. of
Country properties Lettable area Share 7
Denmark 2 6,500 4% 6
Germany 5 64,000 46% 5

France excluding Paris 13 69,500 50% 4
Total 20 140,000 100% 3
2
1
0
2014 2015 2016 2017 2018
Share of Sagax
Sagax’s property portfolio in the Rest of Europe market area During the year, the organisation in Paris signed two new
consists of 20 properties with 140,000 square metres of letta- leases for properties located in France outside of Paris total-
ble area. The market area represents 5% of Sagax’s lettable ling 1,800 square metres of lettable area and received notice
area and rental value. of termination on one lease pertaining to a total of 1,000
The total investments in the market area, including prop- square metres. Net leasing in the Rest of Europe market area
erty acquisitions, amounted to SEK 108 M (17), correspond- increased by 800 square metres.
ing to 3% of the Group’s investments in 2018.
PROPERTY MANAGEMENT In 2018, two properties with a total lettable area of 20,000
At year end, rental revenue for the market area derived from square metres were acquired in the French cities of
36 leases. The average lease term was 14.5 years (16.5). Neuville-en-Ferrain and Lyon, respectively, see page 22.
Rental revenue totalled SEK 123 M (115) and profit from No properties were divested in the market area during the
property management totalled SEK 93 M (81). Net operating year.
income for 2018 increased 7% to SEK 114 M (107), primarily
as a result of property acquisitions during 2017 and 2018.
DIRECTOR'S REPORT
Market value of property portfolio
At 31 December 2018, the market value of the property portfolio was SEK 29,024 M.
All properties were appraised by independent valuation companies. In 2018, Sagax’s yield
was 6.8% and its weighted yield requirement was 7.1%.
INTERNATIONAL ACCOUNTING STANDARDS moving out during the year; refer to the table below entitled
Sagax prepares its consolidated financial statements according Unrealised changes in value. The general change in market
to the EU-approved International Financial Reporting Stan- value affected property values by a total of SEK 804 M (808),
dards (IFRS). primarily due to lower yield requirements in the property
Sagax has elected to recognise its properties at fair value market. The change in market value corresponds to 2.8% of
according to the Fair Value Method, meaning their commer- year end market value of the properties.
cial market value. Accumulated unrealised changes in value for the past ten
years are presented in Note 28 on page 114.
MARKET VALUE
The total market value of Sagax’s 512 properties (495) was SAGAX’S PROPERTIES WITH THE HIGHEST MARKET VALUE
SEK 29,024 M (23,771) on 31 December 2018. The change At 31 December 2018, the total market value of Sagax’s ten
in the carrying amount of the properties during 2018 is ex- largest properties (in terms of value) was SEK 6.0 billion
plained below. Property valuation is subject to some uncer- (5.9). Bank loans corresponded to 21% (25) of the property
tainty and frequently based on assumptions regarding future portfolio’s total market value. Sagax’s ten properties with the
trends for a number of parameters. highest appraised value, categorised alphabetically, are pre-
Net investments during 2018 amounted to SEK 3,437 M sented in the table on page 36.
(1,680) or 14% (8) of the opening property value. In addition,
translation from foreign currency affected the amount by EXTERNAL MARKET VALUATIONS
SEK 551 M (348). The value trend of the properties has been Sagax has chosen independent valuation companies to assess
positive since 2010. The weighted yield requirement was 7.1% the fair value of its properties. The external market valuations
(7.3) at 31 December 2018. are undertaken each quarter and encompass all of Sagax’s prop-
The total recognised unrealised change in value during erties, with the exception of the properties in Germany which,
the year was SEK 1,265 M (1,113). in 2018, were appraised externally as per 31 December.
REVALUATION OF PROPERTIES
The value of the property portfolio rose by SEK 461 M (304)
net as a result of lease renegotiations, new lettings and tenants
Market value of properties by segment, 2014-2018 Change in carrying amount of properties

Total, SEK M No. of
SEK M
2018
29,024 Carrying amount, 31 December 2017 23,771 495
23,771 Acquisition of properties 3,026 48
2017
Investments in the current portfolio 456
20,628
2016 Property sales –45 –31
16,189 Currency translation effect 551
2015
13,428 Change in value 1,265
2014
10,825
Property portfolio, 31 December 2018 29,024 512
2013
0 6,000 12,000 18,000 24,000 30,000
Stockholm Helsinki Rest of Finland Netherlands

Rest of Sweden Finland, Paris Rest of Europe
university cities Unrealised changes in value
SEK M Jan–Dec 2018
New lettings/Renegotiations 677
Vacancies/Renegotiations –216
General change in market value 804
Total 1,265
Summary of the Sagax property portfolio, see page 18. «READ MORE
Market overview, see page 11.
Accounting policies, see Note 1, page 88.
DIRECTOR'S REPORT
Sagax believes that the use of reputable, independent valua- objects shows the valuation companies that were employed at
tion companies creates the optimal long-term conditions for year end and how many properties they appraised. The valua-
a fair and trustworthy assessment of the properties’ market tion techniques and analyses are presented on page 100.
value. The table below on the value distribution of appraised
Market value and area of properties Estimated share of market value corresponding to the present
value of net operating income from existing leases
000s square metres SEK M
3,000 30,000 Weighted Lease Weighted cost Percentage
yield term, of capital, of market
2,400 24,000 Market area requirement years cash flow value
Stockholm 5.8% 4.5 7.9% 24%
1,800 18,000
Helsinki 7.1% 5.0 8.4% 33%
1,200 12,000 Finland,
university cities 7.7% 5.4 8.6% 34%
600 6,000 Paris 7.2% 5.9 8.3% 31%
0
Netherlands 7.3% 6.3 6.7% 39%
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Rest of Sweden 7.0% 9.3 8.6% 48%
Lettable area Rest of Finland 7.5% 5.4 7.2% 35%
Market value Rest of Europe 13.0% 14.5 6.4% 77%
Average 7.1% 6.0 7.9% 34%
Distribution of valuation objects Properties with the highest market value, in alphabetical order
Property appraisers Country No. of properties Lettable area,
Property Municipality sqm
Savills Sweden Sweden 128
Peltola & Co Finland 283 Holger-Craaford Strasse 26 Hechingen, Germany 64,000
Savills Immobilien Germany 5 Inteckningen 5 Lund, Sweden 23,800
Jones Lang LaSalle Netherlands 33 Jordbromalm 3:1 Haninge, Sweden 93,700
Cushman & Wakefield | RED Denmark 2 Jordbromalm 4:3 Haninge, Sweden 51,400
Savills France France 61 Kaapelitie 4 Oulu, Finland 67,600
Total 512 Karaportti 8 Espoo, Finland 16,100

Koneenkatu 8 Hyvinkää, Finland 60,700
Martinkyläntie 9 A Vantaa, Finland 52,800
Ruosilantie 16 Helsinki, Finland 35,100
Verkmästaren 4 Solna, Sweden 16,000
Total 481,200
READ MORE » Valuation techniques and analyses, see Note 13 on page 100.
Accumulated unrealised changes in value, see Note 28 on page 114.
DIRECTOR'S REPORT
Top picture: In Gennevilliers, 15 minutes north-west of Paris, a new industrial building is under construction with 1,800 square metres of lettable
area that is scheduled to be completed at the end of 2019. The premises are fully leased. The property includes an existing building with 4,900
square metres of lettable area.
Bottom picture: During the third quarter of 2018, the Metsälehmuksentie 6 property was acquired in Jyväskylä, comprising 14,000 square metres
of lettable area and 87,000 square metres of land. The property is fully leased.
DIRECTOR'S REPORT
Financing
Equity totalled SEK 15,416 M at year end 2018. Interest-bearing liabilities

amounted to SEK 15,763 M, corresponding to a debt ratio of 47%.
The interest coverage ratio was 433%. The company was awarded a rating
of Baa3 with a positive outlook by Moody’s Investors Service.
BACKGROUND EQUITY
Sagax pursues highly capital-intensive operations. Access Sagax seeks to gain a balance between an attractive return
to capital is an essential condition for the development of a on equity and an acceptable level of risk. At year end, equity
successful property business. Assets totalled SEK 33,690 M totalled SEK 15,416 M (11,356), corresponding to an equity/
(27,240) at year end. Operations are funded using a combina- assets ratio of 46% (42).
tion of equity, interest-bearing liabilities and other liabilities. At 31 December 2018, equity was represented by four
Equity and interest-bearing liabilities corresponded to 92% types of shares: Class A, B and D common shares, and pref-
(92) of Sagax’s year-end financing. erence shares. The shares are listed on Nasdaq Stockholm,
Financial expenses amounted to SEK 481 M (444), rep- Large Cap. There are a total of 13,416,822 Class A shares,
resenting the largest operational expense. During 2018, the 144,979,405 Class B shares, 101,900,000 Class D shares and
interest coverage ratio was 433% (401), while the debt ratio 16,784,028 preference shares outstanding. The holding of
was 47% (50) at year end. The financial structure is designed treasury shares amounted to 1,000,000 Class B shares. The
with a clear focus on operating cash flow and interest coverage chart below shows the trend in equity since 2009, together
ratio. This is expected to create both excellent prerequisites with explanations of reasons for the changes.
for expansion and an attractive return on equity. Equity at 31 December 2018 is calculated as follows, set
Sagax endeavours to have well-balanced fixed-interest and out in the Articles of Association. Of equity, SEK 30.00 is
debt maturity profiles to secure its operating cash flow. The distributed per preference share, plus an accumulated but
average fixed-interest period was 3.0 years (2.1) at year end. unpaid dividend on preference shares of SEK 2.00 per year.
This fixed-interest period reduces interest-rate sensitivity but Subsequently, the remaining equity is distributed among
leads to a higher average interest rate than a shorter fixed- Class A, B and D shares, with up to a maximum of SEK 35.00
interest period. At year end, the average maturity period was distributed per Class D share. At 31 December 2018, equity
3.6 (3.1) years, which is viewed as offering a low refinancing amounted to SEK 71.40 (54.30) per Class A and B share, SEK
risk, considering the company’s debt ratio and position in 35.00 (35.00) per Class D share and SEK 32.00 (32.00) per
general. In 2019, a total of SEK 312 M (316) is to be repaid, preference share. Class D common shares are entitled to five
corresponding to 2% (2) of interest-bearing liabilities at year times the total dividend on Class A and B shares, although not
end 2018. more than SEK 2.00 per share annually.
The Group has financial covenants in its loan contracts.
The covenants are cash-flow based or are related to the debt
ratio. Sagax fulfils all covenants. Since it is unlikely that these
covenants will result in any premature refinancing require-
ment, the company’s financial position is robust.
It was announced in September 2018 that Moody’s
I nvestors Service had raised Sagax’s rating to Baa3 with
a stable outlook. This is an investment grade rating.
Change in shareholders’ equity

SEK M
3,500
3,000
2,500
2,000
1,500
1,000
500
0
–500
–1,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Comprehensive income New share issues

Dividends and buy-back of treasury shares
Financial targets, see page 8.
DIRECTOR'S REPORT
INTEREST-BEARING LIABILITIES (75) reduced interest-bearing liabilities in the balance sheet.

General information on Sagax’s interest-bearing liabilities Accordingly, interest-bearing liabilities are recognised in an
Interest-bearing liabilities represented 47% (50) of Sagax’s amount of SEK 15,683 M (13,616) in the balance sheet.
financing at year end and was Sagax’s main source of Net debt in relation to operational earnings can be mea-
fi nancing. Interest-bearing liabilities consist partly of bank sured as net debt/EBITDA. Interest-bearing net debt for
loans raised using the subsidiaries’ properties as collateral, 2018 averaged 7.4 (8.1) times EBITDA; see below. Net debt
and partly of seven listed unsecured bond loans totalling amounted to SEK 14,812 M (13,182) and is calculated as
SEK 8,718 M (4,674), of which SEK 5,138 M (–) in the interest-bearing liabilities less interest-bearing assets of SEK
form of bond loan within the framework of Sagax’s EMTN 6 M (7), cash and cash equivalents of SEK 73 M (60) and
programme, as well as an unsecured commercial paper pro- listed equities of SEK 872 M (442). EBITDA totalled SEK
gramme of SEK 1,505 M (1,275). Bank loans have been pro- 1,991 M (1,620) and was calculated as net operating income
vided by Deutsche Pfandbriefbank, Nordea, SEB, Swedbank, of SEK 1,869 M (1,558) less central administration costs of
Svenska Handelsbanken, HSBC, Société Générale, ING and SEK 132 M (77) plus dividends received from joint ventures
Den Danske bank. At year end, interest-bearing liabilities of SEK 254 M (139).
amounted to SEK 15,763 M (13,691), of which SEK 10,355 M
(5,848) was denominated in EUR. Interest-bearing liabilities Covenants in loan contracts
during 2018 increased primarily as a result of property acqui- Bank loans
sitions in Finland, the Netherlands and France. Exchange-rate Bank loans corresponded to 19% (33) of the year-end market
fluctuations have increased interest-bearing liabilities by SEK value of the properties. Bank loans amounted to SEK 5,540 M
241 M (166) in 2018. Allocated borrowing costs of SEK 80 M (7,742). Bank loans frequently include various types of cov-
Financial key figures

Financial 2018 2017
covenants in EMTN programme 31 Dec 31 Dec
Net debt/Total assets <65% 44% 48%
Interest coverage ratio >1.8 x 4.3 x 4.0 x
Secured liabilities/Total assets <45% 21% 33%
Rating according to Moody’s Investors Services Baa3, Stable outlook Ba1, Positive outlook
Distribution between secured and unsecured liabilities Sources of financing

Unsecured bank loans, 1% (SEK 101 M)
Commercial paper, 10%
Secured liabilities (SEK 1,505 M)
44% (SEK 6,944 M)
Secured bank loans, Bonds, 55%
Unsecured liabilities (SEK 8,718 M)
35% (SEK 5,439 M)
56% (SEK 8,819 M)
Change in interest-bearing liabilities Net debt/EBITDA, rolling 12 months
SEK M
Multiple
11
Interest-bearing liabilities, 31 December 2017 13,691 10
Refinancing 8,538 9
8
Loan repayment –6,707 7
Change in exchange rates 241 6
5
Interest-bearing liabilities, 31 December 2018 15,763 4
3
Allocated borrowing costs –80 2
Recognised interest-bearing liabilities, 1
0
31 December 2018 15,683 2014 2015 2016 2017 2018
Risks and risk management, see page 50. «READ MORE

Sensitivity analysis, see page 53.
DIRECTOR'S REPORT
enants that must be fulfilled by the debtor. In the event of Sagax has an obligation to have long-term, unutilised credit
any breach of the covenants, the bank may request Sagax to facilities available that cover all commercial paper outstand-
repay the loan prematurely. Typically, the covenants consist ing at any one time.
of certain key performance indicators that must be fulfilled.
Example of undertakings under these covenants include that Financial policy
the debt ratio shall remain below a specific level or that the The financial policy sets guidelines and rules as to how
interest coverage ratio shall exceed a certain level. fi nancial operations in Sagax are to be pursued. The financial
The financial covenants in loan contracts are cash-flow policy is adopted by the Board each year and states how the
based or are related to the debt ratio. Other covenants are that various risks in Sagax’s financial operations are to be limited
borrowing subsidiaries must be fully owned, that they must and the risks that Sagax may assume. The aim is that financial
not raise further loans, that the lease terms are observed and management must:
that creditors are provided with financial information, such as ■■ ensure the short- and long-term supply of capital.
a nnual reports, in addition to other non-financial covenants. ■■ adjust the financial strategy and management of financial risks
Should a mandatory bid be made for the shares in Sagax, on the basis of the development of operations to ensure that a
the banks are entitled, in certain cases, to request the re- long-term stable capital structure is attained and maintained.
negotiation of loan contracts and, ultimately, demand early ■■ attain optimal net financial items within the set risk
repayment. framework.
Bond loans Debt maturity

Unsecured bond loans corresponded to 29% (20) of the year- Sagax’s non-current interest-bearing liabilities amounted to
end market value of the properties. Bond loans amounted to SEK 13,866 M (11,937), or 88% (88) of the total interest-
SEK 8,718 M (4,674). Bonds issued within the scope of the bearing liabilities. Recognised, current interest-bearing liabili-
company’s EMTN programme are registered on Euronext ties amounted to SEK 1,817 M (1,679), or 12% (12) of interest-
Dublin and other bonds on the private bond list on Nasdaq bearing liabilities, of which SEK 1,505 M (1,275) pertained to
Stockholm. During the year, bond loans totalling EUR 500 M commercial paper. Commercial paper may never have a term
(corresponding to SEK 5,138 M) were issued while bond loans exceeding 364 days and is thus always recognised as current.
totalling SEK 550 M and EUR 60 M (corresponding to SEK According to the table on page 37, capital tied-up for 2019
617 M), were bought back or redeemed prematurely. Note 17 amounted to SEK 312 M, corresponding to 2% of interest-
includes an account of the interest-rate terms for bond loans. bearing liabilities. Commercial paper amounting to SEK 1,505
The bond loans registered on Nasdaq Stockholm contain M is recognised in this table with maturity in 2020-2023 since
just one financial covenant, which could affect the dividend the commercial paper is covered at all times by unutilised long-
on common shares. Other covenants include a requirement term revolving credit facilities that mature in 2020-2023.
that the bond loan be market listed and that the company Current interest-bearing liabilities express the financ-
publish quarterly reports. In the event of a mandatory bid for ing requirement in the short term and affect the company’s
the shares in Sagax, bondholders are entitled to request early refinancing risk. Current repayment and regular bank loans
repayment of the loan. which, contractually, have to be paid within 12 months, rep-
The obligations of Sagax’s EMTN programme include resent typical current interest-bearing liabilities in the bal-
that net debt must be less than 65% of total assets, that the ance sheet. The current interest-bearing liabilities are repaid
interest coverage ratio must exceed 1.8 times and that secured via the company’s cash flow or through new borrowing for the
liabilities must be less than 45% of total assets. refinancing of loans that are about to expire.
Should Moody’s Investors Service reduce Sagax’s credit Sagax seeks to maintain a low share of current interest-
rating to below Baa3, the fixed interest coupon on bonds bearing financing in an effort to minimise the company’s
issued under the EMTN programme would rise by 1.25 per- refinancing risk. The company curtails its refinancing risk by
centage points. agreeing on a predetermined maturity in connection with new
borrowing. Sagax also seeks refinancing of the non-current
Commercial paper programme interest-bearing liabilities well in advance. Overall, this work-
The programme for issuing commercial paper allows the ing approach is deemed effective in limiting the company’s
company to implement issues in SEK and EUR. The limits refinancing risk. The average remaining loan maturity period
are SEK 1,500 M and EUR 200 M. The maximum term for was 3.6 years (3.1) at year end.
commercial paper is one year, and at year end, commercial
paper outstanding totalled SEK 1,505 M (1,275) and had an Collateral for interest-bearing liabilities
average remaining term of 0.2 years (0.3). Commercial paper As collateral for the interest-bearing liabilities, deeds totalling
outstanding corresponded to 5% (5) of the year-end market SEK 11,039 M (15,537) were mortgaged at year end. No bank
value of the properties. deposits (1) were submitted as collateral. In addition, collat-
READ MORE » Correlation between the debt ratio and property values, see page 51.
The interest coverage ratio’s dependence on the occupancy rate, see page 51.
Financial KPIs, see page 64.
DIRECTOR'S REPORT
eral is provided in the form of shares and participations in the never be set lower than 0% when determining interest rates.
property-owning Group companies. The company is of the Corresponding limitations for underlying market interest rates
opinion that the terms of the mortgage deeds are commercial. are not stipulated in any of the interest-rate swap agreements.
Accordingly, rising market interest rates in 2018 reduced this
Fixed-interest periods effect on interest expenses.
To limit interest-rate risk, defined as the risk of an impact on
earnings or cash flow due to changes in market interest rates, Fixed-income derivatives
and thus increase the predictability in profit from property Consequently, Sagax’s fixed-income derivatives totalling SEK
management, Sagax has a significant portion of its interest 6,198 M (8,010), corresponding to 58% (59) of the company’s
expenses from fixed-rate loans. To limit interest-rate risk for interest-bearing liabilities subject to floating interest rates,
loans at floating interest rates, the company uses various types curbed the interest-rate risk at 31 December 2018.
of fixed-income derivatives. Overall, fixed-rate loans and Derivatives consist of interest-rate swaps and interest-rate
fixed-income derivatives amounted to SEK 11,336 M (8,010), caps. Sagax’s counterparties for the derivative contracts
or 72% (59) of the company’s total interest-bearing liabilities. are Nordea, Svenska Handelsbanken, SEB, Swedbank, Den
Taking into account fixed-income derivatives, the av- Danske Bank, HSBC, Société Générale, ING and Deutsche
erage fixed-interest period was 3.0 years (2.1) at year end. Pfandbriefbank. Fixed-income derivatives are denominated in
The company’s profit from property management will be SEK or EUR.
impacted only marginally by general changes in interest The year’s changes in the value of financial derivatives is
rates. The longer fixed-interest period reduces interest-rate recognised as realised or unrealised changes in value in profit
sensitivity but leads to a higher average interest rate than a or loss. Unrealised changes in value affect profit for the year
shorter interest coverage ratio. Combined with Sagax’s high but not cash flow or the profit from property management. A
economic o ccupancy rate (95%) and a low element of prop- presentation of Sagax’s exposure to changes in value of finan-
erty e xpenses, the company’s profit from property manage- cial derivatives is available on page 51, as part of the “Risks
ment and cash flow are predictable. The cost of fixing interest and risk management” section.
rates is a consequence of the size of hedging, maturities and
the choice of financial derivatives. Changes in STIBOR and Nominal interest-rate swaps
EURIBOR interest rates also result in changes in the relative An interest-rate swap is a contract between two parties
cost of fixing interest rates. covering an exchange of interest payments during a specified
The average interest rate on the company’s interest- period. By combining a floating interest rate loan (STIBOR
bearing liabilities was 2.2% (3.0), including the effect of or EURIBOR) and an interest-rate swap, a predetermined
derivatives, at year end. The bar chart on page 41 presents interest rate during the term of the interest-rate swap can
the Group’s average interest rates and the share that corre- be ensured. The contract results in Sagax gaining a floating
sponds to loan margins, costs for the underlying STIBOR or rate of interest (corresponding to the interest rate on the loan
EURIBOR interest rates and the cost of fixing interest rates. contract) at the same time that a fixed interest rate (the swap
Compared with the preceding year end, the average cost rate of interest) is paid. An interest swap can be completed for
for the fixed portion of the interest-rate swaps decreased by various maturities such as for 2, 5 or 10 years. The nominal
0.6 percentage points. Lower loan margins reduced interest interest-rate swaps on the closing date had an average term
rates by 0.1 percentage points. The negative STIBOR and of 3.7 years (4.5). At year end, Sagax’s interest-rate swaps
EURIBOR rates increased the cost of the loan contracts by 0.1 consisted of a nominal amount of SEK 2,471 M (4,497), cor-
percentage points and reduced the cost of fixed-income de- responding to 40% (56) of Sagax’s fixed-income derivatives.
rivatives by 0.2 percentage points. This is because most bank No premium is paid for this type of derivative and the value
loans have terms specifying that STIBOR and EURIBOR can of the derivative is zero on maturity dates.
Fixed-interest period and debt maturity, 31 December 2018 Average interest rates, December 31 2014-2018
%
Fixed-interest periods Debt maturity 4.1% 3.3% 3.1% 3.0% 2.2%
5
Year of expiry SEK M Interest rate Share SEK M Share
4
0.2%
2019 5,460 1.8% 35% 312 2% 1.7% 0.2% 0.2%
3
2020 604 3.5% 4% 2,668 17% 1.1% 0.9% 0.8% 0,8
0.2%%
0.2%
2021 1,285 2.2% 8% 3,149 20% 2
2022 1,263 2.5% 8% 1,250 8% 1 2.2% 2.1% 2.1% 2.1% 2.0%
2023 1,110 2.4% 7% 3,246 21% 0

>2023 6,042 2.4% 38% 5,138 33% –0.1% –0.1% –0.1%
–1
Total/ 2014 2015 2016 2017 2018
average 15,763 2.2% 100% 15,763 100%
Loan STIBOR/EURIBOR Fixed interest STIBOR/EURIBOR
margin effect on loans rate effect on fixed
interest
Derivative contracts at year end, see page 42. «READ MORE

Interest-rate risk, see page 52.
DIRECTOR'S REPORT
Interest-rate caps Other financial expenses

The interest-rate caps comprised a nominal amount of SEK In connection with the raising of new or renegotiated credit
3,728 M (3,513) at year end. The interest-rate cap entails that facilities, expenses arise that are accrued over the maturity
the company pays a floating interest rate that can change but of the particular facility. These expenses may consist of, for
not exceed a predetermined interest rate (strike rate). Sagax e xample, legal fees, valuation costs and non-recurring agree-
pays a premium for this type of derivative contract. The value ment fees for the creditor. At 31 December 2018, SEK 80 M
of the interest-rate cap is zero on the maturity dates. At year (75) in allocated borrowing costs was recognised as a reduc-
end, Sagax’s interest-rate caps had an average maturity of 2.8 tion in interest-bearing liabilities in Sagax’s balance sheet.
years (2.2) and an average strike rate of 2.0% (1.8). In 2018, a total of SEK 46 M (28) of allocated borrowing
costs were expensed. Other financial expenses also include
Valuation of fixed-income derivatives expenses for loan pledges to credit institutions. Expenses for
In accordance with the accounting rules, fixed-income deriva- these loan pledges in 2018 amounted to SEK 17 M (12).
tives must be measured at market value and the change in value
recognised in profit or loss. Sagax values all derivatives on a mar- Other liabilities
ket basis through reconciliation with each counterparty. Valua- Other liabilities amounted to SEK 2,591 M (2,268), corre-
tions are also confirmed with the assistance of external parties. sponding to 8% (8) of the company’s total financing. Other
The value of derivatives is affected by current interest liabilities consist mainly of deferred tax liabilities and prepaid
rates, the rate of interest on the derivatives and the remaining income and accrued expenses.
term to maturity.
Working capital
Sagax is of the opinion that the existing working capital for
the forthcoming 12-month period is sufficient to meet cur-
Fixed-income derivatives, 31 December 2018

Nominal amount, Market value, Average
Fixed interest, years SEK M SEK M interest1)
2019 1,033 –2 1.0%
2020 604 –11 2.7%
2021 1,285 – 1.7%
2022 1,263 –13 1.9%
2023 1,110 –1 1.4%
>2023 904 –91 2.3%
Total/average 6,198 –117 1.7%
1) Average strike rate has been used for the interest-rate cap.
Market value of fixed-income derivatives, time factor Trend in capital structure

SEK M % SEK M SEK M SEK M SEK M SEK M
100
0 1,365 1,363 1,899 2,268 2,591
–25 80
4,544 5,981 8,709 11,356 15,416
–50 60
–75
40
–100 8,472 10,499 12,496 13,616 15,683
20
–125
0
–150 2014 2015 2016 2017 2018
2019 2020 2021 2022 2023 2024 2025 2026 2027
Interest-bearing liabilities Shareholders’ equity Other liabilities
READ MORE » Interest-rate risk, see page 52.

Revaluation of interest-rate swaps in the event of changes in swap curves, see page 51.
DIRECTOR'S REPORT
rent requirements. In this context, working capital refers to SAGAX’S CASH FLOW IN 2018
Sagax’s potential to gain access to cash and cash equivalents Cash flow from operating activities before changes in work-
to meet its payment obligations as they fall due. The current ing capital amounted to SEK 1,490 M (1,194). Cash flow
operations tie up a limited amount of working capital, since from operating activities deviates from profit from property
most rental revenue is received in advance, while expenses are management primarily due to profit from joint ventures in
paid in arrears. 2018 partly being reinvested in these operations. Dividends
Sagax’s working capital, excluding prepaid rental revenue of SEK 254 M (139) were received during the year from joint
of SEK 199 M (167), amounted to SEK –1,059 M (–1,350) ventures, an amount that is included in recognised cash flow.
at 31 December 2018. At the same date, unutilised credit Changes in working capital had a net impact of SEK
facilities amounted to SEK 3,392 M (3,233). At year-end, 100 M (–26) on cash flow. Investing activities had a nega-
Sagax had contracts with SEB, Nordea, Den Danske Bank, tive net impact of SEK –3,771 M (–1,855) on cash flow, and
Swedbank, ING ( and ) Société Générale covering revolving pertained mainly to property acquisitions. Cash flow from
credit facilities totalling SEK 4,529 M (3,355), of which SEK financing activities contributed SEK 2,195 M (464) net during
3,122 M was unutilised at year end. Sagax has also reached the year, of which SEK 8,487 M (3,322) as a result of loans
agreements with SEB, Nordea, Swedbank, HSBC and ING raised. A total of SEK 6,707 M (2,395) in capital repayments
covering short-term credit facilities totalling SEK 454 M was charged to cash flow from financing activities and SEK
(324), of which SEK 269 M (236) was unutilised at year end. 479 M (386) was paid in dividends to shareholders during the
No additional collateral needs to be pledged to utilise these year. In total, cash and cash equivalents increased SEK 14 M
lines of credit. (–223) during 2018; see the cash-flow statement on page 82.
Sagax’s holdings of listed shares amounted to SEK 872 M
(442) and mainly comprised shares in NP3 Fastigheter AB
and Nyfosa AB.
Amortization/
Bank/bond repayment
loans
SE 7 M
K
8 0
7
Operating
6,
activities
,4
SEK Investments
1
87
3
SE
,80
Share
,4
issue
M
SE
K
90
Dividend
3
Other
9M
1,
7
SEK
12
SE
1
4 242 Redemption offer
5M
2 2
Property M Preference shares

K
M
sales SEK 2
SE
K
4
SE
SEK
4M Other
M
SEK 60 M SEK 73 M Disposable

at beginning of the year
Cash and cash at year-end
liquidity
equivalents Additional
SEK 1,959 M
SEK 1,886 M
in the form of unutilized
lines of credit1)
1) Credit facilities corresponding to commercial papers outstanding of

SEK 1,505 M are not included in available liquidity.
DIRECTOR'S REPORT
CREDIT RATING RATING SCALE – MOODY’S INVESTORS SERVICE

In September, Moody’s Investors Service raised Sagax’s rating
to Baa3 with a stable outlook. The received rating is based Rating profile
Highest
on Sagax’s circumstances at 30 June 2018 and is an invest- Aaa
ment grade rating. The rating scorecard applied by Moody’s Aa1
I nvestors Service is shown in the chart to the right. Aa2
Investment grade
Moody’s Investors Service applies a rating method to Aa3
establish a rating profile for Sagax on this rating scorecard. A1
The following rating table comprises a key component of this A2
method. A complete description of the rating method for A3
“REITs and other commercial property firms” is available at Baa1
www.moodys.com. Sagax’s rating Baa2
An investment grade category is assessed as beneficial at 30 June 2018 Baa3
for Sagax, since this enables efficient access to the European
capital markets, which means in turn a lower refinancing Ba1
risk, lower financing costs and longer tenors. During the year, Ba2
Sagax issued an unsecured bond loan of EUR 500 M in the Ba3
Non-investment grade
European capital market. The bond loan extends to 17 Janu-
B1
ary 2024 with a fixed interest rate of 2.00%. The bond issue
B2
was the first under the Sagax EMTN programme. The EMTN
B3
programme has an upper limit of EUR 1.5 billion.
Caa1
Caa2
Caa3
Ca
Lowest
C
The following rating table was received from Moody’s Investors Service in October 2018
Moody’s 12–18 Month Forward View
As of 30 June 2018 As of 30 June 2018
REITs and Other Commercial Property Firms Industry Grid Measure Score Measure Score
Factor 1: Scale (5%)
a) Gross Assets (USD Billion) USD 3.46 Baa USD 3.8–4.0 Baa
Factor 2: Business Profile (25%)
a) Market Positioning and Asset Quality Ba Ba Ba Ba
b) Operating Environment Baa Baa Baa Baa
Factor 3: Liquidity and Access To Capital (25%)
a) Liquidity and Access to Capital Baa Baa Baa Baa
b) Unencumbered Assets / Gross Assets 54.2% Ba 54%–56% Ba
Factor 4: Leverage and Coverage (45%)
a) Total Debt + Preferred Stock / Gross Assets 47.9% Baa 47.0%–47.5% Baa
b) Net Debt / EBITDA 7.24 x Ba 7.5 x–7.9 x Ba
c) Secured Debt / Gross Assets 18.5% Baa 15%–17% Baa
d) Fixed-Charge Coverage 4.92 x A 4.0 x–4.2 x Baa
Rating:
a) Indicated Outcome from Scorecard Baa3 Baa3
b) Actual Rating Assigned Baa3
READ MORE » Consolidated cash flow, see page 82.
DIRECTOR'S REPORT
Joint ventures
Sagax’s joint ventures contributed a total of SEK 312 M

to profit from property management during 2018, at the same time as
SEK 254 M was provided in dividends to Sagax.
Sagax owns 50% of Söderport Holding AB and also owns the value of fixed-income derivatives was SEK 42 M (65)
15% of Hemsö Fastighets AB, indirectly through Hemsö during the year. The total value of the commitment associated
I ntressenter AB. The remainder is owned by the Third with ownership of joint ventures amounted to SEK 3,286 M
Swedish National Pension Fund. (2,632), of which SEK 2,837 M (2,259) was recognised as
Sagax’s share of profit from property management in participations in accordance with the equity method and
joint ventures amounted to SEK 312 M (278) during the year. associated financial instruments were recognised at SEK
The company’s share of changes in the value of properties 449 M (373) following market valuation.
amounted to SEK 635 M (541) and the share of changes in
Sagax’s joint ventures
Söderport Hemsö
2018 2017 2018 2017
31 Dec 31 Dec 31 Dec 31 Dec
Sagax’s participating interest, % 50 50 15 15
Rental revenue, SEK M 585 548 2,607 2,363
Profit from property management, SEK M 285 254 1,443 1,314
Profit for the year, SEK M 854 769 3,092 2,591
Sagax’s share of profit from property management, SEK M 142 127 170 151
No. of properties 70 69 365 346
Rental value, SEK M 674 591 2,808 2,541
Properties’ market value, SEK M 7,683 6,603 46,236 38,883
Lettable area, sqm 686,000 650,000 1,732,000 1,636,000
Lease term, years 5.0 4.5 9.7 9.2
Economic vacancy rate, % 4 6 2 2
Interest-bearing liabilities, SEK M 3,907 3,287 29,728 25,575
Loan maturity, years 1.5 2.6 7.9 5.0
Fixed interest, years 3.2 2.8 5.9 5.0
Market value of fixed-income derivatives, SEK M –222 –328 –281 –544
For additional information on Sagax’s joint ventures, refer to Note 23 on page 110. «READ MORE
Consolidated statement of comprehensive income, see page 78.
DIRECTOR'S REPORT
SÖDERPORT
Capital structure, December 31, 2018 Property value per segment, December 31, 2018
Other non-
Deferred tax iability 8% interest-bearing liabilities 3%
Reserve for financial
derivatives 3 %
Non-covered
loans 2%
Equity 38%
Sweden, other 33% Stockholm 67%
Covered loans 47%

Contractual
No. of rental value, Lettable Lease term, Economic Property
Segment properties SEK M area, sqm years occupancy rate value, SEK M
Stockholm 48 433 369,000 3.8 95% 5,172
Rest of Sweden 22 241 317,000 6.9 99% 2,511
Total 70 674 686,000 5.0 96% 7,683
SÖDERPORT HOLDING AB During the year, one property was acquired for SEK 81 M
Sagax owns 50% of Söderport Holding AB, with the remain- with a total lettable area of 8,300 square metres. A total of
ing share owned by Nyfosa Group. On behalf of S öderport, SEK 355 M was invested in the existing property portfolio
Sagax handles the financial administration and most of the during the year.
property management of the Söderport Group. Nyfosa is re- Söderport’s associated company Autologistikk, in which
sponsible for property management at certain locations. Söderport owns 24.5% of the shares, signed an agreement in
Söderport contributed SEK 142 M (127) to Sagax’s profit 2018 for the sale of the company’s warehouse and office prop-
from property management in 2018. erty in Torslanda. As a result of this, Söderport recognised an
A corresponding 64% of Söderport’s rental value of SEK unrealised change in value of SEK 55 M. The sale was com-
674 M was located in Stockholm on 31 December 2018. pleted in January 2019.
S öderport’s economic vacancies amounted to SEK 26 M (35) The partnership between Nyfosa and Sagax is governed
at year end, corresponding to a vacancy rate of 4% (6). Of the by a long-term shareholder agreement, according to which
economic vacancies, SEK 6 M (9) comprised fixed-term rent the parties have equally large controlling rights regarding
discounts provided for new lettings. At year end, Stockholm S öderport. The shareholder agreement determines, inter alia,
accounted for 91% of the economic vacancies. rules for decision making in respect of investments and sales.
In 2018, 71 new leases were signed with a total lettable The shareholder agreement also regulates pre-emption rights
area of 34,000 square metres. During the year, tenants served and how share sales in Söderport may be conducted.
notice of terminating 42 leases on a total of 37,000 square The yield in 2018 was 5.8% (6.2). The change was due pri-
metres. Consequently, net leasing amounted to –3,000 square marily to positive revaluations of properties during the year.
metres. Agreements were also reached in 2018 regarding Söderport’s external loans at year end amounted to SEK
extensions of leases corresponding to a total area of 50,000 3,907 M (3,287), with average weighted capital tied-up of 1.5
square metres. years (2.6). The average weighted fixed-interest term was 3.2
years (2.8).
READ MORE » Please visit sagax.se for a property listing.
DIRECTOR'S REPORT
HEMSÖ
Capital structure, December 31 2018 Other non-interest- Property value per segment, December 31 2018
bearing liabilities 3%
Deferred tax liability 6 % Judicial system 8%
Equity 28%
Healthcare 17% Retirement
homes 41%
Non-covered Schools 34%

loan 63%

Contractual
rental value, Lettable Lease term, Economic Property
Segment No. of properties SEK M area, sqm years occupancy rate value, SEK M
Retirement homes 176 1,106 760,000 9.5 100% 18,954
Schools 110 941 555,000 12.0 99% 15,756
Healthcare 63 455 273,000 7.0 95% 7,845
Judicial system 16 248 144,000 6.9 97% 3,681
Total 365 2,750 1,732,000 9.7 98% 46,236
HEMSÖ INTRESSENTER AB 2,660 M was invested in the existing property portfolio, of

Via Hemsö Intressenter AB, Sagax indirectly owns 15% of which SEK 2,303 M pertained to new production and SEK
Hemsö Fastighets AB, with the remaining 85% owned by the 357 M to new leases and maintenance.
Third Swedish National Pension Fund. Hemsö contributed At year end, Hemsö’s interest-bearing liabilities totalled
SEK 170 M (151) to Sagax’s profit from property management SEK 29,728 M (25,575), of which secured bank loans
during 2018 after profit for Hemsö Intressenter was charged accounted for SEK 1,220 M, unsecured bond loans for SEK
with interest expenses. 23,679 M (20,317) and commercial paper outstanding for
Hemsö owns and develops public properties. The compa- SEK 4,449 M (4,038).
ny’s property portfolio comprised 365 properties with a total The partnership between the Third Swedish National
property value of SEK 46 billion at 31 December 2018. Of Pension Fund and Sagax is governed by a long-term share-
the total property value, Sweden accounts for 72%, Germany holder agreement. The shareholder agreement regulates, inter
16% and Finland 12%. A corresponding 81% of the property alia, the composition of the Board, the focus of operations,
value comprises properties located in metropolitan regions in profit appropriation and certain financing issues as well as
Sweden, Germany and Finland. put and call options between the two shareholders regarding
Of Hemsö’s contractual rents, 60% derives from munic- Sagax’s shareholding in the company. Financial instruments
ipalities, county councils or the state. 94% of rental revenue attributable to Hemsö Intressenter AB had a market valued of
derives from tax-financed operations. An average remaining SEK 449 M (373) during the year.
lease term of 9.7 years (9.2) combined with financially stable Hemsö has a long-term A- rating, with a stable outlook,
tenants and a low vacancy rate ensure stable rental revenue. and a short-term A-2/K1 rating from the Standard & Poor’s
The occupancy rate remained high, at 98% (98), at year end. rating agency. More information on Hemsö Fastighets AB is
The yield was 4.9% (5.2) in 2018. available on the company’s website, www.hemso.se.
In 2018, 29 properties were acquired for SEK 3,135 M
and ten were divested for SEK 867 M. Moreover, SEK
Visit hemso.se for more information. «READ MORE
DIRECTOR'S REPORT
Current earnings capacity
Sagax has a distinct focus on the long-term growth of the company’s profit from property management.
To facilitate assessments of the company’s position, Sagax’s estimated earnings capacity on an
annual basis and a summary of the trend in the earnings capacity at
each year end since 2013 are presented below.
CURRENT EARNINGS CAPACITY CHANGE IN CURRENT EARNINGS CAPACITY IN 2018

The table below shows Sagax’s earnings capacity on a In the table on page 45, Sagax’s reported earnings capacity
12-month basis at 1 January 2019. It is important to note at 31 December between 2013 and 2018 and the changes
that this capacity cannot be compared with a forecast for the between the various year ends are reported broken down into
forthcoming 12 months because it does not contain assess- changes in the existing property portfolio, property acqui-
ments about, for example, future vacancies, the interest rate sitions, property divestments and currency effects. Data on
scenario, currency effects, rent trends or changes in value. investments and divestments during the years concerned is
Sagax reports its current earnings capacity in conjunction also presented in the table. It can be noted that investments
with interim reports and year-end reports. in the existing property portfolio can have an impact on the
The rental value is based on contractual rental revenue earnings capacity subject to a certain time lag, depending on
on an annual basis, with supplements for estimated market whether these are still classed as ongoing investments and if,
rents for vacant premises. Property expenses are based on the for example, occupancy has occurred.
actual outcome in the past year adjusted for the holding period. Property acquisitions in 2018 resulted in an increase of
Central administration costs are based on actual outcomes SEK 322 M in rental value and a net increase of SEK 40 M in
over the most recent 12-month period. Net financial items are property expenses. Vacancies in the acquired property port-
calculated based on interest-bearing liabilities and assets on folio increased the vacancy value by SEK 7 M. Net operating
the balance sheet date. Expenses for interest-bearing liabilities income rose a total of SEK 275 M due to property acquisitions
are based on the Group’s estimated average interest rate, plus during the year.
fi nancing costs allocated over time. Dividends attributable to Sales of properties during the year reduced the rental
the company’s holdings of listed shares were not taken into value by SEK 17 M at the same time as property expenses
account in the earnings capacity. Tax is calculated at the stan- declined by SEK 4 M. Net operating income decreased by a
dard tax rate of 22% (22). Sagax’s share of profit in joint ven- total of SEK 7 M due to property sales during the year.
tures is calculated in accordance with the same assumptions as Net financial items decreased 14% to SEK –387 M despite
for Sagax, taking into account the size of the participation. a rise in interest-bearing liabilities in conjunction with prop-
For the purpose of comparison, it should be noted that erty acquisitions. This is primarily explained by the lower
in Sagax’s year-end report for 2018, it was communicated average interest rate on the company’s interest-bearing liabili-
that the profit from property management for 2019, meaning ties. The EUR price trend resulted in an increase of SEK 37 M
profit before revaluations and tax, was expected to amount in net operating income.
to SEK 1,900 M based on the current property portfolio and Profit after standard tax accruing to holders of the Class A
announced acquisitions and divestments. and B shares increased 25% (11) to SEK 1,178 M (939), corre-
sponding to SEK 7.44 (5.93) per common Class A and B share.
Current earnings capacity
SEK M 1 Jan 2019 1 Jan 2018

Current earnings capacity before tax
Rental value 2,510 2,099
Vacancy –132 –122 SEK M
Rental revenue 2,378 1 97 2,000
Property expenses –415 –333

1,600
Net operating income 1,963 1,644
Central administration –132 –77
1,200
Joint ventures 372 290
Net financial items –387 –448
800
Profit from property management 1,816 1,410
Tax –400 –310
400
Profit after tax 1,416 1,100
– of which, holders of preference shares 34 34 0
– of which, holders of Class D shares 204 127 2014 2015 2016 2017 2018
– of which, holders of Class A and B shares 1,178 939 Profit from property management
DIRECTOR'S REPORT
Trend in current earnings capacity 2013–2018, at 31 December
2013 2014 2015

Change Property Property Change Property Property Change Property Property
existing Currency acquisi- divest- 1 Jan existing Currency acquisi- divest- 1 Jan existing Currency acquisi- divest- 1 Jan
SEK M portfolio effect tions ments 2014 portfolio effect tions ments 2015 portfolio effect tions ments 2016
Rental value 16 10 133 –9 1,051 5 23 199 –11 1,267 16 –21 200 –9 1,453
Vacancy –9 0 –5 – –80 10 –1 –5 1 –74 11 1 –2 5 –59
Rental revenue 7 10 129 –9 971 15 22 194 –10 1,193 27 –20 198 –4 1,394
Property expenses –7 – –15 0 –138 –3 –2 –27 0 –170 –7 0 –19 1 –195

Net operating – 10 114 –9 833 12 20 167 –10 1,023 20 –20 179 –3 1,199
income
Central administration –42 –47 –57

Share of profit of joint ventures 106 198 236
Net financial items –323 –362 –371
Profit from property
management 574 812 1,008
Tax –126 –179 –222

Profit after tax 448 633 786
of which, accrues to
– holders of preference shares 100 111 117
– holders of Class D shares N/A N/A N/A
– holders of Class A and B shares 348 522 670
Investments and
divestments 137 – 1,126 –94 236 – 1,726 –94 200 – 2,200 –36
2016 2017 2018

Change Property Property Change Property Property Change Property Property
existing Currency acquisi- divest- 1 Jan existing Currency acquisi- divest- 1 Jan existing Currency acquisi- divest- 1 Jan
SEK M portfolio effect tions ments 2017 portfolio effect tions ments 2018 portfolio effect tions ments 2019
Rental value 32 31 399 –36 1,880 34 30 166 –13 2,099 53 54 322 –17 2,510
Vacancy 1 –1 –63 2 –121 16 –1 –22 6 –122 –4 –3 –7 4 –132
Rental revenue 34 30 336 –34 1,759 51 30 144 –7 1,977 49 51 315 –13 2,378
Property expenses –18 –4 –59 8 –268 –29 –4 –35 3 –333 –34 –14 –40 6 –415
Net operating 16 26 278 –26 1,491 22 26 110 –4 1,644 15 37 275 –7 1,963
income
Central administration –68 –77 –132

Share of profit of joint ventures 271 290 372
Net financial items –418 –448 –387
management 1,277 1,410 1,816
Tax –281 –310 –400

Profit after tax 996 1,100 1,416
of which, accrues to
– holders of preference shares 117 34 34
– holders of Class D shares 37 127 204
–holders of Class A and B shares 843 939 1,178
Investments and
divestments 252 – 3,477 –949 346 – 1,384 –41 456 – 3,026 –24
Changes in the property portfolio, see page 22. «READ MORE
DIRECTOR'S REPORT
Risks and risk management
Sagax is exposed to various risks that may be of significance to the

company’s future business, earnings and financial position.
The company works actively to identify and manage the risks and opportunities
that are of considerable importance to the operations.
RENTAL REVENUE AND RENT TRENDS electricity and heating costs for the properties. For the bulk
Sagax’s revenue is impacted by long-term demand for prem- of these expenses, tenants are either charged directly or the
ises in the warehouse and light industry segment, the proper- expense is passed on by Sagax at cost price. Sagax’s exposure
ties’ occupancy rate and the rent level received. to changes in operating expenses is thus relatively limited.
The rental markets for the warehouse and light industry In the event of vacancies, the company’s profit is not only
segment in the Stockholm and Helsinki regions are Sagax’s impacted by lost rental revenue but also by expenses for such
largest markets and account for 51% (55) of the Group’s rental items as power, which were previously paid by the tenants.
value. These rental markets are characterised by relatively low
volatility and a limited level of relocation. To limit Sagax’s TRANSACTION-RELATED RISKS
e xposure to vacancies and rent losses, Sagax endeavours to Property acquisitions form part of the company’s day-to-day
offer leases with long average terms and to prioritise tenants operations and are, by their very nature, associated with uncer-
with a high credit rating, despite these entailing slightly lower tainty. Risks related to the acquisition of properties include the
immediate earnings. This is particularly important in rela- future loss of tenants, environmental conditions, limitations
tion to major tenants. Dependency on individual tenants is on the right of use and technical faults. Risks connected with
reduced in pace with the acquisition of properties by Sagax. the acquisition of property companies include taxes and legal
Rent-level risk is attributable to trends in current market disputes. It is therefore vital to have the right expertise for
rents. Sagax’s management strategy stipulating long-term property acquisitions in the organisation and to engage external
leases mitigates this risk for the foreseeable future. Sagax expertise where necessary. Sagax contends that the company
works continuously to renegotiate existing leases with the has adequate expertise to implement acquisitions and to inte-
aim of minimising the short-term risk. Leases with a term in grate these into the property management operation.
excess of three years normally include a supplement linked In connection with property divestments, it is common for
to the Consumer Price Index (CPI) in Sweden and to similar the seller to provide guarantees regarding the validity of the
indexes in other markets, meaning they are fully or partially leases, environmental risks and so forth. When selling a prop-
inflation indexed. At year end, 99% of Sagax’s contractual erty company, it is also common to provide guarantees that no
rents were linked to the CPI or similar indexes. tax disputes or other legal disputes exist that could impact the
company in the future. The guarantees are normally limited
CREDIT RISK in time. It is important that such commitments are correctly
The primary counterparty risk to which Sagax is exposed is formulated and, in Sagax’s opinion, the company has adequate
that tenants could fail to make the payments required by their competence to assess and formulate such documents.
lease. The geographic distribution of Sagax’s property port-
folio and the industries of its tenants are highly diversified. CHANGES IN VALUES OF PROPERTIES
Sagax’s lease structure of many small leases help reduce the Sagax is exposed to changes in the market value of the property
risks of vacancies and rent losses. portfolio. To assess the properties’ market value, Sagax engages
In conjunction with acquisitions and leases, counterparty the services of external valuation companies. The company
risk assessments are carried out and contracts are supple- believes that the use of reputable, independent valuation com-
mented, if necessary, by collateral in the form of deposits, panies creates the optimal long-term conditions for a fair and
bank guarantees, surety provided by the Parent Company or a trustworthy assessment of the properties’ market value.
similar instrument. Sagax works continuously to monitor and Sagax recognises its property holdings at fair value
evaluate the financial position of its tenants. Sagax’s opinion according to the accounting standard IAS 40 Investment
is that the company’s tenants, with a small number of excep- Property, stipulating that the properties’ consolidated
tions, have a solid financial position. carrying amounts correspond to their assessed market value.
Accordingly, declining market values for the company’s prop-
OPERATING AND MAINTENANCE COSTS erties will negatively impact the company’s income statement
Regarding the rental situation for premises in the warehouse and balance sheet. Declining market values may occur due to
and light industry segment, tenants in this area often assume a weakened economy, rising interest rates or property-specific
relatively far-reaching responsibility for operations and main- circumstances, including vacancies, a deterioration in the
tenance. The most significant operating expenses include technical standard or accidents resulting in material damages.

Valuation techniques used for properties, see page 100.
DIRECTOR'S REPORT
The company takes continuous actions to limit its exposure to curves, the effects on Sagax’s profit before tax in connection
these events through, for example, proactive management, the with a simulated parallel shift of, for example, +1.0 percent-
signing of property insurance agreements and by formulating age point (100 basis points) in the underlying swap curves is
leases with adequate contractual terms. presented in the chart below. All other things being equal, this
To prepare the accounts in accordance with generally would entail a positive revaluation of Sagax’s fixed-income
accepted accounting policies, company management must derivatives by SEK 103 M. A corresponding downward shift
make judgments and assumptions that affect asset and liability of 1.0 percentage point would entail a negative revaluation of
items, revenue and expense items recognised in the accounts SEK 99 M. Sagax’s earnings are also affected by the company’s
and other information provided. The actual outcome may differ share in profit of joint ventures, which – like Sagax – use fixed-
from these judgments. The valuation of investment properties income derivatives to reduce their interest-rate risks and mea-
can be significantly affected by the judgments and assumptions sure their derivatives at market value on a quarterly basis.
made by company management. In order to reduce the risk of
incorrect valuations, Sagax has engaged authorised external FINANCING
appraisers to assess the market value of all of the properties. Sagax’s financing primarily comprises equity and inter-
A sensitivity analysis for property values in relation to est-bearing liabilities. In a bid to limit its refinancing risk,
changes in the assumptions on yield requirements, cost of defined as the risk that refinancing existing debt cannot take
capital, rental revenue and property expenses is presented in place on reasonable terms, Sagax endeavours to have a low
Note 13. percentage of current interest-bearing financing and to secure
refinancing for non-current interest-bearing liabilities at ample
CHANGE IN VALUES OF FINANCIAL DERIVATIVES advance notice. In addition, Sagax strives to use several dif-
To limit the interest-rate risk, defined as the risk of an impact ferent sources of financing. Overall, this working approach is
on earnings or cash flow due to changes in market interest deemed effective in limiting the company’s refinancing risk.
rates, and thus increase the predictability of profit from prop- The company’s long-term financing comprises credit facili-
erty management, Sagax uses nominal interest-rate swaps and ties, listed bond loans and commercial paper. The counterpar-
interest-rate caps. Sagax’s fixed-income derivatives comprised ties of the credit facilities are Swedish and foreign commercial
a nominal total of SEK 6,198 M (8,010) at year end. banks. In certain cases, the facilities may be subject to special
The financial derivatives are measured at market value conditions, such as maintaining a specific interest coverage
each quarter and their value is affected by the financial mar- ratio. This means that creditors may be entitled to demand
kets’ expectations regarding the development of underlying repayment of granted credit lines prematurely or request
market interest rates over the term of the derivative. The changed conditions if these special commitments are not met
changes in value are recognised as an expense in profit or loss by the borrower. Sagax has financial covenants. The company
and as a liability in the balance sheet, but do not affect cash complies with all of its financial covenants. Sagax is of the
flow. Over time, all other things being equal, the provision in opinion that the facilities are on commercial terms.
the balance sheet will be gradually reversed and recognised as The table on page 53 shows both the debt ratio’s sensi-
revenue until the end of the derivative’s term. tivity to changes in property values and the interest coverage
To understand the valuation effects on Sagax’s fixed-in- ratio’s sensitivity to changes in the properties’ occupancy rate.
come derivatives in the event of changes in the underlying swap
Revaluation in the event of changes in swap curves Effect on debt ratio upon change in value of
SEK M property portfolio at 31 December 2018
300
Change, % –20 –10 0 +10 +20
200
Value change, SEK M –5,805 –2,902 – 2,902 5,805
100 Debt ratio, % 57 51 47 43 40
0
–100 Effect on interest coverage ratio upon change in

occupancy rate at 31 December 2018
–200
–300 Change, % –10 –5 0 +5 +10

+100 bp Shift +50 bp Shift –50 bp Shift –100 bp Shift Occupancy rate, % 85 90 95 99 N/A
Change in market value (SEK) Change in market value (EUR) Interest coverage ratio, % 387 410 434 457 N/A
Financing, see page 38. «READ MORE

Fixed-income derivatives, see page 42.
DIRECTOR'S REPORT
LIQUIDITY RISK ORGANISATIONAL RISK

Sagax has positive operating cash flow and will have limited The company has a relatively small organisation, which
refinancing requirements over the next few years; refer to creates a dependency on certain employees. The company’s
Note 17 where the maturity dates for the Group’s financing growth has helped to alleviate this risk in recent years. Sagax’s
are presented. Sagax’s working capital, excluding prepaid future development is highly dependent on the expertise,
rental revenue of SEK 199 M, amounted to SEK –1,059 M e xperience and commitment of company management and
(–1,350). The available access to funds amounted to SEK other key individuals. Regular career development talks are
3,392 M (3,233) in the form of unutilised credit facilities. No held with all personal, as a means of identifying the need for
additional collateral needs to be pledged to utilise these credit skills development. The company could be negatively im-
facilities. pacted should one or more of these key individuals terminate
their employment. Employee turnover has been low at Sagax
INTEREST-RATE RISK in recent years. The employment contracts reached are con-
Interest expenses are the Group’s largest current cost item. sidered to be on commercially competitive terms and Sagax
Interest-rate risk is defined as the risk that changes in the has also established annual incentive plans to attract new
interest-rate scenario will affect Sagax’s financing cost. The e mployees and retain existing ones.
interest-rate risk is attributable to the trend in current interest
rates. To reduce Sagax’s exposure to rising interest rates, the OPERATIONAL RISKS
Group has a significant number of its interest expenses from Within the framework of its day-to-day current operations,
fixed-rate loans. To limit interest-rate risk for loans at float- Sagax could potentially incur losses due to flawed procedures,
ing interest rates, interest-rate swaps and interest-rate caps inadequate control or impropriety. Well-adapted administra-
are used. Calculated on the existing financing terms for the tive systems, effective internal control, skills development and
Group’s interest-bearing liabilities on 31 December 2018, a access to reliable valuation and risk models provide a sound
rise in market interest rates of 1 percentage point would have basis for reducing the operational risks. Sagax works contin-
increased Sagax’s annualised interest expenses by SEK 65 M uously to develop the company’s administrative security and
(52). A reduction in market interest rates of 1 percentage point controls.
would have lowered Sagax’s interest expenses by SEK 3 M
(–14) on an annual basis, since many of Sagax’s contracted loan ENVIRONMENTAL RISKS
facilities include base-rate clauses that do not permit base-rates According to applicable environmental legislation, the
to drop below zero when setting interest rates for the interest operator is ultimately responsible for pollution and other
period. Had the company not utilised fixed-income derivatives environmental damage. Under the Swedish Environmental
to mitigate the interest-rate risk, an increase in market interest- Code, Sagax has no operations requiring any special permits.
rates of 1 percentage point would have increased interest However, there may be tenants who conduct operations
expenses by SEK 90 M (97) and a reduction in market interest- requiring special permits under the Environmental Code,
rates of 1 percentage point would have decreased interest meaning that they are regarded as operators as stipulated in
expenses by SEK 28 M (31) on an annual basis. the Environmental Code.
Taking into account Sagax’s derivatives, the average If the operator is unable to perform or defray post-
fixed-interest period was 3.0 (2.1) at year end. Accordingly, treatment of a property, however, the party who acquired the
this entails that Sagax’s profit from property management is property and who knew of or should have detected the pollu-
only impacted to a limited extent in the event of changes in tion when the property was acquired is to assume responsibil-
the general interest rate scenario. ity. This means that under certain circumstances, claims may
be directed at Sagax for land remediation or post-treatment
CURRENCY RISK in the event of the occurrence or suspicion of contamination
At year end, Sagax owned 283 (298) properties in Finland, five of land, catchment area or ground water for the purpose of
(five) properties in Germany, 61 (50) properties in France and returning the property to the condition required according
33 (16) properties in the Netherlands, which entailed exposure to the Environmental Code. Such claims could have a nega-
to the EUR exchange rate. The properties are financed with eq- tive impact on Sagax. It is therefore crucial that the property
uity and external loans. At 31 December 2018, interest-bearing owner and the operator cooperate on issues concerning the
liabilities denominated in EUR corresponded to SEK 10,355 M environmental impact of a particular operation. Sagax per-
(5,848). At the same date, the market value of the properties forms regular environmental analyses of the properties that
in Finland, Germany, France and the Netherlands was SEK are acquisition candidates.
16,708 M (12,566). Net exposure on 31 December, assets less There are currently no material environmental claims
liabilities in EUR, amounted to SEK 5,514 M (4,910). In accor- directed at any of the Group companies. Nor has Sagax iden-
dance with IAS 21, the currency effects for foreign operations tified any significant environmental risks.
and hedge accounting are recognised in Other comprehensive For the Sagax Sustainability Report, see pages 154–165.
income. Other currency effects are recognised in profit or loss.
READ MORE » Taxes, refer to Note 12 on page 98.

Organisation and employees, see page 60.
DIRECTOR'S REPORT
TAXES AND AMENDED LEGISLATION are known as temporary differences; refer to Note 14. Sagax
In a decision of 20 December 2016 pertaining to the has also taken into account deferred tax assets regarding
2014 income year, the Swedish Tax Agency denied the Group accumulated loss carryforwards in its Group companies. The
company Sagax Bruket Fastigheter AB deductions for loss consequence is that Sagax’s earnings and equity are exposed
carryforwards of SEK 277 M and imposed additional tax of to changes in tax legislation in those countries in which the
SEK 28 M. In a ruling on 27 February 2018, the Administrative Group conducts operations.
Court upheld the Swedish Tax Agency’s claim in a decision of Changes in ownership, which entail a change in the con-
7 December 2017 pertaining to the 2015 income year, the Tax trolling influence over the company, could result in partial or
Agency also denied the group company Firethorne AB deduc- entire restrictions on the ability to utilise losses from previous
tions for loss carryforwards of SEK 1,166 M. In a ruling on 7 years. The possibility to utilise the loss carryforwards may
February 2019, the Administrative Court upheld the S wedish also be impacted by amendments to legislation.
Tax Agency’s claim Sagax is of the opinion that the Tax The company pays property tax for all properties except
Agency’s decisions are incorrect and the companies concerned for three properties in Stockholm, and the majority of leases
have appealed the decision. If the Tax Agency’s decisions were include a clause stipulating that this cost will be defrayed by
to be upheld, Sagax estimates that the negative earnings effect the tenants.
recognised for the Group would be SEK 85 M and SEK 156 M, Sagax’s tax expenses are explained in Note 12.
respectively. Sagax has not made any provisions for these risks. Other factors that may have negative implications for the
In its financial statements, Sagax has taken into account company include amendments to legislation or legal practices,
deferred tax based on the difference between an asset’s or including law of tenancy and legislation governing acquisitions
l iability’s carrying amount and its tax-assessment value, which and the environment.
SENSITIVITY ANALYSIS
Sagax’s exposure to material risks in the company’s operations is presented below.
Sensitivity analysis at 31 December 20181)

Effect on profit
from property Effect on profit
management, after tax, Effect on
SEK M Change annual basis annual basis3) equity3)
Economic occupancy rate +/–1% +/–25 +/–20 +/–20
Rental revenue +/–1% +/–24 +/–19 +/–19
Property expenses +/–1% –/+4 –/+3 –/+3
Interest expenses for liabilities in SEK including fixed-income derivatives +/–1% point –38/+12 –30/+9 -30/+9
Interest expenses for liabilities in EUR including fixed-income derivatives +/–1% point –27/–8 –21/–7 –21/–7
Interest expenses for liabilities in SEK excluding fixed-income derivatives +/–1% point –49/+23 –38/+18 –38/+18
Interest expenses for liabilities in EUR excluding fixed-income derivatives +/–1% point –41/+5 –32/+4 –32/+4
Revaluation of fixed-income derivatives in SEK due to shift in interest rate curves +/–1% point N/A +50/–53 +50/–53
Revaluation of fixed-income derivatives in EUR due to shift in interest rate curves +/–1% point N/A +30/–24 +30/–24
Change in SEK/EUR exchange rate2) +/–10% +/–93 +/–73 +/–551
Changed rent level for contract maturity in 2018 +/–10% +/–25 +/–19 +/–19
1) Excluding share in profit of joint ventures.

2) S agax’s net exposure to the SEK/EUR exchange rate comprises assets and liabilities recognised in EUR, in addition to revenue and expenses in EUR.
3) Including standard tax at 22%.
Auditor’s Report, see page 122. «READ MORE

Summary of the Sagax property portfolio, see page 18.
DIRECTOR'S REPORT
The Sagax share and shareholders
Sagax has four share classes, which are all listed on Nasdaq Stockholm, Large Cap.
The company’s market capitalisation on 31 December 2018 amounted to SEK 25 billion.
At year end, Sagax had 10,867 (9,348) shareholders. Sagax’s

Trading in the shares 2018
market capitalisation amounted to SEK 24,664 M (18,080). Turnover Average
Sagax has four classes of shares: Class A, B and D common rate on an trading volume,
Price paid, SEK annual basis, % SEK M
shares, and preference shares. The shares are listed on Nasdaq
31 Dec 31 Dec
Stockholm, Large Cap. 2018 2017 2018 2017 2018 2017
A total of 278,080,255 shares were outstanding at year end, Class A shares 153.50 103.80 3 3 0.2 0.1
of which 1,000,000 were bought back Class B shares held in Class B shares 129.60 98.20 9 8 5.6 4.3
treasury. Refer also to the table of voting rights and proportion Class D shares 31.70 29.92 40 40 4.5 2.0
of share capital for the different classes of shares on page 58. Preference
According to the Articles of Association, each preference shares 34.85 33.40 33 28 0.8 1.3
share confers a preferential right to SEK 2.00 in annual divi-
dends. Class D shares are entitled to five times the total div-
idend on Class A and B shares, although not more than SEK
2.00 per share. The share price trend and information about
share trading are provided below.
Price performance for Class A share 2018 Price performance for Class B share 2018
SEK Number SEK Number
170 150 140 1,300
160 130 1,200
150
120 1,100
140 120 110
130 1,000
120 100 900
110 90 800
100 90 80
700
90 70
80 600
60
70 60 500
60 50
400
50 40
40 30 300
30 30
20 200
20
10 100
10
0 0 0 0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Sagax A Number of shares traded per week, thousands Sagax B Number of shares traded per week, thousands
Carnegie Real Estate Index OMX Stockholm_Pl Carnegie Real Estate Index OMX Stockholm_Pl
Source: Sourcce
Price performance for Class D share 2018 Preference share price performance 2018
SEK Number SEK Number
40 45 450
3,000
35 40 400
2,500
30 35 350
25 2,000 30 300
25 250
20 1,500
20 200
15
1,000 15 150
10
10 100
5 500
5 50
0 0 0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Sagax D Number of shares traded per week, thousands
The preference share Number of shares traded per week, thousands
Sagax D (total return)
Source:
The preference share (total return) Source:
READ MORE » Events after the end of the year, see page 65.
Corporate Governance Report, see page 66.
Notification of the 2018 Annual General Meeting (AGM), see page 146.
DIRECTOR'S REPORT
SHARE CAPITAL DIVIDEND POLICY

The share capital in Sagax at the end of the year amounted Sagax’s dividend policy is that the total dividend to the hold-
to SEK 486,640,446 and distributed among a total of ers of the four share classes will amount to about one third of
278,080,255 shares, including 1,000,000 Class B shares held profit from property management per year. The Board is also
in treasury. The quotient value per share is SEK 1.75. Each authorised to propose the distribution of non-recurring prof-
Class A share carries one voting right and each Class B share, its to shareholders. According to the Articles of Association,
Class D share and preference share carries one tenth of a vot- each preference share confers a preferential right to SEK 2.00
ing right; also refer to Note 27, Equity. Each voting member is in annual dividends. Each Class D share provides entitlement
entitled to vote for the full number of owned and represented to a maximum of SEK 2.00 per share.
shares at the Annual General Meeting (AGM). The Sagax In accordance with this dividend policy, the Board
share is subject to trading on Nasdaq Stockholm. The shares proposes that the 2019 AGM resolve to pay a dividend of
are traded on Large Cap (symbol SAGA A, SAGA B, SAGA SEK 2.00 (1.80) per Class A and Class B common share, an
D and SAGA PREF). increase of 11%. The Board also proposes a dividend of SEK
On 1 June, Sagax completed a rights issue of 23,862,214 2.00 (2.00) per preference share and Class D share through a
Class D common shares, on 14 June, the company completed quarterly payment of SEK 0.50, in accordance with the Arti-
a private placement of 9,574,617 Class D common shares and cles of Association. The proposed dividend to the holders of
on 6 November completed a private placement of 4,900,000 the four share classes amounts to a total of SEK 556 M (446),
Class D common shares. Moreover, due to the exercise of corresponding to 34.6% (33.4) of profit from property man-
warrants under the 2015/2018 Incentive Plan, Sagax issued agement.
121,275 Class B common shares in June. In total, the issues
generated equity of SEK 1,125 M for the company, see also
page 89.
Largest shareholders, 31 December 20181)
No. of shares Percentage of

Class A Class B Class D Preference
shares shares shares shares Share capital Votes2)
David Mindus and companies 5,172,400 37,693,025 4,358,539 775 17.0% 23.6%
Rutger Arnhult and companies 2,861,585 17,381,597 4,401,254 3,017 8.9% 12.7%
Staffan Salén and companies 2,132,464 17,485,330 2,462,922 – 7.9% 10.4%
Third Swedish National Pension Fund – 12,233,829 – – 4.4% 3.1%
Avanza Pension 26,254 557,765 8,539,010 1,761,742 3.9% 2.8%
Länsförsäkringar Fonder – 8,485,826 – – 3.1% 2.1%
Fourth Swedish National Pension Fund 2,858 5,827,117 2,157,806 – 2.9% 2.0%
SEB Fonder – 5,291,216 328,023 – 2.0% 1.4%
Swedish Foundation for Strategic Research – – 5,576,376 – 2.0% 1.4%
Erik Selin and companies 574,985 2,269,000 2,148,868 – 1.8% 2.6%
Ilmarinen Mutual Pension Insurance
Company – – 4,900,000 – 1.8% 1.2%
Swedbank Robur Fonder 250,000 3,266,389 190,216 – 1.3% 1.5%
Patrik Brummer – – 166,666 3,500,000 1.3% 0.9%
ICA-Handlarnas Förbund – – 3,624,253 – 1.3% 0.9%
Handelsbanken Fonder – 3,600,000 – – 1.3% 0.9%
Vanguard – – 2,584,574 558,124 1.1% 0.8%
Volvo Pensions Foundation – – 3,132,243 – 1.1% 0.8%
Lars Ingvarsson and companies 100,000 1,673,205 304,710 – 0.7% 0.7%
Norges Bank – 22,538 2,029,461 – 0.7% 0.5%
Norron Fonder – – 2,047,871 – 0.7% 0.5%
Total 20 largest shareholders 11,120,546 115,786,837 48,952,792 5,823,658 65.3% 70.8%
Other shareholders 2,296,276 29,192,568 52,947,208 10,960,370 34.3% 29.2%

Sub-total 13,416,822 144,979,405 101,900,000 16,784,028 99.6% 100.0%
Treasury shares held by AB Sagax – 1,000,000 – – 0.4% 0.0%

Total 13,416,822 145,979,405 101,900,000 16,784,028 100.0% 100.0%
– of which, Board and employees 7,625,419 59,202,791 8,056,379 923 26.9% 36.1%
1) Ownership structure at 31 December is based on information from Monitor and Euroclear Sweden.
2) Voting rights for treasury shares held by AB Sagax have been excluded.
Share capital trend, see page 113. «READ MORE

Proposed appropriation of retained earnings, see page 119.
Articles of Association, see page 144.
DIRECTOR'S REPORT
INCENTIVE PLANS FOR EMPLOYEES The subscription price corresponds to the price paid for the
Sagax has three warrant plans for the company’s employees. Class B share at the start of the warrant plan, converted using
In total, Sagax’s employees hold 801,670 warrants, corre- the average share price trend for the listed property compa-
sponding to 0.5% of the number of Class A and B shares nies in accordance with Carnegie’s property index (CREX)
outstanding. The company’s CEO and Board Members do during the corresponding period. Accordingly, the warrants
not participate in the plans. These plans are valid for three will have a value on condition that the price performance of
years, and encompass the periods 2016–2019, 2017–2020 and the Sagax share exceeds the average for the listed property
2018–2021. Warrants entitle the holder to subscribe for Class companies during each three-year period.
B shares in June 2019, June 2020 and June 2021, respectively.
Ownership structure, 31 December 20181)

No. of Shareholder No. of Share of Shareholders by No. of Share of
No. of shares shareholders category shares voting power country shares voting power
1–500 5,995 Private individuals Sweden 10,144 88%
501–1,000 1,057 residing in Sweden 9,481 10%
Luxembourg 22 4%
1,001–2,000 986 Private individuals
residing abroad 75 0% USA 48 2%
2,001–5,000 1,175
Companies/ Belgium 9 2%
5,001–10,000 610 institutions in Sweden 663 77%
10,001–50,000 746 Switzerland 12 2%
Companies/
50,001– 298 institutions abroad 648 12% Other countries 632 4%
Total 10,867 Total 10,867 100% Total 10,867 100%
1) Including shares held by AB Sagax.
Key performance indicators per Class B share

2018 2017 2016 2015 2014
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
Price of Class B share at the end of the year, SEK 129.60 98.20 81.75 71.75 44.00
Profit from property management after dilution, SEK 8.61 7.40 5.96 4.90 3.73
Cash flow after dilution, SEK1) 7.89 6.52 5.12 3.99 2.99
Equity after dilution, SEK 71.34 54.26 39.14 25.93 17.44
EPRA NAV, SEK 2) 88.45 70.07 53.78 35.52 27.23
Price of Class B share/Profit from property management, multiple 15.0 13.3 13.7 14.6 11.8
Price of Class B share/Cash flow, multiple1) 16.4 15.1 16.0 18.0 14.7
Price of Class B share/Equity, % 182 181 209 277 252
Price of Class B share/EPRA NAV, % 147 140 152 202 162
1) Cash flow pertains to cash flow from operating activities before changes in working capital.
2) See page 150 for definition.
Share price performance and volatility

Sagax Class A Sagax Class B Sagax Class D Sagax Carnegie Real
Performance1), 2) share share3) share4) preference share Estate Index OMX Stockholm PI
1 year 48% 32% 6% 4% 13% -8%
2 years 65% 59% 12% 10% 11% 6%
3 years 113% 81% N/A 7% 17% 13%
4 years 247% 195% N/A –7% 48% 20%
5 years 473% 436% N/A 6% 100% 34%
Sagax Class A Sagax Class B Sagax Class D Sagax Carnegie Real
Volatility1) share share3) share4) preference share Estate Index OMX Stockholm PI
1 year 31% 22% 10% 12% 12% 12%
2 years 32% 23% 10% 13% 13% 12%
3 years 38% 26% N/A 13% 14% 14%
4 years 39% 30% N/A 13% 16% 14%
5 years 39% 30% N/A 12% 14% 14%
1) Calculated on 31 December 2018.

2) The trend does not include reinvested dividend for Sagax shares or the Carnegie Real Estate Index and OMX Stockholm PI.
3) The Class B shares were listed on 8 April 2013.
4) The Class D shares were listed on 9 November 2016.
READ MORE » Articles of Association, see page 144.
DIRECTOR'S REPORT
The Sagax Board of Directors has proposed to the AGM on 7 EQUITY PER CLASS A AND B SHARE
May 2019 that it resolve to approve a corresponding incentive Equity per Class A and B share after dilution amounted to
plan providing entitlement to the company’s employees, with SEK 71.34 (54.26). EPRA NAV per Class A and B share
the exception of the CEO and the Board Members, to sub- amounted to SEK 88.45 (70.07). The share price for the Class
scribe for new common shares in June 2022. B share at the end of the period was 182% (181) of equity
No additional warrants or convertibles are outstanding. per Class B share and 147% (140) of EPRA NAV per Class B
share. EPRA (the European Public Real Estate Association)
LIQUIDITY PROVIDER is an interest organisation for listed property companies and
Carnegie Investment Bank serves as liquidity provider for investors in Europe, whose assignment includes setting the
the company’s Class A and D shares within the framework standard for the key figure EPRA NAV (Net Asset Value).
of Nasdaq Stockholm’s liquidity provider system. Under the EPRA NAV is used for calculating long-term net asset value
agreement with Carnegie, the liquidity provider establishes and is defined as recognised equity according to the balance
buy and sell prices in the order book for Class A and D Sagax sheet following reversal of reserves for fixed-income deriv-
shares, at the same time as a guaranteed volume of shares is atives, deferred tax pertaining to temporary differences on
provided on the buy and sell pages of the order book. The property values and deferred tax pertaining to reserves for
purpose of the agreement is to promote share liquidity. fixed-income derivatives.
SHARE PRICE RELATIVE TO THE COMPANY’S PERFORMANCE

Profit from property management per Class A and B share, SEK
Profit from property management per Class A and B share
after dilution amounted to SEK 8.61 (7.40) which, compared
with the price of the common share at year end, corresponded
to a multiple of 15.0 (13.3).
Shareholder category, share of equity EPRA NAV, 31 December 2018

SEK per Class A
and B share after
Pension foundations, 3% Non-categorised legal entities 2% SEK M dilution
Equity 15,416 97
Other financial companies, 5%
Interest organizations 5% Deduction for equity for preference shares –537 –3
Social insurance Deduction for equity for Class D shares –3,567 –22
Other Swedish
funds 7% Reversal of derivatives 117 1
legal entities 42%
Fund companies 9% Reversal of deferred tax,
Swedish natural other temporary differences 1,967 12
persons 13% Reversals due to joint ventures 627 4
EPRA NAV 14,023 88
Owners resident abroad 14%
Source: Euroclear Sweden
Share price/profit from property management per common share Share price in relation to equity and EPRA NAV
Multiple %
25 350
20 280
15 210
10 140
5 70
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Share prince/profit from property management Share price/equity per Class B share
per Class B share, rolling 12 months Share price/EPRA NAV per Class B share
History of the business, see page 10. «READ MORE

Changes in consolidated equity, see page 83.
DIRECTOR'S REPORT
Voting rights and proportion of share capital

Voting rights per Proportion of voting Proportion of share
Class of share No. of shares share Number of votes rights capital
Class A shares 13,416,822 1.0 13,416,822 34% 5%
Class B shares 145,979,405 0.1 14,597,941 37% 52%
Class D shares 101,900,000 0.1 10,190,000 26% 37%
Preference shares 16,784,028 0.1 1,678,403 4% 6%
Total 278,080,255 39,883,165 100% 100%
INSIDER-REGISTERED TRANSACTIONS
Below are the transactions reported to the Swedish Financial Supervisory Authority’s insider register conducted
in the period between 1 January 2018 and 28 February 2019 by Board Members and employees of AB Sagax.
Transaction Person in
date Duty to report managerial position Position Character Instruments Volume
8 Feb 2019 Staffan Salén Staffan Salén Chairman of the Board Divestment Sagax D 500,000
8 Feb 2019 Duco AB David Mindus CEO Acquisition Sagax A 52,000
8 Feb 2019 Duco AB David Mindus CEO Acquisition Sagax B 508,000
18 Dec 2018 Camilla Werdelin Ulrika Werdelin Board Member Gift received Sagax B 35,000
18 Dec 2018 Ulrika Werdelin Ulrika Werdelin Board Member Gift presented Sagax B 35,000
17 Dec 2018 Camilla Werdelin Ulrika Werdelin Board Member Divestment Sagax B 3,000
17 Dec 2018 Fredrik Werdelin Ulrika Werdelin Board Member Divestment Sagax B 2,500
17 Dec 2018 Gabriela Werdelin Ulrika Werdelin Board Member Divestment Sagax B 1,800
10 Dec 2018 Björn Garat Björn Garat Deputy Managing Director Divestment Sagax D 12,038
29 Nov 2018 Mindustri AB David Mindus CEO Divestment Sagax D 2,000,000
2 Nov 2018 Duco AB David Mindus CEO Acquisition Sagax A 20,000
2 Nov 2018 Mindustri AB David Mindus CEO Divestment Sagax A 20,000
25 Oct 2018 Salénia Holding AB Staffan Salén Chairman of the Board Acquisition Sagax A 133,731
17 Sep 2018 Filip Engelbert Filip Engelbert Board Member Divestment Sagax D 155,365
30 Aug 2018 Björn Garat Björn Garat Deputy Managing Director Divestment Sagax D 24,227
30 Aug 2018 Björn Garat Björn Garat Deputy Managing Director Acquisition Sagax D 2,800
30 Aug 2018 Gabriela Werdelin Ulrika Werdelin Board Member Divestment Sagax B 1,650
20 Jul 2018 Björn Garat Björn Garat Deputy Managing Director Divestment Sagax D 12,597
18 Jul 2018 Björn Garat Björn Garat Deputy Managing Director Acquisition Sagax D 18,661
18 Jul 2018 Fredrik Werdelin Ulrika Werdelin Board Member Divestment Sagax B 1,000
17 Jul 2018 Björn Garat Björn Garat Deputy Managing Director Acquisition Sagax D 18,039
12 Jun 2018 Björn Garat Björn Garat Deputy Managing Director Acquisition Warrants Class B 20,893
share 2018-2021
11 Jun 2018 Björn Garat Björn Garat Deputy Managing Director Redemption increase Sagax B 27,400
11 Jun 2018 Mikael Dahlberg Mikael Dahlberg Group controller Redemption increase Sagax B 10,400
6 Jun 2018 Agneta Segerhammar Agneta Segerhammar CFO Acquisition Warrants Class B 18,274
share 2018-2021
6 Jun 2018 Mikael Dahlberg Mikael Dahlberg Group controller Acquisition Warrants Class B 8,016
share 2018-2021
4 Jun 2018 Björn Garat Björn Garat Deputy Managing Director Subscription Sagax BTA D 1,589
4 Jun 2018 Förvaltnings AB Johan Thorell Board Member Subscription Sagax BTA D 1,976
Grötlingboudd
Hummelbosholm
Hummelbosholm
29 May 2018 Andreas Mindus David Mindus CEO Subscription Sagax BTA D 1,280
29 May 2018 Björn Garat Björn Garat Deputy Managing Director Subscription Sagax BTA D 89,125
DIRECTOR'S REPORT
Transaction Person in
date Duty to report managerial position Position Character Instruments Volume
29 May 2018 Bockepall Johan Cederlund Board Member Subscription Sagax BTA D 8,221
Förvaltnings AB
29 May 2018 David Mindus David Mindus CEO Subscription Sagax BTA D 400
29 May 2018 David Mindus David Mindus CEO Acquisition Sagax BTA D 187,228
29 May 2018 David Mindus David Mindus CEO Acquisition Sagax BTA D 2,634,566
29 May 2018 Filip Engelbert Filip Engelbert Board Member Acquisition Sagax AB GFA PREF 124,551
29 May 2018 Förvaltnings AB Johan Thorell Board Member Subscription Sagax D 11,400
Grötlingboudd
Förvaltnings AB
29 May 2018 Hummelbosholm Johan Thorell Board Member Subscription Sagax D 99,249
29 May 2018 Förvaltnings AB Johan Thorell Board Member Subscription Sagax D 74,034
Hummelbosholm
29 May 2018 David Mindus David Mindus CEO Subscription Sagax BTA D 1,280
29 May 2018 Isabelle Mindus David Mindus CEO Subscription Sagax BTA D 1,573
LMG Distribution
29 May 2018 Aktiebolag Björn Garat Deputy Managing Director Subscription Sagax BTA D 6,457
29 May 2018 Mikael Dahlberg Mikael Dahlberg Group controller Subscription Sagax BTA D 1,706
29 May 2018 Salénia Holding AB Staffan Salén Chairman of the Board Subscription Sagax BTA D 1,990,580
29 May 2018 Sara Kersby Mindus David Mindus CEO Subscription Sagax BTA D 15,989
29 May 2018 Staffan Salén Staffan Salén Chairman of the Board Subscription Sagax BTA D 4,600
21 May 2018 Camilla Werdelin Ulrika Werdelin Board Member Subscription Sagax BTA D 4,000
21 May 2018 Fredrik Werdelin Ulrika Werdelin Board Member Acquisition Sagax BTA D 11,120
21 May 2018 Gabriela Werdelin Ulrika Werdelin Board Member Acquisition Sagax BTA D 11,404
21 May 2018 Ulrika Werdelin Ulrika Werdelin Board Member Acquisition Sagax BTA D 49,581
18 May 2018 David Mindus David Mindus CEO Acquisition Sagax BTA D 1,650,000
17 May 2018 David Mindus David Mindus CEO Acquisition Sagax A 35,000
Parent Company
Profit after tax for the Parent Company amounted to SEK Cash flow from operating activities before changes in work-
208 M (34). During the year, the Parent Company’s fees for ing capital amounted to a negative SEK 392 M (neg: 112). A
property and company management from Group companies net of SEK 5,068 M (1,287) was invested in 2018, as capital
amounted to SEK 46 M (39) and fees from joint ventures to contributions and through loans to Group companies. During
SEK 16 M (16). the year, cash flow from financing activities contributed SEK
The Parent Company’s assets primarily comprise shares 5,307 M (1,375), mainly in the form of the raising of bond
and participations in subsidiaries or joint ventures, as well as loans in EUR. Parent Company’s cash-flow statement is pre-
receivables from Group companies. The Parent Company’s sented on page 86.
assets totalled SEK 17,766 M (10,879), of which receivables
from Group companies accounted for SEK 11,725 M (7,230).
DIRECTOR'S REPORT
Organisation and employees
For the company to be competitive, it is important for employees to take responsibility

and to feel a sense of involvement in the business, and for the organisation to have a
shared foundation of knowledge and values. A competent organisation is
critical to the company’s development.
LEGAL STRUCTURE sibility for accounting, financing and tax issues throughout
At year end, the Group consisted of 290 Group companies the Group and work closely with colleagues in each country.
with domiciles in Sweden, Finland, France, Denmark and Sagax’s business development in Stockholm also works closely
the Netherlands; see page 61. The properties in Germany with colleagues in Finland, France and the Netherlands.
are directly owned by five Swedish companies. The Parent Sagax has offices in Stockholm, Helsinki, Rotterdam, Paris,
Company owned, directly or indirectly, 289 subsidiaries. In Jyväskylä and Tampere.
addition, the Parent Company owned 50% of the associated
companies Söderport Holding AB and Hemsö Intressenter EMPLOYEES
AB, which in turn owned 30% of Hemsö Fastighets AB. No Sagax’s long-term development is dependent on highly skilled
properties are owned by the Parent Company. and professional employees. For this reason, it is important
that the company is an attractive employer that can attract
ORGANISATION and has the ability to retain highly skilled personnel in the
The company’s domicile and head office are in Stockholm, long term.
where the company’s Group functions of accounting, tax, Sagax offers a flexible and creative environment where
finance and business development are located. In Finland, decision paths are short.
France and the Netherlands, the operations are headed by the Skills development is important for Sagax and career
Managing Directors of each operation. The CFO, Head of development discussions are held annually, to provide incen-
Finance and Tax Director in Stockholm have overall respon- tives for the development of each employee. During the year,
Operating structure
CHIEF EXECUTIVE OFFICER OF AB SAGAX1)
Head of Asset CFO1, 2) Head of Business Managing Managing Managing Director

Management Finance1, 2) Development 2) Director Finland Director France Netherlands
in Sweden
Asset Accounts Tax Finance Business Organisation in Organisation in Organisation in

Management Depart- Director2) Department Development Finland France the Netherlands
Department ment
in Sweden
1) Company management.
2) Overall Group responsibility for specialist area.
READ MORE » Corporate Governance Report, see page 66.

Board of Directors, see page 74.
Company management, see page 76.
DIRECTOR'S REPORT
Sagax conducted the intern recruitment in the appointment except for the CEO and the company’s Board Members. The
of a new position as Tax Director for the Group. When hiring, Incentive Plan helps to increase personal commitment and
great importance is attached to personal qualifications and create a culture where business targets are a natural part of
qualities. day-to-day activities. Sagax employees held a total of 801,670
Sagax also holds an annual conference attended by all of warrants with the right to subscribe for common shares cor-
its employees, where the company’s development, challenges responding to 0.5% of the number of Class A and B shares
and opportunities are discussed for two days. The purpose outstanding.
of the conference is to create a shared knowledge and values
foundation for the entire organisation, with an important aim ETHICS AND EQUAL OPPORTUNITIES
that Sagax’s employees take responsibility and feel a sense of The company has an equal opportunities plan. Regardless of
involvement in the business. gender, age, sexual orientation, religion or ethnic background,
Sagax has managed to remain a relatively small organisa- employees shall be provided with the same opportunities
tion despite its rapid expansion. Of Sagax’s 59 employees, all and have the same rights and obligations. This applies, for
were permanently employed, 26 were women and the average example, to salary structure, opportunities for promotion,
age was 40 years. At the end of the year, four consultants skills development and the right to good working conditions.
were contracted in the operations, mainly to replace existing Equal opportunity efforts are to be pursued as a partnership
staff, for example, during parental leave. The average number between employer and employees. Every employee bears an
of employees during the year was 56.7. 13 employees were individual responsibility for actively participating in equal
recruited in 2018 – five in Finland, two in the Netherlands, opportunity efforts.
two in France and four in Sweden. Five employees left the
company during the year. PROPERTY CARE-TAKING
The guidelines for remuneration of senior executives In Stockholm, Helsinki and Paris, property care-taking and
are shown on page 62 in the corporate governance section. on-call duties are outsourced. Tenants outside Stockholm,
Helsinki and Paris are responsible for property care-taking
INCENTIVE PLANS FOR EMPLOYEES themselves.
Sagax has three warrant plans for the company’s employees.
The plans are for three years and are targeted at all employees
Number of Group companies Age distribution

Number
Domicile Number 25
Sweden 106
20
Finland 150
Denmark 2 15
France 4 10
Netherlands 28
5
Total 290
0
Under 30 year 30-39 year 40-49 year 50-59 year 60-69 year
Women
Men
Number of employees
Country Men Women Total

Sweden 17 12 29
Finland 8 12 20
France 4 2 6
Netherlands 4 0 4
Total 33 26 59
Incentive Plan, see page 97. «READ MORE
DIRECTOR'S REPORT
Multi-year summary
Consolidated statement of comprehensive income

Amounts in SEK M 2018 2017 2016 2015 2014
Rental revenue 2,247 1,870 1,563 1,291 1,093

Other revenue 30 4 10 2 2
Operating and maintenance costs –256 –190 –160 –119 –104
Site leaseholds –22 –19 –18 –17 –14
Property tax –93 –77 –50 –40 –30
Property administration –37 –29 –19 –12 –12
Net operating income 1,869 1,558 1,326 1,104 935
Central administration –132 –77 –68 –57 –47

Profit from joint ventures 830 727 599 439 145
– of which, profit from property management 312 278 247 233 178
– of which, change in the value of properties
and financial instruments 677 606 526 320 20
– of which, tax –160 –157 –174 –115 –53
Financial income 35 19 3 4 4
Financial expenses –481 –444 –409 –390 –366
Profit including changes in value in joint ventures 2,121 1,783 1,451 1,100 671
– of which, profit from property management 1,603 1,334 1,098 895 703
Realised changes in value:

Properties –22 1 20 1 5
Financial instruments 36 3 – –13 1
Receivables/shares in joint ventures – – – – –
Unrealised changes in value:
Properties 1,265 1,113 1,306 677 436
Financial instruments 211 504 –51 67 –260
Profit before tax 3,611 3,405 2,726 1,832 853
Deferred tax –435 –390 –235 –139 –89

Current tax –10 –49 –38 –12 –11
Profit for the year 3,166 2,965 2,453 1,681 753
Translation differences for foreign operations 363 254 196 –92 122
Share of other comprehensive income for joint ventures 3 5 12 –8 8
Translation differences pertaining to hedge accounting –49 –84 –64 10 –40
Tax on items that may be reversed to profit or loss –29 –13 –11 8 –6
Comprehensive income for the year 3,454 3,126 2,586 1,599 837
DIRECTOR'S REPORT
Condensed consolidated statement of financial position

Amounts in SEK M 31 Dec 2018 31 Dec 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014
Investment properties 28,769 23,755 20,628 16,189 13,387

Investment properties for sale 255 16 – – –
Participations in joint ventures 3,286 2,632 1,667 1,259 796
Other fixed assets 18 22 21 32 10
Total fixed assets 32,328 26,426 22,316 17,480 14,193
Cash and bank balances 73 60 283 251 67

Other current assets 1,289 754 505 112 121
Total current assets 1,362 814 788 363 188
Total assets 33,690 27,240 23,104 17,843 14,381
Equity 15,416 11,356 8,709 5,981 4,544
Non-current interest-bearing liabilities 13,866 11,938 10,896 9,959 8,332

Deferred tax liabilities 1,599 1,141 739 479 434
Other non-current liabilities 189 475 570 483 560
Total non-current liabilities 15,654 13,553 12,205 10,921 9,326
Current interest-bearing liabilities 1,817 1,679 1,600 540 140

Other current liabilities 803 652 590 401 371
Total current liabilities 2,620 2,331 2,190 940 511
Total liabilities 18,274 15,885 14,395 11,861 9,837
Total equity and liabilities 33,690 27,240 23,104 17,843 14,381
DIRECTOR'S REPORT
Key performance indicators and data per share

2018 2017 2016 2015 2014
Property-related key figures

Yield, % 6.8 6.9 7.1 7.4 7.6
Total yield 11.7 12.0 14.6 12.1 11.3
Surplus ratio, % 83 83 85 86 86
Occupancy rate by area, % 95 95 93 97 95
Economic occupancy rate, % 95 94 94 96 94
Lease term, years 6.0 6.6 7.1 7.4 8.2
Lettable area, 000s of square metres 2,850 2,489 2,312 1,860 1,634
No. of properties 512 495 440 225 184
Financial key figures

Return on total capital, % 7 7 7 8 8
Return on equity, % 24 30 33 32 18
Average interest rate, % 2.2 3.0 3.1 3.3 4.1
Fixed-interest period incl. derivatives, years 3.0 2.1 2.7 3.0 3.0
Loan maturity, years 3.6 3.1 3.6 4.2 3.2
Equity/assets ratio, % 46 42 38 34 32
Debt ratio, % 47 50 54 59 59
Net debt/EBITDA 7.4 8.1 8.7 9.3 8.8
Interest coverage ratio, multiple 4.3 4.0 3.7 3.3 2.9
Data per Class A and B share1)

Price of Class B share at the end of the year, SEK 129.60 98.20 81.75 71.75 44.00
EPRA NAV, SEK 88.45 70.07 53.78 35.52 27.23
Equity, SEK 71.40 54.30 39.21 26.01 17.49
Equity after dilution, SEK 71.34 54.26 39.14 25.93 17.44
Earnings, SEK 18.48 17.72 14.53 9.88 4.06
Profit after dilution, SEK 18.47 17.69 14.50 9.85 4.05
Profit from property management, SEK 8.62 7.41 5.97 4.92 3.74
Profit from property management after dilution, SEK 8.61 7.40 5.96 4.90 3.73
Cash flow, SEK 7.90 6.53 5.13 4.00 3.00
Cash flow after dilution, SEK 7.89 6.52 5.12 3.99 2.99
Dividend per share, SEK (proposed for 2018) 2.00 1.80 1.45 1.15 0.80
No. of shares at year end, millions 158.4 158.3 158.3 158.3 158.3
No. of shares at year end after dilution, millions 158.5 158.4 158.6 158.8 158.7
Average number, millions 158.3 158.3 158.3 158.3 158.3
Average number after dilution, millions 158.4 158.5 158.6 158.8 158.6
Data per Class D share

Share price at year end, SEK 31.70 29.92 28.30 – –
Equity, SEK 35.00 35.00 35.00 – –
Earnings, SEK 2.00 2.00 2.00 – –
Dividend per share, SEK (proposed for 2018) 2.00 2.00 2.00 – –
No. of shares at year end, millions 101.9 63.6 18.3 – –
Average number, millions 83.0 43.1 2.9 – –
Data per preference share

Share price at year end, SEK 34.85 33.40 30.40 31.30 36.00
Equity, SEK 32.00 32.00 32.00 32.00 32.00
Earnings, SEK 2.00 2.00 2.00 2.00 2.00
Dividend per share, SEK (proposed for 2018) 2.00 2.00 2.00 2.00 2.00
No. of shares at year end, millions 16.8 16.8 58.2 58.2 55.5
Average number, millions 16.8 35.5 58.2 57.8 52.2
1) Excluding 1,000,000 Class B shares bought back by AB Sagax.
Definitions, see page 150.
Calculations, see page 151.
DIRECTOR'S REPORT
Events after the end of the year
On 11 January 2019, Sagax announced in a press release that total investment amounted to SEK 255 M. The properties
based on five separate transactions it had agreed to acquire comprise a lettable area of 31,000 square metres, primar-
eight properties in the Netherlands, three properties in ily comprising warehouse and light industry premises. The
Paris and one property in Stockholm. The total investment remaining average lease term is 1.9 years and the annual
amounted to SEK 200 M. The properties comprise a lettable rental value amounts to SEK 18 M. The occupancy rate is
area of 19,900 square metres, primarily comprising ware- 91%.
house and light industry premises. The remaining average On 6 March, Sagax announced in a press release that as
lease term is 8.2 years and the annual rental value amounts to part of its EMTN programme it had issued an unsecured bond
SEK 13 M. The occupancy rate is 76%. Occupancy is sched- loan of EUR 300 M in the European capital market. The bond
uled to take place during first quarter of 2019. loan has a duration of six years and extends to 13 March 2025
On 25 January, Sagax announced in a press release that with a fixed interest coupon of 2.25%. The bond loan will
based on four separate transactions it had agreed to acquire primarily be used to refinance existing debt with shorter
six properties in Paris and one property in Stockholm. The maturities and for the company’s operating activities.
Parent Company income statement, see page 84. «READ MORE

Parent Company balance sheet, see page 85.
The Parent Company’s cash flow, see page 86.
CORPORATE GOVERNANCE
Corporate Governance Report
Sagax’s owners govern the company directly and indirectly through various decision-making systems. The
important corporate governance systems are discussed below. The corporate governance applied at Sagax
meets the requirements stated in the Swedish Companies Act, the Swedish Annual Accounts Act, the
Swedish Corporate Governance Code (the Code) and Nasdaq Stockholm’s Rule Book for Issuers.
ARTICLES OF ASSOCIATION Control environment

According to the Articles of Association, AB Sagax is a public The basis for internal control consists of the control environ-
company (publ.). The Board is domiciled in Stockholm, ment, which comprises various parts that jointly form the cul-
Sweden. The company is to, directly or through subsidiaries, ture and values governing Sagax. The company has a relatively
own, manage, buy and sell real estate and conduct other com- small organisation. Property care-taking and on-call services
patible operations. For further information, see the relevant have been outsourced, and a large share of the tenants are
section of the Articles of Association. responsible for their own property care-taking. Adminis-
trative services have been procured for the taxation and
SWEDISH CORPORATE GOVERNANCE CODE accounting of German, French, Dutch and Danish operations.
The Swedish Corporate Governance Code came into effect on Administrative property management in Finland is handled
1 July 2005. As of 1 July 2008, the Code applies to all com- by Sagax’s Helsinki offices and administrative management of
panies with shares traded on Nasdaq Stockholm. The Code is operations in France are managed from Sagax’s office in Paris.
intended to serve as one component of self-regulation in the The company’s office in Rotterdam has created an organisa-
Swedish business sector. It is based on the “comply or explain” tion to handle administrative management on an independent
principle, meaning that it is not necessary to comply with all basis during 2018. The timetable for building up an organ-
of the regulations all of the time, and that it is not wrong to isation that can independently handle administrative man-
deviate from one or more individual regulations in the Code if agement depends on the size of operations on each market.
there is a reason which is explained. The Code addresses the Control and follow-up of the business take place mainly from
decision-making systems through which the owners directly the Stockholm office, based on the principles of follow-up,
or indirectly govern the company. The main emphasis clear divisions of responsibility and limited mandates.
is on the Board in its capacity as the central player in corpo- Internal control is also governed by the decision-making
rate governance. The Swedish Corporate Governance Code is paths, powers and responsibilities that have been documented
managed by the Swedish Corporate Governance Board and is and communicated in governing documents such as the
available at www.corporategovernanceboard.se. Regulations Board’s formal work plan, financial policy, authorisation man-
in the corporate governance area for listed companies can be uals and reporting instructions. Internal policies, guidelines
found in the Swedish Companies Act, the stock exchanges’ and manuals are also important to internal control.
listing requirements and regulations and opinions from the
Swedish Securities Council. The most recently revised Code Risk assessment
came into effect on 1 December 2016. Risk management is built into the company’s processes and
The Board of Directors has chosen to add only two mem- various methods are used to evaluate and limit risks and to
bers to the Audit Committee rather than three in accordance ensure that the risks faced by Sagax are managed in accor-
with the Code. The reason is that the Board of Directors dance with established policies and guidelines.
consists of six members in total, and having two members on In accordance with the formal work plan, the Audit
these committees is considered more appropriate. C ommittee reviews internal control at least once annually
The entire Board of Directors has chosen to only meet with the company’s auditors, and the review is presented to
the company’s auditors in the presence of the CEO, which is the Board at the following Board meeting. Risks are identi-
natural since he is the company’s largest shareholder. fied, and measures are established to reduce these risks. The
The date of birth of Board members and management is significant risks that Sagax has identified are misstatements in
not presented as this information is not relevant when assess- the accounts and the valuation of properties, financial deriv-
ing expertise and experience. Education, Board assignments atives, taxes and VAT, and the risk of fraud, losses or mis
and work experience are presented as these are relevant when appropriation of assets.
assessing expertise and experience.
Control activities
INTERNAL CONTROL The identified risks concerning financial reporting are man-
According to the Swedish Companies Act and the Swedish aged via the company’s control structures, resulting in several
Corporate Governance Code, the Board is responsible for control activities. These activities are intended to prevent,
internal control. This report on the company’s internal detect and correct errors and discrepancies and include
control has been prepared in accordance with the Swedish analytical follow-up at several levels of the organisation and
C orporate Governance Code. It concerns the company’s comparison of profit/loss items, account reconciliations, fol-
financial statements. low-up and reconciliation of Board resolutions and policies
adopted by the Board, approval and accounting of business Governance and follow-up
transactions, proxy and authority structures, authorised signa- Profit outcomes are continuously followed up at several levels
tories, Group-wide definitions, templates, reporting tools and of the company, i.e. at both the property and Group levels.
accounting and valuation principles. Standardised reporting They are checked against both budget and forecasts. The
procedures and clear work plans and divisions of responsibil- result is analysed by both the administration and accounts
ity are important parts of Sagax’s control activities. departments and presentations are made to both the CEO and
When Sagax’s financial reports are prepared, significant the Board. According to the Board’s instruction to the Audit
income statement and balance sheet items are examined and Committee, the company’s auditors must report directly to
analysed with extra thoroughness. Risk management concern- the Audit Committee at least twice annually. The auditors
ing these items is the top priority. In the income statement, must report their observations from their examination and
these items are primarily rental revenue, financial items and their assessment of the internal control. Their observations
changes in value since these amount to significant sums, and are then presented to the Board at the following Board meet-
in the case of changes in value they are highly dependent on ing. Minutes from the Audit Committee meetings are incor-
judgments. With respect to the income statement, properties porated into Board materials prior to the next Board meeting.
and interest-bearing liabilities are analysed with extra care.
System controls, process description and various intra-Group Internal auditing requirements
directives are used to ensure that no material misstatements The effectiveness of internal auditing largely depends on
have occurred or could occur. the company’s organisational structure and the size of the
Having an organisation abroad entails the need to coordi- organisation. Sagax has a relatively small organisation, with
nate administrative procedures and having systems to prevent the administration of finance, accounting and leases managed
deterioration of the control environment. Accordingly, Sagax’s from the company’s Stockholm, Helsinki, Rotterdam and
offices in Helsinki, Stockholm, Paris and Rotterdam essen- Paris offices. Profit/loss and the balance sheet are followed
tially share the same systems and procedure. The four organ- up quarterly, by the various functions in the company and by
isations use the same IT systems on the same servers, and the company management. As a result of these considerations, the
offices are in close communication. However, the Paris and company does not see a need for a special internal audit unit.
Rotterdam offices are still partly dependent on external com-
petencies for ongoing accounting and for the accounting of BOARD OF DIRECTORS
taxes and fees. The intention is that ongoing accounting will According to the Articles of Association, Sagax’s Board is to
ultimately essentially be transferred to the systems used at comprise at least three (3) and at most eight (8) members,
the Stockholm and Helsinki offices. not including deputies. Sagax’s Board of Directors consists of
Property managers have a clear profit responsibility for six members, who were elected at the 2018 AGM. The Board
the properties in their charge. Together with the analysis comprises Board Members Johan Cederlund, Filip Engelbert,
performed at Group level, their regular analyses of the prop- Staffan Salén, Johan Thorell, Ulrika Werdelin and CEO
erties’ financial statements are an important part of internal David Mindus. Staffan Salén was appointed Chairman of the
controls to ensure that the financial statements is free of Board at the 2018 AGM. The term of all Board Members runs
material misstatements. Sagax continuously develops its sys- until the end of the next AGM. For further information about
tem support for the operation. the Members of the Board, see page 74.
Information and communication BOARD OF DIRECTORS’ WORK PROCEDURES

The aim of Sagax’s information and communications policy is The Board’s tasks are governed by Swedish Companies Act
to provide efficient and accurate information about its finan- and the Articles of Association. The Board’s work is also gov-
cial statements. The company’s insider and financial policies erned by the formal work plan adopted by the Board every
also address information and communication about the finan- year at the statutory Board meeting or the AGM. The formal
cial statements. Policies and guidelines for financial state- work plan describes the Board’s tasks and the division of
ments, as well as updates and amendments, are available to responsibility between the Board and the CEO. The directive
the relevant employees, and the executive management team issued to the CEO and the instructions on financial reporting
annually reviews the rules and regulations with all employees. are adopted at the same time.
The company’s rules and regulations are designed according to ■■ T he Board’s tasks include deciding on the acquisition and
Swedish law, Nasdaq Stockholm regulations and the Swedish disposal of companies and properties, procurement of loans
Corporate Governance Code. and guarantees, organisational issues, forecasts and full-year
Company management presents the quarterly report to all and interim reports.
employees after it has been communicated in accordance with ■■ According to the Board’s work plan, it is the Chairman of
the rules and regulations. The Board receives additional infor- the Board’s responsibility to ensure that the Board performs
mation about risk management, internal control and financial its work effectively and fulfils its obligations.
statements from the auditors via the Audit Committee, or at
Board meetings attended by the auditors.
In particular, the Chairman of the Board must: meetings in 2018, one of which was a statutory meeting. The
■■ organise and lead the Board’s work, encourage an open and main issues at the meetings for the year were acquisition and
constructive discussion within the Board and facilitate the divestment of properties, financing issues and the adoption of
Board’s work to the greatest possible extent. interim reports and forecasts. The Board was also informed of
■■ e nsure that the Board continuously updates and deepens its the current state of the business. In addition to the minuted
knowledge of the company and its operations, and otherwise meetings, the Board also met once for a special discussion
receives the training necessary to perform Board work effec- of the company’s future strategies and financial targets. The
tively. Chairman of the Board ensured that the Board’s work was
■■ m aintain ongoing contact with and serve as a discussion evaluated and the results then discussed by the Board. The
partner and support for the CEO, and consult with the CEO financial targets adopted by the Board were followed up as
on strategic issues. budgets and quarterly reports were adopted.
■■ e nsure that the Board receives satisfactory information and
decision-making support documentation for its work. PERFORMANCE MANAGEMENT

■■ e nsure that the CEO continuously provides Board Members According to its investment strategy, Sagax aims to continue
with the information needed to follow the company’s posi- its growth through the acquisition of new properties and
tion and performance. investments in existing properties. The company invests in
■■ c hair Board meetings, consult with the CEO on the agenda properties that fulfill the Group’s requirements for a healthy
and ensure that the CEO summons Board Members to return and balanced risk. Each investment is considered sepa-
meetings. rately when decisions are made.
■■ verify that Board resolutions are effectively enacted. The Board must also ensure that the company has good
■■ e nsure that Board matters are not handled in a way that internal control in place, and must continuously keep itself
contravenes the provisions of the Swedish Companies Act informed of and evaluate whether the internal control systems
and the Articles of Association. are working. In addition, the Board must maintain an ongoing
■■ e nsure that Board Members are familiar with legislation on dialogue with the company’s auditors and management in
insiders and the company’s insider policy. order to further assure itself that the internal control system
■■ ensure that the Board’s work is evaluated once a year. is working.
According to the formal work plan, the Board must meet A simplified view of how Sagax’s Board work proceeds
at least five times per calendar year in addition to the statu- during the course of a year and the issues that must always be
tory meeting and strategy days. The work plan discusses the considered at the Board meetings referred to in the work plan
issues that must always be considered at these five meetings is presented below.
and the statutory meeting. Sagax’s Board held 21 minuted
FUNDAMENTAL STRUCTURE FOR BOARD WORK AT SAGAX
December Board meeting February Board meeting

• Budget for coming year • Year-end report and forecast
• State of the business
• Accounting and auditing issues,
• Financing issues and risks
ember Janua as well as the audit report
• Capital structure Dec ry
• Evaluation of the Board r Fe • Profit outcomes
be br • State of the business
of Directors m
ve
ua
• Evaluation of company • Financing issues and risks

No
ry
management • Organizational issues

tember October
• Organizational issues • Reports from Board committees

Mars
• Forthcoming AGM
October Board meeting

April
• Interim financial report May Board meeting

and forecast • Interim financial report
Sep
• Accounting and auditing and forecast

issues, as well as the audit report
t
• Profit outcomes
us
• Profit outcomes g ay
Au • State of the business
• State of the business
July June • Financing issues and risks
• Financing issues and risks
• Internal control • Organizational issues
• Organizational issues • Forthcoming AGM
• Strategy issues
Strategy days in September July Board meeting Board statutory meeting

Over the course of two days, the • Semi-annual report and forecast • Formal work plan and
Board of Directors holds • Profit outcomes policy documents
strategic discussions and receives • State of the business • Board Committees
more in-depth information through • Financing issues and risks • Signatory power
presentations by both internal and • Organizational issues • Authorization manual
external experts. • Meeting plan
NOMINATION COMMITTEE AND BOARD COMMITTEES for company management. The Remuneration Committee
Nomination Committee held one meeting about remuneration, as well as conferring
The 2018 AGM resolved to assign the Chairman of the Board with one other on multiple occasions by telephone and e-mail
to contact the three largest shareholders or groups of share- during the year. The Committee’s report on its evaluation of
holders in terms of votes, pertaining to directly registered senior executives is available at the Sagax website,
shareholders and nominee-registered shareholders, according www.sagax.se.
to Euroclear’s transcript of the shareholders’ register at 30
September 2018 and ask each to appoint one representative, Audit Committee
plus the Chairman of the Board, to constitute the Nomination The members of the Audit Committee, which was appointed
Committee for the period until a new Nomination Commit- at the Board’s statutory meeting on 7 May 2018, are Johan
tee has been appointed according to authorisation from the Thorell and Staffan Salén. The Audit Committee normally
next AGM. The majority of the members of the Nomination meets the company’s auditors twice per year. The Board has
Committee are to be independent in relation to the company adopted an instruction concerning the work of the Audit
and company management. At least one of the Nomination Committee. The task of the Audit Committee is to maintain
Committee’s members must be independent in relation to and increase the efficiency of contacts with the Group’s audi-
the company’s largest shareholder or the group of sharehold- tors, exercise supervision over accounting and financial state-
ers, in terms of votes, that works together in respect of the ments procedures, evaluate the auditors’ work and monitor
administration of the company. The CEO or another mem- the development of accounting policies and requirements. The
ber of executive management must not be a member of the Audit Committee held two minuted meetings with the audi-
Nomination Committee. Board Members may be appointed tors in 2018, as well as one minuted meeting in 2019. During
to the Nomination Committee but are not to constitute a these meetings, topics including the auditors’ examination of
majority of its members. If more than one Board Member the company’s financial reporting and internal controls were
is appointed to the Nomination Committee, at least one of presented and discussed. The auditors’ observations and opin-
them is required to be dependent in relation to the company’s ions were subsequently reported to the Board.
major shareholders. The Nomination Committee is to elect
its chairman from among its own members. The Chairman AUDIT
of the Board or any other Board member is not to be elected The auditors are required to examine the company’s annual
chairman of the Nomination Committee. The composition report and accounting, as well as the management by the
of the Nomination Committee must be announced no later Board and the CEO. The auditors are required to attend, and
than six months prior to the 2019 AGM. The Nomination present a report at, the Board meeting where the decision is
Committee announced on 25 October 2018 has the following made whether to adopt the annual accounts for the preceding
composition: fiscal year. The auditors are required to submit an auditor’s
■■ Björn Alsén, representing David Mindus and companies. report to the AGM after every fiscal year. The auditors also
■■ Håkan Engstam, representing Rutger Arnhult and companies. reviewed the interim report for January-June 2018, and sub-
■■ Erik Salén, representing the Salén family and companies. mitted a review report concerning the interim financial infor-
■■ Staffan Salén, Chairman of the Sagax Board of Directors. mation for that period. The auditors are elected by the AGM
The Nomination Committee has, in accordance with the for a one-year term.
requirements of the Swedish Annual Accounts Act and the The 2018 AGM elected the authorised accounting firm
Swedish Corporate Governance Code, decided on a diversity Ernst & Young AB, with Authorised Public Accountant
policy for election to the Board. The policy reads “The Board Magnus Fredmer as the signing auditor in charge for the
must have an appropriate composition in terms of expertise period until the 2019 AGM. Magnus Fredmer has been
and experience. It is considered important that members are Sagax’s auditor since 2012.
also shareholders in the company. It is of the utmost impor- The company’s auditors attended one Sagax Board meet-
tance that the selection of members is non-discriminatory on ing in 2018 and one in 2019.
the grounds of sex, transgender identity or expression, ethnic-
ity, religion or other belief, disability, sexual orientation and STOCK MARKET INFORMATION
age.” The Nomination Committee held one minuted meeting The company is required to provide rapid, correct, relevant
and also maintained contact by telephone and e-mail. and reliable information to existing and potential sharehold-
ers and other investors that not only meet the requirements of
Remuneration Committee Nasdaq Stockholm and the stock market at all times, but the
At its statutory meeting on 7 May 2018, the Board appointed company’s own strict requirements as well. The company sub-
a Remuneration Committee consisting of the Board of mits interim reports concerning the business on a quarterly
Directors. The Board has adopted an instruction concerning basis, and a year-end report and annual report for the entire
the work of the Remuneration Committee. The task of the fiscal year. Sagax uses its website to rapidly provide informa-
Remuneration Committee is to prepare issues concerning tion to the stock market. Significant events are announced
remuneration and other terms and conditions of employment through separate press releases.
POLICY DOCUMENTS According to the Articles of Association, each preference

The company’s Board of Directors has adopted the following share confers a preferential right to SEK 2.00 in annual div-
policies: financial policy, information policy, insider policy, idends. Each Class D share provides entitlement to a max-
dividend policy, anti-corruption policy, equal opportunities imum of SEK 2.00 per share. The dividend on preference
plan, sustainability policy and health and safety policy. On shares and Class D shares is paid quarterly, in the amount of
an annual basis, the Board also decides on the directive it SEK 0.50 on each occasion.
issues to the CEO, the instruction for preparing the financial
statements, the attestation manual, the Board’s work plan Anti-corruption policy
and instructions for the Board’s Audit and Remuneration The policy aims to clarify the company’s views on corruption
Committees. Policies are to be revised when this is required and to reduce any uncertainty about what can be regarded
in order to ensure that they are up to date and support the as corruption. The policy states that Sagax must never be
business in meeting its stated objectives and targets. involved in or permit corruption. Nor will the company
accept that employees allow themselves to be bribed or
Financial policy receive gifts that can be equated with bribes. Violation of the
The financial policy indicates guidelines and rules as to how policy constitute grounds for dismissal by the company. In
financial operations in Sagax are to be pursued. It is adopted cases of doubt, the company’s CEO must always be consulted.
by the Board and states how to limit various risks in Sagax’s
financial affairs and the risks that the company may take. It Non-discrimination policy
also states how to report on Sagax’s financial affairs to the Sagax’s non-discrimination policy aims to clarify that the
Board. The financial policy establishes the division of respon- principle of equal treatment applies at Sagax, meaning that no
sibility and administrative rules, and must also provide guid- discrimination or other type of special treatment may occur.
ance in the daily work of the finance staff unit. The financial The policy stipulates how Sagax must regularly take active
policy applies to all Sagax companies. measures to combat discrimination and special treatment and
promote equal rights and opportunities regardless of gender,
Information policy transgender identity or expression, ethnicity, religion or other
The purpose of Sagax’s information policy is to ensure that expression of faith, disability, sexual orientation or age. These
stock market players receive rapid, simultaneous, accurate, efforts are to be pursued as a partnership between employer
relevant and reliable information about the company. The and employees.
information policy must be adhered to by all employees,
Board Members and externally retained consultants. Infor- Sustainability policy
mation to the public is primarily issued in the form of press The aim of the sustainability policy is to clarify guidelines
releases and financial reports. for Sagax’s long-term sustainability work. Sagax’s overriding
objective is the generation of the maximum possible risk-
Insider policy adjusted return to the company’s owners and to achieve this
Sagax’s insider policy is intended to reduce the risk that a goal the company operations are consistently conducted with
Sagax employee could violate applicable insider laws. The a long-term perspective. Sagax’s work with sustainability
insider policy is a supplement to the insider laws in force and, issues is a natural part of operations and helps to achieve the
in some respects, its requirements are stricter than those of company’s goals. Sagax’s work is based on internationally
the law. The insider policy applies to all people in an insider accepted sustainability definitions, including the UN Global
situation, parties closely related to these insiders and other Compact initiative, highlighting four areas in particular for
people who have been informed that the policy applies to the company responsibility, namely human rights, labour, the
them. All employees and consultants are obligated to report environment and anti-corruption.
insider transactions to Sagax’s CEO.
Health and safety policy
Dividend policy Sagax’s long-term goals are dependent on highly skilled and
Sagax’s dividend policy is intended to allow for continued professional employees. For this reason, it is important that
growth and adequate preparedness to take advantage of busi- the company is an attractive employer that can attract and has
ness opportunities. As in the past, the Board also considers it the ability to retain highly skilled personnel in the long term.
to be of great importance that expansion can occur while pre- The Health and safety policy stipulates guidelines for how
serving freedom of action and financial stability. Accordingly, Sagax continuously follows up operations to prevent ill-health
the Board considers it to be appropriate that the dividend, and accidents at work.
including the dividend on Class D shares and preference
shares, suitably correspond to about one third of profit from OTHER DISCLOSURES CONCERNING THE BOARD
property management annually. The Board is also authorised AND MANAGEMENT
to propose the distribution of non-recurring profits to share- There are no conflicts of interest between the Board or man-
holders. agement on the one hand and the company on the other. Board
Members Filip Engelbert, Johan Thorell, Ulrika Werdelin and other senior executives in accordance with the guidelines
Johan Cederlund are independent in relation to the company, below. Agreements with other senior executives are reached
company management and the company’s principal owners. by the CEO jointly with the Chairman of the Board.
David Mindus, who is Sagax’s CEO, is dependent in relation The company is to offer commercially competitive remu-
to the company. Staffan Salén and David Mindus represent in neration levels and terms and conditions of employment in
excess of 10% of the voting rights and are thus considered to order to retain and, where necessary, recruit senior executives
be dependent in relation to the company’s principal owners. with the necessary expertise and experience. Remuneration
Independence in relation to the company and its principal to the company’s management is to essentially take the form
owners entails that there are no extensive business connec- of cash salary. Remuneration may comprise a combination of
tions with the company, and that the Board Members repre- fixed and variable salary. Remuneration is to mainly comprise
sent less than 10% of the shares or voting rights at year end. fixed salary and be considered to correspond to commercially
No special agreements have been reached between Sagax competitive compensation for doing an adequate job. The
and major shareholders, customers, suppliers or other parties variable salary supplement is to pertain to additional compen-
that caused any Board members or executive management sation for work that has been exceptionally well performed,
to be chosen for these posts. There are no restrictions on the an exceptional workload or another similar circumstance.
rights of Board Members or senior executives to sell their Unless there are special reasons for not applying this rule, the
Sagax securities. None of the Group’s member companies variable salary supplement is not to exceed 50% of the fixed
has entered into agreements that entitle Board Members or annual salary. In addition, the Board is to annually assess
members of executive management to benefits after their whether or not a share-based or share-price-based incentive
respective assignments end. However, members of executive plan is to be proposed to the AGM. Termination salary must
management are entitled to a salary for a certain period after not exceed six monthly salaries. Severance pay is not to be
their employment has been terminated by the company; see applied.
Note 5. The Board of Directors is entitled to deviate from the
aforementioned guidelines if the Board finds specific reasons
REMUNERATION OF THE BOARD AND to motivate this in isolated cases. If the Board of Directors
SENIOR EXECUTIVES deviates from the remuneration guidelines for senior execu-
The AGM on 7 May 2018 resolved to pay a total of SEK tives, a report on this must be made to the immediately fol-
960,000 in director fees, of which SEK 300,000 to the lowing AGM."
C hairman of the Board and SEK 165,000 to each other AB Sagax has complied with the guidelines resolved by
non-executive Board member elected by the AGM. The CEO the AGM. For further information about remuneration of
receives no remuneration for his Board assignment for AB company management, see Note 5. The Board will propose
Sagax. Fees to the auditors are to be paid based on approved to the 2019 AGM that corresponding guidelines also apply in
invoices. the future.
Board fees to three of the Board members were paid to
companies in accordance with agreements reached between ANNUAL GENERAL MEETING (AGM)
the individuals in question and Sagax, which are cost-neutral The AGM is the company’s highest decision-making body.
for Sagax. At the AGM, all shareholders are given the opportunity to
The 2018 AGM passed the following guidelines for exercise influence over the company represented by their
remuneration of senior executives: respective shareholdings. Considering the current ownership
group, it has not been viewed as justified to implement such
"Remuneration paid to the CEO is prepared by the Remuner- measures as simultaneous interpretation at the AGM or trans-
ation Committee and established by the Board at a scheduled lating presentations into other languages.
Board meeting. The CEO does not participate in this deci-
sion. The Board assigns the CEO the task of negotiating with AGM 7 May 2018
The AGM of AB Sagax on 7 May 2018 resolved:
■■ t he income statements and balance sheets, and the Board’s
MANAGEMENT STRUCTURE
proposed appropriation of profits be adopted.
■■ t o adopt the Board’s proposed dividend of SEK 1.80 per
Shareholders Nomination
via the AGM Committee Class A and Class B common share and SEK 2.00 per pref-
Auditors Remuneration erence share and Class D common share for the 2017 fiscal
Board of Directors Committee year, with quarterly payments of SEK 0.50 per preference
Audit Committee share and Class D common share. Friday 29 June 2018;
Friday 28 September 2018; Friday 28 December 2018 and
CEO
Friday 29 March 2019 were resolved as the record dates for
Company the payments of dividends on preference shares and Class D
management common shares.
■■ t hat the new Class D common shares and the new prefer- basis of a new issue of Class A common shares, Class B
ence shares that may be issued under the authority granted common shares, preference shares, Class D common shares,
by the Meeting are to provide entitlement to dividends from warrants and/or convertibles in the company. The total
the date on which they are entered into the shareholders’ number of shares encompassed by such new share issues
register administered by Euroclear. may not exceed 10% of the number of votes in the company,
■■ t o discharge the Board Members and the CEO from per- based on the total number of votes in the company on the
sonal liability for the 2017 fiscal year. date when Board first utilises the authorisation.
■■ t hat the number of Board Members amount to six for the ■■ t o authorise the Board, on one or more occasions prior to
period until the next AGM. the next Annual General Meeting, to make decisions to
■■ t o re-elect the Board Members Johan Cederlund, Filip acquire a total of as many Class A common shares, Class B
Engelbert, David Mindus, Staffan Salén, Johan Thorell and common shares, preference shares, Class D common shares,
Ulrika Werdelin. Staffan Salén was appointed Chairman of warrants and/or convertibles as necessary so that the com-
the Board. pany’s holdings at any time do not exceed a tenth of the
■■ t o pay fees in the amount of SEK 300,000 to the Board total number of shares in the company. Acquisitions of trea-
Chairman and SEK 165,000 to each other non-executive sury shares are to take place on Nasdaq Stockholm and may
Board member elected by the AGM. The fees also include only take place at a price within the price span applicable
remuneration for committee work. at any time, meaning the span between the highest bid and
■■ t o establish principles for the composition of a Nomination lowest offer price, or on the basis of an acquisition offering
Committee for the 2019 AGM. directed to all shareholders, whereby the acquisition is to
■■ to re-elect Ernst & Young AB as auditors for the forthcom- take place at a price that on the decision date corresponds
ing one-year period, with Magnus Fredmer as the audi- to a minimum of the applicable share price and a maximum
tor-in-charge. Fees to the auditors are to be paid based on of 150% of the applicable share price. Acquisition of trea-
approved invoices. sury warrants and/or convertibles is to take place at a price
■■ t o establish guidelines for remuneration of senior execu- that on the decision date corresponds to a maximum of the
tives. market value.
■■ to implement the 2018/2021 Incentive Plan, based on the ■■ t o authorise the Board, on one or more occasions prior
issue of a maximum of 500,000 Series 2018/2021 war- to the next AGM, to make decisions to transfer, with or
rants. Disapplying the preferential rights of shareholders, without disapplying the shareholders’ preferential rights,
subscription entitlement will accrue to the wholly owned all or portions of the company’s holding of treasury Class A
subsidiary, Satrap Kapitalförvaltning AB. The warrants will common shares, Class B common shares, preference shares,
be issued free of charge. Each warrant entitles the Class D common shares and/or warrants as payment for
holder to subscribe for one new Class B common share in acquisitions of properties or property companies, or parts of
AB Sagax. properties or property companies, at a price corresponding
■■ S atrap Kapitalförvaltning be permitted to transfer a max- to the share price or, regarding warrants the market value,
imum of 500,000 warrants in AB Sagax of the 2018/2021 on the date of sale. Transfer of all or portions of the com-
series to employees, or to have control over the warrants pany’s holdings of treasury Class A common shares, Class B
in some other manner in order to secure obligations pur- common shares, preference shares and/or Class D common
suant to Incentive Plan 2018/2021. Each employee is shares may also occur, on one or more occasions prior to the
to be offered an opportunity to acquire warrants in an next AGM, to finance such acquisitions, for which shares
amount corresponding to a maximum of one twelfth of the are to be sold on Nasdaq Stockholm at a price that is within
e mployee’s annual salary before income tax. It is estimated the price interval applicable at any time.
that the maximum number of additional Class B common ■■ t o approve the Board’s decision to increase the company’s
shares will not exceed 500,000, corresponding to approx- share capital by a maximum of SEK 41,758,874.50 through
imately 0.34% of the total number of Class B common a new share issue of a maximum of 23,862,214 Class D
shares in the company, subject to full subscription and full common shares, with preferential rights for existing share-
exercise of all warrants. The increase in share capital in holders. The right to subscribe for Class D common shares
such a case will amount to a maximum of SEK 875,000. with preferential right will accrue to those who on the
The Incentive Plan is targeted at individuals who are or will record date of the Rights Issue are registered as shareholders
be employees of AB Sagax or its subsidiaries. The compa- of the company. Each existing share (regardless of whether
ny’s Board of Directors and the CEO are not covered by the it is a Class A, Class B or D common share or a preference
offer. share) provides entitlement to one (1) subscription right.
■■ t o authorise the Board, within the framework of the appli- Ten (10) subscription rights provide entitlement to one
cable Articles of Association, with or without disapplying new Class D common share. The subscription price is SEK
the shareholders’ preferential rights, on one or more occa- 27.50 per Class D common share. The record date for the
sions prior to the next Annual General Meeting, to make adoption of which shareholders are entitled to subscribe for
decisions to increase the company’s share capital on the Class D common shares using preferential right shall be 11
May 2018. Subscription of Class D common shares using ■■ be registered in the shareholders’ register maintained by
subscription rights is to take place by cash payment during Euroclear Sweden AB (“Euroclear”) on Tuesday, 30 April
the period of 15 May 2018 through 29 May 2018. Subscrip- 2019.
tion of Class D common shares without using subscription ■■ notify the company of their intention to participate at
rights is to take place during the same period on a separate the following address: AB Sagax, attention: Coco Thorin,
subscription list. The Board of Directors is to be entitled to Engelbrektsplan 1,
extend the subscription and payment period. SE-114 34 Stockholm or by e-mail to:
arsstamma2019@sagax.se, not later than Tuesday 30 April
Ahead of the AGM on 7 May 2019 2019 at 4:00 p.m.
The 2019 AGM of Sagax will be held on 7 May 2019 at 4:00 Notification should include name, personal identification
p.m. at Spårvagnshallarna, Birger Jarlsgatan 57 A, Stockholm, number or corporate registration number, address and
Sweden. Shareholders intending to participate in the AGM telephone number.
must: Notice to convene the AGM, including resolution
proposals, is presented on page 146.
During the second quarter 2018, the Admiraal de Ruyterstraat 2 property was acquired in Schiedam, 15 minutes from central Rotterdam.
The property encompasses 10,700 square metres of lettable area and is located near the Port of Rotterdam, which the largest in Europe.
The premises are fully leased to a tenant active in the installation of air conditioning.
Board of Directors
STAFFAN SALÉN DAVID MINDUS

Board Member since 2004 and Chairman of the Board since Board Member and CEO since 2004. Member of the
2016. Member of the Audit and Remuneration Committees. Remuneration Committee.
Education: MSc in Business and Economics from Stockholm Education: MSc in Business and Economics from Stockholm
University. University.
Other Board assignments: Chairman of eWork Scandinavia Other Board assignments: Hemsö Fastighets AB.
AB, Amapola AB and Westindia AB. Board Member of Work experience: Previously analyst and business developer in
companies including Strand Kapitalförvaltning AB, Green property companies and consulting companies.
Landscaping AB and Landauer Ltd. Dependent in relation to the company and its principal
Current position: President of Salénia AB. owners.
Work experience: Previously Executive Vice President and Holding in AB Sagax as of 31 December 2018: 5,172,400
Communications Director of FöreningsSparbanken AB, Class A shares, 37,693,025 Class B shares, 4,358,539 Class
Managing Editor of the Finanstidningen financial magazine D shares, 775 preference shares and 55,500 Class B share
and financial analyst at Proctor & Gamble. futures (sell).
Dependent in relation to the company and its principal
owners. JOHAN THORELL
Holding in AB Sagax as of 31 December 2018: 2,132,464 Board Member since 2004. Member of the Audit and
Class A shares, 17,485,330 Class B shares and 2,462,922 Remuneration Committees.
Class D shares. Education: MSc in Business and Economics from the
Stockholm School of Economics.
JOHAN CEDERLUND Other Board assignments: Board member of Tagehus Hold-
Board Member since 2010. Member of the Remuneration ing AB, Hemsö Fastighets AB, Delarka Holding AB, Oscar
Committee. Properties Holding AB, Kallebäck Property Investors AB,
Education: MSc in Business and Economics from the K2A Knaust & Andersson Fastigheter AB and Nicoccino
Stockholm School of Economics and Master of Laws from Holding AB.
Stockholm University. Current position: CEO of Gryningskust Holding AB.
Other Board assignments: Including Chairman of the industrial Work experience: Active in property management since 1996.
and retail group Lotorp and Chairman and Board Member of Independent in relation to the company and its principal
other companies in the Lotorp Group. owners.
Work experience: Previously lawyer and partner of the law firm Holding in AB Sagax as of 31 December 2018: 101,627 Class
Vinge, with a focus on company acquisitions, financing and A shares, 1,016,270 Class B shares and 861,332 Class D
the stock market. shares.
Independent in relation to the company and its principal
owners. ULRIKA WERDELIN
Holding in AB Sagax as of 31 December 2018: 77,080 Class B Board Member since 2010. Member of the Remuneration
shares and 13,359 Class D shares. Committee.
Education: MSc in Business and Economics from the
FILIP ENGELBERT Stockholm School of Economics.
Board Member since 2007. Member of the Remuneration Current position: Chief Platform Officer for Accel, a global
Committee. venture capital firm based in London and Silicon Valley.
Education: Bachelor of Science from Babson College, USA. Work experience: Most recently as advisor and project man-
Other Board assignments: Board member of Matterhorn AEH ager in the financial sector through her company Werdelin
AB, Otiva F AB, which is a subsidiary of Matterhorn AEH Advisory. COO of the Lapithus Group, which manages loan
AB, Gornergrat Capital AB, IfDelayed AB, Tipptapp AB and portfolios for the European Principal Finance Fund (EPF),
Stellar Equipment AB. one of the funds managed by the US company Apollo Capital
Work experience: Previously CEO of Avito AB, Kontakt East Management, which invests in private equity and property
Holding AB and Remium AB. loans. Previously Managing Director of Goldman Sachs Inter-
Independent in relation to the company and its principal national, COO in Europe for Goldman Sachs Principal Invest-
owners. ment Area, the division within Goldman Sachs that operates
Holding in AB Sagax as of 31 December 2018: 120,500 Class Goldman Sachs Capital Partners and Goldman Sachs Mezza-
A shares and 1,059,892 Class B shares. nine Partners funds.
Independent in relation to the company and its principal
owners.
Holding in AB Sagax as of 31 December 2018: 24,661 Class A
The holding includes own holdings, those of related parties shares, 538,045 Class B shares and 264,513 Class D shares.
and holdings in related companies as of 31 December 2018.
READ MORE » Insider-registered transactions, see page 54.
Sagax’s Board of Directors consists of Johan Cederlund, Staffan Salén, Ulrika Werdelin, David Mindus, Filip Engelbert and Johan Thorell.
Remuneration paid to the Board

Participation in total number of Board meetings
Name Assignment Elected Independent 1)

Remuneration, SEK Board meetings Remuneration Committee Audit Committee
Staffan Salén Chairman 2004 No 300,000 21 of 21 1 of 1 2 of 2
Filip Engelbert Member 2007 Yes 165,000 20 of 21 0 of 1
David Mindus CEO/Member 2004 No – 21 of 21 1 of 1
Johan Thorell Member 2004 Yes 165,000 21 of 21 1 of 1 2 of 2
Ulrika Werdelin Member 2010 Yes 165,000 20 of 21 1 of 1
Johan Cederlund Member 2010 Yes 165,000 18 of 21 1 of 1
1) Independent in relation to the company and its principal owners means that there are no extensive business connections with the company and that Board Members
represented less than 10% of the shares or votes at the end of the year.
Remuneration of the Board and CEO, see Note 5 on page 96. «READ MORE
Company management
DAVID MINDUS
See page 68.
BJÖRN GARAT
Head of Finance and Deputy Managing Director since 2012.
Education: MSc in International Economics and Business at Linköping University.
Work experience: Partner and responsible for Corporate Finance at Remium Nordic AB and
financial analyst.
Holding in AB Sagax as of 31 December 2018: 60,765 Class A shares, 893,874 Class B shares,
50,847 Class D shares, 148 preference shares and 60,709 warrants for Class B shares.
AGNETA SEGERHAMMAR
CFO of Sagax since 2018.
Education: Bachelor’s degree in Business Administration from Uppsala University.
Work experience: CFO and Deputy Managing Director of A Group of Retail Assets Sweden AB
(Publ), Director of Finance of Steen & Ström, CFO of Areim, Kista Galleria KB and JLL.
Previously auditor at PwC.
Holding in AB Sagax as of 31 December 2018: 18,274 warrants for Class B shares.
Auditor
MAGNUS FREDMER
Born 1964.
Auditor of the company since 2012.
Authorised Public Accountant at Ernst & Young and member of FAR.
Other audit assignments include Niam Fonder and Svenska Bostäder AB.
No holding in AB Sagax as of 31 December 2018.
The holding includes own holdings, those of related parties and holdings in related companies as of 31
December 2018. Sagax has incentive plans for all employees, which do not include the company’s CEO.
READ MORE » Remuneration of senior executives, see Note 5 on page 96.

Remuneration of auditors, see Note 6 on page 97.
Other executives
ROMAIN AUTREAUX
Managing Director of Sagax France since 2014.
Education: MSc in Engineering at Ecole Spéciale des Travaux Public and Master from ESSEC Business School.
Work experience: Director at LBO France and Asset Manager at DTZ Asset Management.
Holding in AB Sagax as of 31 December 2018: 26,244 Class B shares and 54,223 warrants for Class B shares.
ANELI CILIC
Business Developer at Sagax since 2015.
Education: MSc in Business and Economics from the Stockholm School of Economics.
Work experience: Portfolio Manager at SEB Investment Management, Risk Manager Nordic region at
GE Capital Real Estate, Associate Director at Jones Lang LaSalle.
Holding in AB Sagax as of 31 December 2018: 7,420 Class B shares, 37,387 warrants for
Class B shares and 18,500 Class B share futures (buy).
AREND DEN BOEF

Managing Director of Sagax Nederland BV since 2017.
Education: MSc in Engineering at Delft University of Technology and a MSc at Amsterdam School of Real Estate.
Work experience: Partner in Titan Real Estate Investment Management, Head of Asset Management at De
Groene Groep and several positions at Jones Lang LaSalle. Holding in AB Sagax as of 31 December 2018:
10,500 Class B shares, 1,050 Class D shares, 18,500 Class B share futures (buy) and 29,258 warrants for
Class B shares.
JOHAN HEDANDER
Business Developer at Sagax since 2007.
Education: MSc in Engineering from KTH Royal Institute of Technology.
Work experience: Investment analysis and transactions in the property sector.
Holding in AB Sagax as of 31 December 2018: 100 Class A shares, 13,100 Class B shares, 8,492 Class D
shares and 30,614 warrants for Class B shares.
URBAN SJÖLUND
Head of Asset Management since 2015.
Education: MSc in Engineering from KTH Royal Institute of Technology.
Work experience: Head of Asset Management and Leasing Manager at Fabege AB, executive positions in
Storheden and Wihlborgs.
Holding in AB Sagax as of 31 December 2018: 25,931 Class B shares, 5,461 Class D shares and 47,098
warrants for Class B shares.
VINCENT SPRUIJT
Managing Director of Sagax Nederland BV since 2017.
Education: MSc in Business Economics at Erasmus University of Rotterdam.
Work experience: Asset manager at The iO Group, Portfolio Director at TeeslandiOG, Associate Director for
Pan-European Investment Team at Valad and partner in Titan Real Estate Investment Management.
Holding in AB Sagax as of 31 December 2018: 10,500 Class B shares, 18,500 Class B share futures (buy) and
29,258 warrants for Class B shares
JAAKKO VEHANEN
Managing Director of Sagax Finland Oy since 2007.
Education: MSc in Engineering at Helsinki University of Technology.
Work experience: Responsible for the Finnish operation at Addici Facility Management Oy and
property management for Sponda Abp.
Holding in AB Sagax as of 31 December 2018: 50,336 Class B shares and 45,199 warrants for Class B shares.
Auditor’s Report, see page 122. «READ MORE
FINANCIAL REPORTS
Consolidated statement of comprehensive income

Amounts in SEK M Note 2018 2017
Rental revenue 2 2,247 1,870

Other revenue 30 4
Operating expenses 4 –197 –147
Maintenance costs 4 –59 –43
Site leaseholds 4, 9 –22 –19
Property tax 4 –93 –77
Other property expenses 4 –37 –29
Net operating income 3 1,869 1,558
Central administration 5, 6, 21 –132 –77

Profit from joint ventures 10 830 727
– of which, profit from property management 312 278
– of which, change in value of properties and financial instruments 677 606
– of which, tax –160 –157
Financial income 7 35 19
Financial expenses 8 –481 –444
Profit including changes in value in joint ventures 2,121 1,783
– of which, profit from property management 3 1,603 1,334
Change in value of properties, realised –22 1

Change in value of properties, unrealised 13, 28 1,265 1,113
Changes in value of financial instruments, realised 18 36 3
Changes in value of financial instruments, unrealised 18, 28 211 504
Profit before tax 3,611 3,405
Deferred tax 12 –435 –390

Current tax 12 –10 –49
Profit for the year1) 3 3,166 2,965
Other comprehensive income – items that may be reversed to profit or loss:

Translation differences for foreign operations 363 254
Share of other comprehensive income for joint ventures 3 5
Translation differences pertaining to hedge accounting in foreign operations –49 –84
Tax on items that may be reversed to profit or loss –29 –13
Comprehensive income for the year1) 3,454 3,126
Earnings per Class A and B share, SEK 27 18.48 17.72

Earnings per Class A and B share after dilution, SEK 27 18.47 17.69
Earnings per Class D share, SEK 2.00 2.00
Average number of common shares, millions 158.4 158.3
Average number of common shares after dilution, millions 158.5 158.5
Average number of Class D shares, millions 83.0 43.1
1) Profit for the year and comprehensive income are attributable in their entirety to the Parent Company’s shareholders.
FINANCIAL REPORTS
Comments on the consolidated

statement of comprehensive income
REVENUE FINANCIAL EXPENSES
Rental revenue rose 20% to SEK 2,247 M (1,870). Revenue was Financial expenses in 2018 amounted to SEK 481 M (444). The
primarily positively affected by property acquisitions. Other company’s average interest rate was 2.2% (3.0) at 31 December
revenue of SEK 30 M (4) primarily comprised compensation from 2018. Interest-bearing liabilities increased to SEK 15,763 M
tenants who prematurely vacated premises and insurance com- (13,691) due to property acquisitions, which also explains the
pensation. increase in financial expenses during the year.
Interest expenses amounted to SEK 407 M (400), amortisa-
PROPERTY EXPENSES tion of allocated borrowing costs to SEK 46 M (28), costs for loan
Operating and maintenance costs rose to a total of SEK 256 M commitments to SEK 17 M (12) and other financial expenses to
(190). Property tax and site leaseholds amounted to SEK 115 M SEK 11 M (4). For more information about financing at Sagax,
(96). Other property expenses amounted to SEK 37 M (29). refer to Note 17.
All of these cost increases were mainly attributable to property
acquisitions. CHANGES IN VALUE
The change in value recognised for investment properties during
CENTRAL ADMINISTRATION the year totalled SEK 1,243 M (1,114), of which SEK 1,265 M
Costs for the Group’s central administration amounted to SEK (1,113) pertained to unrealised changes in value. SEK 804 M of
132 M (77), corresponding to 5.9% (4.1) of the Group’s rental the changes in value was due to a general change in market value
revenue. The cost increase was mainly attributable to a larger in both Sweden and abroad. SEK 461 M was due to improved
organisation. earnings, refer also to Note 13.
Central administration costs in the consolidated income state- The change in the value of financial instruments amounted
ment comprise expenses for such items as company administra- to SEK 247 M (507) for the period. The changes in value attrib-
tion and expenses for maintaining the stock exchange listing. The utable to fixed-income derivatives amounted to SEK 61 M (107),
Parent Company’s expenses for items such as Group management, of which SEK 37 M (107) comprised unrealised changes in value
IT, auditing and financial reporting are included in the concept and SEK 24 M (–) realised changes in value. The changes in
of central administration. Parts of the expenses for Sagax offices value were due primarily to rising market interest rates and the
in Helsinki, Paris and Rotterdam are also categorised as central time factor. Revaluation of listed shares resulted in an unreal-
administration costs. ised change in value of SEK 97 M (24). The divestment of shares
during the year resulted in a realised change in value of SEK 12 M
PROFIT FROM JOINT VENTURES (3). Financial instruments attributable to joint ventures were
Profit from joint ventures pertained to Sagax’s shares in the earn- revalued upwards by SEK 76 M (373). Refer also to Note 18.
ings of the company’s joint ventures; refer to page 45 for more
information. EARNINGS
Profit from joint ventures including changes in the value of Profit from property management increased 20% to SEK 1,603 M
properties and fixed-income derivatives and after tax amounted (1,334). The increase was mainly attributable to property acquisi-
to SEK 830 M (727), of which profit from property management tions in 2017–2018. Profit from property management per Class A
accounted for SEK 312 M (278), changes in the value of fixed- and B share after dilution rose 16% to SEK 8.61 (7.40).
income derivatives for SEK 42 M (65) and changes in the value of Profit after tax for the year was SEK 3,166 M (2,965).
properties for SEK 635 M (541). Profit was charged with deferred
tax of SEK 160 M (157). Refer also to Note 23. TAX
Sagax recognised a tax expense of SEK 445 M (439). The
FINANCIAL INCOME deferred tax expense for the year amounted to SEK 435 M (390)
Sagax’s financial income amounted to SEK 35 M (19) and mainly and the current tax expense to SEK 10 M (49), primarily attribut-
comprised dividends received from holdings of publicly traded able to the operations abroad. Refer also to Note 12.
shares and interest income from the Group’s cash and cash equiv-
alents.
Rental revenue Profit from property management

SEK M/Quarter SEK M/Year SEK M/Quarter SEK M/Year
600 2,400 500 2,000
500 2,000 1,600
400
400 1,600
300 1,200
300 1,200
200 800
200 800
100 400 100 400
0 0 0
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Rental revenue per quarter Profit from property management per quarter
Rolling annual value Rolling annual value
FINANCIAL REPORTS
Consolidated statement of financial position

31 Dec 31 Dec
ASSETS
Fixed assets
Investment properties 13 28,769 23,755
Investment properties for sale 13 255 16
Tangible fixed assets 21 5 12
Participations in joint ventures and associated companies 23 2,837 2,259
Financial receivables 15 9 9
Financial instruments 18 453 374
Total fixed assets 32,328 26,426
Current assets
Rent receivables 96 47
Prepaid costs and accrued income 16 130 125
Other receivables 190 139
Listed shares 18 872 442
Cash and bank balances 30 73 60
Total current assets 1,362 814
TOTAL ASSETS 33,690 27,240
EQUITY AND LIABILITIES

Equity 27
Share capital 487 419
Other contributed capital 3,126 2,069
Reserves, translation differences 585 297
Retained earnings including profit for the year 11,218 8,570
Total equity 15,416 11,356
Non-current liabilities
Interest-bearing liabilities 17, 29 13,866 11,937
Deferred tax liabilities 14 1,599 1,141
Financial derivatives 18 122 422
Other non-current liabilities 19 67 53
Total non-current liabilities 15,654 13,553
Current liabilities
Interest-bearing liabilities 17 1,817 1,679
Accounts payable 42 29
Accrued expenses and deferred income 20 458 391
Other liabilities 304 232
Total current liabilities 2,620 2,331
Total liabilities 18,274 15,885
TOTAL EQUITY AND LIABILITIES 33,690 27,240
FINANCIAL REPORTS
Comments on the consolidated

statement of financial position and cash flows
ASSETS The purpose of recognising deferred tax is to take into account
Fixed assets any tax consequences of, for example, future sales of assets
At 31 December 2018, the property portfolio comprised 512 or the utilisation of loss carryforwards. Comments on tax are
(495) properties with lettable area of 2,850,000 square metres presented in Notes 12 and 14. The debt is recognised net per
(2,489,000). All properties were market appraised by indepen- country as deferred tax liabilities of SEK 1,599 M (1,141) in the
dent valuation agencies. The change in the carrying amount of the balance sheet. Loss carryforwards in the Group amounted to SEK
properties is explained in Note 13. 1,992 M (1,938) at year end.
Participations in joint ventures totalling SEK 2,837 M (2,259) Sagax’s fixed-income derivatives comprise only interest-rate
comprise shares in Hemsö Intressenter AB and Söderport Holding cap and nominal interest-rate swaps. The deficit value of the
AB. Pursuant to the equity method, shares in profit, share of derivatives decreased in 2018 due primarily to early redemp-
other comprehensive income, capital contributions and dividends tion of fixed-income derivatives. The total market value of the
received are recognised in this balance item. fixed-income derivatives was SEK –117 M (–421) on the balance
sheet date. The surplus value and deficit value, respectively, of the
Current assets fixed-income derivatives are recognised gross in the balance sheet
Prepaid costs and accrued income of SEK 130 M (125) consist as a receivable of SEK 4 M (1) and a liability of SEK 122 M (422).
mainly of accrual rent discounts and arrangement fees. The quarterly market valuations of derivative contracts affect rec-
Other receivables of SEK 190 M (139) consist mainly of ognised earnings and equity, but do not impact on the company’s
receivables pertaining to VAT, income tax and property tax. cash flow or debt ratio.
Sagax’s financial investments amounted to SEK 872 M (442)
and comprised listed shares, mainly in NP3 Fastigheter AB and Current liabilities
Nyfosa AB. Current interest-bearing liabilities amounted to SEK 1,817 M
Cash and bank balances amounted to SEK 73 M (60) at (1,679), of which SEK 1,505 M (1,275) comprised commercial
year end. Sagax also had unutilised lines of credit totalling SEK paper. At year end, accrued expenses and deferred income con-
1,886 M (1,958) at year end. Total disposable liquidity amounted sisted mainly of accrued interest expenses and prepaid rental
to SEK 1,959 M (2,018). Credit facilities corresponding to revenue.
commercial papers outstanding of SEK 1,505 M (1,275) are not
included in available liquidity. CASH FLOW
Cash flow from operating activities before changes in working
EQUITY AND LIABILITIES capital amounted to SEK 1,490 M (1,194). Cash flow from oper-
Equity ating activities deviates from profit from property management
Consolidated equity amounted to SEK 15,416 M (11,356) on 31 primarily due to profit from joint ventures in 2018 partly being
December 2018, up SEK 4,060 M in 2018. The change is attrib- reinvested in these operations. Only dividends received from joint
utable to comprehensive income in 2018 of SEK 3,454 M, new ventures affect cash flow.
share issues of SEK 1,125 M after transaction costs and share Changes in working capital had an impact of SEK 100 M
dividends and incentive plans for a total SEK –519 M. Changes in (–26) on cash flow. Investing activities had an impact of –3,771 M
equity are presented on page 83. (–1,855) on cash flow, and pertained mainly to property acqui-
sitions and investments in the existing property portfolio. Cash
Non-current liabilities flow from financing activities contributed SEK 2,195 M (464) to
The Group’s interest-bearing liabilities are described in Note Sagax, of which SEK 1,125 M as a result of new share issues and a
17. Interest-bearing liabilities increased during the year, mainly net SEK 1,780 M (927) as a result of the refinancing of investments
because of the refinancing of property investments. The liabilities and repayments. In total, cash and cash equivalents increased SEK
also increased by SEK 241 M (166) due to exchange-rate fluctua- 14 M (–223); see the cash-flow statement on page 82.
tions in 2018.
Profit from property management and cash flow Cash flow from operating activities
SEK M, bars SEK M, curve
SEK M 600 1,800
1,800
500 1,500
1,500
400 1,200
1,200
300 900
900
200 600
600
300 100 300
0 0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Profit from property management, rolling annual value Cash flow from operating activities before
change in working capital, per quarter
Cash flow from operating activities before change in
Rolling annual value
FINANCIAL REPORTS
Consolidated statement of cash flows

Amounts in SEK M Note 30 2018 2017
Changes in value of financial instruments –247 –507

Change in value of properties –1,244 –1,112
Result from ownership of joint ventures –830 –727
Dividend from joint ventures 254 139
Dissolution of allocated borrowing costs 46 28
Tax paid –87 –25
Other items not included in cash flow –15 –7
Cash flow from operating activities before
changes in working capital 1,490 1,194
Cash flow from changes in current receivables –88 –43

Cash flow from changes in current liabilities 188 17
Cash flow from operating activities 1,590 1,168
Acquisition of properties –3,026 –1,382

Property sales 24 41
Investments in existing properties –456 –341
Acquisition of listed shares –450 –244
Sales of listed shares 129 73
Increase in other fixed assets – –2
Decrease in other fixed assets 8 –
Cash flow from investing activities –3,771 –1,855
Issue of Class D shares 1,125 –

Redemption offer regarding preference shares – –66
Dividend paid to shareholders –479 –386
Incentive Plan –2 –23
Borrowings 8,487 3,322
Repayment of loans –6,707 –2,395
Early redemption of financial derivatives –242 –
Deposits from tenants 14 12
Increase in other non-current liabilities –2 –
Cash flow from financing activities 2,195 464
Cash flow for the year 14 –223
Exchange rate differences in cash and cash equivalents –1 –
Change in cash and cash equivalents 13 –223

Cash and cash equivalents at beginning of period 60 283
Cash and cash equivalents at end of period 73 60
FINANCIAL REPORTS
Consolidated changes in equity

Other Reserves, translation Profit earned incl.
Amounts in SEK M Share capital contributed capital differences profit for the year Total equity
Equity, 31 December 2016 413 2,142 136 6,017 8,709
Dividends – – – –390 –390

Redemption of preference shares –73 –1,280 – – –1,353
Offset issue of Class D shares 79 1,210 – – 1,289
Transaction costs – –3 – – –3
Incentive Plan – – – 2 2
Redemption of Incentive Plan – – – –25 –25
Comprehensive income, January–December 2017 – – 161 2,965 3,126
Equity, 31 December 2017 419 2,069 297 8,570 11,356
Dividends – – – –517 –517

Issue of Class D shares 68 1,055 – – 1,123
Transaction costs – –8 – – –8
Issue of Class B shares, Incentive Plan – 10 – – 10
Redemption of Incentive Plan – – – –4 –4
Incentive Plan – – – 3 3
Comprehensive income, January–December 2018 – – 288 3,166 3,454
Equity, 31 December 20181) 487 3,126 585 11,218 15,416
1) Equity is attributable in its entirety to the Parent Company’s shareholders.
FINANCIAL REPORTS
Parent Company income statement

Net sales 26 62 55
Administration costs 5, 6, 21 –107 –70
Loss before financial income and expenses –45 –15
Profit/loss from participations in Group companies 11 145 –35

Profit from participations in joint ventures 10 54 39
Financial income 7 460 357
Financial expenses 8 –395 –296
Profit before appropriations 219 50
Tax allocation fund –6 –9

Group contributions received/paid – –
Profit before tax 213 41
Tax on net profit for the year 12 –5 –7

Profit for the year 208 34
Parent Company statement of comprehensive income

Amounts in SEK M 2018 2017

Other comprehensive income – –
Comprehensive income for the year 208 34
FINANCIAL REPORTS
Parent Company balance sheet

2018 2017
Amounts in SEK M Note 31 Dec 31 Dec
ASSETS
Fixed assets
Tangible fixed assets
Equipment 21 2 2
Financial fixed assets

Participations in Group companies 22 5,678 3,303
Participations in joint ventures 23 285 286
Receivables from Group companies 24 2,144 2,022
Financial receivables 15 4 3
Total fixed assets 8,113 5,616
Current assets
Receivables from Group companies 24 9,581 5,208
Prepaid costs and accrued income 16 59 47
Other receivables 11 4
Cash and bank balances 31 2 4
Total current assets 9,653 5,263
TOTAL ASSETS 17,766 10,879
EQUITY AND LIABILITIES

Equity
Restricted equity 27
Share capital 487 419
Statutory reserve 121 121
Total restricted equity 608 540
Unrestricted equity
Share premium reserve 2,871 1,814
Retained earnings 155 643
Total unrestricted equity 3,234 2,491
Total equity 3,842 3,031
Untaxed reserves 23 17
Liabilities
Non-current interest-bearing liabilities 17 9,311 4,674
Non-current liabilities to Group companies 25 257 438
Deferred tax liabilities 14 3 3
Current interest-bearing liabilities 17 1,625 1,331
Current liabilities to Group companies 25 2,481 1,220
Accounts payable 1 1
Other liabilities 149 94
Accrued expenses and deferred income 20 73 70
Total liabilities 13,901 7,831
TOTAL EQUITY AND LIABILITIES 17,766 10,879
FINANCIAL REPORTS
Parent Company statement of cash flows

Amounts in SEK M Note 30 2018 2017
Profit before tax 213 41
Items not affecting cash flow

Profit/loss from participations in Group companies –145 45
Intra-Group interest income –288 –212
Intra-Group interest expenses 51 49
Appropriations 6 9
Unrealised exchange rate differences –202 –55
Other items not included in cash flow –27 11
Cash flow from operating activities before
changes in working capital –392 –112
Cash flow from changes in current receivables 18 –14

Cash flow from changes in current liabilities 134 18
Cash flow from operating activities –241 –108
Participations in Group companies –2,231 –

Receivables from Group companies –2,836 –1,286
Increase in other fixed assets –1 –1
Cash flow from investing activities –5,068 –1,287
Issue of new shares 1,125 –

Redemption offer regarding preference shares – –66
Dividend paid to shareholders –479 –386
Incentive Plan –4 –25
Borrowings 6,504 2,447
Repayment of loans –1,649 –600
Liabilities to Group companies –181 –
Change in other non-current liabilities –9 5
Cash flow from financing activities 5,307 1,375
Cash flow for the year –2 –20
Cash and cash equivalents, 1 January 4 24

Cash and cash equivalents, 31 December 2 4
FINANCIAL REPORTS
Parent Company changes in equity

Unrestricted
Amounts in SEK M Note 27 Share capital Statutory reserve equity Total equity
Equity, 31 December 2016 413 121 2,944 3,478
Redemption of preference shares –73 – –1,280 –1,353

Offset issue of Class D shares 79 – 1,210 1,289
Transaction costs – – –3 –3
Dividends – – –390 –390
Redemption of Incentive Plan 2014–2017 – – –25 –25
Profit for 2017 – – 34 34
Equity, 31 December 2017 419 121 2,491 3,031
Issue of Class D shares 68 – 1,055 1,123

Transaction costs – – –8 –8
Issue of Class B shares, Incentive Plan – – 10 10
Dividends – – –517 –517
Redemption of 2015–2018 Incentive Plan – – –4 –4
Profit for 2018 – – 208 208
Equity, 31 December 2018 487 121 3,234 3,842
FINANCIAL REPORTS
Accounting policies and notes
NOTE
1 Accounting policies
INFORMATION ABOUT THE COMPANY measured at fair value, and deferred tax, which is recognised at
The Annual Report and consolidated financial statements for AB nominal amount.
Sagax (publ), Corporate Registration Number 556520-0028,
relating to the 2018 fiscal year have been approved by the Board Group
of Directors for publication on 12 April 2019. The year-end The consolidated financial statements encompass AB Sagax and
report was presented on 7 February 2019. The Parent Company subsidiaries. Subsidiaries are companies in which the Parent
is a Swedish public limited-liability company with its registered Company has a controlling influence, directly or indirectly, on
office in Stockholm, Sweden. The company’s address is AB Sagax the operational or financial governance. AB Sagax holds, directly
(publ), Engelbrektsplan 1, SE-114 34 Stockholm, Sweden. AB or indirectly, 100% of the voting rights in all of its subsidiaries.
Sagax is a property company whose business concept is to invest The consolidated financial statements are presented in accordance
in commercial properties, primarily in the warehouse and light with the acquisition method, whereby an acquisition of a sub-
industry segment. The company is listed on Nasdaq Stockholm, sidiary is considered a transaction in which the Parent Company
Large Cap. The Group’s operations are described in the Board of indirectly acquires the assets of the subsidiary and assumes its
Directors’ Report. The Annual Report and consolidated financial liabilities. The acquired company’s revenue and expenses as well
statements will be proposed for adoption at the Annual General as its identifiable assets and liabilities are included in the con-
Meeting on 7 May 2019. solidated financial statements as of the date of the acquisition.
Companies that are divested are included in the consolidated
BASIC ACCOUNTING PRINCIPLES financial statements until the Parent Company’s controlling influ-
General ence ceases. Intra-Group transactions, receivables and liabilities
The consolidated financial statements have been prepared in between the companies in the Group, are eliminated in their
accordance with International Financial Reporting Standards entirety.
(IFRS), approved by the EU, and the interpretations of the Inter- A joint venture is a joint arrangement through which the
national Financial Reporting Interpretations Committee (IFRIC). parties who have joint controlling interests are entitled to the net
In addition, the consolidated financial statements have been pre- assets. Associated companies are companies over which the holding
pared in accordance with Swedish law applying Recommendation company exercises significant influence and are classified as neither
RFR 1 Supplementary Accounting Rules for Corporate Groups of a subsidiary nor shares in a joint venture. Shares in joint ventures
the Swedish Financial Reporting Board. and associated companies are recognised according to the equity
The functional currency for the Parent Company is SEK, method, meaning that shares in a company are recognised at cost at
which is also the presentation currency for the Parent Company the date of acquisition and subsequently adjusted with the holding
and the Group. All amounts are in millions of Swedish kronor company’s share of the change in the investment entity’s net assets.
(SEK M) unless otherwise specified, and refer to the fiscal year The holding company’s result includes the holding company’s share
from 1 January to 31 December 2018. Figures in parentheses of profit/loss in the investment entity. Due to negative shares in
refer to the corresponding date or period in the preceding year. profit, the carrying amount of the shares may be impaired to zero
Rounding-off differences may occur. according to this principle. Any further negative shares in profit are
In accordance with IAS 21 The Effects of Changes in Foreign recognised against any capital claims on the company in question.
Exchange Rates, Sagax regards the EUR as the functional cur- A joint operation is a joint arrangement through which the parties
rency of the operations in Finland, Germany, the Netherlands and are entitled to the assets and have obligations for the liabilities per-
France. For the operations in Denmark, the DKK is regarded as taining to the arrangement. A party to a joint operation reports its
the functional currency. In preparing the consolidated financial assets and liabilities including its share of all joint assets and liabili-
statements, the balance sheets of the Group’s foreign operations ties and its revenue and expenses from the operations, as well as its
are translated from their functional currencies into SEK based on shares of the operations’ joint revenue and expenses.
the exchange rates applying at the balance sheet date. Revenue When Sagax acquires a company with one or more properties,
and expense items are translated at the average exchange rate for the acquisition is classified as an asset deal or a business combi-
the year. Any translation differences that arise are recognised in nation. An acquisition of a property company with a property
other comprehensive income and as a change of the reserves in business (employees, personnel, company management and busi-
consolidated equity. When a foreign operation is divested, the ness systems are indications of a property business) entails that
accumulated translation differences are recognised together with the acquisition is regarded as a business combination, whereby
the gain or loss from the divestment. the full amount of deferred tax is recognised on the difference
Assets and liabilities are recognised at cost, except for invest- between the assessed property value and the residual value for
ment properties, financial investments and financial instruments tax purposes. The acquisition of a property company without the
attributable to joint ventures and financial derivatives, which are abovementioned components is to be regarded as an asset deal,
FINANCIAL REPORTS
NOTE
1 Accounting policies, cont’d.
whereby no deferred tax attributable to the acquisition is rec- In the light of the decisions taken by the Swedish Tax Agency
ognised. All of the Group’s corporate acquisitions during the year concerning the Group companies Sagax Bruket Fastigheter AB
were classified as asset deals. and Firethorne AB, the assessment of the value of deferred tax
The Group has no goodwill items to report. assets linked to loss carryforwards is a critical assessment con-
ducted by the Board, refer to Note 31.
Parent Company The classification of Sagax’s preference shares as equity
The Parent Company prepares its annual report in accordance instruments in accordance with IAS 32 is also a significant assess-
with the Annual Accounts Act and the Swedish Financial Report- ment made by the Board of Directors. The Board believes that
ing Board’s recommendation RFR 2 Accounting for legal entities. the outstanding preference shares in accordance with IAS 32
RFR 2 implies that in the annual report of the legal entity, the comprise an equity instrument since no contractual obligation to
Parent Company must apply all EU-approved IFRS and state- pay dividends or repay contributed capital exists. A payment is
ments as far as possible within the framework of the Annual dependent on a resolution on payment being made by the Annual
Accounts Act and taking into consideration the connection General Meeting, a resolution that can only be made after the
between accounting and taxation. Board has proposed that the Meeting pay dividends. There is also
Shares in subsidiaries are recognised in the Parent Company no obligation or contractual financial incentive for the company to
according to the cost method. The carrying amount is tested on redeem the preference shares. Sagax’s Class A, B and D common
a continuous basis by reference to the subsidiaries’ consolidated shares have been categorised as equity instruments.
equity. In the event the carrying amount is less than the consol-
idated value of the subsidiaries, an impairment charge is applied AMENDED REPORTING RULES, IFRS
and charged to profit or loss. If an earlier impairment is no longer Amendments to IFRSs with an impact or a potential impact on
justified, it is reversed. Sagax’s financial statements are presented below.
CRITICAL ASSESSMENTS Amended accounting rules that came into effect in 2018
IFRS and Swedish GAAP require that Sagax makes assessments IFRS 15 Revenue from Contracts with Customers is to be applied
and assumptions that affect the Group’s reported assets, liabilities, from 1 January 2018 Sagax’s revenue primarily comprises rental
revenue and expenses, and other information. These assessments revenue, which is not encompassed by this standard but by IAS
are based on historical experience and other factors deemed appro- 17 Leases. Accordingly, the standard has no material impact on its
priate under the prevailing circumstances. The actual outcome financial reporting.
may differ from these assessments if other assumptions are made or IFRS 9 Financial instruments replaces IAS 39 Financial Instru-
other conditions are present. Additional factors that can affect the ments: Recognition and Measurement from 2018. The standard
assessment of the Group are discussed in Note 31. addresses the classification and measurement of financial assets and
Concerning the valuation of investment properties, the assess- liabilities, impairment of financial instruments and hedge account-
ments can have a significant influence on the Group’s earnings and ing. Sagax’s hedge accounting of net investments in foreign sub-
financial position. The valuation requires an assessment of future sidiaries is deemed to remain effective under IFRS 9. Derivatives
cash flow and the establishment of a yield requirement. The valua- continue to be measured at fair value through profit or loss. The
tions are carried out on a quarterly basis by independent valuation standard’s new model for loss allowances did not have any material
companies, except for the German properties, which have only impact on expected credit losses. Accordingly, the transition did
been valued externally at year end for cost reasons. The valuations not have any material impact on Sagax’s financial reporting.
and assessments made are discussed under Investment properties
in Note 13. External valuations of financial instruments, based on New or amended accounting standards and
observable market data, such as derivatives are obtained quarterly interpretations applicable after 2018
and provide the basis for unrealised changes in value that, pursuant IFRS 16 Leases, which Sagax will begin applying from 1 January
to IFRS, affect the Group’s earnings and financial position. 2019 without retroactive restatement, entails extensive changes
Another significant assessment issue is the manner in which to the recognition of leases for lessees and requires that most
deferred tax should be treated in the consolidated financial state- leases are recognised in the statement of financial position as
ments – see the “Taxes” section in this Note. assets and liabilities. For lessors, the new standard does not entail
Sagax’s operations are focused on growth of the cash flow any major changes to recognition. Leases and site leaseholds are
from the operating activities, meaning growth in profit from initially recognised at a value calculated as the present value of
property management. As a result, financial targets, forecasts and the lease payments and site leasehold. Sagax will recognise a lease
dividend policies, for example, are based on profit from property liability for site leaseholds of SEK 340 M and a corresponding
management. No target is set for amounts of changes in value right-of-use asset will be recognised as an investment property.
and these amounts are not included in the basis for dividends. According to the new standard, site leaseholds will no longer
The statement of comprehensive income has been presented with be recognised as a properties expense but instead as a financial
respect for this in order to provide a true and fair view of the expense. The recognised expense for 2018 amounted to SEK 21
operations. Changes in value (not affecting cash flow) are rec- M. Other leases pertaining to offices, vehicles, office equipment
ognised after items affecting cash flow and a revenue line, profit and land leases will only have a minor impact on the accounts.
from property management, has been added to the statement.
FINANCIAL REPORTS
NOTE
Amendments to Swedish regulations FINANCIAL EXPENSES

Amendments to the Swedish regulations did not have a material Financial expenses refers to interest, fees and other expenses that
impact on Sagax’s financial statements and reporting in 2018. arise when Sagax takes up interest-bearing liabilities. Expendi-
tures for obtaining mortgage deeds are expenses in the company
CLASSIFICATION accounts while the item is capitalised in the consolidated balance
Fixed assets and non-current liabilities consist exclusively of sheet. Financial expenses are charged to earnings for the period to
amounts expected to be recovered or paid after more than twelve which they refer.
months from the balance sheet date. Current assets and current Financial expenses also include expenses for fixed-income
liabilities consist only of amounts expected to be recovered or derivatives. Payment streams arising from these contracts are rec-
paid within twelve months of the balance sheet date. ognised as income for the period to which they refer. Unrealised
changes in value are recognised under a separate heading in the
REPORTING FOR SEGMENTS income statement and do not affect financial income or expenses.
The company’s internal reporting procedures are based primarily Interest expenses during the production periods of large projects
on the geographic division of the market, which reflects assessed involving new construction, additions or renovations are capital-
market risks. The division of segments corresponds to the Group’s ised and do not affect financial expenses.
internal reporting structure.
GROUP AND SHAREHOLDER CONTRIBUTIONS
REVENUE Group contributions received or granted by the Parent Company
Revenues consist primarily of rents for the provision of premises. have been recognised as appropriations. Shareholder contri-
Rental revenue is distributed linearly, in accordance with IAS 17. butions are recognised in accordance with a statement by the
Rental revenue, which in an accounting perspective is designated Swedish Financial Reporting Board, which means that they are
operating lease agreements, is recognised in the period to which recognised as an investment in participations in subsidiaries.
it applies. In cases where rental contracts involve reduced rent
during a portion of the lease period that corresponds to a higher COMPENSATION TO EMPLOYEES
rent at a different time, the lower or higher-than-normal rent is Compensation to employees, such as wages, salaries and social
distributed over the lease term of the contract. security expenses, paid vacations and paid sick leave, etc., are rec-
Rent paid in advance is recognised in the statement of finan- ognised as the employees perform services in return for the com-
cial position as prepaid rental revenue. Rental revenue from pensation. Bonuses are paid and expensed as they are granted and
acquired properties are booked as of the occupancy date. pension premiums are paid and expensed on a monthly basis.
Interest income is recognised as it is earned (the calculation
being based on the yield on the underlying asset, using the effec- PENSIONS
tive interest rate). For employees in Sweden who are entitled to allocations to a
The net gain/loss from property sales is recognised when pension fund, Sagax pays pension premiums in accordance with
properties are vacated, unless special provisions have been a defined-contribution plan. In term of the amounts allocated,
stipulated in the purchase agreement. If properties have been the premiums should reflect the customary ITP provisions. Sagax
vacated after the close of a quarter, when the properties are to be has no remaining obligations or commitments resulting from
measured at market value, they are recognised in the following these premium payments for future pensions. Payments are made
interim report at a value corresponding to that agreed between to stand-alone entities that administer the plans. There are no
the parties. The changes in the value of these properties are commitments for defined-benefit ITP plans or other benefits after
included under the heading unrealised changes in value in the termination of employment.
interim report. Consequently, no realised changes in the value For the operations in Finland, France and the Netherlands,
are recognised in the quarter in which the properties have been Sagax pays statutory pension premiums. No further payments are
vacated. If Sagax concludes a sales agreement and vacates the made regarding the regarding the employees’ pension benefits.
properties during the same quarter, the changes in value are rec- There are no commitments after termination of employment.
ognised as realised changes in value.
EQUITY
EXPENSES Buyback of treasury shares
Expenses are charged to earnings for the period in which they In connection with the buyback of treasury shares, equity is reduced
arose. Central administration costs in the consolidated income by the purchase consideration paid including any transaction costs.
statement comprise expenses for such items as company admin- After the AGM has passed a resolution approving the payment
istration and expenses for maintaining the stock exchange listing. of a dividend, these dividends are recognised as a reduction in equity
The Parent Company’s expenses for items such as Group manage- and as an expense pending payment.
ment, IT, auditing and financial reporting are included in the con- Dividends received from holdings in joint ventures and asso-
cept of central administration. Part of expenses for Sagax’s offices ciated companies are recognised in the Group as a reduction of
in Helsinki, Paris and Rotterdam are also categorised as central the participations’ value since the earnings from these companies
administration costs. are continuously recognised as revenue. Dividends in the Parent
Company are recognised as financial income since shares in profit
are not included in the accounts.
FINANCIAL REPORTS
NOTE
Earnings per common share TANGIBLE FIXED ASSETS

Earnings per Class A and B common share are defined as profit in Tangible fixed assets consist of equipment, machinery and prop-
relation to the average number of Class A and B common shares erty modifications, which have been recognised at cost, less
after taking into account the profit for the period attributable to deductions for accumulated depreciation according to plan and
Class D common shares and preference shares’ portion; refer also any impairment carried out. Tangible fixed assets are depreciated
to Note 27. at the rate of 20% per year.
Earnings per Class D common share are defined as a corre-
sponding right to dividends, as determined by the Articles of FINANCIAL INSTRUMENTS
Association, and may not exceed SEK 2.00 per year. The Group applies IFRS 9 Financial Instruments from 2018. Ini-
tial application of IFRS 9 did not have any material impact on the
Incentive Plan company’s equity as per 1 January 2018. The comparative year
Payment of option premiums in connection with incentive plans 2017 is recognised in accordance with IAS 39.
is recognised in the Group as an increase of consolidated equity. Financial instruments on the asset side of the balance sheet
Salary payments attributable to incentive plans are recognised in encompass cash and cash equivalents, rent receivables, financial
the Group as a reduction of equity and, in the Parent Company, as investments, loan receivables, derivatives and other instruments
administration costs. Settlement for any exercise of warrants from and on the liabilities side loan liabilities, derivatives, accounts
outstanding warrant plans is recognised directly against equity. payable and other liabilities. Financial instruments are initially
measured at fair value plus any transaction costs. The exception is
CASH FLOW the category of financial instruments that is measured at fair value
The cash flow statement has been prepared according to the indi- through profit or loss and for which any transaction costs have not
rect method, meaning that net profit or loss is adjusted for non- been taken into account.
cash transactions during the year as well as any revenue or expenses
associated with the cash flow from investing or financing activities. Recognition in and derecognition from the balance sheet
Financial assets and financial liabilities are recognised in the bal-
INVESTMENT PROPERTIES ance sheet when the Group becomes a party in accordance with
Sagax’s properties are held for the purpose of generating rental the contractual terms of the instrument. Rent receivables and
revenue, and are referred to as “investment properties” in accor- accounts receivable are recognised when the invoice is sent and
dance with IAS 40. Sagax has elected to measure its properties at the terms of the company’s right to receive compensation have
fair value and has commissioned independent valuation agencies been satisfied. Operating liabilities are recognised when the
to value all of the Group’s properties. The properties were valued counterparty has delivered the goods or services, regardless of
in accordance with these externally conducted valuations at 31 whether or not an invoice has been received. Accounts payable
December 2018. Properties for which sale agreements have been are recognised when the invoice is received.
reached are valued, in accordance with Sagax’s accounting poli- Financial assets are derecognised from the balance sheet when
cies, at the agreed amount. the rights to payment from the holdings have been terminated
According to IFRS 13, the aim of fair value measurement is or been transferred and all material rights and risks attributable
to estimate the price of the asset on the measurement date in an to ownership have been transferred. Financial liabilities are
orderly transaction between market participants under current derecognised from the balance sheet when the obligations result-
market conditions. The highest and best use of the asset is taken ing from the agreement have been realised or are extinguished in
into account in this respect. The valuation is carried out in line some other manner.
with Level 3 of the fair value hierarchy in IFRS 13, unobservable
inputs. According to accepted theory, the value of a property Receivables
consists of the discounted present value of the future cash flows Receivables are classified at amortised cost if the contractual
that the asset is expected to generate. The principle method of terms result solely in payments of principal and interest on the
appraisal used was cash flow calculations in which the present principal amount outstanding. Receivables are initially measured
value of net operating income, investments and residual values at fair value plus any transaction costs. They are subsequently
was calculated. The residual value is calculated by perpetually measured at amortised cost based on the effective interest rate
capitalising the estimated net operating income the year follow- method less loss allowance. A loss allowance for expected losses
ing the last year of calculation by the assigned yield requirement. on receivables, based on past history and assessment of risk of
The present value of cash flow and residual value is calculated by loss, is established when the receivable arises. Receivables in the
discounting the cash flow and residual value by the cost of capital. Parent Company from subsidiaries are recognised at cost. The loss
For further information about measurement, refer to Note 13. allowance is deemed to be of an insignificant amount.
Investment properties are recognised in the Group companies Current receivables fall due for payment within one year of
at cost less accumulated depreciation. In accordance with IFRS, the balance sheet date. Because the Group recognises property
property values are not depreciated in the consolidated financial sales on the date of vacancy, receivables do not normally arise as a
statements. Depreciation carried out in the Group companies is result of property sales.
therefore reversed in the consolidated financial statements.
FINANCIAL REPORTS
NOTE
Financial assets measured at fair value through are subsequently measured at fair value in the balance sheet and
profit or loss changes in value are recognised in profit or loss.
Assets that do not meet the criteria for amortised cost or fair The fair value of fixed-income derivatives is based on a dis-
value through other comprehensive income are recognised as counting of calculated future cash flows in accordance with the
financial assets measured at fair value through profit or loss. This contract’s terms and due dates, based on market interest rates.
includes derivatives, assets held for trading and options. Fair value To calculate the market value, market interest rates for each
is determined in accordance with the listed market value or using term as quoted on the balance sheet date and generally accepted
various calculation methods. calculation methods are used, entailing that the fair value was
Sagax’s ownership in Hemsö Intressenter AB is governed established according to observable inputs, meaning Level 2, of
by a long-term shareholder agreement with the Third Swedish the fair value hierarchy according to IFRS 13. Unrealised change
National Pension Fund. The shareholder agreement regulates, in value refers to the change arising during the fiscal year in the
inter alia, put and call options between the two shareholders value of the derivatives held by the Group at year end. The Group
regarding Sagax’s shareholding in the company. Financial instru- does not apply hedge accounting. Instead, it has elected to report
ments attributable to Hemsö Intressenter AB had a market value changes in value directly in the income statement.
of SEK 449 M (373).
TAXES INCLUDING DEFERRED TAX
Receivables and liabilities in foreign currencies Income tax refers to current and deferred tax.
Transactions in foreign currencies are recognised at the transaction- Income tax is charged to the consolidated statement of com-
day rate. Monetary assets and liabilities in foreign currencies are prehensive income. Deferred tax is recognised in accordance
translated at the closing rate, and exchange-rate differences are with the balance sheet method. With this method, deferred tax
recognised in profit for the year. Exchange rate differences relating liabilities and assets are reported for all differences between an
to external Group operating receivables and operating liabilities asset’s or liability’s carrying amount and its tax value – that is,
are recognised in operating profit. Exchange rate differences arising temporary differences. This implies that a tax liability or tax asset
on loans raised in foreign currency in order to currency hedge net is triggered when the asset or liability is realised. For Sagax, there
investments in foreign operations are recognised in other compre- are temporary differences relating to properties, derivatives and
hensive income to the extent that the hedge is effective. untaxed reserves. Deferred tax assets attributable to loss carryfor-
wards are recognised, given the likelihood of future tax surpluses
Cash and cash equivalents being available that can be applied to loss carryforwards.
Cash and cash equivalents are recognised at their nominal value Deferred tax assets and tax liabilities are calculated using the
at year end. tax rates that are expected to apply to the period when the receiv-
ables or liabilities are settled, based on the tax legislation in effect
Financial liabilities on the balance sheet date.
Non-current liabilities are liabilities that fall due for payment Reporting of deferred tax complies with IAS 12. Sagax
after more than one year from the balance sheet date. Current reports in accordance with the following:
liabilities are liabilities that fall due for payment within one year. If the acquisition constitutes a business combination, full
Loans are initially measured at fair value net after transaction deferred tax is recognised on the difference between the assessed
costs. The loans are subsequently measured at amortised cost. If property value and the tax residual value.
there are differences between the borrowing amount, net after If the acquisition is an asset deal, no deferred tax is recognised
transaction costs, and the repayment amount, these are rec- on the acquisition date. Deferred tax is recognised on differences
ognised in profit or loss distributed over the lending period by between the carrying amounts of the properties and their tax
applying the effective interest rate. Accrued interest is recognised residual values arising after the acquisition date.
under accrued expenses. Deferred tax is recognised at the nominal value, with no dis-
counting. Aside from the time factor, neither is the fact that prop-
Derivatives and hedge accounting erties can often be sold in a tax-efficient manner taken into account.
Sagax uses fixed-income derivatives to reduce interest-rate risks The real tax expense for a property sale can thus differ from the tax
and achieve the desired fixed-interest term. Borrowing at a float- liability previously recognised by Sagax in its accounts.
ing interest rate is replaced by a fixed interest rate through inter-
est swaps or, alternatively, the interest-rate risk is limited using an LEASING
interest-rate cap aimed at restricting changes in future cash flows Leasing contracts in which essentially all risks and advantages
relating to interest payments. associated with ownership are transferred to the lessee are classi-
In the statement of financial position, fixed-income deriva- fied as operating leases.
tives with negative values are recognised as non-current liabilities Leases attributable to Sagax’s investment properties are to be
since the amounts will not be settled in cash. However, a theoret- considered as operating leases. The recognition of these contracts
ical maturing amount in 2019 can be mathematically calculated. is determined by the revenue principle and Note 2.
All other things being equal, the time factor alone entails that Given that the lessor retains the financial risk, site leaseholds
reserves for the deficit value of fixed-income derivatives in Sagax are also recognised as operating leases in Note 9.
will be dissolved in a total amount of SEK 31 M in 2019. Sagax has signed several short-term leases for passenger cars
Derivatives are initially recognised at cost in the statement of and office machines. The total amount of these leases is not signif-
financial position on the date of transaction. All derivatives icant. The lease payments are recognised as a cost in profit or loss
and are distributed straight line over the term of the lease.
FINANCIAL REPORTS
NOTE
2 Operating leases – rental revenue
The Group’s rental revenue for 2018 amounted to SEK 2,247 M Contractual annual rent
(1,870). The increase in rental revenue was primarily an effect of Year of expiry No. of leases Area, sqm SEK M Share
a larger property portfolio and revenue-increasing investments in 2019 679 246,000 249 10%
the existing property portfolio. 2020 248 343,000 304 13%
Rental revenue consists of the rental value less the value of 2021 148 277,000 241 10%
premises that were vacant during the year, as well as rent dis- 2022 141 296,000 290 12%
counts granted. “Rental value” refers to rental revenue received 2023 113 213,000 216 9%
plus the estimated market rent for vacant spaces. Rental value >2023 216 1,334,000 1,079 45%
Total 1,545 2,708,000 2,378 100%
includes additional expenses that are debited, such as surcharges
for heating, electricity, property taxes and indexation.
The year of maturity for signed leases is shown in the follow-
ing table, in which contractual annual rent refers to the annual Contractual future rental revenue 31 Dec 2018 31 Dec 2017
value of an existing lease. The table below also illustrates Sagax’s Contractual rental revenue, year 1 2,378 1,977
management strategy for non-current leases, where 54% of the Contractual rental revenue, years 2–5 5,781 5,274
contractual annual rent falls due for renegotiation after 2022. Contractual rental revenue, after year 5 6,092 5,819
The remaining average lease term was 6.0 (6.6) years. The Total 14,251 13,070
economic occupancy rate was 95% (94) at year end. The total
rental value of unleased premises and rent discounts granted was
SEK 132 M (122) at year end.
Sagax’s strategy is to focus on achieving low operating risk
– for example, by prioritising non-current leases. The following
table shows contractual future rental revenue relating to existing
leases.
FINANCIAL REPORTS
NOTE
3 Reporting of the Group’s market areas
Finland,
Stockholm Helsinki university cities Paris
Revenue 2018 2017 2018 2017 2018 2017 2018 2017
Rental revenue 636 569 512 464 249 132 168 104
Other revenue 7 2 2 1 – – 2 –
Property expenses –131 –112 –119 –97 –46 –9 –41 –29
Net operating income 512 459 395 368 204 124 129 75
Financial income – – – – – – – –
Financial expenses –181 –142 –81 –77 –54 –43 –31 –27
Central administration costs – – – – – – – –
Profit from joint ventures – – – – – – – –
Profit from property management 330 317 315 291 150 79 98 48
Unrealised
changes in value1) 630 401 383 217 112 102 39 160
Realised
changes in value1) – 1 2 –1 – – – –
Changes in value related to
joint ventures – – – – – – – –
Tax on joint ventures – – – – – – – –
Current tax – – – – – – – –
Deferred tax – – – – – – – –
Profit for the year 960 719 699 507 262 181 137 208
Investment properties 9,822 8,670 6,333 5,014 2,732 1,826 1,995 1,386
Cash and cash equivalents – – – – – – – –
Unallocated items:
Deferred
tax assets – – – – – – – –
Other assets – – – – – – – –
Total assets 9,822 8,670 6,333 5,013 2,732 1,826 1,995 1,386
Property loans – – – – – – – –
Unallocated items:
Deferred
tax liabilities – – – – – – – –
Other liabilities – – – – – – – –
Total liabilities – – – – – – – –
Consolidated equity – – – – – – – –
Total liabilities and equity

– – – – – – – –
Other information
Investments in
properties 232 157 177 118 19 – 8 48
Items not affecting cash flow:
Unrealised
changes in value 630 401 383 217 112 102 39 160
Profit from
joint ventures – – – – – – – –
Deferred tax – – – – – – – –
Total items not affecting cash flow 630 401 383 217 112 102 39 160
1) Changes in value of financial instruments have not been distributed by market area.
FINANCIAL REPORTS
Netherlands Rest of Sweden Rest of Finland Rest of Europe Unallocated items Total Group
2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
126 63 206 206 226 217 123 115 – – 2,247 1,870
4 – – – 15 1 – – – – 30 4
–7 –2 –11 –13 –27 –29 –9 –8 –17 –18 –408 –316
123 61 195 193 214 189 114 107 –17 –18 1,869 1,558
– – – – 1 – – – 34 19 35 19
–42 –21 –40 –60 –52 –30 –21 –26 21 –18 –481 –444
– – – – – – – – –132 –77 –132 –77
– – – – – – – – 312 278 312 278
81 40 156 133 161 159 93 81 219 186 1,603 1,334
30 13 –40 43 86 146 24 31 212 504 1,476 1,617
– – –1 – –23 1 – – 36 3 14 4
– – – – – – – – 677 606 677 –606

– – – – – – – – –160 –157 –160 –157
– – – – – – – – –10 –49 –10 –49
– – – – – – – – –435 –390 –435 –390
111 52 114 176 224 307 118 112 540 702 3,166 2,965
1,817 850 2,392 2,446 2,373 2,210 1,560 1,370 – – 29,024 23,771
– – – – – – – – 73 60 73 60
– – – – – – – – – – – –
– – – – – – – – 4,593 3,409 4,593 3,408
1,817 850 2,392 2,446 2,373 2,210 1,560 1,370 4,666 3,469 33,690 27,240
– – – – – – – – 15,683 13,616 15,683 13,616
– – – – – – – – 1,599 1,141 1,599 1,141

– – – – – – – – 992 1,127 992 1,127
– – – – – – – – 18,274 15,884 18,274 15,884
– – – – – – – – 15,416 11,356 15,416 11,356
– – – – – – – – 33,690 27,240 33,690 27,240
4 – 3 12 10 1 3 5 – – 456 341
30 13 –40 43 86 146 24 31 211 504 1,475 1,617
– – – – – – – – 830 727 830 727

– – – – – – – – –435 –390 –435 –390
30 13 –40 43 86 146 24 31 606 841 1,870 1,954
The operating segments match Sagax’s internal operational

monitoring as it is reviewed by the company’s CEO.
According to IFRS 8, disclosure must be made if revenue
from a single customer exceeds 10%. This was not the case in
2018 and 2017.
FINANCIAL REPORTS
NOTE
4 Property expenses NOTE
5
Employees and
HR expenses
In 2018, property expenses amounted to SEK 408 M (316). Group Parent Company
This amount includes direct property expenses, such as opera- 2018 2017 2018 2017
tion, maintenance, site leaseholds and property taxes, as well as Number of employees
indirect expenses for property administration. Most of Sagax’s Average number of
employees 56.7 47.0 29.5 26.6
leases state that certain property expenses are to be borne by the
of whom, men 32.5 28.0 17.1 15.8
tenant. Sagax has also signed triple net leases, meaning the tenant
itself is the contractual party and bears all operating and main- Wages, salaries and
tenance costs. Properties outside Stockholm, Helsinki and Paris other remuneration
Board, CEO and other
account for the predominant part of the triple net leases.
senior executives 10.4 8.8 10.4 8.8
of which, bonus 2.8 1.5 2.8 1.5
OPERATING AND MAINTENANCE COSTS
Other employees 68,5 39.8 44,7 22,4
Operating and maintenance costs include expenses for electricity, Total 78,9 48.6 55,1 31,2
heating, water, property care-taking, insurance and maintenance.
In cases where Sagax signs contracts for operating and mainte-
nance costs, the costs are generally passed on to the tenant in the Social security expenses
form of rent surcharges. Operating expenses for 2018 amounted Board, CEO and other
senior executives 4.3 3.2 4.3 3.2
to SEK 197 M (147) and maintenance costs to SEK 59 M (43).
of which, pension expenses 0.8 0.7 0.8 0.7
Other employees 20,4 13.2 15,5 9.6
SITE LEASEHOLDS of which, pension expenses 6.8 5.5 3.4 2.9
The site leasehold is the annual fee Sagax pays for the use of the Total 24,7 16.4 19,8 12,8
land. At year end, the number of properties held on leasehold
amounted to 89 (84). In 2018, site leaseholds including ground BOARD OF DIRECTORS AND CEO
rents amounted to SEK 22 M (19) and referred primarily to In 2018, the Parent Company had six (six) Board members, includ-
Sagax’s leaseholds in the City of Stockholm. For 2019, current ing one (one) woman. If the CEO is included, the Group and the
ground rent and fees for tenancy contracts amount to SEK 23 M. Parent Company had three (three) senior executives. Group man-
agement comprises the CEO, the Head of Finance and the CFO.
PROPERTY TAX In 2018, the CEO was paid a salary of SEK 3.8 M (3.4),
In Sweden, the property tax is a state-levied tax paid annually as including benefits of SEK 5,000 (5,000), and SEK 1 M (0.5) in
a percentage of the assessed property tax value. For Sagax, prop- bonus for the 2017 fiscal year. For 2018, contractual remuneration
erty tax varies between 0.5 and 1.0%, depending on whether the and benefits to the CEO were SEK 3.0 M per year in fixed salary
property is classified as warehouse/industrial premises (0.5%) plus a variable remuneration component of a maximum of four
or as office/retail premises (1.0%). Sagax has three properties in monthly salaries, which is payable in relation to individually set
Stockholm for which no property tax is paid. In Finland and the targets. In 2019, the CEO will be paid a contractual amount of
Netherlands, property tax is a municipal charge and tax rates SEK 1.1 M in bonus for the 2018 fiscal year.
vary among the municipalities. For Sagax’s properties, the tax For 2019, contractual remuneration to the CEO amounted to
in Finland is between 0.93 and 1.55% and in the Netherlands is SEK 3.3 M in fixed salary plus variable remuneration of a max-
between 0.16% and 0.33% of the assessed property tax value. imum of four monthly salaries, which is payable in relation to
German property tax is set locally, and amounted to 1.26% of the individually set targets. The CEO does not receive any pension
property tax value for Sagax. French property tax is set locally benefits. In the event of termination initiated by the company,
based on 15% of anticipated rental revenue. the CEO is entitled to three months’ salary.
In 2018, property tax totalled SEK 93 M (77). Fees totalling SEK 1.0 M (1.0) were paid to the Board of
Directors, in accordance with a resolution passed by the AGM on
OTHER PROPERTY EXPENSES 7 May 2018. Of this total, the Chairman of the Board received
Other property expenses include leasing expenses and manage- SEK 300,000 (300,000), while each of the other four (four)
ment expenses. These expenses amounted to SEK 37 M (29) in non-executive members received SEK 165,000 (165,000). Board
2018. fees to three of the Board members were paid to companies in
accordance with agreements reached between the individuals
in question and Sagax, and this arrangement is cost-neutral for
Sagax. The CEO receives no remuneration for his Board assign-
ment for AB Sagax.
OTHER SENIOR EXECUTIVES

Sagax’s Group management – senior executives with Group-
wide spheres of responsibility – comprises the CEO, the Head of
Finance and the CFO.
In 2018, the Head of Finance and the CFO were paid a salary
of SEK 5.6 M (4.4), including a bonus of SEK 1.8 M (1.0). A total
of SEK 0.8 M (0.7) relating to pension insurance was also paid.
Remuneration and benefits will be paid to other senior execu-
tives as per contract in the amount of SEK 3.7 M per year in fixed
FINANCIAL REPORTS
NOTE
5
Employees and
HR expenses, cont’d. NOTE
6 Remuneration of auditors
salary plus a variable remuneration component for 2019. The vari- Group Parent Company
2018 2017 2018 2017
able remuneration component may not exceed SEK 1.4 M. Pen-
Ernst & Young AB:
sion premiums are paid into defined-contribution pension plans as
Remuneration for audit 3.2 3.1 0.5 0.5
described in Note 1.
Upon termination initiated by the company, these executives Remuneration for audit
are entitled to four months’ salaries or the terms stipulated by cur- activity in addition to
auditing assignment 0.5 – – –
rent legislation. The period of notice upon termination of employ-
Other consulting services
ment by the senior executives, excluding the CEO, is four months. provided by the audit
company – – – –
INCENTIVE PLAN Total 3.7 3.1 0.5 0.5
Sagax has three warrant plans for the company’s employees.
These plans are valid for three years, encompassing the periods
7
2016/2019, 2017/2020 and 2018/2021. Warrants entitle the
holder to subscribe for new Class B common shares in June 2019, NOTE Financial income
June 2020 and June 2021, respectively. The subscription price
corresponds to the price paid for the Sagax share at the start of
the warrant plans converted using the average share price trend Group Parent Company
2018 2017 2018 2017
for the listed property companies in accordance with Carne-
Interest income, subsidiaries – – 288 212
gie’s property index (CREX) during the corresponding period.
Interest income 4 1 3 –
Accordingly, the warrants will have a value on condition that the
Dividends from listed com-
price performance of the Sagax share exceeds the average for the panies 31 18 – –
listed property companies during each three-year period. At year Other financial income – – 169 145
end, Sagax employees held a total of 801,670 warrants with the Total 35 19 460 357
right to subscribe for common shares corresponding to 0.5% of
the number of common shares outstanding. The company’s CEO The Group’s interest income derives mainly from the Group’s cash
and Board Members do not participate in the plans. and cash equivalents. The Parent Company’s other financial income
In 2018, Sagax issued 121,275 Class B common shares due to pertains to exchange-rate gains on receivables.
the exercise of warrants and bought back 195,375 warrants under
the 2015/2018 Incentive Plan at the corresponding market value
on the buy-back date. Costs for buying back the warrants totalled
8
SEK 4 M.
Employees acquired 318,948 warrants for a total of SEK NOTE Financial expenses
3.3 M in 2018. During the three first years, the employees who
participate in incentive plans receive a premium subsidy in the Group Parent Company
form of extra salary in an amount corresponding to one-twelfth of 2018 2017 2018 2017
an annual salary, depending on the number of acquired warrants. Interest expenses 407 400 199 155
The subsidy requires that annual salary is less than SEK 0.5 M. Amortisation of allocated
borrowing costs 46 28 17 12
This procedure was in line with the resolution of the 2018 AGM.
Unutilised lines of credit 17 12 8 4
No additional warrants or convertibles were issued by the
Interest expenses to
company.
subsidiaries – – 51 49
Redemption costs for
SICK LEAVE 2018 financial derivatives – – 100 –
Sick leave during 2018 amounted to 1.1% (0.6), of which the pro- Other financial
portion of employees on long-term sick leave was 42.9% (0). Sick expenses 11 4 20 76
leave distributed by age category and gender is shown below. Total 481 444 395 296
Financial expenses are expenses that arise for interest-bearing

Age Sick leave
loans, financial derivatives and loan commitments.
20–29 6.1%
The Parent Company’s interest expenses totalling SEK 199 M
30–49 0.7%
(155) included SEK 165 M (121) in the form of direct interest
50> 0.2%
expenses for loans raised. The Group’s interest expenses totalling
SEK 407 M (400) included SEK 298 M (267) in the form of direct
Gender Sick leave
interest expenses for loans raised, excluding interest expenses
Men 1.3%
pertaining to fixed-income derivatives.
Women 0.9%
The Parent Company’s other financial expenses mainly per-
tain to exchange-rate losses.
FINANCIAL REPORTS
NOTE
9 Operating leases – site leaseholds NOTE
12 Tax expense
Group liabilities. The difference between these amounts is multiplied by the

31 Dec 2018 31 Dec 2017 applicable tax rate and recognised as deferred tax. The intention is
Fall due for payment within 1 year 23 19 to make allowances for the tax implications in connection with, for
Fall due for payment within 2–5 years 79 68 example, future sales of assets or the utilisation of loss carryforwards.
Fall due for payment in more than The income tax is allocated in profit or loss to two items; cur-
5 years 429 346 rent tax and deferred tax. Current tax is based on the year’s taxable
Total 531 434
income, which may differ from recognised income, with the tax rate
The summary relates to costs for contracted future site lease- for each country. The differences are due to the company’s ability to:
holds. Site leaseholds are the fees that an owner of a building on 1) perform tax-related depreciation,
land owned by a municipality pays to the municipality. 2) make direct deductions for certain property-related investments
Sagax had 89 (84) properties with site leaseholds in Sweden, that are capitalised in the company’s financial statements, and
Finland and the Netherlands at the end of 2018, and the 3) utilise existing loss carryforwards.
expenses amounted to SEK 21 M (19). Existing site leaseholds Deferred tax was calculated using the tax rate for each
expire at a relatively even rate over the next 60 years. country for coming years, as approved on the balance sheet date.
Sagax’s French operations are classified as part of the SIIC regime
by the French tax authorities.
10
Profit from participations in
NOTE joint ventures
Recognised tax expense/ Group Parent Company
tax revenue 2018 2017 2018 2017
Group
2018 2017
Current tax expense:
Profit from property management: Computed tax expense –11 –49 –5 –6

Hemsö Intressenter AB 170 151 Tax resulting from changes in tax value 1 – – –
Söderport Holding AB 142 127 Total current tax –10 –49 –5 –6
Total 312 278
Deferred tax expense/tax revenue:
Changes in value of properties: Deferred tax relating to untaxed reserves –1 –9 – –
Hemsö Intressenter AB 294 253 Deferred tax relating to loss
Söderport Holding AB 341 289 carryforwards –53 –16 – –
Total 635 541 Deferred tax relating to temporary
differences in financial derivatives –13 –14 – –
Changes in value of financial instruments: Deferred tax relating to temporary
Hemsö Intressenter AB 14 20 differences in properties –369 –352 – –11)
Söderport Holding AB 29 45 Total deferred tax –435 –390 – –1
Total 42 65
Total recognised tax expense/tax
Tax: revenue –445 –439 –5 –7
Hemsö Intressenter AB –75 –81 1) The Parent Company recognises deferred tax for a directly owned limited partnership.
Söderport Holding AB –85 –76
Total –160 –157
The tax revenue and tax expenses that affected Sagax’s recogni-
tion of current tax and deferred tax are presented below.
11
Profit/loss from participations Group Parent Company
Reconciliation of recognised tax on the
NOTE in Group companies basis of tax expenses 2018 2017 2018 2017
Parent Company Profit before tax 3,611 3,405 219 41

2018 2017 Reversal of profit from joint ventures1) –830 –727 – –
Share in profit from Bilhornet KB 3 3 Profit before tax excluding joint
ventures 2,781 2,678 219 41
Profit/loss from divestment of subsidiaries – –45
Dividends from subsidiaries 142 7 Expected tax expense according to
Swedish tax rate of 22% –612 –589 –48 –9
Total 145 –35
Difference in foreign tax rates 49 68 – –
Non-deductible expenses –4 –2 –1 –1
12
Non-taxable revenue 51 94 43 3
NOTE Tax expense Deductible expenses recognised
against equity 2 1 1 1
Sagax recognises tax expenses in the form of current tax and Other tax adjustments 12 –13 – –
deferred tax. Current tax is defined as tax to be paid or received Tax resulting from changes in tax value 1 –5 – –
relating to taxable profit for the current year. Adjustments of cur- Tax in conjunction with property
divestments –6 5 – –
rent tax for prior years are also included here.
Change in deferred tax resulting from
Deferred tax is defined as the future tax implications of events change in tax rate 62 – – –
that have been addressed in the company’s accounts or tax returns. Recognised tax –445 –439 –5 –7
Based on the tax-corrected net present value approach, a comparison 1) Since the tax expense is already taken into account in profit from joint ventures, this
is made between the carrying amounts and tax bases of assets and profit has been reversed in the reconciliation.
FINANCIAL REPORTS
NOTE
12 Tax expense, cont’d.
The items impacting profit that affected the Group’s recognition of current tax and deferred tax for the 2018 fiscal year are
presented below.
Difference in
relation to
Basis, Basis, Total recognised
Reconciliation of recognised tax on the basis of income and expense items current tax deferred tax tax basis profit
Profit from property management, excluding shares in profit from joint ventures 1,291 – 1,291 –
Tax deductible depreciation and investments –753 753 – –
Non-deductible expenses 15 – 15 15
Non-taxable revenue –206 – –206 –206
Deductible expenses recognised against equity –8 – –8 –8
Change in deferred tax resulting from change in tax rate – –300 –300 –300
Other tax adjustments –226 172 –54 –54
Taxable profit from property management 114 625 740 –551
Changes in value, properties – 1,265 1,265 –

Property divestments –22 28 6 28
Changes in value, financial derivatives 12 234 247 –
Other tax adjustments 3 59 62 62
Taxable profit before loss carryforwards 108 2,211 2,319 –461
Loss carryforwards, opening balance –1,938 1,938 – –

Changed property tax values –7 – –7 –7
Loss carryforwards, closing balance 1,992 –1,992 – –
Taxable profit 155 2,157 2,312 –468
Recognised tax –10 –435 –445
NOTE
13 Investment properties
The change in the carrying amounts of properties is presented In 2018, unrealised changes in value amounted to SEK 1,265 M as
below. follows:
Group
Specification of the year’s changes 2018 2017 Amounts in SEK M 2018 2017
Recognised carrying amount 23,771 20,628 New lettings/Renegotiations 677 415
Acquisition of properties 3,026 1,382 Vacancies/Renegotiations –216 –110
Investments in the current portfolio 456 341 General market value changes 804 808
Carrying amount of sold properties –45 –41 Total 1,265 1,113
Currency translation effect 551 348
Change in value 1,265 1,113
Carrying amount, 31 December 29,024 23,771
MARKET VALUES
The total market value of Sagax’s properties and site leaseholds Calculation of yield 31 Dec 2018 31 Dec 2017
was SEK 29,024 M (23,771). SEK 96 M (112) M of the property Net operating income according to
statement of comprehensive income 1,869 1,558
value pertained to 20 (27) properties owned through joint oper-
Holding adjustment for acquisitions
ations in Finland. Currency effects accounted for SEK 551 M
and divestments 91 62
(348) of the change in value. Amounts have been translated from Currency translation to closing rate 2 21
EUR and DKK at the closing rate: EUR 1 is equivalent to SEK Adjusted net operating income 1,962 1,641
10.28 and DKK 1 is equivalent to SEK 1.38. The total recognised Carrying amount of properties 29,024 23,771
unrealised change in value during the year was SEK 1,265 M Yield, % 6.8 6.9
(1,113). A large number of parameters and factors are taken into
account when calculating fair value. All properties were valued
externally as at 31 December 2018. The valuation techniques and
general conditions are presented on the following pages. No prop-
erties are owned by the Parent Company.
The properties’ yield in 2018 was 6.8% (6.9).
FINANCIAL REPORTS
NOTE
13 Investment properties, cont’d.
future trend of market rents, other use, and non-current vacancy

Properties with the highest market value, in alphabetical order
rate can be taken into consideration via the cash flow statement.
Lettable Operating and maintenance costs are based on an analysis of
Property Municipality area, sqm
the historical costs associated with the various properties and on
Holger-Crafoord Strasse 26 Hechingen, Germany 64,000
experience and statistics pertaining to similar properties, includ-
Inteckningen 5 Lund, Sweden 23,800
ing statistics presented by IPD. However, these expenses are of
Jordbromalm 3:1 Haninge, Sweden 93,700
minor importance when valuing Sagax’s property portfolio since
Jordbromalm 4:3 Haninge, Sweden 51,400
Kaapelitie 4 Oulu, Finland 67,600
tenants normally pay these expenses in addition to the agreed rent.
Karaportti 8 Espoo, Finland 16,100
Koneenkatu 8 Hyvinkää, Finland 60,700 ADJUSTMENT OF NET OPERATING INCOME IN
Martinkyläntie 9A Vantaa, Finland 52,800 CONNECTION WITH VALUATION
Ruosliantie 16 Helsinki, Finland 35,100 Net operating income for 2019, as computed by the appraisers,
Verkmästaren 4 Solna, Sweden 16,000 totalled approximately SEK 1,992 M in the valuations. This net
Total 481,200 operating income can be compared with the net operating income of
SEK 1,963 M that Sagax recognises in Current earnings capacity as
VALUATION TECHNIQUE per 1 January 2019. The net operating income on which the apprais-
The valuations were carried out in Sweden in accordance with ers based their estimated market value is consequently reasonable in
the guidelines in the IPD Swedish Property Index. Each valuation comparison with the current earnings capacity at year end.
entity is valued individually by a property appraiser certified by
ASPECT (Association for Surveying, Property Evaluation and CHANGES IN VALUE RELATIVE TO INFLATION
valuation, Competence development and Transaction). The cor- The table below shows the actual changes in value of the proper-
responding applies to Sagax’s foreign properties. The principle ties when inflation expressed as a change of the Consumer Price
method of appraisal used was cash flow calculations in which the Index (CPI) is taken into account. Changes in value refers to the
present value of cash flows and residual values was calculated. change in the market value of the property portfolio that exceeds
The residual value is calculated by perpetually capitalising the investments.
estimated net operating income the year following the last year of
calculation by the assigned yield requirement. The present value
of cash flow and residual value is calculated by discounting the Unrealised changes in the value of properties 2008–2018
cash flow and residual value by the cost of capital. The value of Actual change
any development rights has been added to the present value. Year Change in value1) CPI change2) in value
The properties are inspected by the appraisers according to a 2009 SEK –244 M –3.9% 0.5% –4.4%
rolling schedule. All properties, except for two small properties 2010 SEK 176 M 2.5% 2.0% 0.5%
in Denmark, have been inspected over the past three years. These 2011 SEK 129 M 1.6% 2.6% –1.0%
inspections include public areas and a selection of premises with 2012 SEK 134 M 1.5% 0.7% 0.8%
specific emphasis placed on major tenants and vacant premises. 2013 SEK 136 M 1.3% 0.5% 0.8%
The purpose of the inspections is to assess the properties’ overall 2014 SEK 436 M 3.3% 0.2% 3.1%
standard and condition, maintenance requirements, market posi- 2015 SEK 677 M 4.5% 0.0% 4.5%
tion and the attractiveness of the premises. 2016 SEK 1,306 M 7.1% 0.7% 6.4%
2017 SEK 1,113 M 5.0% 1.4% 3.6%
ANALYSIS AND GENERAL CONDITIONS 2018 SEK 1,265 M 4.8% 1.6% 3.2%
The calculation period was adjusted to the remaining term of 1) Changes in value in excess of investments.
existing leases and varies between five and 20 years. As a rule, 2) W
eighted change in CPI or the equivalent in the markets where Sagax owns properties.
the calculation period is ten years. Cash flow calculations are
based on inflation assumptions made by valuation companies of
between 0 and 2% per year for the calculation periods with dif- Summary of Sagax’s property valuations
ferences between the various countries. Assessments of future net Fair value SEK 29,024 M
operating income are based on an analysis of current leases and Independent valuation Savills Sweden, Savills Immobilien, Savills
the current rental market. The calculations consider each lease companies SA, Peltola & Co, Jones Lang Lasalle and
Cushman & Wakefield | RED
individually. Normally, existing lease agreements are assumed to
Calculation period 5–20 years
remain in effect until the end of the lease period. In cases where
Assumed inflationary trend 0–2 %
the rental terms and conditions have been assessed as being on a
Long-term vacancy rate Normally 5–20%
competitive market level, it has been assumed that the leases can
Operating and maintenance Historical costs for the respective properties
be extended with no change in the terms and conditions or that
costs and experience and statistics from compa-
the premises can be leased to new tenants on comparable terms. In rable properties.
cases where the outgoing rent is not considered to be in line with Cost of capital, cash flow 4.0–16.0%. Weighted average 7.9%
market-level rent, it has been adjusted to correspond to such a Cost of capital, residual value 4.0–16.0%. Weighted average 8.4%
level. The highest and best use of the properties has been assumed Yield requirement 4.5–15.0%. Weighted average 7.1%
when valuing the properties. The market position, rent level,
FINANCIAL REPORTS
NOTE
COST OF CAPITAL AND YIELD REQUIREMENT on individual assessments of the risk level and market position of
The cost of capital represents a nominal yield requirement on each property.
total capital. The cost of capital is based on the nominal yield At 31 December 2018, the weighted cost of capital for dis-
on five-year government bonds, plus a general risk premium for counting cash flows and residual values was 7.9% (8.1) and 8.4%
properties and an entity-specific additional amount. The yield (8.6), respectively. The weighted yield requirement was 7.1% (7.3).
requirement for the assessment of residual value was selected on This means that if Sagax’s property portfolio was to be viewed the-
the basis of market information from the sub-market in question, oretically as one single property, the market value of SEK 29,024 M
and adapted to the property’s phase in its economic lifecycle at would correspond to a yield requirement of 7.1%, a cost of capital
the end of the calculation period. The cost of capital for the pres- of 7.9% for cash flow and a cost of capital of 8.4% for discounting
ent value calculation of cash flows (4.0–16.0%), the cost of capital the residual value to present value. As the chart illustrates, the
for the present value calculation of residual value (4.0–16.0%) recognised yield for Sagax corresponds well with the yield require-
and the yield requirement for the residual value calculations ment established in conjunction with property valuations.
(4.5–15.0%) are based on analyses of transactions carried out and The table below presents the recognised property values’ sen-
sitivity to changes in assumptions.
The properties’ expected future cash flow during the Yield compared with yield requirement
selected calculation period is measured as follows:
%
10
+ Rent payments
– Operational payments 8
– Maintenance 6
= Net operating income 4
– Investments 2
= Cash flow 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Reported yield
Yield requirement used in valuations
Sensitivity analysis for property values
Change in value
Amounts in SEK M Change 2018 2017
Yield requirement +/- 0.25% points –751/+821 –604/+620
Cost of capital +/- 0.25% points –651/+680 –505/+530
Rental revenue +/– 5% +1,094/–1,103 +894/–893
Property expenses +/– 5% –201/+195 –159/+161
Cost of capital and yield requirement
Weighted average Cost of capital, cash flow Cost of capital, residualvalue Yield requirement
Market area 2018 2017 2018 2017 2018 2017

Stockholm 7.9% 8.1% 7.9% 8.1% 5.8% 6.0%
Helsinki 8.4% 8.8% 9.1% 9.5% 7.1% 7.5%
Finland, university cities 8.6% 8.3% 9.7% 9.8% 7.7% 7.8%
Paris 8.3% 8.0% 8.3% 8.0% 7.2% 7.1%
Netherlands 6.7% 6.9% 6.7% 6.9% 7.3% 8.4%
Rest of Sweden 8.6% 8.5% 8.4% 8.5% 7.0% 6.9%
Rest of Finland 7.2% 7.3% 9.5% 10.0% 7.5% 8.0%
Rest of Europe 6.4% 6.6% 6.7% 6.7% 13.0% 13.5%
Weighted average 7.9% 8.1% 8.4% 8.6% 7.1% 7.3%
Intervals Cost of capital, cash flow Cost of capital, residual value Yield requirement
Market area 2018 2017 2018 2017 2018 2017

Stockholm 4,9–9,3 % 5,7–9,7 % 4,9–9,3 % 5,8–9,7 % 5,5–8,3 % 5,2–7,5 %
Helsinki 5,5–12,4 % 5,5–13,0 % 7,1–12,4 % 8,2–14,0 % 5,1–10,4 % 6,2–12,0 %
Finland, university cities 5.5–14.3% 5,5–14,5 % 8,5–14,1 % 8,8–14,5 % 6,4–12,1 % 6,8–12,5 %
Paris 4,0–12,0 % 4,0–12,0 % 4,0–12,0 % 4,0–12,0 % 4,5–9,5 % 4,5–9,5 %
Netherlands 6,0–7,8 % 6,4–7,9 % 6,0–7,8 % 6,4–7,9 % 6,5–8,8 % 6,8–11,5 %
Rest of Sweden 6,9–11,7 % 6,9–12,0 % 6,9–11,7 % 6,9–12,0 % 5,3–9,5 % 5,5–9,8 %
Rest of Finland 5,5–16,0 % 5,5–16,0 % 7,8–16,0 % 8,5–17,0 % 5,8–14,0 % 6,5–15,0 %
Rest of Europe 5,5–12,8 % 5,8–10,8 % 5,5–12,8 % 5,8–11,3 % 7,0–15,0 % 7,2–15,0 %
Weighted average 7.9% 8.1% 8.4% 8.6% 7.1% 7.3%
FINANCIAL REPORTS
NOTE
VALUATION COMPANIES Jones Lang LaSalle

Savills Jones Lang LaSalle appraises the value of the Dutch properties
Savills appraises the Swedish, French and German properties and is a global property consultancy with 82,000 employees and
and is one of the world’s leading property consultancies, with almost 300 offices in 80 countries. See also www.jll.com
35,000 employees in over 600 office in more than 60 countries.
The company is listed on the London Stock Exchange. See also Cushman & Wakefield | RED
www.savills.com Cushman & Wakefield | RED appraises the value of Sagax’s two
Danish properties and is a Danish company in partnership with
Peltola & Co Cushman & Wakefield, a property service company with 48,000
Kiinteistötaito Peltola & Co Oy appraises the value of the Finnish employees and 400 offices in 70 countries. See also www.red.dk.
properties and is specialised in the valuation of retail, office,
industrial and warehouse properties. Each year, it conducts
valuations of approximately 1,200 properties. See also
www.kiinteistotaito.fi
NOTE
14 Deferred tax liabilities and tax assets
Deferred tax was calculated using the tax rate for each country Sagax’s total deferred tax asset and tax liability are recognised
for coming years, as approved on the balance sheet date; refer to gross below.
Note 1 Accounting policies.
The Group’s loss carryforwards amounted to SEK 1,992 M Group Parent Company
Deferred tax assets 2018 2017 2018 2017
(1,938), taking into account earnings for 2018. The opportunity to
utilise the loss carryforwards is affected by tax regulations governing Financial instruments 9 61 – –
Loss carryforwards 406 414 – –
time-limited restrictions. There are also the more distant time limits
Total 415 476 – –
to consider regarding the loss carryforward of SEK 693 M (608).
On 31 December 2018, the Parent Company had no (–) loss
carryforwards. Deferred tax liabilities
In the consolidated statement of financial position, the Temporary differences in
deferred tax assets and tax liabilities are netted by country in properties 1,991 1,595 3 3
Untaxed reserves 23 22 – –
accordance with the table below.
Total 2,014 1,617 3 3
Group
Deferred tax liabilities, net
Recognised deferred tax liabilities 2018 2017 1,599 1,141 3 3
Denmark 4 1
Finland 662 438 The residual values for tax purposes of the Group’s properties
Netherlands 24 6 amount to SEK 14,831 M (12,290).
Sweden 820 615
Germany 89 81
Total 1,599 1,141
15 16
Prepaid costs and
NOTE Financial receivables NOTE accrued income
Group Group Parent Company

31 Dec 2018 31 Dec 2017 31 Dec 31 Dec 31 Dec 31 Dec
2018 2017 2018 2017
Non-current interest-bearing receivables 6 7
Allocated borrowing costs – – 36 34
Other non-current receivables 2 2
Rent discounts distribut-
Total 9 9
ed over the period and
arrangement fees 111 95 – –
Accrued rental revenue 3 20 – –
Accrued interest income – – 11 11
Other 16 10 1 2
Total 130 125 48 47
The Group does not recognise any allocated borrowing costs in

this balance sheet item since, in accordance with IFRS 9, these
costs have reduced interest-bearing liabilities by SEK 80 M (75)
in the consolidated statement of financial position.
FINANCIAL REPORTS
NOTE
17 Interest-bearing liabilities
Group Parent Company company’s refinancing risk. Sagax curtails its refinancing risk
by agreeing on a predetermined maturity in connection with
2018 2017 2018 2017
Interest-bearing liabilities,
new borrowing. Sagax also seeks to refinance its non-current
non-current portion 13,866 11,937 9,311 4,674 interest-bearing liabilities well in advance. Overall, this working
Commercial paper 1,505 1,275 1,505 1,275 approach is deemed effective in limiting the company’s refinanc-
Other interest-bearing ing risk. The average remaining loan maturity period was 3.6
liabilities, years (3.1) at year end.
current portion 312 404 – 57
At year end, Sagax had listed outstanding bond loans totalling
Total 15,683 13,616 10,816 6,006
SEK 8,718 M (4,674). In 2018, bond loans totalling EUR 500
M were issued while a bond loan of SEK 550 M and one of EUR
Interest-bearing liabilities accounted for 47% (50) of the com- 60 M were repurchased. Bonds issued within the scope of the
pany’s financing at 31 December 2018 and represented Sagax’s company’s EMTN programme are registered on Euronext Dublin
main source of financing. Interest-bearing liabilities consist partly and other bonds on the private bond list on Nasdaq Stockholm.
of bank loans using the subsidiaries’ properties as collateral, and Bond loans issued by Sagax as per 31 December 2018 are pre-
partly of seven unsecured listed bond loans, as well as an unse- sented below.
cured commercial paper programme of SEK 1,505 M (1,275).
Bank loans are provided by Deutsche Pfandbriefbank, Nordea,
Unsecured bond loans
SEB, Swedbank, Svenska Handelsbanken, HSBC, ING, Société
Maturity Amount Currency Interest terms
Générale and Den Danske bank. At year end, interest-bearing
2015–2020 300 SEK STIBOR 3 months + 3.20% margin
liabilities amounted to SEK 15,763 M (13,691), of which SEK
2015–2020 80 EUR EURIBOR 6 months + 3.50% margin
10,355 M (5,848) was denominated in EUR. Interest-bearing
2016–2021 300 SEK STIBOR 3 months + 4.75% margin
liabilities during 2018 increased primarily as a result of property
2016–2021 30 EUR EURIBOR 6 months + 4.70% margin
acquisitions. Interest-bearing liabilities increased SEK 241 M 2017–2021 600 SEK STIBOR 3 months + 2.25% margin
(166), due to exchange-rate fluctuations during the year. 2017–2022 1,250 SEK STIBOR 3 months + 2.15% margin
In accordance with IFRS 9, allocated borrowing costs of SEK 2018–2024 500 EUR 2.00% fixed interest coupon
80 M (75) reduced interest-bearing liabilities in the balance
sheet. Interest-bearing liabilities of SEK 15,683 M (13,616) were At year end, Sagax had available liquidity of SEK 1,959 M
thus recognised. In connection with the raising of new or rene- (2,018), including unutilised lines of credit totalling SEK 1,886 M
gotiated credit facilities, expenses arise that are accrued over the (1,958). Credit facilities corresponding to commercial paper
maturity of the particular facility. These expenses may include outstanding of SEK 1,505 M (1,275) are not included in available
legal fees, valuation costs and non-recurring agreement fees for liquidity. At year end, the company had contracts with SEB, Nor-
the creditor. In 2018, a total of SEK 46 M (28) was recognised as dea, Den Danske Bank, Swedbank, ING and Société Générale
expenses for allocated borrowing costs. covering revolving credit facilities totalling SEK 4,529 M (3,355)
Sagax’s non-current interest-bearing liabilities amounted to available to Sagax, of which SEK 1,618 M (1,722) was unutilised
SEK 13,946 M (12,012), or 88% (89) of the total interest-bearing at year end. Sagax has also reached agreements with SEB, Nordea,
liabilities. Less allocated borrowing costs, non-current interest- Swedbank, HSBC and ING covering short-term credit facilities
bearing liabilities of SEK 13,866 M (11,937) were recognised at totalling SEK 354 M (249), of which SEK 203 M (161) was unuti-
year end. lised at year end. Other lines of credit amounted to SEK 100 M
Current interest-bearing liabilities amounted to SEK 1,817 M (75), of which SEK 65 M (75) was unutilised. Expenses for these
(1,679), or 12% (11) of Sagax’s interest-bearing liabilities. SEK lines of credit amounted to SEK 17 M (12) in 2018. No additional
1,505 M (1,275) in outstanding commercial paper was termed collateral needs to be pledged to utilise these lines of credit.
current in the balance sheet since such commercial paper always The table below shows the years in which Sagax’s inter-
has a terms of less than one year. However, the commercial est-bearing liabilities fall due for final payment or capital repay-
paper has been recognised as non-current in the table of Sagax’s ment according to plan. Except for a bond at a fixed interest rate,
loan maturity at year end on page 104 since the paper’s back-up
facilities have a term exceeding one year. The commercial paper Net debt 31 Dec 2018 31 Dec 2017
was issued by the Parent Company. In 2019, SEK 126 M will Interest-bearing liabilities 15,763 13,691
be repaid according to agreement, of which SEK 87 M refers to Interest-bearing assets –6 –7
loans maturing in 2019. The current interest-bearing liabilities Liquidity –73 –60
are repaid via the company’s cash flow, through extension of loan Listed shares –872 –442
contracts or through new borrowing for the refinancing of loans Net debt 14,812 13,182
that are about to expire. Sagax seeks to maintain a low share of
current interest-bearing financing in an effort to minimise the
FINANCIAL REPORTS
NOTE
17 Interest-bearing liabilities, cont’d.
non-current interest-bearing liabilities primarily have a short loans. Purchased interest-rate swaps have been taken into consid-
fixed-interest period entailing that the amortised cost essentially eration in view of their contractual interest rates and terms. An
matches the fair value. On 31 December, the fixed rate bond had a interest-rate cap of SEK 3,728 M is recognised in the table below
market value that was SEK 1 M lower than the amortised cost. The at the interest rate applying on the balance sheet date and the
calculation of interest-bearing net debt is presented on page 103. year of maturity when the various interest-rate caps expire.
The following table shows the fixed-interest structure of the
Loan maturity, years Amount Share Fixed interest, years Amount Average interest Share
2019 312 2% 2019 5,460 1.8% 35%
2020 2,668 17% 2020 604 3.5% 4%
2021 3,149 20% 2021 1,285 2.2% 8%
2022 1,250 8% 2022 1,263 2.5% 8%
2023 3,246 21% 2023 1,110 2.4% 7%
>2023 5,138 33% >2023 6,042 2.4% 38%
Total 15,763 100% Total/average 15,763 2.2% 100%
The average loan maturity was 3.6 years (3.1) The average fixed-interest period was 3.0 years (2.3).
NOTE
18 Financial instruments
Group Accounting Policies. Changes in the value of the fixed-income

Derivatives 31 Dec 2018 31 Dec 2017 derivatives portfolio arise, for example, as an effect of changed
Surplus values of financial derivatives 4 1
market interest rates and changes to the remaining lease term.
Deficit values of financial derivatives –121 –422
Fixed-income derivatives have been measured at market value
Total –117 –421
in accordance with valuations received from the counterparties.
Derivatives consist of nominal interest-rate swaps and an interest-
Group rate cap. Sagax’s counterparties for the derivative contracts are
Changes in value of financial
Nordea Bank, Svenska Handelsbanken, SEB, Swedbank, Den
instruments, unrealised 2018 2017
Danske Bank, HSBC, Deutsche Pfandbriefbank, ING and Société
Fixed-income derivatives 37 107
Listed shares 97 24
Générale. Sagax’s fixed-income derivatives are denominated in
Financial instruments attributable SEK or EUR.
to joint ventures 76 373 The table on the following page shows the fixed-interest
Total 211 504 structure of the derivatives. The average interest rates for the
derivatives are recognised at the terms applying at year end. On
Group 31 December 2018, the market value of Sagax’s fixed-income
Changes in value of financial
derivatives portfolio was SEK –117 M (–421).
instruments, realised 2018 2017
Sagax’s fixed-income derivatives comprised a nominal total of
Fixed-income derivatives 24 –
SEK 6,198 M (8,010) at year end. The fixed-income derivatives
Listed shares 12 3
Total 36 3
curbed Sagax’s interest-rate risk at year end, corresponding to
58% (59) of the company’s interest-bearing liabilities subject to
The earnings impact for 2018 amounted to SEK 247 M (507), of floating interest rates. Sagax’s derivatives distributed by counter-
which SEK 36 M (3) was a realised change in value. party are presented on the following page. The weighted average
Listed shares were revalued at the closing price at the balance interest rate was 1.8%, but because none of Sagax’s interest-rate
sheet date with an unrealised earnings impact of SEK 97 M (24). caps had a strike rate at year end that impacted the weighted aver-
Carrying amount of SEK 872 M (442) at 31 December 2018. age interest rate for the company, it was the interest-rate swaps’
Sagax’s ownership in Hemsö Intressenter AB is governed by a average weighted interest rate of 1.5% that impacted the Group’s
long-term shareholder agreement with the Third Swedish National recognised interest rate of 2.2% at year end.
Pension Fund. The shareholder agreement regulates, inter alia, put Including fixed-income derivatives, the average fixed-i nterest
and call options between the two shareholders regarding Sagax’s period was 3.0 years (2.3) at year end. The company’s profit
shareholding in the company. In accordance with IFRS 9, financial from property management will be impacted only marginally by
instruments attributable to Hemsö Intressenter AB were market changes in interest rates.
valued at SEK 449 M (373) during the year. The year’s changes in the value of financial derivatives is rec-
Sagax’s financial strategy is based on low interest-rate risk, to ognised as realised or unrealised changes in value in Sagax’s profit
be achieved through measures such as fixed-income derivatives. or loss. Unrealised changes in value affect Sagax’s profit before
According to IFRS, fixed-income derivatives are to be measured tax but not cash flow or the profit from property management.
on market terms. The valuation principles are stated in Note 1
FINANCIAL REPORTS
NOTE
18 Financial instruments, cont’d.
Derivative contracts, 31 December 2018
Average Average
Number Nominal amount Share remaining maturity interest rate Market value
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
Amounts in SEK M 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
Nominal interest-rate
swaps:
Deutsche Pfandbriefbank 2 9 1,111 2,241 18% 28% 1.5 4.9 0.6% 2.3% –15 –219
Svenska Handelsbanken – 4 – 321 – 4% – 3.6 – 4.2% – –47
Nordea 8 10 479 961 8% 12% 4.5 4.7 3.0% 2.6% –38 –76
Swedbank 1 2 252 345 4% 4% 4.0 3.8 0.5% 0.5% –5 –4
SEB 1 5 629 629 10% 8% 6.9 3.5 2.2% 3.6% –64 –76
Sub-total 11 30 2,471 4,497 40% 56% 3.7 4.5 1.5% 2.5% –121 –422
Interest-rate cap:
Deutsche Pfandbriefbank 1 2 139 692 2% 9% 4.8 0.0 2.0%1) 1.8%1) 3 0
Den Danske Bank 1 1 144 138 2% 2% 1.0 2.0 2.0% 1)
2.0%1) – 0
ING 1 – 447 – 7% – 4.5 – 2.0%1) – 1 –
HSBC 1 1 380 364 6% 5% 2.7 3.7 1.3%1) 1.3%1) – 1
Nordea 5 5 888 873 14% 11% 1.8 2.8 1.9%1) 1.9%1) – 0
Société Générale 1 – 272 – 4% – 4.3 – 2.0% 1)
– – –
Swedbank 3 3 658 645 11% 8% 1.9 2.9 1.9%1) 1.9%1) – 0
SEB 1 1 800 800 13% 10% 3.1 4.1 2.5%1) 2.5%1) – 0
Sub-total 14 13 3,728 3,513 60% 44% 2.8 2.6 2.0%1) 2.0%1) 4 1
Total 25 43 6,198 8,010 100% 100% 3.2 3.7 1.8% 1)

2.3% 1)
–117 –421
1) Average strike rate for Sagax’s interest-rate cap.
OTHER FINANCIAL INSTRUMENTS IN THE STATEMENT

Fixed-income derivatives, 31 December 2018
OF FINANCIAL POSITION
Nominal Market value, Average The statement of financial position includes receivables and liabil-
Fixed interest, years amount, SEK M SEK M interest1) ities to be considered as financial instruments measured at cost.
2019 1,033 –2 1.0% Amortised cost essentially corresponds to market value at year
2020 604 –11 2.7% end.
2021 1,285 – 1.7%
2022 1,263 –13 1.8%
2023 1,110 –1 1.6%
>2023 904 –90 2.3%
Total/average 6,198 –117 1.8%
1) Average strike rate has been used for interest-rate cap.
The table above presents the distribution of fixed-income deriva- The table below shows future liquidity flows attributable to
tives over time and how average interest rates and market values fixed-income derivatives, which comprise interest paid minus
are allocated per final year. interest received. To calculate the variable component of a
The liquidity flows attributable to credits are presented fixed-income derivative, STIBOR and EURIBOR rates were used
below. Assumptions have also been applied to these regarding across the entire term of the derivatives as they were quoted on
STIBOR and EURIBOR rates as they were quoted on the balance the balance sheet date. The above assumption includes the total
sheet date. Other liabilities are short term and fall due for pay- payment obligation for contractual loans and fixed-income deriv-
ment within one year. atives totalling SEK 17,011 M (15,022) over the remaining term.
For comparison, the estimated liquidity flows as per 31 December
2018 and 31 December 2017 are recognised.
Future liquidity flows for interest-bearing Future liquidity flows for interest-bearing
liabilities and fixed-income derivatives, 31 Dec 2017 liabilities and fixed-income derivatives, 31 Dec 2018
Opening To be Closing Interest Derivative Total Opening To be Closing Interest Derivative Total
Year liabilities repaid liabilities payment payment payments Year liabilities repaid liabilities payment payment payments
2018 13,691 –316 13,375 –265 –113 –694 2019 15,763 –312 15,451 –224 –38 –574
2019 13,375 –2,982 10,393 –227 –111 –3,320 2020 15,451 –2,668 12,783 –270 –31 –2,969
2020 10,393 –2,955 7,438 –176 –103 –3,234 2021 12,783 – 3,149 9,634 –191 –29 –3,368
2021 7,438 –2,785 4,653 –105 –88 –2,978 2022 9,634 –1,250 8,384 –144 –25 –1,419
2022 4,653 –4,653 – –18 –50 –4,721 2023 8,384 –3,246 5,138 –128 –22 –3,396
>2022 – – – – –75 –75 >2023 5,138 –5,138 – –108 –39 –5,284
Total –13,691 –791 –540 –15,022 Total –15,763 –1,064 –184 –17,011
FINANCIAL REPORTS
NOTE
18 Financial instruments, cont’d.
Categorisation of financial instruments
Group 31 Dec 2018 Group 31 Dec 20171)

Financial assets/ Financial assets/
Financial assets/ liabilities measured liabilities measured Financial liabilities
liabilities measured at fair value at fair value measured at
at amortised through profit Loans and accounts through profit amortised
cost or loss receivable or loss cost
Financial assets
Fixed-income derivatives – 4 – 1 –
Financial instruments attributable to joint ventures – 449 – 373 –
Rent receivables 96 – 47 – –
Listed shares – 872 – 442 –
Other receivables 190 – 139 – –
Cash and cash equivalents 73 – 60 – –
Total 359 1,325 246 816 –
Financial liabilities
Fixed-income derivatives – 121 – 422 –
Interest-bearing liabilities 15,683 – – – 13,616
Accounts payable 42 – – – 29
Other liabilities 139 – – – 84
Accrued expenses and deferred income 458 – – – 391
Total 16,322 121 – 422 14,120
1) Categorisation for 2017 is in accordance with IAS 39, which applied until 31 December 2017.
NOTE
19 Other non-current liabilities NOTE
21
Tangible
fixed assets
Group Parent Company Group Parent Company

31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2018 2017 2018 2017 2018 2017 2018 2017
Deposits from Accumulated cost at the
tenants 67 53 – – beginning of the year 17 7 6 6
Total 67 53 – – Investments during the year 2 10 0 0
Reclassification to
properties –8 – – –
Total 11 17 6 6
20
Accrued expenses and Accumulated
NOTE deferred income depreciation at the beginning
of the year –5 –4 –5 –4
Depreciation for the year –1 –1 0 –1
Group Parent Company Total –6 –5 –5 –5
2018 2017 2018 2017 Carrying amount 5 12 1 1
Accrued property tax 22 30 – –
Accrued financial Tangible fixed assets comprise equipment and office adaptations for
expenses 87 109 67 66 Sagax’s offices in Stockholm, Helsinki, Paris and Rotterdam. Initial
Prepaid rental revenue 199 167 – – design expenses were reclassified to the property cost during the
Other interim liabilities 150 85 5 3 year.
Total 458 391 72 69
FINANCIAL REPORTS
NOTE
22 Participations in Group companies
The Parent Company AB Sagax’s directly owned and indirectly owned subsidiaries are shown below. All of the following directly
owned subsidiaries in which the participation is less than 100% are owned jointly with other wholly owned Group companies.
Number of Carrying Carrying

shares/participa- amount amount
Directly owned subsidiaries Corp. Reg. No. Domicile Share tions 31 Dec 2018 31 Dec 2017
Bilhornet KB 969685-9124 Stockholm 1% 1 7 4
Fastighetsaktiebolaget Apicius 559015-8902 Stockholm 100% 100,000 1 –
Firethorne AB 556014-2571 Stockholm 100% 14,372,924 661 661
Sagax Alpha AB 556527-1540 Stockholm 100% 1,000 1 1
Sagax Beta AB 556546-4558 Stockholm 100% 1,000 132 0
Sagax Bruket Fastigheter AB 556022-3934 Stockholm 100% 20,000,000 740 740
Sagax Europa AB 556715-1914 Stockholm 100% 1,000 713 389
Sagax Finland Holding AB 556923-4262 Stockholm 100% 50,000 373 0
Sagax Finland OY 2104952-4 Helsinki 51% 2,500 27 27
Sagax Invest AB 556640-8547 Stockholm 100% 1,000 30 30
Sagax Jordbro AB 556734-4741 Stockholm 100% 1,000 75 75
Sagax Lund AB 556740-3505 Stockholm 100% 1,000 35 35
Sagax Macrohuset AB 559025-5013 Stockholm 100% 1,000 0 0
Sagax Nederland B.V. KVK66495202 Rotterdam 100% 1,000 0 0
Sagax Projektutveckling AB 559029-0473 Stockholm 100% 1,000 0 0
Sagax Småland AB 556768-9509 Stockholm 100% 1,000 121 61
Sagax Stockholm 6 AB 556909-6117 Stockholm 100% 1,000 5 5
Sagax Stockholm 8 AB 556909-6091 Stockholm 100% 500 4 4
Sagax Stockholm 26 AB 559163-6575 Stockholm 100% 1,000 0 –
Sagax Stockholm Tio AB 556954-1955 Stockholm 100% 500 265 0
Sagax Stockholm Två AB 556713-4837 Stockholm 100% 500 1,185 1,000
Storstockholms Industrifastigheter AB 556695-9572 Stockholm 89% 1,000 50 4
Svenskasagax Holding SAS FR808512826 Paris 100% 1,000 909 252
Veddesta Properties AB 556573-9124 Stockholm 100% 1,000 53 13
Total 5,678 3,303
Indirectly owned subsidiaries Corp. Reg. No. Country Domicile Indirectly owned subsidiaries Corp. Reg. No. Country Domicile
Alpha 1 Oy 2155931-3 Finland Helsinki IJA Fastighets AB 556801-3956 Sweden Stockholm
As Oy Kuopion Haapaniemenkatu 61) 0214793-8 Finland Kuopio Jobegu AB 556697-8937 Sweden Stockholm
Asunto Oy Edelfeltinkatu 31) 0160356-7 Finland Kotka Karkkilan Linja-autoasema Oy1) 0126992-5 Finland Karkkila
Asunto Oy Leivonhovi1) 0150230-1 Finland Lahti KB Kolsva 1 916608-8386 Sweden Stockholm
Asunto Oy Porin Santojentie 151) 0217489-9 Finland Pori KB Slänten 17 969667-0604 Sweden Stockholm
Asunto Oy Tapionkatu 251) 0137915-5 Finland Pori KB Titania 969636-7763 Sweden Stockholm
Asunto Oy Tietola1) 0128859-5 Finland Lohja Kiinteistö Oy Aittokulma1) 0219425-9 Finland Jyväskylä
Breidan 4 Fastighets KB 969715-9268 Sweden Stockholm Kiinteistö Oy Karjalantie 3 0211878-2 Finland Kotka
Cephyr AB 556646-0753 Sweden Stockholm Kiinteistö Oy Kolmenkeikka 0169467-3 Finland Lieksa
EVAF B-FROST Finland Properties Oy 2115360-4 Finland Helsinki Kiinteistö Oy Kommila1) 0226274-1 Finland Varkaus
Fastighets AB Microhuset 559016-3159 Sweden Stockholm Kiinteistö Oy Vantaan Sanomati 2634936-6 Finland Helsinki
Fastighets AB Microhuset 559016-3159 Sweden Stockholm Kiinteistö Oy Vesalankeskus1) 0146223-1 Finland Hollola
Fastighetsbolaget Bårebo Klingan 3 Fastigheter 556726-7942 Sweden Stockholm
Gräsanden AB 556737-4151 Sweden Stockholm Koskelo Holding Oy 2009577-2 Finland Espoo
Fastighetsbolaget Reglaget AB 556591-6706 Sweden Stockholm KOy Ansakulma 2705230-2 Finland Vantaa
Fastighetsförv Skultuna 3 KB 969646-0196 Sweden Stockholm KOy Denegin Keskikankaantie 9 2059988-2 Finland Helsinki
Förvaltningsbolaget Hedenhög i KOy Espoon Karaportti 8 2547952-1 Finland Espoo
Huddinge AB 556468-6615 Sweden Stockholm KOy Espoon Koskelontie 27 A 2691505-7 Finland Espoo
Gammelbackan Palvelukeskus Oy1) 0214069-9 Finland Porvoo Koy Espoon Mänkimiehentie 4 2886834-6 Finland Espoo
Grepens KB 916452-1354 Sweden Lidköping
FINANCIAL REPORTS
NOTE
22 Participations in Group companies, cont’d.
KOy Espoon Olarinluoma 8 2298118-8 Finland Helsinki KOy Pirkkalan Vesalanportti 2229677-0 Finland Pirkkala
KOy Espoon Ruukintie 20 0783679-1 Finland Espoo KOy Porin Korjaamokatu 1 2612408-7 Finland Helsinki
KOy Forssan Koikkurintie 2 2731647-8 Finland Forssa KOy Porin Raja-Hiltantie 8 2731631-2 Finland Pori
KOy Gunnarlankatu 5 2128395-1 Finland Helsinki KOy Rauman Äyhönjärventie 5 2731635-5 Finland Rauma
KOy Hakamäenkuja 8-10 2541642-4 Finland Helsinki KOy Ristipellontie 17 2447642-5 Finland Helsinki
KOy Helsingin Konalankuja 5 2702587-3 Finland Helsinki KOy Rovaniemen Teollisuustie 28 2731633-9 Finland Rovaniemi
KOy Helsingin Muonakulma 2756538-6 Finland Helsinki KOy Ruosilankulma 1937007-9 Finland Helsinki
KOy Helsingin Muonamiehenraitti 2809177-6 Finland Helsinki KOy Ruosilantie 18 0744708-3 Finland Helsinki
KOy Helsingin Puusepänkatu 2 1589532-9 Finland Helsinki KOy Seinäjoen Yrittäjäntie 2 2731618-7 Finland Seinäjoki
KOy Helsingin Ristipellonkulma 2773506-6 Finland Helsinki KOy Sähkötie 8 2565951-4 Finland Vantaa
KOy Helsingin Ruosilantie 14 2773505-8 Finland Helsinki KOy Tampereen Joentaustankatu 3 2731623-2 Finland Tampere
KOy Helsingin Ruosilantie 16 2773508-2 Finland Helsinki KOy Tampereen Nuutisarankatu 19 2612407-9 Finland Helsinki
KOy Helsingin Valokaari 8 2702507-2 Finland Helsinki KOy Tampereen Patamäenkatu 7 1636010-7 Finland Tampere
KOy Hollolan Tarmontie 2-4 2103880-9 Finland Helsinki KOy Terässammon Yrituskeskus 1740299-7 Finland Jyväskylä
KOy Hyvinkään Hakakalliontie 7 2731622-4 Finland Hyvinkää KOy TRE Hautalankatu 19-20 2945481-5 Finland Tampere
KOy Hämeenlinnan Autotehtaantie 1 2702571-8 Finland Helsinki KOy TRE Hautalankatu 31 2945486-6 Finland Tampere
KOy JKL Metsälehmuksentie 6 2933938-2 Finland Jyväskylä KOy Tuusulan Pakkasraitti 4 2652079-2 Finland Tuusula
KOy Joensuun Muuntamontie 3 2832727-5 Finland Joensuu KOy Vantaan Ansatie 4 0598169-6 Finland Helsinki
KOy Juhanilanmäki 0734652-2 Finland Helsinki KOy Vantaan Hakamäenkulma 2696847-4 Finland Helsinki
KOy Jykeskeljo 1772102-3 Finland Jyväskylä KOy Vantaan Honkanummentie 5 1044118-4 Finland Helsinki
KOy Jyskän Palvelukeskus1) 0175433-0 Finland Jyväskylä KOy Vantaan Juurakkotie 3 2814954-4 Finland Vantaa
KOy Jyväskylän Ahjokatu 26 1994773-9 Finland Jyväskylä KOy Vantaan Kiitoradantie 14 1898385-0 Finland Helsinki
KOy Jyväskylän Metsäraivio 2 2945477-8 Finland Jyväskylä KOy Vantaan Klinkkerikaari 2 0558383-1 Finland Vantaa
KOy Jyväskylän Savelankatu 5 2854809-4 Finland Jyväskylä KOy Vantaan Kärkikuja 1832321-1 Finland Helsinki
KOy Jyväskylän Yritystie 1 2854808-6 Finland Jyväskylä KOy Vantaan Martinkyläntie 9 2599495-3 Finland Vantaa
KOy Karkkilan Sähkökiinteistö1) 1536323-4 Finland Karkkila KOy Vantaan Niittykulma 2756539-4 Finland Vantaa
KOy Kempeleen Vihikari 10 2878206-7 Finland Kempele KOy Vantaan Niittyvillankuja 2 2731626-7 Finland Vantaa
KOy Keski-Suomen Talo1) 0712443-6 Finland Jyväskylä KOy Vantaan Nuolitie 20 2825579-3 Finland Vantaa
KOy Kiimingin Hallitie 2 2765013-4 Finland Oulu KOy Vantaan Porttisuontie 9 2112915-3 Finland Helsinki
KOy Koivuhaanportti 10 0741876-8 Finland Helsinki KOy Vantaan Sarkatie 2 1971094-2 Finland Vantaa
KOy Kokkolan Patamäentie 1 2832725-9 Finland Kokkola KOy Vantaan Taivaltie 4 0625322-8 Finland Vantaa
KOy Konalankuja 2 0119121-6 Finland Helsinki KOy Vantaan Tiilitie 9 2591653-3 Finland Vantaa
KOy Konekeskus 0825860-4 Finland Jyväskylä KOy Vantaan Tikkurilantie 146 2702493-4 Finland Helsinki
KOy Kotkan Kisällinkatu 10 2612405-2 Finland Helsinki KOy Vantaan Tikkurilantie 5 2319111-0 Finland Helsinki
KOy Kuopion Lukkosalmenportti 2190203-8 Finland Kuopio KOy Vantaan Trukkikuja 1 2613719-5 Finland Helsinki
KOy Kuopion Mestarinkatu 5 2731637-1 Finland Kuopio KOy Vantaan Tulkintie 29 1635180-9 Finland Helsinki
KOy Lahden Ansiokatu 8 2731639-8 Finland Lahti KOy Vantaanlaaksontie 6 2298116-1 Finland Helsinki
KOy Lahden Jatkokatu 1 2612409-5 Finland Helsinki KOy Virkatie 10 2475125-5 Finland Helsinki
KOy Lapuan Metsäkiventie 4 2119444-9 Finland Lapua KOy Virkatie 7 2565952-2 Finland Vantaa
Hämeen- KOy Virkatie 8 A 2565960-2 Finland Vantaa
KOy Larin Kyöstinkatu 28 2731644-3 Finland linna
KOy Virkatie 8 B 2565956-5 Finland Vantaa
KOy Liedon Avantintie 20 2612411-6 Finland Helsinki
KOy Ylivieskan Kiskotie 2 2731628-3 Finland Ylivieska
KOy Lohjan Ratakatu 26 2731642-7 Finland Lohja
KOy Ylöjärven Teollisuustie 11 2607210-9 Finland Ylöjärvi
KOy Luomannotko 5 2731645-1 Finland Espoo
KOy Ylöjärven Vanha Vaasantie 2607206-1 Finland Ylöjärvi
KOy Lyhtykulma 2681286-7 Finland Helsinki
KOy Yrityspaja 1731678-1 Finland Jyväskylä
KOy Muuramen Punasilta 2097941-2 Finland Muurame
KOy Ärrävaara 2404395-3 Finland Vantaa
KOy Mäntän Seppälänpuistotie 7 0479474-1 Finland Mänttä-
Vilppula Kugghjulet 3 AB 556034-5901 Sweden Stockholm
Marcato Fastigheter AB 556438-8527 Sweden Stockholm
KOy Nimismiehenpelto 0658624-1 Finland Helsinki
Marcato Förvaltnings AB 556248-7982 Sweden Stockholm
KOy Noljakan Liikekeskus 1)
0548737-2 Finland Joensuu
Panncentralen 1 Fastighets AB 556606-2583 Sweden Stockholm
KOy Nurmon Ostoskeskus1) 0181183-3 Finland Seinäjoki
Sagax Ackumulatorn i Huddinge 556623-1170 Sweden Stockholm
KOy Oulun Johdinkuja 5 2265934-0 Finland Oulu
KOy Oulun Jääsalontie 17 2731625-9 Finland Oulu Sagax Almere 1 B.V. KVK67193439 Nether- Rotterdam
lands
KOy Oulun Kaapelitie 4 2303033-3 Finland Helsinki
Sagax Alpha KB 969667-5777 Sweden Stockholm
Koy Oulun Lumijoentie 2 2878202-4 Finland Oulu
Sagax Beta AB 559165-0006 Sweden Stockholm
Koy Oulun Moreenikuja 2 2765012-6 Finland Oulu
Sagax Beta KB 969680-2256 Sweden Stockholm
KOy Peltolamminkatu 40 0804138-4 Finland Helsinki
Sagax Beta Komplementär AB 556646-6891 Sweden Stockholm
FINANCIAL REPORTS
NOTE
Sagax Bokbindaren 1 AB 556757-8504 Sweden Stockholm Sagax Industrial 12 B.v. KVK71851240 Nether- Rotterdam
Sagax Danderyd AB 556162-4338 Sweden Stockholm lands
Sagax Donker Duyvisweg 301 B.V. KVK66641276 Nether- Rotterdam Sagax Industrial 13 B.V. KVK71851178 Nether- Rotterdam
lands lands
Sagax Eindhoven 1 B.V. KVK67272177 Nether- Rotterdam Sagax Industrial 14 B.V. KVK71851194 Nether- Rotterdam
lands lands
Sagax Elb AB 559164-9974 Sweden Stockholm Sagax Industrial 15 B.V. KVK71851143 Nether- Rotterdam
Sagax Elektra 11 AB 559092-7595 Sweden Stockholm lands
Sagax Eng AB 559164-9966 Sweden Stockholm Sagax Industrial 16 B.V. KVK72572256 Nether- Rotterdam
lands
Sagax Fastighet Egah Almuk AB 559075-2720 Sweden Stockholm
Sagax Finland AB 556759-7975 Sweden Stockholm Sagax Industrial 17 B.V. KVK72572299 Nether- Rotterdam
lands
Sagax Finland Asset Management OY 2513597-2 Finland Helsinki
Sagax Industrial 18 B.V. KVK72572310 Nether- Rotterdam
Sagax Finland Holding 2 Oy 2547955-6 Finland Helsinki
lands
Sagax Jönköping KB 969700-5099 Sweden Stockholm
Sagax Karlskoga AB 556728-6843 Sweden Karlskoga
Sagax Kista AB 556855-5006 Sweden Stockholm
Sagax Konsumentvägen AB 556717-8305 Sweden Stockholm
Sagax Korsberga AB 556715-1963 Sweden Stockholm
Sagax Kvm AB 559128-7809 Sweden Stockholm
Sagax Lager AB 559128-7791 Sweden Stockholm
Sagax Lillsjö AB 556674-7365 Sweden Stockholm
Sagax MIX AB 559003-7213 Sweden Stockholm
Sagax NEEAH AB 556715-8521 Sweden Stockholm
Sagax PLP Holding AB 556668-8643 Sweden Stockholm
Sagax Postflyg AB 556791-5052 Sweden Stockholm
Sagax Real Estate ApS 35669744 Denmark Herlev
Sagax Rek AB 559164-9982 Sweden Stockholm
Sagax Finland Real Estate Oy 2553679-2 Finland Helsinki
Sagax Roosendaal 1 B.V. KVK67470939 Nether- Rotterdam
Sagax Fort AB 559128-7825 Sweden Stockholm lands
Sagax Hallenstraat 16 B.V. KVK66500133 Nether- Rotterdam Sagax Rosersberg AB 556740-3596 Sweden Stockholm
lands
Sagax Sapla 1 AB 556740-5187 Sweden Stockholm
Sagax Haninge AB 556730-5080 Sweden Stockholm
Sagax Helsingborg KB 969716-9374 Sweden Stockholm
Nether-
Sagax Holdco 1 B.V KVK70337136 lands Rotterdam Sagax Sapla 4 AB 556740-5278 Sweden Stockholm
Nether- Sagax Sapla 5 AB 556683-0377 Sweden Stockholm
Sagax Holdco 2 B.V KVK71059679 lands Rotterdam Sagax Skarphallen AB 556979-4588 Sweden Stockholm
Sagax Holding 1 ApS 35669752 Denmark Herlev Sagax Skarpnäck AB 556852-4531 Sweden Stockholm
Sagax Huskvarna AB 556703-0555 Sweden Stockholm Sagax Skruvnyckeln Holding AB 559105-5743 Sweden Stockholm
Sagax Industrial 1 B.V. KVK68504691 Nether- Rotterdam Sagax Solna AB 556073-1407 Sweden Stockholm
lands
Sagax Staffanstorp AB 556805-3762 Sweden Stockholm
Sagax Stam AB 559128-7882 Sweden Stockholm
lands
Sagax Stockholm 15 AB 559037-4962 Sweden Stockholm
lands
lands Sagax Stockholm 23 AB 559083-1888 Sweden Stockholm
Sagax Industrial 5 B.V. KVK6913511 Nether- Rotterdam Sagax Stockholm 24 AB 559083-1896 Sweden Stockholm
lands Sagax Stockholm Nio AB 556954-1963 Sweden Stockholm
Sagax Industrial 6 B.V. KVK70338744 Nether- Rotterdam Sagax Sätra AB 556930-2085 Sweden Stockholm
lands Sagax Tel B.V. KVK67390382 Nether- Rotterdam
Sagax Industrial 7 B.V. KVK70338833 Nether- Rotterdam lands
lands Sagax Temple Holding 2 Oy 2111984-4 Finland Helsinki
Sagax Industrial 8 B.V. KVK70701393 Nether- Rotterdam Sagax Temple Holding 4 Oy 2111986-0 Finland Helsinki
lands Sagax Temple Portfolio 1 Oy 2111959-6 Finland Helsinki
Sagax Industrial 9 B.V. KVK70697620 Nether- Rotterdam Sagax Temple Portfolio 2 Oy 2111967-6 Finland Helsinki
lands Sagax Temple Portfolio 3 Oy 2111963-3 Finland Helsinki
Sagax Industrial 10 B.V. KVK71061584 Nether- Rotterdam Sagax Temple Portfolio 4 Oy 2111970-5 Finland Helsinki
lands
Sagax Terneuzen B.V. KVK68120370 Nether- Rotterdam
Sagax Industrial 11 B.V. KVK71062394 Nether- Rotterdam lands
lands
FINANCIAL REPORTS
NOTE
Sagax Tsg AB 556715-1930 Sweden Stockholm Saunakallion Ostoskeskus Oy1) 0197158-9 Finland Järvenpää
Sagax Tyskland AB 556715-1930 Sweden Stockholm Sointulan Keskus Oy1) 0197931-0 Finland Valkeakoski
Sagax Veddesta 2:42 AB 556804-6436 Sweden Stockholm Storstockholms Industrifastigheter KB 969695-2648 Sweden Stockholm
Sagax Vetlanda AB 556687-2262 Sweden Stockholm Stubbehagen Fastighets AB 556698-0891 Sweden Stockholm
Sagax Yta AB 559128-7908 Sweden Stockholm Svenskasagax 1 SAS FR808495303 France Paris
Sagax Åptimera AB 556200-9844 Sweden Stockholm Svenskasagax 2 SAS FR822558268 France Paris
Sagax Älvsjö AB 559035-3149 Sweden Stockholm Svenskasagax 3 SAS FR834337230 France Paris
Sallan Kauppakeskus Oy1) 0192910-2 Finland Salla T E Real Estate KB 969712-2852 Sweden Stockholm
Satrap Kapitalförvaltning AB 556748-3309 Sweden Stockholm Tikkakosken Liikekeskus Oy1) 0194775-7 Finland Jyväskylä
Tillverkaren 1 Fastighets AB 556730-4307 Sweden Stockholm
1) Joint operations.
NOTE
23 Participations in joint ventures
Sagax owns 50% of the Group company Söderport Holding AB schools, healthcare and judicial system. The company has long-
together with the Nyfosa Group. Söderport contributed SEK term leases, and stable tenants and owners. The properties are
142 M (127) to Sagax’s profit from property management in 2018. located in Sweden, Finland and Germany. In Sweden, tenants are
At year end, Söderport owned 70 (69) properties with lettable largely the government, county councils and municipalities. In
area of 686,000 square metres (650,000). 54% (57) of the letta- Finland, tenants mainly comprise municipalities and private com-
ble area was in Stockholm on 31 December 2018, of which the panies. Tenants in Germany include private operators of retire-
main portion comprised industrial and warehouse properties in ment homes, profit or non-profit.
Årsta and Västberga. In 2018, Söderport Holding AB recognised A corresponding 81% of the property value comprises prop-
revenue of SEK 585 M (548), and posted profit from property erties located in metropolitan regions in Sweden, Germany and
management of SEK 285 M (254). On behalf of Söderport, AB Finland. The international property portfolio accounted for 28%
Sagax provides property management and financial management (22) of the properties’ market value. More information on Hemsö
services to the Söderport Group. Nyfosa is responsible for prop- Fastighets AB is available on the company’s website, hemso.se.
erty management at certain locations. Sagax recognises shares in profit and participating interests in
Sagax owns 50% of Hemsö Intressenter AB, which in turn joint ventures according to the equity method; the companies are
owns 30% of Hemsö Fastighets AB, with the remaining share thus not consolidated. Shares in profit, as well as additional acqui-
owned by the Third Swedish National Pension Fund. Hemsö sition costs, are recognised across the values of participations in
Intressenter AB contributed SEK 170 M (151) to Sagax’s profit the consolidated financial statements. Consolidated comprehen-
from property management in 2018. Hemsö Fastighets AB owns sive income includes the Group’s share of comprehensive income
and develops public properties, properties for retirement homes, in the investment entity.
Parent Company
Joint venture Corp. Reg. No. Domicile Share 31 Dec 2018 31 Dec 2017
Hemsö Intressenter AB 556917-4336 Stockholm 50% 285 285
Fastighetsaktiebolaget Apicius1) 559015-8902 Stockholm 50% – 1
Total 285 286
Group
Joint ventures/associated companies Corp. Reg. No. Domicile Share 31 Dec 2018 31 Dec 2017
Hemsö Intressenter AB 556917-4336 Stockholm 50% 1,324 973
Söderport Holding AB 556819-2230 Stockholm 50% 1,513 1,286
Fastighetsaktiebolaget Apicius1) 559015-8902 Stockholm – – 1
Total 2,837 2,259
1) The company became a wholly owned subsidiary in 2018.
FINANCIAL REPORTS
NOTE
23 Participations in joint ventures, cont’d.
Sagax’s joint ventures Reconciliation of share value
Hemsö Söderport Hemsö Intressenter AB Söderport Holding AB

31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
2018 2017 2018 2017
Sagax’s participating Sagax’s share of
equity, % 1,324 972 1,520 1,294
interest, % 15 15 50 50
Carrying amount for
Rental revenue, SEK M 2,607 2,363 585 548
participation 1,324 973 1,513 1,286
management, SEK M 1,439 1,314 285 254
Profit for the year, SEK M 3,092 2,591 854 769 Hemsö Intressenter AB Söderport Holding AB
Sagax’s share of Parent Parent
profit from property Group Company Group Company
management, SEK M 170 151 142 127 Opening balance
No. of properties 365 346 70 69 1 Jan 2018 973 285 1,286 –
Rental value, SEK M 2,808 2,541 674 591 Percentage of com-

prehensive income 405 – 427 –
Properties’
market value, SEK M 46,236 38,883 7,683 6,603 Dividends –54 – –200 –
Lettable area, sqm 1,732,000 1,636,000 686,000 650,000 Closing balance
31 Dec 2018 1,324 285 1,513 –
Lease term, years 9.7 9.2 5.0 4.5
Economic vacancy rate, % 2 2 4 6
Interest-bearing liabilities,
SEK M 29,729 25,575 3,907 3,287
Loan maturity, years 7.9 5.0 1.5 2.6
Fixed interest, years 5.9 5.0 3.2 2.8
Market value of fixed-
income derivatives, SEK M –281 –544 –222 –328
Aggregated income statements Aggregated balance sheets
Hemsö Intressenter AB1) Söderport Holding AB Hemsö Intressenter AB Söderport Holding AB

2018 2017 2018 2017
2018 2017 2018 2017
Investment properties – – 7,683 6,603
management 340 302 285 254
Other fixed assets 4,127 3,424 274 211
Changes in value,
properties 588 505 682 560 Cash and cash equiv-
alents 32 32 35 53
Changes in value,
financial instruments 27 40 58 91 Other current assets – – 61 51
Tax –149 –162 –170 –144 Total assets 4,159 3,456 8,053 6,919
Profit for the year 806 685 854 769
Other comprehensive 6 9 – – Equity 2,648 1,945 3,041 2,587
income Interest-bearing
Comprehensive in- 812 694 854 769 non-current liabilities 1,470 1,470 3,692 3,287
come for the year Derivatives – – 222 328
Sagax’s participation, Other non-current
50% of comprehensive liabilities – – 694 529
income for the year 406 347 427 385
Interest-bearing current
1) Hemsö Intressenter AB owns 30% of Hemsö Fastighets AB. liabilities – – 215 –
Current liabilities 41 41 189 188
Total equity and
liabilities 4,159 3,456 8,053 6,919
FINANCIAL REPORTS
NOTE
24 Receivables from Group companies
NOTE
24
Receivables from Group companies,
cont’d.
Parent Company Parent Company

Group companies 31 Dec 2018 31 Dec 2017 Group companies 31 Dec 2018 31 Dec 2017
Current receivables from Group companies Non-current receivables from Group companies
Sagax Almere 1 B.V. 252 286 Fastighets AB Råfilmen 145 –
Sagax Beta Komplementär AB 2,324 2 Sagax Fastighet Egah Almuk A 11 –
Sagax Donker Duyvisweg 301 B.V. 59 74 Sagax Finland Holding 2 Oy 402 391
Sagax Eindhoven 1 B.V. 28 36 Sagax Finland Holding 4 Oy – 4
Sagax Finland AB 61 67
Sagax Finland Holding 6 Oy – 4
Sagax Finland Asset Management Oy 4 –
Sagax Finland Holding 7 Oy 25 28
Sagax Finland Holding 2 Oy 1 –
Sagax Holding 1 ApS – 15
Sagax Finland Holding 13 Oy 120 – Sagax Invest AB – 186
Sagax Finland Holding 14 Oy 107 – Sagax Jordbro AB 527 527
Sagax Finland Holding 15 Oy 160 – Sagax Stockholm 7 AB 91 91
Sagax Finland Holding 16 Oy 95 – Sagax Veddesta AB 23 –
Sagax Finland Oy – 1 Total 2,144 2,022
Sagax Finland Real Estate Oy 53 49
Sagax Hallenstraat 16 B.V. 31 36
25
Svenska Holding SAS 48 –
Sagax Holding 1 ApS 55 –
NOTE Liabilities to Group companies
Sagax Industrial 1 B.V. 51 62
Sagax Industrial 2 B.V. 25 31
Sagax Industrial 3 B.V. 18 21 Parent Company
Sagax Industrial 4 B.V. 39 47 Group companies 31 Dec 2018 31 Dec 2017
Sagax Industrial 5 B.V. 181 – Current liabilities to Group companies
Sagax Industrial 6 B.V. 33 – Fastighetsaktiebolaget Apicius 1 –
Sagax Industrial 7 B.V. 150 – Firethorne AB 650 632
Sagax Industrial 8 B.V. 37 – Sagax Beta AB 132 –
Sagax Industrial 9 B.V. 17 – Sagax Europa AB 115 –
Sagax Industrial 10 B.V. 66 – Sagax Holding 1 ApS – 14
Sagax Industrial 11 B.V. 24 – Sagax Finland Asset Management Oy – 27
Sagax Industrial 12 B.v. 65 –
Sagax Finland Holding AB 384 249
Sagax Industrial 15 B.V. 74 –
Sagax Finland Oy 489 –
Sagax Industrial 16 B.V. 88 –
Sagax Invest AB – 78
Sagax Invest AB 94 –
Sagax Jordbro AB 171 128
Sagax Macrohuset AB 35 –
Sagax Solna AB 21 22
Sagax Nederland B.V. 23 3
Sagax Stockholm 6 AB 42 35
Sagax Projektutveckling AB 37 9
Sagax Real Estate ApS 1 1
Sagax Roosendaal 1 B.V. 20 25
Sagax Stockholm 19 AB 260 –
Sagax Småland AB 344 727
Sagax Stockholm Två AB 185 –
Sagax Stockholm Nio AB 18 18
Sagax Temple Portfolio 3 Oy – 9
Sagax Stockholm Tio AB 138 51
Sagax Stockholm 12 AB 2 16 Total 2,482 1,220
Parent Company
31 Dec
Group companies 2018 31 Dec 2017
Non-current liabilities to Group companies
Sagax Tel B.V. 28 38 Sagax Beta Komplementär AB – 438
Sagax Temple Holding 2 Oy 138 30 Sagax Finland Oy 257 –
Sagax Temple Holding 3 Oy – 26 Total 257 438
Sagax Temple Holding 4 Oy 127 52
Sagax Temple Portfolio 1 Oy 369 183
Sagax Temple Portfolio 3 Oy 476 –
Sagax Temple S.à.r.l. – 7
Sagax Terneuzen B.V. 233 181
Sagax Tyskland AB 620 627
Satrap Kapitalförvaltning AB 147 101
Svenskasagax 2 SAS 63 722
Svenskasagax 3 SAS 143 –
Total 9,582 5,208
FINANCIAL REPORTS
NOTE
26 Transactions with related parties
BOARD OF DIRECTORS AND SENIOR EXECUTIVES PARENT COMPANY

In 2018, the Parent Company’s Accounts Department provided The Parent Company, AB Sagax, is responsible for stock market
accounting services to the companies that are wholly owned by issues, such as financial reporting and stock market informa-
the CEO, David Mindus. For these services, the companies were tion. The Parent Company is also responsible for credit market
charged SEK 44,000 excluding value added tax. No other trans- issues, such as borrowing and financial risk management. Services
actions took place between Sagax and members of the company’s between Group companies are charged on commercial terms
Board, other senior executives or relatives of these in 2018. For and conditions and in accordance with market-based pricing.
remuneration of the Board of Directors and senior executives, Intra-Group services comprise management services and internal
refer to Note 5. interest charging. During the year, the Parent Company’s fees
for property and company management from Group companies
amounted to SEK 46 M (39) and fees from joint ventures to SEK
16 M (16).
NOTE
27 Equity
SHARE CAPITAL
On 1 June, Sagax completed a rights issue of 23,862,214 Class The share capital trend during the past ten years, as registered by the
D common shares, on 14 June, the company completed a private Swedish Companies Registration Office, is also described below.
placement of 9,574,617 Class D common shares and on 6 Novem-
ber completed a private placement of 4,900,000 Class D common Voting rights and proportion of share capital
Propor-
shares. Moreover, due to the exercise of warrants, Sagax issued
Voting Propor- tion
121,275 Class B common shares in June. The completion of these Number of rights Number of tion of share
issues increased the share capital by SEK 67.3 M. Class of share shares per share votes of votes capital
The number of treasury shares amounted to 1,000,000 Class B Class A shares 13,416,822 1.00 13,416,822 34% 5%
shares at 31 December 2018. The shares were repurchased in 2013. Class B shares 145,979,405 0.10 14,597,940 37% 52%
The shares have a quotient value of SEK 1.75 per share. All Class D shares 101,900,000 0.10 10,190,000 25% 37%
Preference
shares were fully paid up. Voting rights and the proportion of
shares 16,784,028 0.10 1,678,403 4% 6%
share capital per class of share are presented below.
Total 278,080,255 39,883,165 100% 100%
Share capital trend 2009-2018
Increase in Total Total number of Total number of Total number of Total number of Total number
Date Event share capital share capital Class A shares Class B shares Class D shares preference shares of shares
3 Apr 2009 Non-cash issue 6,875,000 142,712,990 12,077,322 – – 16,465,276 28,542,598
14 Apr 2009 Non-cash issue 700,000 143,412,990 12,077,322 – – 16,605,276 28,682,598
4 June 2009 Private placement 20,000,000 163,412,990 12,077,322 – – 20,605,276 32,682,598
13 Apr 2010 Rights issue 54,470,995 217,883,985 12,077,322 – – 31,499,475 43,576,797
13 Apr 2010 Private placement 20,000,000 237,883,985 12,077,322 – – 35,499,475 47,576,797
9 Jul 2010 Private placement 8,762,735 246,646,720 12,077,322 – – 37,252,022 49,329,344
9 Nov 2010 Warrants 256,875 246,903,595 12,128,697 – – 37,252,022 49,380,719
23 Nov 2010 Warrants 1,191,555 248,095,150 12,367,008 – – 37,252,022 49,619,030
17 Dec 2010 Warrants 1,066,405 249,161,555 12,580,289 – – 37,252,022 49,832,311
30 Dec 2010 Warrants 743,750 249,905,305 12,729,039 – – 37,252,022 49,981,061
27 Jan 2011 Warrants 885,625 250,790,930 12,906,164 – – 37,252,022 50,158,186
1 Mar 2011 Warrants 2,553,290 253,344,220 13,416,822 – – 37,252,022 50,668,844
21 Dec 2012 Private placement 63,739,890 317,084,110 13,416,822 – – 50,000,000 63,416,822
26 Mar 2013 Bonus issue1) 28,689,713 345,773,824 13,416,822 134,168,220 – 50,000,000 197,585,042
26 Mar 2013 Private placement 20,457,342 366,231,166 13,416,822 145,858,130 – 50,000,000 209,274,952
25 Apr 2014 Private placement 5,250,000 371,481,166 13,416,822 145,858,130 – 53,000,000 212,274,952
22 Dec 2014 Private placement 4,375,000 375,856,166 13,416,822 145,858,130 – 55,500,000 214,774,952
24 Mar 2015 Private placement 4,812,500 380,668,666 13,416,822 145,858,130 58,250,000 217,524,952
2 Nov 2016 Rights issue 25,261,243 405,929,909 13,416,822 145,858,130 14,434,996 58,250,000 231,959,948
2 Nov 2016 Private placement 6,676,257 412,606,166 13,416,822 145,858,130 18,250,000 58,250,000 235,774,952
9 Jun 2017 Cancellation of shares –72,565,451 340,040,715 13,416,822 145,858,130 18,250,000 16,784,028 194,308,980
9 Jun 2017 Offset issue 79,298,046 419,338,761 13,416,822 145,858,130 63,563,169 16,784,028 239,622,149
1 Jun 2018 Rights issue 41,758,875 461,097,636 13,416,822 145,858,130 87,425,383 16,784,028 263,484,363
14 Jun 2018 Private placement 16,755,580 477,853,216 13,416,822 145,858,130 97,000,000 16,784,028 273,058,980
19 Jun 2018 Incentive Plan2) 212,231 478,065,447 13,416,822 145,979,405 97,000,000 16,784,028 273,180,255
6 Nov 2018 Private placement 8,575,000 486,640,446 13,416,822 145,979,405 101,900,000 16,784,028 278,080,255
1) The quotient value per share was reduced to SEK 1.75 in conjunction with the bonus issue of Class B common shares.
2) New share issues due to the exercise of warrants under the 2015-2018 Incentive Plan.
FINANCIAL REPORTS
NOTE
27 Equity, cont’d.
WARRANTS The total proposed dividend amounts to SEK 556.2 M. The dividend
Sagax has three warrant plans for the company’s employees. These plans corresponds to 34.6% (33.4) of consolidated profit from property
are valid for three years, encompassing the periods 2016-2019, 2017- management for 2018 and 37% (37) of consolidated cash flow for
2020 and 2018-2021. Warrants entitle the holder to subscribe for new 2018 before changes in working capital, which is in line with Sagax’s
common shares in June 2019, June 2020 and June 2021, respectively. dividend strategy to distribute about one-third of the annual profit
The subscription price corresponds to the price paid for the Sagax share from property management in total dividend payments on common
at the start of the warrant plans converted using the average share price and preference shares.
trend for the listed property companies in accordance with Carnegie’s The dividend policy is intended to allow for continued growth
property index (CREX) during the corresponding period. Accordingly, and adequate preparedness to take advantage of business opportu-
the warrants will have a value on condition that the price performance nities. The Board is also authorised to propose the distribution of
of the Sagax share exceeds the average for the listed property companies non-recurring profits to shareholders.
during each three-year period. At year end, Sagax employees held a total
of 801,670 warrants with the right to subscribe for Class B common EARNINGS PER SHARE
shares corresponding to 0.5% of the number of common shares outstand- According to the Articles of Association, each preference share con-
ing. A new share issued of 121,275 Class B common shares was carried fers a preferential right to SEK 2.00 in annual dividends. Each Class
out in June 2018 due to the exercise of warrants under the 2015-2018 D share provides entitlement to a maximum of SEK 2.00 per share.
Incentive Plan. The remainder of employees’ warrants for the Incentive Accordingly, when calculating earnings per Class A and B common
Plan 2015-2018 was bought back by Sagax AB for SEK 4 M, which cor- share, profit for the year was reduced by SEK 2.00 per preference
responds to the market value on the date of the repurchase. The compa- share and Class D share, by a total of SEK 237 M. The calculation is
ny’s CEO and Board Members do not participate in the plans. based on the total number of preference and Class D shares at year
No additional warrants or convertibles are outstanding. end, 16,784,028 preference shares and 101,900,000 Class D shares.
When calculating earnings per common Class A and B share
CONSOLIDATED EQUITY after dilution due to the warrants outstanding, in accordance with
The share capital corresponds to the Parent Company’s share capital. IAS 33, the dilution has been calculated as the number of Class B
Other contributed capital refers to capital contributed by share- shares that must be issued to cover the difference between the strike
holders. Reserves pertain to currency translation differences arising price and market price of all potential Class B shares (warrants) out-
as a result of foreign operations, shares in the other comprehensive standing, assuming it is probable that they will be exercised.
income of joint ventures and currency translation differences per-
28
taining to hedge accounting from foreign operations. Profit earned
relates to profit earned in the Group. NOTE Unrealised changes in value
PARENT COMPANY’S RESTRICTED AND NON-RESTRICTED EQUITY

Under the Swedish Companies Act, equity consists of restricted (non Unrealised changes in value recognised in profit or loss over the
dividend-carrying) and non-restricted (dividend-carrying) equity. past five-year period are presented below, taking into account the
Distributions to shareholders may not exceed an amount that ensures deferred tax effect and year.
full coverage of restricted equity following the dividend payment. 2018 2017 2016 2015 2014 Total
Moreover, a dividend may only be paid if it is defensible taking into Properties 1,265 1,113 1,306 677 436 4,797
account the requirements arising from the nature, scope and inherent Financial instruments 211 504 –51 67 –260 471
risks of the operations on the size of the equity and the company’s and Deferred tax –325 –356 –276 –164 –39 –1,160
the Group’s consolidation needs, cash and cash equivalents and posi- Total 1,151 1,261 979 580 137 4,108
tion otherwise. Dividends are proposed by the Board of Directors in
accordance with the stipulations of the Swedish Companies Act, and At 31 December 2018, Sagax’s closing accumulated and unreal-
are approved by the AGM. ised changes in the value of the property portfolio totalled SEK
5,054 M for the past ten years. This means that the property
DIVIDENDS portfolio, as assessed by independent valuation companies, is
Sagax’s Board of Directors proposes that the 2019 AGM resolves to expected to rise in value by this net amount compared with 2009.
pay a dividend of SEK 2.00 (1.80) per Class A and B common share
for each Class A and B common share held on the record date. A Unrealised changes in value of properties 2009–2018
total of SEK 318.8 M in dividends is proposed to be distributed to Recognised Divestment of prop- Accumulated
unrealised changes erties with a change unrealised changes
holders of Class A and Class B common shares. Year in value, SEK M of value, SEK M in value, SEK M
The Board proposes that the 2019 AGM approve a dividend 2009 –245 0 –245
of SEK 2.00 (2.00) per Class D share to be paid quarterly in the 2010 175 –7 –77
amount of SEK 0.50 per Class D share during the period between 2011 130 –6 47
the 2019 and 2020 AGMs. A total of SEK 203.8 M in dividends is 2012 134 –2 179
2013 136 2 317
proposed to holders of the company’s Class D shares.
2014 436 4 757
The Board proposes that the 2019 AGM approve a dividend of SEK
2015 677 39 1,473
2.00 (2.00) per preference share to be paid on a quarterly basis in the 2016 1,306 –180 2,599
amount of SEK 0.50 per preference share during the period between 2017 1,113 14 3,726
the 2019 and 2020 AGMs. A total of SEK 33.6 M in dividends is pro- 2018 1,265 63 5,054
posed to be distributed to holders of the company’s preference shares. Total 5,127 –73
FINANCIAL REPORTS
NOTE
29 Pledged assets and contingent liabilities
Group Parent Company

Pledged assets for
interest-bearing liabilities 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Property mortgages1) 11,039 15,537 – –
Chattel mortgages – 4 – –
Pledged bank accounts – 1 – –
Pledged participations in subsidiaries2) 1,412 3,874 259 992
Pledged participations in joint ventures 1,324 973 285 285
Pledged Group receivables – – 714 527
Total 13,776 20,388 1,258 1,804
1) In Finland, mortgage deeds obtained exceed interest-bearing liabilities by SEK 4,517 M (6,783), in accordance with market practices.
2) P ledged participations in subsidiaries refer to the companies’ share of the Group’s net assets less a deduction for pledged property mortgages and chattel mortgages.
Group Parent Company

Contingent liabilities 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Sureties for subsidiaries’ interest-rate swaps – – 58 154
Sureties for subsidiaries’ credits – – 4,297 7,382
Total contingent liabilities – – 4,355 7,536
NOTE
30 Cash-flow statements
Group Parent Company Cash flow from operating activities before changes in working
Items included in 31 Dec 31 Dec 31 Dec 31 Dec capital amounted to SEK 1,490 M (1,194). Cash flow from oper-
cash and cash equivalents 2018 2017 2018 2017 ating activities deviates from profit from property management
Cash and bank balances 73 60 2 4 primarily because the cash flow in joint ventures was reinvested
Total 73 60 2 4 in these operations in 2018. Changes in working capital had an
impact of SEK 100 M (–26) on cash flow.
Financial expenses amounted to SEK 481 M (444). The compa- Investing activities impacted cash flow by SEK –3,771 M
ny’s average interest rate was 2.2% (3.0) at 31 December 2018. (–1,855) and related primarily to net investments of SEK 3,437 M
In 2018, interest-bearing liabilities on property acquisitions (1,682) in the property business. Investments in new construction,
increased to SEK 15,763 M (13,691), at the same time as interest additions and renovations of existing properties amounted to SEK
paid by the Group on interest-bearing liabilities amounted to 456 M (341) during the fiscal year. Property acquisitions impacted
SEK 407 M (400). Sagax’s financial income amounted to SEK consolidated cash flow in the amount of SEK 3,026 M (1,382).
35 M (19). Property divestments contributed SEK 24 M (41) to cash flow.
Working capital, excluding prepaid rental revenue of SEK Cash flow from financing activities contributed a net amount
199 M (167), amounted to SEK –1,059 M (–1,350) at 31 Decem- of SEK 2,195 M (464) to Sagax. The Group raised SEK 8,487 M
ber 2018. At the same date, unutilised credit facilities amounted (3,322) in new loans and repaid SEK 6,707 M (2,395). A total of
to SEK 3,392 M (3,233), including lines of credit corresponding SEK 479 M (386) was distributed to shareholders during the year
to commercial paper outstanding. No additional collateral needs and SEK 0 M (66) was paid out due to the redemption offer for
to be pledged to utilise these lines of credit. preference shares. In total, cash and cash equivalents increased by
SEK 13 M (–223) to SEK 73 M (60) in 2018.
CHANGES IN LIABILITIES ATTRIBUTABLE TO FINANCING ACTIVITIES
2017 2018
31 Dec 2016 Cash flow Non-cash flow 31 Dec 2017 Cash flow Non-cash flow 31 Dec 2018
Change in Change in
Borrowing exchange Borrowing exchange
costs rates costs rates Classification
Current interest-
bearing liabilities 1,600 65 – 14 1,679 226 – 36 –124 1,817
Non-current interest-
bearing liabilities 10,896 862 28 152 11,937 1,554 46 205 124 13,866
Total 12,495 927 28 166 13,616 1,780 46 241 – 15,683
FINANCIAL REPORTS
NOTE
31 Operational risks
Sagax is exposed to various risks that may be of significance to the Risks connected with the acquisition of property companies
company’s future business, earnings and financial position. include taxes and legal disputes. It is therefore vital to have the
right expertise for property acquisitions in the organisation and to
RENTAL REVENUE AND RENT TRENDS engage external expertise where necessary. Sagax contends that the
Sagax’s revenue is impacted by long-term demand for premises company has adequate expertise to implement acquisitions and to
in the warehouse and light industry segment, the properties’ integrate these into the property management operation.
occupancy rate and the rent level received. In connection with property divestments, it is common for
The rental markets for the warehouse and light industry seg- the seller to provide guarantees regarding the validity of the
ment in the Stockholm and Helsinki regions are Sagax’s largest leases, environmental risks and so forth. When selling a property
markets and account for 51% (53) of the Group’s rental value. company, it is also common to provide guarantees that no tax
These rental markets are characterised by relatively low volatil- disputes or other legal disputes exist that could impact the com-
ity and a limited level of relocation. To limit Sagax’s exposure to pany in the future. The guarantees are normally limited in time.
vacancies and rent losses, Sagax endeavours to offer leases with It is important that such commitments are correctly formulated
long average terms and to prioritise tenants with a high credit and, in Sagax’s opinion, the company has adequate competence to
rating, despite these entailing slightly lower immediate earn- assess and formulate such documents.
ings. This is particularly important in relation to major tenants.
Dependency on individual tenants is reduced in pace with the CHANGES IN VALUES OF PROPERTIES
acquisition of properties by Sagax. Sagax is exposed to changes in the market value of the property
Rent-level risk is attributable to trends in current market portfolio. To assess the properties’ market value, Sagax engages
rents. Sagax’s management strategy stipulating long-term leases the services of external valuation companies. The company
mitigates this risk for the foreseeable future. Sagax works con- believes that the use of well-known, independent valuation com-
tinuously to renegotiate existing leases with the aim of mini- panies creates optimal long-term conditions for a fair and trust-
mising the short-term risk. Leases with a term in excess of three worthy assessment of the properties’ market values.
years normally include a supplement linked to the Consumer Sagax recognises its property holdings at fair value according
Price Index (CPI) in Sweden and to similar indexes in other to the accounting standard IAS 40 Investment Property, which
markets, meaning they are fully or partially inflation indexed. stipulates that the properties’ consolidated carrying amounts
At year end, 99% of Sagax’s contractual rents were linked to the match their assessed market value. Accordingly, declining market
CPI or similar indexes. values for the company’s properties will negatively impact the
company’s income statement and balance sheet. Declining market
CREDIT RISK values may occur due to a weakened economy, rising interest rates
The primary counterparty risk to which Sagax is exposed is that or property-specific circumstances, including vacancies, a deteri-
tenants could fail to make the payments required by their lease. In oration in the technical standard or accidents resulting in material
conjunction with acquisitions and leases, counterparty risk assess- damages. The company takes continuous actions to limit its expo-
ments are carried out and contracts are supplemented, if necessary, sure to these events through, for example, proactive management,
by collateral in the form of deposits, bank guarantees, surety pro- the signing of property insurance agreements and by formulating
vided by the Parent Company or a similar instrument. Sagax works leases with adequate contractual terms.
continuously to monitor and evaluate the financial position of its To prepare the accounts in accordance with generally
tenants. Sagax’s opinion is that the company’s tenants, with a small accepted accounting policies, company management must make
number of exceptions, stand on solid financial ground. judgments and assumptions that affect asset and liability items,
revenue and expense items recognised in the accounts and other
OPERATING AND MAINTENANCE COSTS information provided. The actual outcome may differ from these
Regarding the rental situation for premises in the warehouse and judgments. The valuation of investment properties can be sig-
light industry segment, tenants in this area often assume relatively nificantly affected by the judgments and assumptions made by
far-reaching responsibility for operations and maintenance. The company management. Sagax has engaged authorised external
most significant operating expenses include electricity and heating appraisers to assess the market value of all of the properties in
costs for the properties. For the bulk of these expenses, tenants are accordance with the Fair Value Method in order to reduce the risk
either charged directly or the expense is passed on by Sagax at cost of incorrect valuations.
price. Sagax’s exposure to changes in operating expenses is thus
relatively limited. In the event of vacancies, the company’s profit is CHANGE IN VALUES OF FINANCIAL DERIVATIVES
not only impacted by lost rental revenue but also by expenses for To limit the interest-rate risk, defined as the risk of an impact on
such items as power, which were previously paid by the tenants. earnings or cash flow due to changes in market interest rates, and
thus increase the predictability of profit from property manage-
TRANSACTION-RELATED RISKS ment, Sagax uses nominal interest-rate swaps and interest-rate
Property acquisitions form part of the company’s day-to-day oper- caps. Sagax’s fixed-income derivatives comprised a nominal total
ations and are, by their very nature, associated with uncertainty. of SEK 6,198 M (8,010) at year end.
Risks related to the acquisition of properties include the future The financial derivatives are measured at market value each
loss of tenants, environmental conditions and technical faults. quarter and their value is affected by the financial markets’
FINANCIAL REPORTS
NOTE
31 Operational risks, cont’d.
a specific interest coverage ratio. This means that creditors may

Revaluation in the event of changes in swap curves be entitled to demand repayment of granted credit lines prema-
SEK M
turely or request changed conditions if these special commit-
300
ments are not met by the borrower. Sagax has financial covenants.
200
The company complies with all of its financial covenants. Sagax is
100 of the opinion that the facilities are on commercial terms.
0 Sagax seeks to maintain a low share of current interest-bear-
–100
ing financing in an effort to minimise the company’s refinancing
risk. Sagax curtails its refinancing risk by agreeing on a certain
–200
maturity in connection with new borrowing. Sagax also strives
–300
+100 bp Shift +50 bp Shift –50 bp Shift –100 bp Shift to refinance its non-current interest-bearing liabilities well in
advance. Overall, this working approach is deemed effective in
Change in market value (SEK) Change in market value (EUR)
limiting the company’s refinancing risk.
expectations regarding the development of underlying market A sensitivity analysis is presented below, showing the effects
interest rates over the term of the derivative. The changes in value of a change in property values on Sagax’s debt ratio. A sensitivity
are recognised as an expense in profit or loss and as a liability analysis is presented below, showing the effects of a change in the
in the balance sheet, but do not affect cash flow. Over time, all occupancy rate on Sagax’s interest coverage ratio.
other things being equal, the provision in the balance sheet will
be gradually reversed and recognised as revenue until the end of LIQUIDITY RISK
the derivative’s term. Sagax has positive operating cash flow and will have limited refi-
To understand the valuation effects on Sagax’s fixed-income nancing requirements over the next few years; refer to Note 17
derivatives in the event of changes in the underlying swap curves, where the maturity dates for the Group’s financing are presented.
the effects on Sagax’s profit before tax in connection with a Sagax’s working capital, excluding prepaid rental revenue of SEK
simulated parallel shift of, for example, +1.0 percentage point 199 M (167), amounted to SEK –1,059 M (–1,350). The available
(100 basis points) in the underlying swap curves is presented in access to funds amounted to SEK 3,392 M (3,233) in the form of
the chart above. All other things being equal, this would entail a unutilised credit facilities. No additional collateral needs to be
positive revaluation of Sagax’s fixed-income derivatives by SEK pledged to utilise these credit facilities.
103 M (226). The corresponding shift of –1.0 percentage point
would entail a negative revaluation of SEK –99 M (–231). Sagax’s INTEREST-RATE RISK
earnings are also affected by the company’s share in profit of joint Interest expenses are the Group’s largest current cost item. Inter-
ventures, which – like Sagax – use fixed-income derivatives to est-rate risk is defined as the risk that changes in the interest rate
reduce their interest-rate risk and measure their derivatives at scenario will affect Sagax’s financing cost. The interest-rate risk is
market value on a quarterly basis. attributable to the trend in current interest rates. To reduce Sagax’s
exposure to rising interest rates, the Group has a significant number
FINANCING of its interest expenses from fixed-rate loans. To limit interest-rate
Sagax’s financing primarily comprises equity and interest-bearing risk for loans with a floating rate, interest-rate swaps and inter-
liabilities. Sagax endeavours to secure a long, average remaining est-rate caps are used. Calculated on the existing financing terms
term of interest-bearing liabilities in a bid to limit its refinancing for the Group’s interest-bearing liabilities on 31 December 2018,
risk, defined as the risk that refinancing existing debt cannot take a rise in market interest rates of 1 percentage point would have
place on reasonable terms. increased Sagax’s annualised interest expenses by SEK 65 M (52).
The company’s long-term financing comprises credit facilities A reduction in market interest rates of 1 percentage point would
and listed bond loans. The counterparties of the credit facilities have lowered Sagax’s interest expenses by SEK 3 M (14) on an
are Swedish and foreign commercial banks. In certain cases, the annual basis, since many of Sagax’s contracted loan facilities include
facilities may be subject to special conditions, such as maintaining base-rate clauses that do not permit base rates to drop below zero
Effect on debt ratio upon change in value of Effect on interest coverage ratio upon change in
property portfolio at 31 December 2018 occupancy rate at 31 December 2018
–20% –10% 0% +10% +20% –10% –5% 0% +5% +10%

Value change, SEK M –5,805 –2,902 – 2,902 5,805 Occupancy rate, % 85 90 95 99 N/A
Debt ratio, % 57 51 47 43 40 Interest coverage
ratio, % 387 410 434 457 N/A
Effect on debt ratio upon change in value of Effect on interest coverage ratio upon change in
property portfolio at 31 December 2017 occupancy rate at 31 December 2017
–20% –10% 0% +10% +20% –10% –5% 0% +5% +10%

Value change, SEK M –4,757 –2,377 – 2,377 4,757 Occupancy rate, % 85 89 94 99 N/A
Debt ratio, % 61 55 50 46 43 Interest coverage
ratio, % 330 350 370 390 N/A
FINANCIAL REPORTS
NOTE
when setting interest rates for the interest period. Had the company tenants who conduct operations requiring special permits under
not utilised fixed-income derivatives to mitigate the interest-rate the Environmental Code, meaning that they are regarded as oper-
risk, an increase in market interest rates of 1 percentage point would ators as stipulated in the Environmental Code.
have increased interest expenses by SEK 90 M (97) and a reduction If the operator is unable to perform or defray post-treatment
in market interest rates of 1 percentage point would have decreased of a property, however, the party who acquired the property and
interest expenses by SEK 28 M (31) on an annual basis. Taking into who knew of or should have detected the pollution when the
account Sagax’s derivatives, the average fixed-interest period was 3.0 property was acquired is to assume responsibility. This means
years (2.1) at year end. Accordingly, this entails that Sagax’s profit that under certain circumstances, claims may be directed at
from property management is only impacted to a limited extent in Sagax for land remediation or post-treatment in the event of the
the event of changes in the general interest rate scenario. occurrence or suspicion of contamination of land, catchment area
or ground water for the purpose of returning the property to the
CURRENCY RISK condition required according to the Environmental Code. Such
At year end, Sagax owned 283 (298) properties in Finland, 5 (5) claims could have a negative impact on Sagax. It is therefore cru-
properties in Germany, 61 (50) properties in France and 33 (16) cial that the property owner and the operator cooperate on issues
properties in the Netherlands, which entailed exposure to the concerning the environmental impact of a particular operation.
EUR exchange rate. The properties are financed with equity and Sagax performs regular environmental analyses of the properties
external loans. At 31 December 2018, interest-bearing liabilities that are acquisition candidates.
denominated in EUR corresponded to SEK 10,355 M (5,848). There are currently no material environmental claims
At the same date, the market value of the properties in Finland, directed at any of the Group companies. Nor has Sagax identified
G ermany, France and the Netherlands was SEK 16,708 M any significant environmental risks.
(12,566). Net exposure on 31 December 2018, assets less lia-
bilities in EUR, amounted to SEK 5,514 M (4,910). Currency TAXES AND AMENDED LEGISLATION
translation effects for foreign operations and hedge accounting In a decision of 20 December 2016 pertaining to the 2014 income
are recognised in Other comprehensive income. Other currency year, the Swedish Tax Agency denied the Group company Sagax
translation effects are recognised in profit or loss. Bruket Fastigheter AB deductions for loss carryforwards of SEK
277 M and imposed additional tax of SEK 28 M. In a ruling on
ORGANISATIONAL RISK 27 February 2018, the Administrative Court upheld the Swedish
The company has a relatively small organisation, which creates Tax Agency’s claim in a decision of 7 December 2017 pertaining
a dependency on certain employees. The company’s growth has to the 2015 income year, the Tax Agency also denied the group
helped to alleviate this risk in recent years. Sagax’s future devel- company Firethorne AB deductions for loss carryforwards of
opment is highly dependent on the expertise, experience and SEK 1,166 M. In a ruling on 7 February 2019, the Administra-
commitment of company management and other key individuals. tive Court upheld the Swedish Tax Agency’s decision. Sagax is
Regular career development talks are held with all personnel, as of the opinion that the Tax Agency’s decisions are incorrect and
a means of identifying the need for skills development. The com- the companies concerned have appealed the decision. If the Tax
pany could be negatively impacted should one or more of these Agency’s decisions were to be upheld, Sagax estimates that the
key individuals terminate their employment. Employee turnover negative earnings effect recognised for the Group would be SEK
has been low at Sagax in recent years. The employment contracts 85 M and SEK 156 M, respectively. Sagax has not made any pro-
reached are considered to be on commercially competitive terms visions for these risks.
and Sagax has also established annual incentive plans to attract In its financial statements, Sagax has taken into account
new employees and retain existing ones. deferred tax based on the difference between an asset’s or lia-
bility’s carrying amount and its tax-assessment value, which are
OPERATIONAL RISKS known as temporary differences; refer to Note 14. Sagax has also
Within the framework of its day-to-day current operations, Sagax taken into account deferred tax assets regarding accumulated
could potentially incur losses due to flawed procedures, inade- loss carryforwards in its Group companies. The consequence
quate control or impropriety. The company’s investments abroad is that Sagax’s earnings and equity are exposed to changes in
also entail a risk of misunderstanding due to both linguistic and tax legislation in those countries in which the Group conducts
cultural reasons. Well-adapted administrative systems, effec- operations. Changes in ownership, which entail a change in the
tive internal control, own organisation, skills development and controlling influence over the company, could result in partial or
access to reliable valuation and risk models provide a sound basis entire restrictions on the ability to utilise losses from previous
for reducing the operational risks. Sagax works continuously to years. The possibility to utilise the loss carryforwards may also be
develop the company’s administrative security and controls. As impacted by amendments to legislation.
part of this, the Sagax Board has decided on a number of policies, The company pays property tax for all properties except for
including an anti-corruption policy and codes of conduct and three special-purpose properties in Stockholm, and the major-
established a whistle-blower function. ity of leases include a clause stipulating that this cost will be
defrayed by the tenants.
ENVIRONMENTAL RISKS Sagax’s tax expenses are explained in Note 12.
According to applicable environmental legislation, the operator Other factors that may have negative implications for the
is ultimately responsible for pollution and other environmental company include amendments to legislation or legal practices,
damage. Under the Swedish Environmental Code, Sagax has no including law of tenancy and legislation governing acquisitions
operations requiring any special permits. However, there may be and the environment.
FINANCIAL REPORTS
NOTE
SENSITIVITY ANALYSIS
Sagax’s exposure to material risks in the company’s operations is presented below.
Sensitivity analysis at 31 December 2018

Effect on profit from property Effect on profit after
Amounts in SEK M Change management, annual basis tax, annual basis3) Effect on equity3)
Economic occupancy rate +/–1% +/–25 +/–20 +/–20
Rental revenue +/–1% +/–24 +/–19 +/–19
Property expenses +/–1% –/+4 –/+3 –/+3
Interest expenses for liabilities in SEK including
fixed-income derivatives +/–1% point –38/+12 –30/+9 –30/+9
Interest expenses for liabilities in EUR including
fixed-income derivatives +/–1% point –27/–8 –21/–7 –21/–7
Interest expenses for liabilities in SEK excluding
Interest expenses for liabilities in EUR excluding
Revaluation of fixed-income derivatives in SEK due
to shift in interest rate curves1) +/–1% point N/A +50/–53 +50/–53
Revaluation of fixed-income derivatives in EUR due
to shift in interest rate curves1) +/–1% point N/A +30/–24 +30/–24
Change in SEK/EUR exchange rate2) +/–10% +/–93 +/–73 +/–551
Changed rent level for contract maturity in 2019 +/–10% +/–25 +/–19 +/–19
1) Excluding share in profit of joint ventures.

2) Sagax’s net exposure to the SEK/EUR exchange rate comprises assets and liabilities recognised in EUR, in addition to revenue and expenses in EUR.
3) Including standard tax at 22%.
NOTE
32 Significant events after the close of the fiscal year
On 11 January 2019, Sagax announced in a press release that investment amounted to SEK 255 M. The properties comprise a
based on five separate transactions it had agreed to acquire eight lettable area of 31,000 square metres, primarily comprising ware-
properties in the Netherlands, three properties in Paris and one house and light industry premises. The remaining average lease
property in Stockholm. The total investment amounted to SEK term is 1.9 years and the annual rental value amounts to SEK
200 M. The properties comprise a lettable area of 19,900 square 18 M. The occupancy rate is 91%.
metres, primarily comprising warehouse and light industry prem- On 6 March, Sagax announced in a press release that as part
ises. The remaining average lease term is 8.2 years and the annual of its EMTN programme it had issued an unsecured bond loan of
rental value amounts to SEK 13 M. The occupancy rate is 76%. EUR 300 M in the European capital market. The bond loan has
Occupancy is scheduled to take place during first quarter of 2019. a duration of 6 years and extends to 13 March 2025 with a fixed
On 25 January 2019, Sagax announced in a press release that interest coupon of 2.25%. The bond loan will primarily be used to
based on four separate transactions it had agreed to acquire six refinance existing debt with shorter maturities and for the com-
properties in Paris and one property in Stockholm. The total pany’s operating activities.
NOTE
33 Appropriation of retained earnings
The following amount is at the disposal of the AGM:
Retained earnings SEK 155,438,306.68

Share premium reserve SEK 2,871,171,326.28
Profit for the year SEK 207,977,389.78
Total SEK 3,234,587,022.75
To the shareholders, SEK 2.00 per Class A and Class B common share SEK 316,792,454.00
To the shareholders, SEK 2.00 per Class D common share SEK 203,800,000.00
To holders of preference shares, SEK 2.00 per share SEK 33,568,056.00
To be transferred to the share premium reserve SEK 2,680,426,512.75
To be carried forward SEK 0.00
Total SEK 3,234,587,022.75
FINANCIAL REPORTS
NOTE
33 Appropriation of retained earnings, cont’d.
STATEMENT OF THE BOARD OF DIRECTORS ON THE instead correspond to a maximum of 39.6% of consolidated profit
PROPOSED DISTRIBUTION OF UNAPPROPRIATED EARNINGS from property management for 2018 and a maximum of 42.5% of
AND AUTHORISATION TO BUY BACK OWN SHARES consolidated cash flow from operating activities before changes in
Pursuant to Chapter 18, Section 4 of the Swedish Companies working capital during 2018. The Board has established that the
Act, the Board of Directors must make a statement in respect of company will have full coverage for its restricted equity after the
the proposed distribution of unappropriated earnings. It is also proposed dividend.
stated in Chapter 19, Section 22 of the Companies Act that the The Board considers that the proposed dividend to the share-
Board must make a statement on the proposal to pass a resolution holders and the proposed authorisation to buy back shares are
concerning the buyback of own shares. defensible based on the criteria contained in the second and third
The Group’s equity has been calculated in compliance paragraphs, Section 3, Chapter 17 of the Swedish Companies Act
with IFRS standards, as adopted by the EU, the interpretations (nature, scope and risks of the business, consolidation require-
of these (IFRIC) and Swedish law through the application of ments, liquidity and other financial circumstances).
Recommendation RFR 1 Supplementary Accounting Rules for In the Board’s opinion, the company’s and the Group’s equity
Corporate Groups of the Swedish Financial Reporting Board. The after the proposed dividend, and after any utilisation of the
Parent Company’s equity has been calculated in accordance with authorisation to buy back shares, will be sufficient in view of the
Swedish law, applying recommendation RFR 2 Accounting for nature and scope of the business and the associated risks. In this
Legal Entities of the Swedish Financial Reporting Board. context, the Board has taken into account such factors as the
The Board of Directors proposes that the AGM resolve to pay company’s and the Group’s historical and budgeted performance,
the shareholders a dividend of SEK 2.00 per Class A and Class B investment plans and the general economic environment.
common share for the 2018 fiscal year. 9 May 2019 is proposed as The proposed dividend constitutes 14.4% of the Parent Com-
the record date for payment of dividends on common shares. The pany’s equity and 3.6% of consolidated equity at 31 December
dividend is expected to be paid by Euroclear on the third working 2018. Should the authorisation to issue preference shares and/
day after the record date. or common shares be fully utilised and the rights issue fully sub-
The Board of Directors proposes that the AGM resolve to pay scribed, as proposed to the 2019 AGM, the proposed dividend
dividend to shareholders of SEK 2.00 per preference share and payment will instead correspond to a maximum of 16.5% of
per Class D common share for the 2018 fiscal year, with quarterly Parent Company equity and a maximum of 4.1% of consolidated
payment of SEK 0.50 per preference share and per Class D com- equity at 31 December 2018. In view of the nature and perfor-
mon share. The Board of Directors proposes Friday 28 June 2019; mance of the business, the company and the Group have a solid
Monday 30 September 2019; Monday 30 December 2019 and equity/assets ratio. Against this background, the Board considers
Tuesday 31 March 2020 as the record dates for the payments of that the company and the Group are in a good position to cope
dividends on preference shares and Class D common shares. The with future business risks and withstand any losses that may be
dividend is expected to be paid by Euroclear on the third work- incurred. Planned investments have been taken into account in
ing day after each record date. The Board of Directors’ proposal the proposed dividend payment and the proposed authorisation
on the payment of dividends to holders of preference shares is in to buy back treasury shares. Nor will the payment of the dividend
accordance with the Articles of Association, which stipulate the and utilisation of the authorisation to buy back treasury shares
terms and conditions for the preference shares and the Class D have any adverse impact on the company’s or the Group’s ability
common shares. to make further commercially motivated investments in accor-
The Board also proposes that the AGM resolve that the new dance with adopted plans.
preference shares and Class D common shares that may be issued The proposed dividend and any utilisation of the authori-
under the authorisation granted according to Items 14 shall pro- sation to buy back shares will not affect the company’s and the
vide entitlement to dividends from the date on which they are Group’s ability to meet its payment obligations in a timely man-
entered into the shareholders' register administered by Euroclear ner. The Board has assessed other known circumstances that may
Sweden AB. If the authorisations is fully utilised, dividends for be significant to the company’s and the Group’s financial position
the forthcoming preference shares and/or common shares will be and that have not been addressed in the above. No circumstance
payable in a maximum amount of SEK 79,766,330.60. was discovered during the assessment that would cast doubt
The proposed dividend payment in 2019 corresponds to on the defensibility of the proposed dividend or the proposed
34.6% of consolidated profit from property management for 2018 authorisation to buy back treasury shares.
and 37.2% of consolidated cash flow from operating activities
before changes in working capital in 2018. If the authorisation to Stockholm, April 2019
issue preference shares and/or common shares is fully utilised, as AB Sagax (publ)
proposed to the 2019 AGM, the proposed dividend payment will Board of Directors
FINANCIAL REPORTS
SIGNING OF THE ANNUAL REPORT

The undersigned signatories give their assurance that the consolidated financial statements and Annual Report have been prepared in
accordance with the IFRS standards adopted by the EU and generally accepted accounting policies and provide a true and fair view of
the Group’s and the company’s financial position and results, and the Board of Directors’ Report on the Group provides a true and
fair overview of the development of the Group’s and the company’s business, position and results and describe significant risks and
uncertainties faced by the companies included in the Group.
Stockholm, 12 April 2019
Staffan Salén Johan Cederlund

Chairman of the Board Board member
Filip Engelbert Johan Thorell

Board Member Board Member
Ulrika Werdelin David Mindus

Board member Board member and
Chief Executive Officer
Our audit report was submitted on 12 April 2019
Magnus Fredmer
Authorised Public Accountant
Ernst & Young AB
AUDITOR'S REPORT
Auditor’s report
To the general meeting of the shareholders of AB Sagax (publ), corporate identity number 556520-0028
REPORT ON THE ANNUAL ACCOUNTS AND Our opinions in this report on the annual accounts and consoli-
CONSOLIDATED ACCOUNTS dated accounts are consistent with the content of the additional
Opinions report that has been submitted to the parent company's audit
We have audited the annual accounts and consolidated accounts committee in accordance with the Audit Regulation (537/2014)
of AB Sagax (publ) except for the corporate governance statement Article 11.
on pages 66-72 for the year 2018. The annual accounts and con-
solidated accounts of the company are included on pages 8-121 in Basis for Opinions
this document. We conducted our audit in accordance with International
In our opinion, the annual accounts have been prepared in Standards on Auditing (ISA) and generally accepted auditing
accordance with the Annual Accounts Act and present fairly, in all standards in Sweden. Our responsibilities under those standards
material respects, the financial position of the parent company as of are further described in the Auditor’s Responsibilities section. We
31 December 2018 and its financial performance and cash flow for are independent of the parent company and the group in accor-
the year then ended in accordance with the Annual Accounts Act. dance with professional ethics for accountants in Sweden and
The consolidated accounts have been prepared in accordance with have otherwise fulfilled our ethical responsibilities in accordance
the Annual Accounts Act and present fairly, in all material respects, with these requirements. This includes that, based on the best of
the financial position of the group as of 31 December 2018 and our knowledge and belief, no prohibited services referred to in the
their financial performance and cash flow for the year then ended Audit Regulation (537/2014) Article 5.1 have been provided to
in accordance with International Financial Reporting Standards the audited company or, where applicable, its parent company or
(IFRS), as adopted by the EU, and the Annual Accounts Act. Our its controlled companies within the EU.
opinions do not cover the corporate governance statement on pages We believe that the audit evidence we have obtained is suffi-
66-72. The statutory administration report is consistent with the cient and appropriate to provide a basis for our opinions.
other parts of the annual accounts and consolidated accounts.
We therefore recommend that the general meeting of share-
holders adopts the income statement and balance sheet for the
parent company and the statement of comprehensive income and
the statement of financial position for the group.
Key Audit Matters

Key audit matters of the audit are those matters that, in our pro- responsibilities for the audit of the financial statements section
fessional judgment, were of most significance in our audit of the of our report, including in relation to these matters. Accordingly,
annual accounts and consolidated accounts of the current period. our audit included the performance of procedures designed to
These matters were addressed in the context of our audit of, and respond to our assessment of the risks of material misstatement
in forming our opinion thereon, the annual accounts and consoli- of the financial statements. The results of our audit procedures,
dated accounts as a whole, but we do not provide a separate opin- including the procedures performed to address the matters below,
ion on these matters. For each matter below, our description of provide the basis for our audit opinion on the accompanying
how our audit addressed the matter is provided in that context. financial statements.
We have fulfilled the responsibilities described in the Auditor’s
VALUATION OF INVESTMENT PROPERTIES
Description How our audit addressed this key audit matter
The fair value of the Groups investment properties amounted to SEK 29 024 In our audit we have evaluated the company´s process for property valuation
million on 31 December 2018. As at 31 December 2018, all of the properties by evaluating the valuation methodology, and input data in the externally
in the portfolio have been valued by external valuation experts. The valuations prepared valuations. We have evaluated the skills and objectivity of the exter-
are prepared in accordance with the discounted cash flow model, whereby nal experts. We have made comparisons to known market information. With
the future cash flows are forecast. The required yields for the properties are support from our valuation specialists we have reviewed the valuation model
assessed on each property´s unique risk profile and observable transactions in used. With support from our valuation specialists we have also reviewed the
the market for properties with a similar nature. Based on the high degree of reasonability of the adopted assumptions such as yield requirements, vacancy
assumptions and assessments which are made in connection with the proper- rates, rental income and operating costs. We have reviewed the disclosures
ty valuations, we believe that this area is a particularly important area in our provided in the annual accounts.
audit. A description of the valuation of the property portfolio is stated in the
section on accounting principles and in the section on significant assessments
in note 1 “Accounting principles” and note 13 “Investment properties”.
AUDITOR'S REPORT
DEFERRED TAX ASSETS, TAX LOSS CARRYFORWARDS
Description How our audit addressed this key audit matter
The Group reports SEK 1 599 million in deferred net tax liabilities, whereof In our audit, we have evaluated and reviewed the company´s process for de-
415 million in deferred tax assets and 2 014 million in deferred tax liabilities. ferred taxes. We have read and evaluated the company’s documentation and
position on the cases in question, where the process is proceeding against the
The calculation and reporting of deferred tax related to carried forward losses Swedish Tax Authority regarding the carried forward tax losses and their size.
is complex and contains a high degree of judgment and assumptions, includ- We have obtained the company’s external advisors’ assessment of the cases
ing the existence and valuation of carried forward tax losses. As stated in in question and we have, with the support of our tax specialists, assessed
note 31 in the annual report there is an ongoing process against the Swedish the application against current tax legislation. Vi have assessed the value of
Tax Authority regarding carried forward tax losses of 1 443 million. Based on the deferred tax assets and reviewed the disclosures provided in the annual
the assessments and assumptions made related to the valuation of forward accounts.
tax losses and deferred tax assets, we consider this area as being particularly
important in our audit.
The description of current tax and deferred tax is stated in the annual
accounts in note 1 “Accounting policies”, notes 12 “Tax expense” and 14
“Deferred tax liabilities and tax assets” and not 31 “Operational risks”.
OTHER INFORMATION THAN THE ANNUAL ACCOUNTS AND to continue as a going concern. They disclose, as applicable, mat-
CONSOLIDATED ACCOUNTS ters related to going concern and using the going concern basis
This document also contains other information than the annual of accounting. The going concern basis of accounting is however
accounts and consolidated accounts and is found on pages 1-7 and not applied if the Board of Directors and the Managing Director
126-165. The Board of Directors and the Managing Director are intends to liquidate the company, to cease operations, or has no
responsible for this other information. realistic alternative but to do so.
Our opinion on the annual accounts and consolidated The Audit Committee shall, without prejudice to the Board
accounts does not cover this other information and we do not of Director’s responsibilities and tasks in general, among other
express any form of assurance conclusion regarding this other things oversee the company’s financial reporting process.
information.
In connection with our audit of the annual accounts and Auditor’s responsibility
consolidated accounts, our responsibility is to read the infor- Our objectives are to obtain reasonable assurance about whether
mation identified above and consider whether the information the annual accounts and consolidated accounts as a whole are free
is materially inconsistent with the annual accounts and consoli- from material misstatement, whether due to fraud or error, and
dated accounts. In this procedure we also take into account our to issue an auditor’s report that includes our opinions. Reason-
knowledge otherwise obtained in the audit and assess whether the able assurance is a high level of assurance, but is not a guarantee
information otherwise appears to be materially misstated. that an audit conducted in accordance with ISAs and generally
If we, based on the work performed concerning this informa- accepted auditing standards in Sweden will always detect a mate-
tion, conclude that there is a material misstatement of this other rial misstatement when it exists. Misstatements can arise from
information, we are required to report that fact. We have nothing fraud or error and are considered material if, individually or in
to report in this regard. the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these annual
Responsibilities of the Board of Directors and accounts and consolidated accounts.
the Managing Director As part of an audit in accordance with ISAs, we exercise pro-
The Board of Directors and the Managing Director are responsi- fessional judgment and maintain professional skepticism through-
ble for the preparation of the annual accounts and consolidated out the audit. We also:
accounts and that they give a fair presentation in accordance ■■ I dentify and assess the risks of material misstatement of the
with the Annual Accounts Act and, concerning the consolidated annual accounts and consolidated accounts, whether due to
accounts, in accordance with IFRS as adopted by the EU. The fraud or error, design and perform audit procedures responsive
Board of Directors and the Managing Director are also respon- to those risks, and obtain audit evidence that is sufficient and
sible for such internal control as they determine is necessary appropriate to provide a basis for our opinions. The risk of
to enable the preparation of annual accounts and consolidated not detecting a material misstatement resulting from fraud is
accounts that are free from material misstatement, whether due higher than for one resulting from error, as fraud may involve
to fraud or error. collusion, forgery, intentional omissions, misrepresentations, or
In preparing the annual accounts and consolidated accounts, the override of internal control.
The Board of Directors and the Managing Director are respon- ■■ O btain an understanding of the company’s internal control
sible for the assessment of the company’s and the group’s ability relevant to our audit in order to design audit procedures that
AUDITOR'S REPORT
are appropriate in the circumstances, but not for the purpose ■■ btain sufficient and appropriate audit evidence regarding the
O
of expressing an opinion on the effectiveness of the company’s financial information of the entities or business activities within
internal control. the group to express an opinion on the consolidated accounts.
■■ Evaluate the appropriateness of accounting policies used and the We are responsible for the direction, supervision and perfor-
reasonableness of accounting estimates and related disclosures mance of the group audit. We remain solely responsible for our
made by the Board of Directors and the Managing Director. opinions.
■■ C onclude on the appropriateness of the Board of Directors’ We must inform the Board of Directors of, among other matters,
and the Managing Director’s use of the going concern basis of the planned scope and timing of the audit. We must also inform
accounting in preparing the annual accounts and consolidated of significant audit findings during our audit, including any signifi-
accounts. We also draw a conclusion, based on the audit evidence cant deficiencies in internal control that we identified.
obtained, as to whether any material uncertainty exists related We must also provide the Board of Directors with a statement
to events or conditions that may cast significant doubt on the that we have complied with relevant ethical requirements regard-
company’s and the group’s ability to continue as a going con- ing independence, and to communicate with them all relation-
cern. If we conclude that a material uncertainty exists, we are ships and other matters that may reasonably be thought to bear on
required to draw attention in our auditor’s report to the related our independence, and where applicable, related safeguards.
disclosures in the annual accounts and consolidated accounts or, From the matters communicated with the Board of Directors,
if such disclosures are inadequate, to modify our opinion about we determine those matters that were of most significance in the
the annual accounts and consolidated accounts. Our conclusions audit of the annual accounts and consolidated accounts, including
are based on the audit evidence obtained up to the date of our the most important assessed risks for material misstatement, and
auditor’s report. However, future events or conditions may cause are therefore the key audit matters. We describe these matters in
a company and a group to cease to continue as a going concern. the auditor’s report unless law or regulation precludes disclosure
■■ Evaluate the overall presentation, structure and content of about the matter.
the annual accounts and consolidated accounts, including the
disclosures, and whether the annual accounts and consolidated
accounts represent the underlying transactions and events in a
manner that achieves fair presentation.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS dividend, this includes an assessment of whether the dividend
Opinions is justifiable considering the requirements which the company's
In addition to our audit of the annual accounts and consolidated and the group’s type of operations, size and risks place on the size
accounts, we have also audited the administration of the Board of the parent company's and the group’s equity, consolidation
of Directors and the Managing Director of AB Sagax (publ) for requirements, liquidity and position in general.
the year 2018 and the proposed appropriations of the company’s The Board of Directors is responsible for the company’s orga-
profit or loss. nization and the administration of the company’s affairs. This
We recommend to the general meeting of shareholders that includes among other things continuous assessment of the com-
the profit be appropriated in accordance with the proposal in pany’s and the group’s financial situation and ensuring that the
the statutory administration report and that the members of the company's organization is designed so that the accounting, man-
Board of Directors and the Managing Director be discharged from agement of assets and the company’s financial affairs otherwise
liability for the financial year. are controlled in a reassuring manner. The Managing Director
shall manage the ongoing administration according to the Board
Basis for opinions of Directors’ guidelines and instructions and among other matters
We conducted the audit in accordance with generally accepted take measures that are necessary to fulfill the company’s account-
auditing standards in Sweden. Our responsibilities under those ing in accordance with law and handle the management of assets
standards are further described in the Auditor’s Responsibilities in a reassuring manner.
section. We are independent of the parent company and the group
in accordance with professional ethics for accountants in Sweden Auditor’s responsibility
and have otherwise fulfilled our ethical responsibilities in accor- Our objective concerning the audit of the administration, and
dance with these requirements. thereby our opinion about discharge from liability, is to obtain
We believe that the audit evidence we have obtained is suffi- audit evidence to assess with a reasonable degree of assurance
cient and appropriate to provide a basis for our opinions. whether any member of the Board of Directors or the Managing
Director in any material respect:
Responsibilities of the Board of Directors and ■■ has undertaken any action or been guilty of any omission which
the Managing Director can give rise to liability to the company, or

The Board of Directors is responsible for the proposal for appro- ■■ i n any other way has acted in contravention of the Companies
priations of the company’s profit or loss. At the proposal of a Act, the Annual Accounts Act or the Articles of Association.
AUDITOR'S REPORT
Our objective concerning the audit of the proposed appropri- Our examination of the corporate governance statement is con-
ations of the company’s profit or loss, and thereby our opinion ducted in accordance with FAR´s auditing standard RevU 16 The
about this, is to assess with reasonable degree of assurance auditor´s examination of the corporate governance statement.
whether the proposal is in accordance with the Companies Act. This means that our examination of the corporate governance
Reasonable assurance is a high level of assurance, but is not a statement is different and substantially less in scope than an audit
guarantee that an audit conducted in accordance with generally conducted in accordance with International Standards on Audit-
accepted auditing standards in Sweden will always detect actions ing and generally accepted auditing standards in Sweden. We
or omissions that can give rise to liability to the company, or that believe that the examination has provided us with sufficient basis
the proposed appropriations of the company’s profit or loss are for our opinions.
not in accordance with the Companies Act. A corporate governance statement has been prepared. Disclo-
As part of an audit in accordance with generally accepted sures in accordance with chapter 6 section 6 the second paragraph
auditing standards in Sweden, we exercise professional judgment points 2-6 of the Annual Accounts Act and chapter 7 section 31
and maintain professional skepticism throughout the audit. The the second paragraph the same law are consistent with the other
examination of the administration and the proposed appropri- parts of the annual accounts and consolidated accounts and are in
ations of the company’s profit or loss is based primarily on the accordance with the Annual Accounts Act.
audit of the accounts. Additional audit procedures performed are
based on our professional judgment with starting point in risk and The auditor’s mandate
materiality. This means that we focus the examination on such Ernst & Young AB, Box 7850, 103 99 Stockholm, was elected as
actions, areas and relationships that are material for the opera- auditors by the annual general meeting May 7, 2018 and has been
tions and where deviations and violations would have particular the company´s auditor since May 8, 2008.
importance for the company’s situation. We examine and test
decisions undertaken, support for decisions, actions taken and
other circumstances that are relevant to our opinion concerning
discharge from liability. As a basis for our opinion on the Board
of Directors’ proposed appropriations of the company’s profit or
loss we examined the Board of Directors’ reasoned statement and
a selection of supporting evidence in order to be able to assess
whether the proposal is in accordance with the Companies Act.
Stockholm 12 April, 2019
The auditor’s examination of the corporate Ernst & Young AB
governance statement
The Board of Directors is responsible for that the corporate gover-
nance statement on pages 64-71 has been prepared in accordance Magnus Fredmer
with the Annual Accounts Act. Authorized Public Accountant
PROPERTY PORTFOLIO
Stockholm
Property listing – Stockholm

Lettable area in sqm
Warehouse/
Ref Property listing Address Municipality Industrial Offices Other Total
1 Kumla Hage 2 Kumla Gårdsväg 22 Botkyrka 4,111 500 – 4,611
2 Kumla Hage 7 Segersbyvägen 5 Botkyrka 1,050 900 – 1,950
3 Tumba 7:234 Gustav de Lavals Väg 10-12 Botkyrka 16,531 540 – 17,071
4 Tuna Äng 3 Tuna Gårdsväg 4 Botkyrka 5,300 1,896 – 7,196
5 Bulten 1 Danderydsvägen 142 Danderyd 7,200 – – 7,200
6 Bulten 2 Danderydsvägen 144 Danderyd – – 850 850
7 Bulten 4 Ryttarvägen 5 Danderyd 888 349 – 1,237
8 Bulten 5 Ryttarvägen 4 Danderyd 7,910 – – 7,910
9 Bulten 6 Rinkebyvägen 9 Danderyd 1,700 – – 1,700
10 Bulten 10 Ryttarvägen 2 Danderyd 2,800 – – 2,800
11 Jordbromalm 3:1 Dåntorpsvägen 4-30 Haninge 91,874 1,830 – 93,704
12 Jordbromalm 6:10* Rörvägen 7 Haninge 4,690 1,328 – 6,018
13 Jordbromalm 6:13 Lagervägen 7 Haninge 13,300 2,800 – 16,100
14 Jordbromalm 6:82 Rörvägen 9 Haninge – – -
15 Jordbromalm 4:3 Lillsjövägen 7 Haninge 47,329 4,106 – 51,435
16 Söderbymalm 7:49 Hantverkarvägen 31 Haninge 8,020 800 – 8,820
17 Ackumulatorn 1 Regulatorvägen 21 Huddinge 5,777 3,566 – 9,343
18 Cirkelsågen 1 Speditionsvägen 18 Huddinge 8,609 – – 8,609
19 Heden 1 Mälarvägen 15 Huddinge 3,410 650 – 4,060
20 Heden 4 Lövbacksvägen 4, 6 Huddinge 4,658 – – 4,658
21 Klingan 3 Svarvarvägen 14 B Huddinge 1,600 230 – 1,830
22 Kugghjulet 3 Lännavägen 62 Huddinge 5,214 206 – 5,420
23 Skiftnyckeln 2 Svarvarvägen 8 B Huddinge 1,130 225 – 1,355
24 Slänten 17 G:a Södertäljevägen 125 Huddinge 3,284 1,094 – 4,378
25 Telegrafen 1 Kommunalvägen 27 B Huddinge 616 910 – 1,526
26 Jakobsberg 22:14 Brantvägen 2 Järfälla 2,000 650 – 2,650
27 Veddesta 1:13 Veddestavägen 2 Järfälla 5,292 276 – 5,568
28 Veddesta 2:20 Kontovägen 1-5 Järfälla 10,892 2,182 – 13,074
29 Veddesta 2:42 Girovägen 3 Järfälla 3,940 440 – 4,380
30 Veddesta 1:27 Saldovägen 22 Järfälla 2,520 192 – 2,712
31 Skarpnäs 12:9 Svarvarvägen 8 Nacka 2,360 200 – 2,560
32 Trosta 1:27 Trosta 187 Sigtuna 3,810 – – 3,810
33 Märsta 17:2 Maskingatan 8 A Sigtuna 3,621 – – 3,621
34 Märsta 24:18 Turbingatan 2 Sigtuna 1,033 862 – 1,895
35 Rosersberg 11:105 Metallvägen 47 Sigtuna 6,345 855 – 7,200
36 Elektrikern 2 Djupdalsvägen 27 Sollentuna 2,150 507 – 2,657
37 Rankan 1 Sollentunaholmsvägen 13, 15 Sollentuna 6,798 540 – 7,338
38 Reglaget 2 Bergkällavägen 20-22 Sollentuna 1,335 1,760 – 3,095
39 Resan 1 Konsumentvägen 2 Sollentuna 1,210 – – 1,210
40 Romben 2 Staffans väg 2 Sollentuna 6,930 5,300 – 12,230
41 Romben 3 Staffans väg 4 Sollentuna 12,047 5,525 – 17,572
42 Verkmästaren 4 Ekensbergsvägen 117 Solna 10,907 5,045 – 15,952
43 Domnarvet 16* Fagerstagatan 7 Stockholm 2,419 1,997 – 4,416
44 Domnarvet 17* Fagerstagatan 5 Stockholm 6,549 1,395 – 7,944
45 Domnarvet 34* Garpenbergsgatan 3 Stockholm 1,460 560 – 2,020
46 Domnarvet 40* Gunnebogatan 34 Stockholm 2,045 532 – 2,577
47 Elektra 11 Västberga Allé 38, 40 och 50 Stockholm 11,030 970 – 12,000
48 Fabrikören 9* Konsumentvägen 9-11 Stockholm 3,111 955 – 4,066
49 Finspång 6* Finspångsgatan 49-51 Stockholm 6,989 1,380 – 8,369
50 Flyghallen 1* Flygfältsgatan 15 Stockholm 741 2,332 – 3,073
51 Gjutmästaren 8 Bryggerivägen 7, 9, 13, 15 Stockholm – – – –
52 Hangaren 1* Flygfältsgatan 1-11 Stockholm 6,780 4,070 – 10,850
53 Hangaren 3* Postflygsgatan 2-12 Stockholm 2,468 1,150 – 3,618
54 Horndal 1* Fagerstagatan 29 Stockholm 7,053 1,270 – 8,323
55 Hällsätra 2* Stensätravägen 3 Stockholm 8,207 2,717 – 10,924
56 Induktorn 15 Ranhammarsvägen 6 Stockholm 392 60 – 452
57 Induktorn 24 Ranhammarsvägen 12, 14 Stockholm 8,453 4,336 – 12,789
58 Induktorn 35* Ranhammarsvägen 10 Stockholm 3,610 – – 3,610
59 Kolsva 1* Fagerstagatan 26 Stockholm 4,800 365 – 5,165
60 Konsumenten 1* Konsumentvägen 4, 8 Stockholm 6,108 1,788 – 7,896
61 Miklaholt 2* Haukadalsgatan 10 Stockholm 970 954 – 1,924
*) Held on a leasehold
Acquired in 2018
PROPERTY PORTFOLIO
Property listing – Stockholm

Warehouse/
62 Miklaholt 3 Haukadalsgatan 2-8 Stockholm 2,880 2,711 – 5,591
63 Murmästare-Ämbetet 1* Murmästarvägen 21-45 Stockholm 11,196 682 – 11,878
64 Murmästare-Ämbetet 2* Murmästarvägen 17-19 Stockholm 7,305 640 – 7,945
65 Murmästare-Ämbetet 3* Murmästarvägen 1 Stockholm 9,939 1,410 – 11,349
66 Panncentralen 1* Partihandlarvägen 50-52 Stockholm 10,457 2,092 – 12,549
67 Råfilmen 1* Harpsundsvägen 181 Stockholm 1,410 – – 1,410
68 Sillö 3* Edsvallabacken 20-24 Stockholm 5,904 1,146 – 7,050
69 Skultuna 3* Finspångsgatan 44 Stockholm 8,828 2,926 – 11,754
70 Stensätra 16* Stensätravägen 2-4 Stockholm 9,725 1,740 – 11,465
71 Säteritaket 1* Maltesholmsvägen 88 Stockholm 934 1,532 – 2,466
72 Tillverkaren 1 Grossistvägen 1-5 Stockholm 2,675 – – 2,675
73 Valsverket 10* Karlsbodavägen 2-4 Stockholm 9,840 6,600 – 16,440
74 Varubilen 1* Konsumentvägen 13-17 Stockholm 5,830 1,835 – 7,665
75 Vitå 1 Torshamnsgatan 10 Stockholm 9,449 – – 9,449
76 Vitå 2 Viderögatan 3-5 Stockholm 5,708 3,296 – 9,004
77 Stolen 1 Gribbylundsvägen 2 Täby 1,534 1,317 – 2,851
78 Njursta 1:23 Saturnusvägen 2 Upplands Väsby 6,850 750 – 7,600
79 Librobäck 4:23 Börjegatan 77 B-C Uppsala 13,903 1,260 – 15,163
80 Runö 7:73 & 7:74 Sågvägen 26 Österåker 2,490 – – 2,490
Sub-total 540,233 103,032 850 644,115
STOCKHOLM
ARLANDA
Uppsala AIRPORT
79 32
33
Sigtuna
34
35
Upplands Väsby
78
38
41 80
40 39
37
77
Täby
Sollentuna
36
26
Järfälla 5
58 6 10
29 76 9
30 27 44 61 7
28 69 75 8
4345 62
49
46
59 57
71
BROMMA 73
54
AIRPORT 42
55 51
56 31
Stockholm
Nacka
65
64 70 66
63 47
21
19 24 48 53
20 74 60
50 52
72 67
Huddinge
Tyresö
25 68
2 22
1 17
4
Botkyrka 23
18
3
Haninge 16
11
14 15
12 13
PROPERTY PORTFOLIO
Helsinki
Property listing – Helsinki

Warehouse/
1 Kiilaniityntie 1 (49-82-3-5) Kiilaniityntie 1 Espoo 3,230 - – 3,230
2 Luomannotko 5 (49-22-6-5-L) Luomannotko 5 Espoo 1,497 163 – 1,660
3 Nimismiehenpelto 4 A (49-47-2-6) Nimismiehenpelto 4 A Espoo 1,150 - – 1,150
4 Nimismiehenpelto 4 B (49-47-2-7) Nimismiehenpelto 4 B Espoo 2,899 - – 2,899
5 Nimismiehenpelto 6 (49-47-2-5) Nimismiehenpelto 6 Espoo 7,170 1,600 – 8,770
6 Mänkimiehentie 4 (49-43-14-6) Mänkimiehentie 4 Espoo 16,318 2,122 – 18,440
7 Tillinmäentie 1 (49-42-11-5) Tillinmäentie 1 Espoo 8,071 4,661 – 12,732
8 Karaportti 8 (49-54-185-1) Karaportti 8 Espoo 10,561 5,552 – 16,113
9 Olarinluoma 8 (49-22-3-4) Olarinluoma 8 Espoo 3,537 1,396 – 4,933
10 Koskelontie 27 A & B (49-82-2-7) Koskelontie 27 Espoo 4,153 1,089 – 5,242
11 Hyttitie 8 (91-38-172-4) Hyttitie 8 Helsinki 3,871 336 – 4,207
12 Konalankuja 2 (91-32-38-6) Konalankuja 2 Helsinki 3,909 494 – 4,403
13 Konalankuja 5 (91-32-38-3) Konalankuja 5 Helsinki 3,602 1,445 – 5,047
14 Hernepellontie 11 (91-36-66-1-L1)* Hernepellontie 11 Helsinki 1,000 - – 1,000
15 Linnanpajantie 26 (91-47-262-5-L1)* Linnanpajantie 26 Helsinki 2,172 - – 2,172
16 Lyhtytie 7 (91-40-153-22)* Lyhtytie 7 Helsinki 576 287 – 863
17 Muonamiehentie 12 (91-46-130-26)* Muonamiehentie 12 Helsinki 1,936 236 – 2,172
18 Muonamiehentie 14 (91-46-130-27)* Muonamiehentie 14 Helsinki 1,000 400 – 1,400
19 Puusepänkatu 2 (91-43-59-5)* Puusepänkatu 2 Helsinki 7,460 400 – 7,860
20 Ruosilantie 1 (91-32-41-3) Ruosilantie 1 Helsinki 5,342 1,735 – 7,077
24 Ristipellontie 16 (91-32-39-3) Ristipellontie 16 Helsinki 2,069 2,276 – 4,345
25 Ristipellontie 17 (91-32-36-6) Ristipellontie 17 Helsinki 2,158 565 – 2,723
26 Valokaari 8 (91-40-149-9) Valokaari 8 Helsinki 9,646 2,221 – 11,867
27 Palkkitie 3 (858-401-3-355) Palkkitie 3 Tuusula 12,313 1,450 – 13,763
28 Pakkasraitti 4 (858-411-1-150) (858-411-1-172) Pakkasraitti 4 Tuusula 2,917 504 – 3,421
29 Vanha Valtatie 191 (858-3-7005-3) Vanha Valtatie 191 Tuusula - - 1,417 1,417
30 Ansatie 3 (92-40-500-7) (92-40-500-2) Ansatie 3 Vantaa 9,421 2,427 – 11,848
31 Ansatie 4 (92-40-502-2) Ansatie 4 Vantaa 9,774 2,254 – 12,028
32 Hakamäenkuja 8 (92-68-106-3) Hakamäenkuja 8 Vantaa 550 550 – 1,100
33 Hakamäenkuja 4-6 (92-68-106-5) Hakamäenkuja 4-6 Vantaa 2,229 376 – 2,605
34 Hakamäenkuja 10 (92-68-106-4) Hakamäenkuja 10 Vantaa 550 550 – 1,100
35 Pavintie 3 (92-96-101-4) Pavintie 3 Vantaa 24,094 2,195 – 26,289
36 Pavintie 7 (92-96-101-7) Pavintie 7 Vantaa 5,581 130 – 5,711
37 Juhanilantie 1 (92-41-102-8) Juhanilantie 1 Vantaa 1,600 610 – 2,210
40 Juurakkotie 3 (92-68-13-11) Juurakkotie 3 Vantaa 4,206 2,368 – 6,574
41 Kiitoradantie 14 (92-52-253-1) Kiitoradantie 14 Vantaa 3,569 1,044 – 4,613
42 Klinkkerikaari 2 (92-26-114-13) Klinkkerikaari 2 Vantaa 6,286 - – 6,286
43 Koivuhaankuja 1 (92-68-200-1) Koivuhaankuja 1 Vantaa 1,576 1,118 – 2,694
44 Kärkikuja 2 (92-41-109-7) Kärkikuja 2 Vantaa 3,572 1,136 – 4,708
45 Nuolitie 20 (92-41-266-1) Nuolitie 20 Vantaa 7,507 466 – 7,973
46 Niittytie 13 (92-68-11-9) Niittytie 13 Vantaa 2,349 1,327 – 3,676
47 Porraskuja 1 (92-41-102-4) Porraskuja 1 Vantaa 850 - – 850
48 Porraskuja 3 (92-41-102-5) Porraskuja 3 Vantaa 800 280 – 1,080
49 Sarkatie 2 (92-14-203-2) Sarkatie 2 Vantaa 990 810 – 1,800
50 Tiilitie 9 (92-26-118-16) Tiilitie 9 Vantaa 4,469 588 – 5,057
51 Martinkyläntie 9 (92-17-113-4) Martinkyläntie 9 Vantaa 41,412 11,394 – 52,806
52 Niittyvillankuja 2 (92-68-10-23) Niittyvillankuja 2 Vantaa 5,209 872 – 6,081
53 Koivuvaarankuja 2 (92-12-202-1) Koivuvaarankuja 2 Vantaa 19,250 10,546 – 29,796
54 Taivaltie 4 (92-16-119-4) Taivaltie 4 Vantaa 2,938 1,221 – 4,159
Acquired in 2018
PROPERTY PORTFOLIO
Property listing – Helsinki

Warehouse/
55 Tulkintie 29 (92-40-503-1) Tulkintie 29 Vantaa 10,128 4,932 – 15,060
56 Manttaalitie 12 (92-52-308-10) Manttaalitie 12 Vantaa 3,247 1,440 – 4,687
57 Sähkötie 8 (92-50-1-13) Sähkötie 8 Vantaa 5,793 1,119 – 6,912
58 Vantaanlaaksontie 6 (92-16-114-9) Vantaalaaksontie 6 Vantaa 6,140 2,488 – 8,628
59 Vantaanlaaksontie 6 (92-16-114-11) Vantaalaaksontie 6 Vantaa 3,905 1,275 – 5,180
60 Virkatie 7 (92-52-105-1) Virkatie 7 Vantaa 10,489 412 – 10,901
61 Virkatie 8 A (92-52-101-25) Virkatie 8 A Vantaa 10,015 60 – 10,075
62 Virkatie 8 A (92-52-101-24) Virkatie 8 A Vantaa – – – –
63 Virkatie 8 B (92-52-101-21) Virkatie 8 B Vantaa 3,971 2,002 – 5,973
64 Virkatie 10 (92-52-101-5) Virkatie 10 Vantaa 1,583 1,407 – 2,990
65 Tikkurilantie 5 (92-66-22-1) Tikkurilantie 5 Vantaa 57,367 4,930 – 62,297
66 Tikkurilantie 146 (92-41-252-3) Tikkurilantie 146 Vantaa 7,877 3,732 – 11,609
67 Trukkikuja 1 (92-75-200-1) Trukkikuja 1 Vantaa 3,360 2,228 – 5,588
68 Porttisuontie 9 (92-64-0004-0003) Porttisuontie 9 Vantaa 3,860 610 – 4,470
69 Sanomatie 3 (92-17-113-3) Sanomatie 3 Vantaa 2,854 474 – 3,328
Sub-total 457,896 116,131 1,417 575,444
HELSINKI
27 140
29 152
28
HELSINKI
E12
AIRPORT
120 67
40 47 48 61 64 66 56 33 E75
60 34
37 39 44 45 65 62 63 41 32
38 30 31 43
E18 35
55 46 52 Vantaa
50 69 51 36
42 26 68
Ring III 57 16
49 58 59
10 E18
1 54
53 170
24 25 11
21
12 2018 22
13 101
Ring I 17 23
15
5 8 14
4 3
E75
Espoo
19
E12 170
170
6 102 2
E75
9
HELSINKI
7
E12
PROPERTY PORTFOLIO
Property listing – Finland, university cities

Warehouse/
1 Vesalantie 15 (604-406-1-15) Vesalantie 15 Pirkkala 1,736 – – 1,736
2 Ahjokatu 26 (179-15-8-12) Ahjokatu 26 Jyväskylä 1,242 1,010 – 2,252
3 Ahlmaninkatu 2 E (179-5-130-1-L1) Ahlmaninkatu 2 E Jyväskylä – 2,429 – 2,429
4 Asmalammentie 4 (179-401-1-605) Asmalammentie 4 Jyväskylä – – 308 308
5 Harkkotie 6 (179-401-18-187) Harkkotie 6 Jyväskylä 655 – – 655
6 Kirkkokatu 1 (179-62-3-1) Kirkkokatu 1 Jyväskylä – – 483 483
7 Kuormaajantie 26 (179-19-100-3) Kuormaajantie 26 Jyväskylä 4,334 1,093 – 5,427
8 Metsälehmuksentie 6 (179-72-19-1) Metsälehmuksentie 6 Jyväskylä 12,514 1,410 – 13,924
9 Metsäraivio 2 (179-26-77-11) Metsäravio 2 Jyväskylä 1,113 – – 1,113
10 Nisulankatu 78 (179-11-53-3-L1)* Nisulankatu 78 Jyväskylä 388 1,697 – 2,085
11 Onkapannu 3 (179-6-112-65) Onkapannu 3 Jyväskylä 2,692 570 – 3,262
12 Onkapannu 4 (179-6-112-51) Onkapannu 4 Jyväskylä 1,440 – – 1,440
13 Onkapannu 4b (179-6-112-51) Onkapannu 4b Jyväskylä 161 501 – 662
14 Onkapannu 6 (179-6-112-62) Onkapannu 6 Jyväskylä 1,184 – – 1,184
15 Onkapannu 8 (179-6-112-63) Onkapannu 8 Jyväskylä 968 66 – 1,034
16 Palokärjentie 7 (179-48-1-12) Palokärjentie 7 Jyväskylä 810 – – 810
17 Puulaakintie 8 (179-19-67-4-L1)* Puulaakintie 8 Jyväskylä 1,486 – – 1,486
18 Runkotie 2 (179-16-119-1) Runkotie 2 Jyväskylä – – 226 226
19 Ruokomäentie 50 (179-402-9-35-L1)* Ruokomäentie 50 Jyväskylä 2,000 – – 2,000
20 Savelankatu 3 (179-6-112-51) Savelankatu 3 Jyväskylä 1,175 – – 1,175
23 Sepänkatu 4 (179-2-37-6) Sepänkatu 4 Jyväskylä 518 3,703 – 4,221
24 Urheilutie 41 (180-401-1-238) Urheilutie 41 Jyväskylä – – 964 964
25 Valmetintie 11 (179-401-87-126) Valmetintie 11 Jyväskylä 4,742 – – 4,742
26 Yritystie 1 (179-19-69-9) Yritystie 1 Jyväskylä 10,820 – – 10,820
27 Vihikari 10 (244-401-219-2) Vihikari 10 Kempele 12,867 5,220 – 18,087
28 Laukaantie 21 (410-409-11-2) Laukaantie 21 Laukaa – – 340 340
29 Avantintie 20 (423-455-1-502) Avantintie 20 Lieto 5,600 – – 5,600
30 Korvenkyläntie 10 (500-402-8- etc.)* Korvenkyläntie 10 Muurame 1,149 – – 1,149
31 Liikekuja 4 (500-402-1-641) Liikekuja 4 Muurame 600 – – 600
32 Punasillantie 15 (500-402-6-384) Punasillantie 15 Muurame 4,234 66 – 4,300
33 Linnavuorentie 15 (536-13-10-1) Linnavuorentie 15 Nokia – – 876 876
34 Soininkatu 1 (680-6-6040-21) Soininkatu 1 Raisio 537 – – 537
35 Ahertajankatu 2 (837-65-7065-1) Ahertajankatu 2 Tampere 1,848 – 60 1,908
36 Hautalankatu 19 (837-37-5817-1) Hautalankatu 19 Tampere 1,348 1,470 – 2,818
37 Hautalankatu 20 (837-37-5818-1) Hautalankatu 20 Tampere 1,948 684 – 2,632
38 Hautalankatu 31 (837-37-5819-2) Hautalankatu 31 Tampere 1,650 660 – 2,310
39 Joentaustankatu 3 (837-230-3555-9-B) Joentaustankatu 3 Tampere 6,199 1,173 – 7,372
40 Nuutisarankatu 19 (837-302-785-17) Nuutisarankatu 19 Tampere 4,044 – – 4,044
41 Patamäenkatu 7 (837-302-781-17) Patamäenkatu 7 Tampere 16,846 8,783 – 25,629
42 Peltolammink. 40 (837-323-5957-10)* Peltolamminkatu 40 Tampere – – 536 536
43 Rantaperkiönkatu 2 (837-303-896-1) Rantaperkiönkatu 2 Tampere 490 – – 490
44 Tuotekatu 3 (837-330-6123-11)* Tuotekatu 3 Tampere 10,047 639 – 10,686
45 Turvesuonkatu 14 (837-263-2472-5) Turvesuonkatu 14 Tampere 433 – – 433
46 Hallitie 2 (564-409-47-159) Hallitie 2 Oulu 3,578 – – 3,578
47 Isterintie 64 (564-22-1028-1) Isterintie 64 Oulu – – 395 395
48 Järvenkorventie 4 (564-63-23-4) Järvenkorventie 4 Oulu – – 450 450
49 Jääsalontie 17 (564-9-31-1-S) Jääsalontie 17 Oulu 2,619 2,217 – 4,836
50 Kaapelitie 4 (564-84-8-6) Kaapelitie 4 Oulu 26,189 41,400 – 67,589
51 Kurtintie 2 (84-401-4-269) Kurtintie 2 Oulu – – 278 278
52 Lumijoentie 2 (564-9-23-40) Lumijoentie 2 Oulu 6,778 – – 6,778
53 Mittarikuja 5 (564-84-8-5) Mittarikuja 5 Oulu 6,900 300 – 7,200
54 Moreenikuja 2 (564-83-32-13) Moreenikuja 2 Oulu 5,937 81 – 6,018
Acquired in 2018
PROPERTY PORTFOLIO
Property listing – Finland, university cities

Warehouse/
55 Ruotutie 3 (564-86-7-2)* Ruotutie 3 Oulu – – 490 490
56 Sammonkatu 4 (564-80-19-6)* Sammonkatu 4 Oulu – – 1,066 1,066
57 Sarasuontie 1 (564-27-20-2)* Sarasuontie 1 Oulu – – 300 300
58 Taakakepintie 1 (564-72-207-1)* Taakakepintie 1 Oulu – – 551 551
59 Valtatie 61 (564-52-13-27)* Valtatie 61 Oulu – – 773 773
60 Teollisuustie 11 (980-428-39-8) Teollisuustie 11 Ylöjärvi 4,700 397 – 5,097
61 Vanha Vaasantie 13 (980-428-17-3) Vanha Vaasantie 13 Ylöjärvi 6,872 2,083 – 8,955
62 Kanslerintie 10 (853-62-58-2)* Kanslerintie 10 Turku – – 450 450
63 Nummenpuistonkatu 2 (853-11-100-7) Nummenpuistonkatu 2 Turku – – 200 200
64 Paakarlantie 3 (853-66-3-15) Paakarlantie 3 Turku 25,691 1,483 – 27,174
Sub-total 215,756 79,135 8,746 303,637
FINLAND, UNIVERSITY CITIES
Oulu
Oulu
27
27
Oulu
Oulu
14
14 properties,
properties, no.
no. 46–59
46–59
Muurame
Muurame
33 properties,
properties, no.
no. 30–32
30–32
Jyväskylä
Jyväskylä
25
25 properties,
properties, no.
no. 2–26
2–26
Vasa
Vasa
Tampere
Tampere
11
11 properties,
properties, no.
no. 35–45
35–45
28
28
Turku
Turku
33 properties,
properties, no.
no. 62–64
62–64
Pori
Pori 61
61
60
60
33
33
Tampere
Tampere
11
Lahti
Lahti
34
34
29
29
Turku
Turku
Helsinki
Helsinki
PROPERTY PORTFOLIO
Paris
Property listing – Paris

Warehouse/
1 Blanc Mesnil 19 avenue Albert Einstein Blanc Mesnil 10,931 2,635 – 13,566
2 Brétigny-sur-Orge 6 rue des Prés d'Aulnay Brétigny-sur-Orge – 515 – 515
3 Brétigny-sur-Orge 1 rue du Petit Paris Brétigny-sur-Orge 724 674 – 1,398
4 Bures-sur-Yvette 6 rue de Guyonnerie Bures-sur-Yvette 170 667 – 837
5 Champigny-sur-Marne 232 avenue du Général de Gaulle Champigny-sur-Marne 2,696 540 – 3,236
6 Cormeilles-en-Parisis ZAC Le Bois Rochefort Cormeilles-en-Parisis – – – -
7 Emerainville 35 Boulevard de Beaubourg Emerainville 2,379 1,556 – 3,935
8 Emerainville 56 Boulevard de Beaubourg Emerainville 837 162 – 999
9 Fresnes 8-10 rue de Chevilly Fresnes 5,563 975 – 6,538
10 Gennevilliers 16 boulevard Gallieni Gennevilliers 6,792 1,147 – 7,939
11 Gennevilliers 125 avenue Roche Gennevilliers 333 322 – 655
12 Gennevilliers 110 avenue Paul Vaillant Couturier Gennevilliers 2,706 2,214 – 4,920
13 Herblay 16 rue de la Patelle Herblay 6,600 800 – 7,400
14 Herblay 22 rue du Gros Murger Herblay 10,151 2,174 – 12,325
15 Lagny 17, rue Branly et 28, rue Jacquard Lagny sur Marne 2,327 796 – 3,123
16 Lagny 5251 rue Freycinet Lagny sur Marne 1,562 748 – 2,310
17 Les Ulis 12 avenue des Tropiques Les Ulis 3,426 1,730 – 5,156
18 Les Ulis 4 avenue du Parana Les Ulis 3,643 520 – 4,163
19 Les Ulis 4 avenue du Parana Les Ulis 2,461 395 – 2,856
20 Lieusaint La Mare aux Plantards Lieusaint 1,996 2,488 – 4,484
21 Limeil-Brévannes rue des longs rideaux Limeil-Brévannes 7,109 1,167 – 8,276
22 Lisses 5-7-9 rue des Cerisiers - ZI de lÉglantier Lisses 2,655 1,836 – 4,491
23 Lisses 14-16 Rue des Cerisiers - ZA des Eglantiers Lisses 1,079 277 – 1,356
24 Massy 4 rue Galvani Massy 3,106 1,551 – 4,657
25 Massy 4 rue Galvani Massy 544 259 – 803
26 Massy 9 rue du Buisson aux Fraises Massy 4,257 4,224 – 8,481
27 Moissy-Cramayel 107 rue Marcelin Berthelot Moissy-Cramayel – 1,229 – 1,229
51 et 53 avenue de Sénart,
28 Montgeron 8 et 10 allée du bois Renaud Montgeron 881 4,468 – 5,349
29 Montgeron 97 avenue Jean Jaurès Montgeron 137 – 137
30 Montgeron 98 avenue Jean Jaurès Montgeron 1,170 788 – 1,958
31 Nanterre 6 rue des Peupliers Nanterre 1,432 1,433 – 2,865
32 Nanterre 39 avenue des Guilleraies Nanterre 1,450 793 – 2,243
33 Noisiel 8-10 rue de la Mare Blanche Noisiel 1,847 575 – 2,422
34 Noisy-Le-Grand 20-24 rue de Ballon Noisy-Le-Grand 5,398 433 – 5,831
35 Pantin 85 et 87 rue Cartier Bresson Pantin 6,528 714 – 7,242
36 Pantin 166-168 rue Denis Diderot Pantin 977 475 – 1,452
37 3 rue Rouvet Paris 3 rue Rouvet et 18 rue Barbanègre Paris – 473 – 473
38 Porcheville avenue Ozanne Porcheville 3,514 328 – 3,842
39 Roissy-en-Brie 1 rue Denis Papin Roissy-en-Brie 154 264 – 418
"2 à 4 rue de la Sablière et rue du
40 Sainte-Geneviève-des-Bois Petit Fief" Sainte-Geneviève-des-Bois 295 342 – 637
41 Survilliers 63 Grande rue Survilliers 36,325 3,428 – 39,753
42 Taverny 45 rue Constantin Pecqueur Taverny 13,500 – – 13,500
43 Trappes 10-13 avenue Jean d'Alembert Trappes 2,300 – – 2,300
44 Tremblay 25 rue Henri Farman Tremblay 1,315 478 – 1,793
45 Vigneux-sur-Seine Lieudit “La Fosse Montalbot” - Vigneux-sur-Seine 2,076 – – 2,076
26 Chemin du Port Brun
46 Villebon-Sur-Yvette "Rue de la Prairie, Complexe industriel Villebon-Sur-Yvette 5,090 1,210 – 6,300
de la Prairie de Villebon sur Yvette"
47 Villemoisson-sur-Orge 46 avenue des Gardes Messiers Villemoisson-sur-Orge – 556 – 556
48 Wissous 4 route de Paray Wissous 2,250 – – 2,250
Sub-total 170,549 48,496 – 219,045
Acquired in 2018
PROPERTY PORTFOLIO
PARIS
A1
E15
A15
41 E19
42
13 14
AIRPORT
38
AIRPORT 44
A1
6 E15
12 1
11 10 A3
A14 E15
31 32 35 36
37 A3
E15
Paris 15 16
33
A12
A13 34 A4
E5 E50
E5 5
7 8
39
43
9
21
A86
48
26 AIRPORT
24 25 E54
45 29 30
4 46 27 28
19 A6
E15
17 18
47
40
A10
E5
20
2 3
22 23
PROPERTY PORTFOLIO
Netherlands
Property listing – Netherlands

Warehouse/
1 Almere Rondebeltweg 21 Almere – – – –
2 Almere Rondebeltweg 31 Almere – 2,635 – 2,635
3 Almere Rondebeltweg 41-43-49-51 Almere 23,168 – – 23,168
4 Bladel Handelsweg 23, Hallenstraat 16 Bladel 6,100 900 – 7,000
5 Boxtel Kruisbroekstraat 7, 9, 15 & Ladonkseweg 26 Boxtel 5,789 300 – 6,089
6 Delfgauw Groothandelsweg 5 Delfgauw 3,153 560 – 3,713
7 Den Bosch Het Zuiderkruis 11 Den Bosch 4,000 270 – 4,270
8 Dordrecht Debijestraat 5, Röntgenstraat 1 Dordrecht 1,917 500 – 2,417
9 Dordrecht Donker Duyvisweg 301 Dordrecht 9,130 2,472 – 11,602
10 Eindhoven Esp 100 Eindhoven 2,356 1,314 – 3,670
11 Eindhoven Esp 125 Eindhoven 2,922 866 – 3,788
12 Eindhoven Esp 241 Eindhoven 2,510 409 – 2,919
13 Eindhoven Hoevenweg 11-11a Eindhoven 2,986 2,926 – 5,912
14 Enschede* Kopersteden 1 Enschede 18,262 2,451 – 20,713
15 Haarlem Oudeweg 42 Haarlem 5,382 1,896 – 7,278
16 Hoofddorp Diamantlaan 10 Haarlem 2,750 709 – 3,459
17 Hoofddorp Opaallaan 35 Haarlem 872 600 700 2,172
18 Helmond Grasbeemd 12 Helmond 2,400 340 – 2,740
19 Klundert* Kwartelweg 1 Moerdijk 3,220 262 – 3,482
20 Roosendal1) Borchwerf 39-39A Roosendal 6,100 900 – 7,000
21 Schiedam Admiraal de Ruyterstraat 2 Schiedam 8,116 4,022 – 12,138
22 Son en Breugel Ekkersrijt 7501 Son en Breugel 1,793 1,706 – 3,499
23 Terneuzen Innovatieweg 4 (4542 NH Hoek) Terneuzen 3,024 700 – 3,724
24 Terneuzen Innovatieweg 6 (4542 NH Hoek) Terneuzen 5,768 1,136 – 6,904
27 Terneuzen Innovatieweg 12 (4542 NH Hoek) Terneuzen 608 2,022 – 2,630
29 Utrecht Proostwetering 30 Utrecht 8,259 244 – 8,503
30 Utrecht Zonnebaan 23-45 Utrecht 9,238 7,812 – 17,050
31 Zeist Huis ter Heideweg 18-58 Zeist 14,663 5,566 – 20,229
32 Zoetermeer Chroomstraat 140 Zoetermeer 5,744 1,500 – 7,244
Sub-total 169,769 51,609 700 222,078
1) Two properties
Acquired in 2018
PROPERTY PORTFOLIO
NETHERLANDS
E 22
E 22
E 32
E 22 Zwolle
16 17
15
1 3
Amsterdam 2 v
E 30 14
The Hague Utrecht 31
32 29 30
6
Rotterdam
21 E 25
E 31
8 9
Dordrecht
19 7
Middelburg 5 22 18
20 E 19
10 11
4 12 13
25 26
23 24
27 28
PROPERTY PORTFOLIO
Rest of Sweden
Property listing – Rest of Sweden

Warehouse/
1 Traktorn 4, Traktorn 5 Traktorvägen 4 Aneby 2,002 – – 2,002
2 Brädan 1 Tuvängsgatan 2 Eksjö 5,174 – – 5,174
3 Romberga 11:5 Sämskarbogatan 6 Enköping 510 570 – 1,080
4 Nollplanet 8* Fabriksgatan 7 Eskilstuna 905 346 – 1,251
5 Mörten 17 Bruksgatan 7 C Eslöv 7,640 – – 7,640
6 Geväret 1, Värjan 2 Mossvägen 16 Falköping 6,115 – – 6,115
7 Bårebo 1:17 Bårebo 3-5 Gnosjö 6,010 917 200 7,127
8 Arendal 1:10 Synnerödsvägen 7 Gothenburg 3,381 1,115 – 4,496
9 Högsbo 34:18* J A Wettergrens Gata 10 Gothenburg 2,914 2,420 – 5,334
10 Bronsen 1 Industrigatan 87 Helsingborg 8,426 – – 8,426
11 Plankan 2 Brännerigatan 2 Höganäs 7,187 – – 7,187
12 Terminalen 10 Magasinsvägen 5 Karlskoga 7,632 1,552 – 9,184
13 Spärren 2* Spärrgatan 7 Karlstad 923 1,031 – 1,954
14 Kristianstad 3:35 Björkhemsvägen 12 Kristianstad 8,737 – – 8,737
15 Grepen 9, Grepen 12, Grepen 14 Skogvaktarevägen 11, 15 & 17 Lidköping 6,954 – – 6,954
16 Inteckningen 5 Magistratsvägen 16-18 Lund 12,924 7,506 3,359 23,789
17 Stockholmsledet 12 Emdalavägen 3 Lund 5,438 380 – 5,818
18 Bredablick 4* Sallerupsvägen 34 Malmö 17,795 – – 17,795
19 Båtyxan 5* Järnyxegatan 15-17 Malmö 4,865 775 – 5,640
20 Båtyxan 6* Stenyxegatan 1 Malmö 11,075 1,660 300 13,035
21 Vevaxeln 4 Vevaxelgatan 2 Malmö 1,080 1,758 – 2,838
22 Lommen 6, Anden 1 Långgatan 74 & 80 Mellerud 7,265 – – 7,265
23 Pollaren 1 Barlastgatan 10 Norrköping 40,730 – – 40,730
24 Pollaren 2 Barlastgatan 10 Norrköping 7,700 – – 7,700
25 Sköldmön 9 Anneforsvägen 63 Nässjö 6,314 – – 6,314
26 Kamaxeln 6* Batterivägen 11 Skövde 1,267 1,013 – 2,280
27 Borggård 1:344 Industrivägen 4 Staffanstorp 8,976 324 – 9,300
28 Eksjöhovgård 7:5 Svetsaregatan 4 Sävsjö 8,741 1,170 – 9,911
29 Gästgivaregården 1:305 Vrigstad Sävsjö 13,735 620 – 14,355
30 Sågen 5 Västra Järnvägsgatan 2 Sävsjö 1,490 – – 1,490
31 Fiskmåsen 14 Hermelinsgatan 12 Tranås 8,703 351 – 9,054
32 Trävaran 1 Tommarpsvägen 116 Trelleborg 11,199 – – 11,199
33 Ratten 6 Kardanvägen 28 Trollhättan 1,161 1,481 – 2,642
34 Listen 10 Stålvägen 4 Vetlanda 5,849 – – 5,849
35 Nedervara 3:4 Gamla Tegelbruket Vara 10,220 – – 10,220
36 Gräsanden 7 Skaragatan15 Vara 6,946 1,801 – 8,747
37 Bockaberg 2:2 Solbergavägen 44 Vetlanda 16,720 2,807 – 19,527
38 Snickaren 3 Snickarvägen 4 Vetlanda 11,430 1,570 – 13,000
39 Myresjö 31:2 Myresjö Vetlanda 54,120 3,875 – 57,995
40 Sågklingan 9 Pilgatan 19 Västerås 1,340 2,240 – 3,580
41 Snäppan 5 Drottning Kristinas väg 6 Åmål 4,190 – – 4,190
42 Hissmontören 2 Klerkgatan 18 Örebro 7,455 2,876 – 10,331
Sub-total 363,394 40,158 3,859 407,411
PROPERTY PORTFOLIO
REST OF SWEDEN
Uppsala
Uppsala
Västerås
Västerås
40 3
Karlstad
Karlstad
40 3
13 Örebro
Örebro Stockholm
13
12 4
Stockholm
12 42 4
42
41
41
Norrköping
Norrköping
22
22 24
23 24
23
15 26
26
15
33
33 Skövde
Skövde
35
35
66 31
36
36 31
88
99 Jönköping
Jönköping 11
Gothenburg
Gothenburg E22
25 29
25 29 E22
E6 22
28 34
28 34
77 37
30 38 37
30 38
39
39
SKÅNE
SKÅNE
Malmö
Malmö
44properties,
properties,no.
no.18–21
18–21
Lund
Lund
E6
22properties,
properties,no.
no.16–17
16–17
Helsingborg
Helsingborg
14
14
11properties,
properties,no.
no.10
10
Helsingborg
Helsingborg E22
Eslöv
Eslöv
11properties,
properties,no.
no.55
Höganäs
Höganäs
11properties,
properties,no.
no.11
11 Malmö
Staffanstorp
Staffanstorp
11properties,
properties,no.
no.27
27
Trelleborg
Trelleborg
11properties,
properties,no.
no.32
32
PROPERTY PORTFOLIO
Rest of Finland
Property listing – Rest of Finland

Warehouse/
1 Rekolankulma 4 (10-16-3-11) Rekolankulma 4 Alavo 494 – – 494
2 Juhanintie 1 (609-61-12-12)* Juhanintie 1 Pori – – 172 172
3 Kalevanpuisto 30 (609-10-1-24) Kalevanpuisto 30 Pori – – 163 163
4 Korjaamonkatu 1 (609-33-5-3) Korjaamonkatu 1 Pori 2,620 – – 2,620
5 Kotkantie 1 (609-50-21-2) Kotkantie 1 Pori – – 903 903
6 Kruuti-Jussintie 3 (609-30-2-1) Kruuti-Jussintie 3 Pori 984 – 76 1,060
7 Raja-Hiltantie 8 (609-30-4-1) Raja-Hiltantie 8 Pori 1,278 435 – 1,713
8 Tavaratie 4 (609-9-35-5) Tavaratie 4 Pori 1,027 – – 1,027
9 Tommilantie 24 (609-23-30-9)* Tommilantie 24 Pori – – 250 250
10 Alkrogintie 2 (638-414-1-287-L1)* Alkrogintie 2 Porvoo 396 – – 396
11 Kisällintie 6 (638-5-214-6) Kisällintie 6 Porvoo 1,260 – – 1,260
12 Suolaketie 2 (638-417-1-887) Suolaketie 2 Porvoo – – 597 597
13 Kirkkoluodontie 1 (678-412-1-181) Kirkkoluodontie 1 Raahe – – 512 512
14 Maunulantie 1 (678-415-83-4) Maunulantie 1 Raahe – – 372 372
15 Pajuniityntie 8 (678-413-2-173) Pajuniityntie 8 Raahe – – 683 683
16 Rantakatu 57 (678-12-45-18) Rantakatu 57 Raahe – – 310 310
17 Teollisuuskatu 4 (710-8-805-5) Teollisuuskatu 4 Ekenäs 1,711 – – 1,711
18 Västanbyntie 4 (710-13-108-1) Västanbyntie 4 Ekenäs 796 – – 796
19 Koikkurintie 2 (61-6-165-7-4) Koikkurintie 2 Forssa 1,230 322 – 1,552
20 Murrontie 3 (61-15-277-12) Murrontie 3 Forssa 26,176 4,880 – 31,056
21 Rajakatu 22 (69-401-6-427) Rajakatu 22 Haapajärvi 519 – – 519
22 Kansanpellontie (71-402-3-86) Kansanpellontie Haapavesi – – 550 550
23 Keskustie 8 (86-410-3-36) Keskustie 8 Hausjärvi – – 1,246 1,246
24 Vuorikatu 2 (111-7-24-2) Vuorikatu 2 Heinola – – 600 600
25 Keskikankaantie 9 (98-435-7-409) Keskikankaantie 9 Hollola 15,942 3,281 – 19,223
26 Tarmontie 2-4 (98-435-7-400) Tarmontie 2-4 Hollola 12,465 2,205 – 14,670
27 Tiilikankaantie 1 (98-455-3-81) Tiilikankaantie 1 Hollola – – 584 584
28 Asemankatu 20 (106-1-83-8) Asemankatu 20 Hyvinkää – – 378 378
29 Hakakalliontie 7 (106-24-2307-2-D) Hakakalliontie 7 Hyvinkää 895 783 – 1,678
30 Jussilankatu 5 (106-11-1039-1) Jussilankatu 5 Hyvinkää – – 1,280 1,280
31 Koneenkatu 8 (106-7-606-16) Koneenkatu 8 Hyvinkää – 1,200 – 1,200
32 Koneenkatu 8 (106-7-606-25) Koneenkatu 8 Hyvinkää 7,107 – – 7,107
33 Koneenkatu 8 (106-7-606-26) Koneenkatu 8 Hyvinkää 1,764 – – 1,764
34 Koneenkatu 8 (106-7-606-27) Koneenkatu 8 Hyvinkää 13,091 10,329 – 23,420
35 Koneenkatu 8 (106-7-606-28) Koneenkatu 8 Hyvinkää 24,854 3,601 – 28,455
36 Muovikatu 4 (106-9-835-3 etc.) Muovikatu 4 Hyvinkää 4,850 – – 4,850
37 Sillankorvankatu 66 (106-15-1460-2)* Sillankorvankatu 66 Hyvinkää – – 451 451
38 Huhdintie 10-12 (224-5-46-1) Huhdintie 10-12 Karkkila – – 1,152 1,152
39 Kolisevantie 21 (224-3-38-1) Kolisevantie 21 Karkkila 240 – – 240
40 Kaivontekijänkatu 4 (143-9-6-5) Kaivontekijänkatu 4 Ikalis 571 – – 571
41 Helsingintie 31 (153-13-60-1) Helsingintie 31 Imatra 850 – – 850
42 Joutsenonkatu 32 (153-33-25-23) Joutsenonkatu 32 Imatra – – 1,012 1,012
43 Makasiinikuja 1 (153-55-108-7) Makasiinikuja 1 Imatra 930 – – 930
44 Vallinkoskentie 2 (153-15-47-30) Vallinkoskentie 2 Imatra – – 320 320
45 Varikonkatu 5 (598-12-9-9) Varikonkatu 5 Pietarsaari 899 – 91 990
46 Muuntamontie 3 (167-9-903-25) Muuntamontie 3 Joensuu 2,713 – – 2,713
47 Nuottaniementie 2 (167-18-1881-2)* Nuottaniementie 2 Joensuu – – 418 418
48 Viemannintie 1 (174-401-14-122) Viemannintie 1 Juankoski 551 – – 551
49 Kauppakatu 8 (182-20-1-1) Kauppakatu 8 Jämsä – – 590 590
50 Kettukalliontie 27 (205-5-164-9-L2)* Kettukalliontie 27 Kajaani 597 – – 597
51 Makkolankatu 10 (205-4-10-4) Makkolankatu 10 Kajaani – – 429 429
PROPERTY PORTFOLIO

Warehouse/
52 Varistie 8 (205-8-16-8) Varistie 8 Kajaani 908 – 82 990
53 Tampionkatu 12 (214-13-902-5) Tampionkatu 12 Kankaanpää 490 – – 490
54 Patamäentie 1 (272-34-1-12) Patamäentie 1 Kokkola 3,258 – – 3,258
55 Patamäentie 10 (272-34-3-2) Patamäentie 10 Kokkola 800 – – 800
56 Jylhäntie 3 (233-403-3-124) Jylhäntie 3 Kauhava 542 – – 542
57 Koivuharjunkatu 55 (240-4-435-3)* Koivuharjunkatu 55 Kemi – – 617 617
58 Pelkosenniementie 4 (320-2-2097-5) Pelkosenniementie 4 Kemijärvi – – 308 308
59 Paloasemantie 13 (273-401-11-103) Paloasemantie 13 Kolari 623 – – 623
60 Karhulantie 35 (285-31-8-12) Karhulantie 35 A Kotka – – 2,765 2,765
61 Kisällinkatu 10 (285-46160-1) Kisällinkatu 10 Kotka 2,324 – – 2,324
62 Kotkantie 25 (285-6-606-10) Kotkantie 25 Kotka – – 225 225
63 Peurantie 5 (285-10-1-4)* Peurantie 5 Kotka – – 486 486
64 Pokakuja 1 (285-35-52-1)* Pokakuja 1 Kotka – – 437 437
65 Pulttikatu 9 (285-46-134-1) Pulttikatu 9 Kotka 1037 – 90 1,127
66 Turvalantie 31 (285-41-64-2) Turvalantie 31 Kotka – – 298 298
67 Kaupinkatu 19 (286-11-22-5-L1)* Kaupinkatu 19 Kouvola 675 – – 675
68 Kyminasemantie 6 (44-424-8-37) Kyminasemantie 6 Kouvola – – 664 664
69 Valtakatu 16 (306-1-58-2) Valtakatu 16 Kouvola – – 2,336 2,336
70 Jauratie 1 (290-405-26-376) Jauratie 1 Kuhmo 444 – – 444
71 Haapaniemenkatu 6 (297-5-13-5) Haapaniemenkatu 6 Kuopio – – 138 138
72 Lukkosalmentie 14 (297-22-3-4-L1)* Lukkosalmentie 14 Kuopio 1755 – – 1,755
73 Mestarinkatu 5 (297-24-14-3-3) Mestarinkatu 5 Kuopio 1,790 852 – 2,642
74 Sandelsinkatu 1 (297-9-27-1) Sandelsinkatu 1 Kuopio – – 315 315
75 Mäkitie 3 (301-4-25-10) Mäkitie 3 Kurikka 539 – – 539
76 Turuntie 563 (257-488-1-117) Turuntie 563 Kirkkonummi – – 310 310
77 Aniankatu 9 (398-4-379-5) Aniankatu 9 Lahti 2,027 – – 2,027
78 Ansiokatu 8 (398-23-116-7-W) Ansiokatu 8 Lahti 1,711 700 – 2,411
79 N/A Liipolankatu 9 (398-20-144-6) Eteläinen Liipolankatu 9 Lahti – – 421 421
80 Jatkokatu 1 (398-9-9050-2) Jatkokatu 1 Lahti 4,980 – – 4,980
81 Lahdenkatu 48 (398-4-4191-5) Lahdenkatu 48 Lahti – – 698 698
82 Vanhanradankatu 42 (398-20-246-8) Vanhanradankatu 42 Lahti 26,441 646 – 27,087
83 Vesijärvenkatu 3 (398-1-25-3) Vesijärvenkatu 3 Lahti – – 487 487
84 Metsäkiventie 4 (408-14-1413-1) Metsäkiventie 4 Lapua 5,456 657 – 6,113
85 Kerantie 25 (422-9-124-1) Kerantie 25 Lieksa 529 – – 529
86 Pankakoskentie 3 (422-415-105-75) Pankakoskentie 3 Lieksa – – 307 307
87 Hirvikoskentie 213 (430-401-2-93) Hirvikoskentie 213 Loimaa – – 307 307
88 Melliläntie 103 (482-402-6-31) Melliläntie 103 Loimaa – – 349 349
89 Gunnarlankatu 5 (444-13-662-1) Gunnarlankatu 5 Lohja 7,507 976 – 8,483
90 Puistokatu 23 (444-11-85-1) Puistokatu 23 Lohja – – 674 674
91 Ratakatu 26 (444-15-360-6) Ratakatu 26 Lohja 1,168 385 – 1,553
92 Ratakatu 28 (444-15-360-1) Ratakatu 28 Lohja 1,224 – – 1,224
93 Tietolantie 1 (444-422-1-211) Tietolantie 1 Lohja – – 1,054 1,054
94 Veijolantie 7 (444-15-522-1) Veijolantie 7 Lohja – – 407 407
95 Valtatie 23 (494-403-12-39) Valtatie 23 Muhos – – 653 653
96 Viljamaantie 9 (505-412-3-56) Viljamaantie 9 Mäntsälä – – 405 405
97 Puistokatu 10 (506-1-182-5) Puistokatu 10 Mänttä-Vilppula – – 383 383
98 Runttimäentie 8 (506-402-2-27) Runttimäentie 8 Mänttä-Vilppula – – 157 157
99 Seppälän puistotie 7 (508-1-131-9) Seppälän puistotie 7 Mänttä-Vilppula – – 2,135 2,135
100 Teollisuustie 9 (541-134-4-3) Teollisuustie 9 Nurmes 519 – – 519
101 Ketunkopintie 2 (543-404-4-0) Ketunkopintie 2 Nurmijärvi – – 715 715
102 Puistotie 3 (543-414-2-250) Puistotie 3 Nurmijärvi – – 495 495
103 Pihlajavedentie 21 (740-13-36-13) Pihlajavedentie 21 Savonlinna – – 1,070 1,070
104 Välttitie 7 (895-18-7-4-L1)* Välttitie 7 Uusikaupunki 520 – – 520
105 Asematie 13 (562-416-13-0) Asematie 13 Orivesi – – 415 415
106 Outokummuntie 8 (309-11-1105-1) Outokummuntie 8 Outokumpu 540 – – 540
107 Sodankyläntie 8 (583-402-35-24) Sodankyläntie 8 Pelkosenniemi – – 423 423
108 Kaaritie 7 (593-4-50-5) Kaaritie 7 Pieksämäki 534 – – 534
PROPERTY PORTFOLIO

Warehouse/
109 Kuopiontie 24 (593-4-21-2)* Kuopiontie 24 Pieksämäki – – 586 586
110 Verstastie 3 (791-421-5-66) Verstastie 3 Pulkkila 574 – – 574
111 Uotilan Vanhatie 37 (684-414-3-49) Uotilan Vanhatie 37 Rauma – – 225 225
112 Äyhönjärnentie 5 (684-11-1104-1-8) Äyhönjärventie 5 Rauma 999 153 – 1,152
113 Teollisuustie 28 (698-9-9025-10-H)* Teollisuustie 28 Rovaniemi 1,019 268 – 1,287
114 Juvantie 13 (491-9-39-1) Juvantie 13 Mikkeli – – 486 486
115 Ratakatu 2 (491-1-25-1) Ratakatu 2 Mikkeli 334 – – 334
116 Yrittäjänkatu 10 (491-6-34-8) Yrittäjänkatu 10 Mikkeli 474 – – 474
117 Myllytie 2 (Kauppakeskus) Myllytie 2 Salla – – 1,349 1349
118 Kärkänkatu 18 (734-13-8-1) Kärkänkatu 18 Salo – – 486 486
119 Perämiehenkatu 7 (734-4-8-32-L1)* Perämiehenkatu 7 Salo 1,039 – – 1,039
120 Valkiavuorentie 2 (8743-404-22-6) Valkiavuorentie 2 Seinäjoki – – 397 397
121 Vanhankylänkaari 9 (743-13-6-2) Vanhankylänkaari 9 Seinäjoki 697 – – 697
122 Yrittäjäntie 2 (743-5-24-8-U) Yrittäjäntie 2 Seinäjoki 2,435 534 – 2,969
123 Lohitie 3 (777-406-27-66) Lohitie 3 Suomussalmi 573 – – 573
124 Rahtimiehentie 1 (777-406-3-166) Rahtimiehentie 1 Suomussalmi – – 430 430
125 Autotehtaantie 1 (109-40-103-10) Autotehtaantie 1 Hämeenlinna 11,050 1,131 – 12,181
126 Karhitie 2 (109-25-115-3) Karhitie 2 Hämeenlinna – – 600 600
127 Korsutie 15 (109-9-6-4748) Korsutie 15 Hämeenlinna – – 417 417
128 Larin Kyöstinkatu 30 (109-8-38-3-K) Larin Kyöstinkatu 30 Hämeenlinna 2,398 267 – 2,665
129 Ruununmyllyntie 13 (109-16-86-8) Ruununmyllyntie 13 Hämeenlinna 14,760 2,925 – 17,685
130 Viertokatu 33 (109-6-63-1211) Viertokatu 33 Hämeenlinna – – 335 335
131 Oksapolku 1 (186-9-971-1) Oksapolku 1 Järvenpää – – 1,054 1,054
132 Vanhankyläntie 65 (186-25-2502-4) Vanhankyläntie 65 Järvenpää – – 341 341
133 Wärtsilänkatu 54 (186-8-820-1) Wärtsilänkatu 54 Järvenpää – – 441 441
134 Huhdintie 14 (887-409-6-108) Huhdintie 14 Urjala – – 850 850
135 Peuranoronkatu 4 (908-17-3-7) Peuranoronkatu 4 Valkeakoski 480 – – 480
136 Sointulantie 2 (908-15-5-5)* Sointulantie 2 Valkeakoski – – 423 423
137 Atolantie 7 (915-14-911-14) Atolantie 7 Varkaus – – 414 414
138 Kaura-ahontie 31 (915-7-704-4) Kaura-ahontie 31 Varkaus 707 – – 707
139 Kurolantie 1 (915-15-9001-4) Kurolantie 1 Varkaus – – 690 690
140 Kyllikinkatu 1 (915-13-1311-3) Kyllikinkatu 1 Varkaus – – 466 466
141 Savontie 42 (915-4-61-21) Savontie 42 Varkaus – – 302 302
142 Köpingintie 7 (905-451-33-0) Köpingintie 7 Vaasa 535 – – 535
143 Hiidenmäentie 20 (927-454-4-0) Hiidenmäentie 20 Vihti 16,956 3,316 – 20,272
144 Haapaniementie 41 (931-401-54-133) Haapaniementie 41 Viitasaari – – 237 237
145 Mustasuontie 9 (931-401-1-362) Mustasuontie 9 Viitasaari 487 – – 487
146 Merenlahdentie 16 (405-62-106-11) Merenlahdentie 16 Lappeenranta – – 515 515
147 Onninkatu 1 (405-34-98-1) Onninkatu 1 Lappeenranta – – 573 573
148 Ahjolantie 6 (936-11-9-1) Ahjolantie 6 Virrat 539 – – 539
149 Kiskotie 2 (977-3-7-1) Kiskotie 2 Ylivieska 724 324 – 1,048
150 Puistokatu 12 (992-4-407-19) Puistokatu 12 Äänekoski – – 456 456
Sub-total 251,931 40,170 45,838 337,939
PROPERTY PORTFOLIO
59 107
117
58
113
57
REST OF FINLAND
95
123-124
110
149
22
70
54-55 100
21
45
85-86
48
142 144-145
Vasa 56 106
84
1
75 150 46-47
148
53 103
49
40
105 108-109
Pori
Tampere 24
135-136
111-112
134 Hämeenlinna 146-147
87-88 Lahti
104 19 20 23
Kajaani
Kajaani
33 properties,
properties, no.
no. 50–52
50–52 38-39 96
118-119 41-42101-102
Hyvinkää
Raahe
Raahe Turku
44 properties,
properties, no.
no. 13–16
13–16 143
17 18 Helsinki
76
Kuopio
Kuopio
44 properties,
properties, no.
no. 71–74
71–74
Seinäjoki
Seinäjoki
33 properties,
properties, no.
no. 120–122
120–122
Varkaus
Varkaus
Mänttä-vilppula
Mänttä-vilppula 55 properties,
properties, no.137–141
no.137–141
33 properties,
properties, no.
no. 97–99
97–99
St-Michel
St-Michel
Vasa 33 properties,
properties, no.
no. 114–116
114–116
Lahti
Lahti
77 properties,
properties, no.
no. 77–83
77–83
Hollola
Hollola
Hämeenlinna
Hämeenlinna 33 properties,
properties, no.
no. 25–27
25–27
66 properties,
properties, no.
no. 125–130
125–130
Imatra
Imatra
Pori
Pori 44 properties,
properties, no.
no. 41–44
41–44
88 properties,
properties, no.
no. 2–9
2–9
Pori Kouvola
Kouvola
Tampere 33 properties,
properties, no.
no. 67–69
67–69
Järvenpää
Järvenpää
Hyvinkää Hämeenlinna 33 properties,
properties, no.
no. 131–133
131–133
Hyvinkää
10
10 properties,
properties, no.
no. 28–37
28–37 Kotka
Kotka
Lahti
77 properties,
properties, no.
no. 60–66
60–66
Lohja
Lohja
66 properties,
properties, no.
no. 89–94
89–94
Hyvinkää
Turku Porvoo
Porvoo
33 properties,
properties, no.
no. 10–12
10–12
Helsinki
PROPERTY PORTFOLIO
Rest of Europe
Property listing – Rest of Europe

Warehouse/
No. Property listing Address Municipality Industrial Offices Other Total
1 Holger-Crafoord Strasse 26 Holger-Crafoord Strasse 26 Hechingen, Germany 8,836 287 1,083 10,206
2 Holger-Crafoord Strasse 26 Holger-Crafoord Strasse 26 Hechingen, Germany 10,213 10 12 10,235
3 Holger-Crafoord Strasse 26 Holger-Crafoord Strasse 26 Hechingen, Germany 18,205 91 865 19,161
4 Holger-Crafoord Strasse 26 Holger-Crafoord Strasse 26 Hechingen, Germany 6,644 4,074 1,680 12,398
5 Holger-Crafoord Strasse 26 Holger-Crafoord Strasse 26 Hechingen, Germany 10,531 1,456 – 11,987
6 9 bc Tranders Skjernvej 6 Aalborg, Denmark 3,055 514 – 3,569
7 1 ru Trollesminde Lokesvej 1 Hillerød, Denmark 2,003 887 – 2,890
8 Baltzenheim lieudit «Obergrund » Baltzenheim, France 1,974 214 – 2,188
9 Chassieu Montgolfier 35 avenue des Frères Montgolfier Chassieu, Lyon, France 7,344 600 – 7,944
10 Chassieu Progres 42 rue du Progrès Chassieu, Lyon, France 16,322 – – 16,322
11 Corbas Venissieux 2 avenue de I´Industrie Corbas, Lyon, France 5,834 – – 5,834
12 Decines Vaucanson 42 rue de Vaucanson Décines, Lyon, France 1,725 1,430 – 3,155
13 Etupes 1130 Avenue Oehmichen-Technoland Etupes, France 2,635 439 – 3,074
14 Metz 5 rue des Drapiers Metz, France – 1,898 – 1,898
15 Neuville-en-Ferrain 18 Ter, 98 et 100 Rue de Reckem, rue de
Vertuquet Neuville-en-Ferrain, France 16,000 1,397 – 17,397
16 Ostwald 1 rue des Fauvettes Ostwald, France – 2,233 – 2,233
17 Saint-Avold 101 rue des Généraux Altmayer Saint-Avold, France 586 689 – 1,275
18 Toul Route de Verdun Toul, France 2,793 586 – 3,379
19 Vaulx-En-Velin 4 Rue des Alpes, Zone d'Activité Est Vaulx-En-Velin, Lyon, France 2,658 91 – 2,749
20 Vaulx-En-Velin 5 avenue Karl Marx Vaulx-En-Velin, Lyon, France 1,740 400 – 2,140
Sub-total 119,098 17,296 3,640 140,034
Acquired in 2018
PROPERTY PORTFOLIO
REST OF EUROPE
Aalborg
Copenhagen
Hechingen, 5 properties, no. 1-5

Hamburg
Berlin
Amsterdam
Dusseldorf
15 Cologne
Frankfurt
Lyon, 6 properties, no. 9-12, 19-20
Prague
Luxembourg
14 16 Nuremberg
17 Stuttgart
Paris 18 8
Hechingen
Munich Vienna
13
Zurich
Geneva-
Lyon
Milan
ARTICLES OF ASSOCIATION
Articles of Association
AB SAGAX (PUBL) 556520-0028
ARTICLE 1 by shareholders representing at least two-thirds of the preference shares

The Company’s registered name is AB Sagax. AB Sagax is a public represented at the AGM. If no such dividend is paid or if only a dividend
company (publ). less than SEK 2 per preference share is paid during one or more years,
the preference shares will carry the right to also receive from the follow-
ARTICLE 2 ing year’s distributable funds the Withheld Amount (as defined below)
The Board of Directors is to have its registered office in Stockholm (including, to avoid ambiguity, the Indexation Amount accruing on
City. the Withheld Amount as defined below) before a dividend on common
shares is paid. If no dividend is paid or if a dividend of less than SEK 2
ARTICLE 3 per preference share is paid for one or more years, it is incumbent on the
The company, directly or through subsidiaries, is to own, manage and AGM of the following year to resolve upon the distribution of the quar-
operate activities involving real estate trading and to conduct other terly payment of the Withheld Amount. In other respects, the preference
compatible operations. shares will not carry any entitlement to dividend.
At each individual quarter, the difference between SEK 0.50 and
ARTICLE 4 the paid dividend per preference share will be added to the Withheld
The share capital shall amount to not less than SEK 300,000,000 and Amount (provided that the dividend decided at the AGM is less than
not more than SEK 1,200,000,000. SEK 2 per preference share). If the dividend per preference share is
made in accordance with a decision at a general meeting of shareholders
ARTICLE 5 other than the AGM, the distributed amount per preference share shall
5.1 Class of shares be deducted from the Withheld Amount. The deduction shall occur
The number of shares shall not be fewer than 160 million and not as of the dividend payment date to preference shareholders and shall
e xceed 640 million. Shares may be issued in four classes: Class A, thus be deemed equivalent to settlement of the portion of the Withheld
B and D common shares, and preference shares. Amount that was first to arise. The Withheld Amount shall be increased
Preference shares and Class A, Class B, and Class D common by a factor corresponding to an annual interest rate of 7% (“Indexation
shares may be issued in an amount corresponding to at most 100% of Amount”), and the accrual start date shall be the date of payment for
the share capital. the quarterly dividend. Furthermore, the amount shall be based on the
Class A common shares carry one (1) vote. Class B and D com- difference between SEK 0.50 and the paid dividend amount per prefer-
mon shares carry one tenth (1/10) of a vote each. Preference shares ence share on that same date of payment for the quarterly dividend. In
carry one tenth (1/10) of a vote. instances where that payment occurs at some other point in time than
the date that is one full year subsequent to the date when the addition
5.2 Dividends on common shares or deduction from the Withheld Amount occurred, the upwards ad-
All common shares carry dividend rights without preferential rights. justment of the amount that was added or deducted shall occur by an
If payment of a dividend is adopted, the following applies: amount corresponding to the indexation factor multiplied by the frac-
■■ C lass A and B common shares carry rights to the same dividend per tion of the year that has elapsed. The accrued Indexation Amount is
share. added to the Withheld Amount and it shall thereafter be included in the
■■ C lass D common shares are entitled to five (5) times the total divi- calculation of the Indexation Amount.
dend on Class A and B common shares, although not more than SEK
2.00 annually per share. 5.4 Dissolution of the company
Should the dividend per Class D common share be less than SEK Upon dissolution of the company, preference shares will entitle the
2.00, the limit on the dividend of SEK 2.00 is to be raised so that the holder to receive from the company's remaining assets, an amount
amount by which the dividend fell short of SEK 2.00 per year may be per share that is calculated as the sum of SEK 30 and any Withheld
distributed on a later occasion should a sufficient dividend on com- Amount in accordance with item 5.3 (including, to avoid any confu-
mon shares be resolved, following which time the SEK 2.00 limit on sion, accrued Indexation Amount on the Withheld Amount) before
the dividend will be reinstated. any distributions are made to owners of common shares. The prefer-
Payment of a dividend on Class A and B common shares is to take ence shares shall otherwise not entitle the holder to any distribution
the form of either one payment or four equally large instalments for proceeds.
which the record date is to be the last weekday in June, September, Should the company be dissolved, all common shares will carry
December and March. equal rights to dividends from the company’s assets. However, Class
Payment of dividend on Class D common shares is to take the D common shares will be entitled to no more than SEK 35 per share.
form of four (4) equally large instalments. The record dates for pay-
ment of dividends are to be the last workdays in June, September, 5.5 Share issues
December, and March. For new share issues paid in cash or via offset, shareholders have pref-
erential rights to the new shares in the following way: old shares shall
5.3 Dividends on preference shares entitle the holder to preferential rights on new shares of the same
The preference shares are to entail preferential rights ahead of common class; any shares not subscribed for by such eligible shareholders will
shares to an annual dividend of SEK 2 per share, with quarterly payment be offered to all holders of shares and, in instances where the entire
of SEK 0.50 per share. The record dates for payments are to be the last number of shares are not subscribed for via the latter offer, the shares
workdays in June, September, December, and March. The profit in ac- will then be distributed amongst holders in relation to the number of
cordance with the adopted balance sheet that may be distributed as divi- shares they owned before and, to the extent that this is not possible,
dends according to the clause concerning the protection of the company’s through lottery.
restricted equity and the prudence clause in Chapter 17, Section 3 of For new share issues paid in cash or via offset of only one class
the Swedish Companies Act and which is encompassed by the Board of of shares, shareholders have preferential rights to the new shares in
Directors’ proposal of dividends, may not be excepted from the dividend relation to the number of shares already held. For issues of warrants
to preference shareholders unless a resolution to that effect is supported in exchange for cash or via offset, shareholders have preferential
ARTICLES OF ASSOCIATION
rights to subscribe for warrants as if the issue pertained to the shares ARTICLE 7
that could possibly be newly subscribed for because of the warrant. The company shall have one or two auditors with or without deputy
Likewise, for issues of convertibles in exchange for cash or via offset, auditor(s) or one registered audit firm.
shareholders have preferential right to subscribe for convertibles, as if
the issue pertained to the shares that the convertibles could possibly ARTICLE 8
be exchanged for. Notice of a general meeting of shareholders shall be published in
The above provisions shall not in any way limit the ability to Post- och Inrikes Tidningar as well as on the company’s website. The
make decisions on issues of shares, warrants or convertibles with devi- fact that notice has been published shall be advertised in Svenska
ation from the shareholders' preferential rights. Dagbladet newspaper. In order to participate in a general meeting,
An increase in share capital through a bonus issue may only occur the shareholder must submit registration to the Board of Directors
through the issuance of Class A and Class B common shares. The no later than on the day that is stipulated in the notice of the general
interrelationship between the Class A and Class B common shares meeting. However, that day may not be a Sunday, other public holi-
that are issued through the bonus issue and the previously issued day, Saturday, Midsummer Eve, Christmas Eve or New Year's Eve and
Class A and Class B common shares shall be unchanged. The bonus neither may it be a day that is less than five working days prior to the
shares will be distributed among holders of common shares in relation general meeting.
to the number of common shares of the same share type already held.
The foregoing shall not impose any restriction on the possibility of, ARTICLE 9
via a bonus issue or requisite change to the Articles of Association, Decisions on the following matters shall be valid only if they are
issue shares of a new class. supported by at least two-thirds of representatives of preference
shareholders in attendance at a general meeting, unless the Swedish
5.6 Redemption of preference shares Companies Act stipulates a higher majority.
A reduction of share capital, however not below the minimum ■■ D ecisions on amendment of the Articles of Association that impact
amount, may occur subsequent to a general meeting of shareholders' the rights that accompany preference shares in any respect; and
decision via a redemption of preference shares in accordance with the ■■ D ecisions on a new issue of preference shares that in any way
following grounds. e ntitles the holder to better rights to the company's results than
The general meeting of shareholders decides the number of prefer- the preference shares.
ence shares to be redeemed each time. Exactly which preference shares
will be redeemed is determined by lottery at the general meeting. If the ARTICLE 10
decision is supported by all preference shareholders, however, the gen- The calendar year shall be the company’s fiscal year.
eral meeting may decide which preference shares will be redeemed.
Holders of a preference share that has been ordered for redemption Article 11
shall be obliged to accept payment for the share at an amount calculated The AGM shall be held no earlier than the day after the last working
as the sum of SEK 35 plus any Withheld Amount as per item 5.3 (includ- day of the month of March and no later than 15 June. The following
ing, to avoid any confusion, accrued Indexation Amount on the Withheld items of business shall be addressed at the Annual General Meeting:
Amount up to and including the date when payment of the redemption 1. Election of Chairman of the Meeting
amount falls due). This shall occur either three months after the holder 2. Preparation and approval of the voting list
has been notified of the redemption decision, or, in instances where court 3. Approval of the agenda
approval for the decrease is required, three months after the holder has 4. Election of one or two minutes checkers
been notified of the fact that the court's legally binding decision approv- 5. Determination of whether the Meeting has been duly convened
ing the redemption has been registered. From the day when payment of 6. Presentation of the annual report and the auditors’ report and,
the redemption amount falls due, all calculations of interest shall cease when appropriate, the consolidated financial statements and the
thereafter. auditor’s report for the Group
7. Resolutions
5.7 Share conversion clause a.concerning adoption of the Income Statement, the Balance
Class A common shares shall, upon request by the owner of such Sheet and, where applicable, the consolidated Income State-
shares, be converted to Class B common shares. The conversion re- ment and the consolidated Balance Sheet
quest, must be submitted in writing to the Board of Directors and it b. t he disposition of the company’s profit or loss in accordance
must state the number of Class A common shares that are to be con- with the adopted Balance Sheet
verted to Class B common shares and, if the request does not apply to c. d ischarge of the members of the Board and the CEO from
the entire holding, which Class A common shares the conversion per- personal liability for the fiscal year
tains to. The company must immediately notify the Swedish Compa- 8. Determination of the fees to be paid to the Board
nies Registration Office so that the conversion can be registered in the members and auditors
Register of Companies. The conversion is completed once registration 9. Election of Board members and, where applicable, auditors and
has occurred and is recorded in the CSD register. any deputy auditors
Preference shares shall, upon request by the owner of such shares, be 10. O ther business to be addressed by the Meeting in accordance
converted to Class D common shares. Conversion shall only be possible with the Swedish Companies Act or the Articles of Association.
on condition that no increase in the dividend restriction concerning Series
D common shares is in effect. The conversion request must be submitted ARTICLE 12
in writing to the Board of Directors and state the number of preference In the event of a dispute between the company and its Board of Directors,
shares that are to be converted to Class D common shares and, if the a Board member or a shareholder, the dispute shall be settled by an arbi-
request does not apply to the entire holding, the number of preference trator in accordance with the Swedish Arbitration Act.
shares to which the conversion pertains. The company must immediately
notify the Swedish Companies Registration Office so that the conversion ARTICLE 13
can be registered in the Register of Companies. The conversion is com- The Company’s shares shall be recorded in a CSD register pursuant
pleted once registration has occurred and is recorded in the CSD register. to the Central Securities Depositories and Financial Instruments
Accounts Act (1998:1479).
ARTICLE 6
The Board of Directors shall be comprised of at least three (3) and at The Articles of Association were adopted at the Annual General Meeting,
most eight (8) members, not including deputies. 4 May 2017.
NOTICE OF THE ANNUAL GENERAL MEETING
Notice of the
Annual General Meeting of AB Sagax (publ)
Shareholders in AB Sagax (publ), Corporate Registration Number 556520-0028, (“the Company”) are hereby officially convened to the Annual General
Meeting (AGM) which will be held on Monday, 7 May 2019 at 4:00 p.m. at Spårvagnshallarna, Birger Jarlsgatan 57 A, Stockholm, Sweden.
PARTICIPATION IN THE AGM PROPOSED AGENDA

Shareholders intending to participate in the AGM must: The Board of Directors’ proposed agenda for the AGM:
■■ b e registered in the shareholders’ register maintained by 1. Opening of the Meeting and election of Chairman of the
Euroclear Sweden AB “Euroclear”) on Tuesday, 30 April 2019, Meeting
■■ notify the Company of their intention to participate at the 2. Preparation and approval of the voting list
following address: 3. Approval of the agenda
AB Sagax, attention: Coco Thorin, Engelbrektsplan 1, 4. Election of one or two minutes checkers
SE-114 34 Stockholm or by e-mail to: arsstamma@sagax.se, 5. Determination of whether the Meeting has been duly
not later than Tuesday, 30 April 2019. convened
Notification should include name, personal identification number 6. Presentation of the annual report and the auditors’ report and
or corporate registration number, address and telephone number. of the consolidated financial accounts and the auditor’s report
on the consolidated financial accounts
REPRESENTATIVES AND POWER OF ATTORNEY FORM 7. Resolutions
Shareholders who wish to be represented by proxy must issue a) adoption of the income statement, the balance sheet, the
a power of attorney for the proxy. Proxies representing a legal consolidated income statement and the consolidated
entity must produce a registration certificate (or corresponding balance sheet,
authorisation document) showing that the parties who have b) d isposition of the Company’s earnings in accordance with
signed the power of attorney are authorised signatories for the the adopted balance sheet, and
shareholder. To facilitate entry at the AGM, an original version of c) discharge of the members of the Board and the CEO from
the power of attorney (together with any authorisation document) personal liability for the fiscal year
should be sent to the Company, together with the notification to 8. Resolution concerning the number of Board members
attend. The power of attorney may not have been issued earlier 9. Determination of the fees to be paid to the Board members
than five years prior to the Meeting. A form for notifying power and auditors
of attorney is available on the Company’s website www.sagax.se 10. Election of the Board of Directors, Chairman and auditors
and will be sent free of charge to those shareholders who request 11. Resolution concerning principles for appointing the
such a form and notify their postal or e-mail address. To order a Nomination Committee
power of attorney form, apply to the postal and e-mail address 12. Resolution concerning guidelines for remuneration of senior
stated above. executives
13. Resolution concerning the introduction of Incentive Plan
TRUSTEE-REGISTERED SHARES 2019/2022 through the a) issue of warrants to the subsidiary
Shareholders whose shares are held in the name of a trustee must Satrap Kapitalförvaltning AB and b) approval of the transfer of
temporarily re-register the shares in their own name at Euroclear the warrants to employees of the Company or its subsidiaries
to be entitled to participate in the Meeting. Such registration, 14. Resolution concerning authorisation of the Board of Directors
which normally takes a few days, must be completed (registered to increase the share capital through new issue of shares, war-
with Euroclear) no later than Tuesday, 30 April 2019, and must rants and/or convertibles
be requested from the trustee well in advance of this date. 15. Resolution concerning authorisation of the Board of Directors
to make decisions on the Company’s acquisition of treasury
PROCESSING OF PERSONAL DATA shares, warrants and/or convertibles and/or transfers of
In connection with notification, the Company will process the treasury shares and/or warrants
personal data of shareholders that is requested above. The personal 16. R esolutions concerning bonus issue with the issue of new
data collected from the shareholders’ register, notification of atten- Class A common shares and Class B common shares
dance at the AGM and information about proxies and assistants will 17. Closing of the Meeting
be used for registration, preparing the voting list for the AGM and,
where appropriate, the minutes of the Meeting. Personal data will PROPOSALS
only be used for the 2019 AGM. For information about how your Item 1
personal data will be processed, visit www.sagax.se and “About The Nomination Committee proposes that Staffan Salén be
Sagax” under the section “Sagax in brief” and “Privacy policy.” elected Chairman of the AGM.
NUMBER OF SHARES Item 7 b)

On the date of issue of the official announcement of the AGM, The Board proposes that the AGM resolve in favour of a dividend
the Company had a total of 278,080,255 shares, of which of SEK 2.00 per Class A and Class B common share and that the
16,784,028 were preference shares (each carrying one tenth of a AGM also resolve in favour of a dividend of SEK 2.00 per pref-
vote), 13,416,822 were Class A common shares (each carrying one erence share and Class D common share for the 2018 fiscal year,
vote), 145,979,405 were Class B common shares (each carrying with quarterly payments of SEK 0.50 per preference share and
one tenth of a vote), and 101,900,000 were Class D common Class D common share. 9 May 2019 is proposed by the Board as
shares (each carrying one tenth of a vote), corresponding to a total the record date for payment of dividends on Class A and Class B
of 39,883,165.3 votes. The Company holds 1,000,000 Class B common shares. The dividend is expected to be paid by Euroclear
treasury shares, corresponding to 100,000 voting rights. on the third working day after the record date. The Board of Direc-
tors proposes Friday, 28 June 2019; Monday, 30 September 2019; The CEO or another member of executive management must not
Monday, 30 December 2019 and Tuesday, 31 March 2020 as the be a member of the Nomination Committee. Board members may
record dates for the payments of dividends on preference shares be appointed to the Nomination Committee but are not to con-
and Class D common shares. The dividend is expected to be paid stitute a majority of its members. If more than one Board member
by Euroclear on the third working day after each record date. is appointed to the Nomination Committee, at least one of them
The Board of Directors also proposes that the AGM resolve is required to be dependent in relation to the Company’s major
that the Class D common shares and the new preference shares shareholders.
that may be issued under the authorisation granted according to The Nomination Committee is to elect its chairman from
Item 14 below provide entitlement to dividends from the date on among its own members. The Chairman of the Board or any other
which they are entered into the shareholders’ register adminis- Board member is not to be elected chairman of the Nomination
tered by Euroclear. Committee. The composition of the Nomination Committee is to
be announced no later than six months prior to the 2020 AGM. If
Item 8 a member leaves the Nomination Committee before its work has
The Nomination Committee proposes that the number of Board been completed and if the Nomination Committee considers that
members amount to six for the period until the next AGM. it is necessary to replace this member, the Nomination Committee
is to appoint a new member according to the principles above, but
Item 9 using Euroclear’s transcript of the shareholders’ register as its point
The Nomination Committee proposes that fees be paid in the of departure, as soon as possible after the member has vacated his/
amount of SEK 330,000 to the Chairman of the Board and SEK her position. Changes in the composition of the Nomination Com-
180,000 to each other non-executive Board member elected by mittee must be immediately announced. No fee is to be paid to the
the AGM. The fees also include remuneration for committee members for their work on the Nomination Committee.
work. The Nomination Committee’s proposal concerning the The Nomination Committee is to submit proposals concern-
composition of the Board entails that director fees will total SEK ing the following matters to the 2019 AGM for resolution:
1,050,000. The proposed fees entail an increase of SEK 30,000 a) proposal regarding Chairman of the Meeting
for the Chairman and SEK 15,000 for each of the other Board b) proposal regarding members of the Board of Directors
members elected by the Meeting in relation to the fees resolved c) proposal regarding Chairman of the Board
in 2018. It is proposed that the auditors be remunerated in return d) proposals regarding auditors
for approved invoices. e) proposal regarding director fees, distributed between the
Chairman and other members of the Board of Directors
Item 10 f ) proposal regarding remuneration of the Company’s auditors
The Nomination Committee proposes that the AGM resolve to g) proposal regarding principles for the Nomination Committee
re-elect Board members Johan Cederlund, Filip Engelbert, David ahead of the 2020 AGM.
Mindus, Staffan Salén, Johan Thorell and Ulrika Werdelin. The
Nomination Committee also proposes that Staffan Salén be re- Item 12
elected Chairman of the Board. Should the assignment as Chair- The Board of Directors’ proposes that the AGM adopt guidelines
man of the Board cease prematurely, the Board of Directors is to for remuneration of the Company’s senior executives, essentially
elect a new Chairman from among its own members. as follows:
Details about the proposed members of the Board are avail- Remuneration paid to the CEO is prepared by the Remuner-
able on the Company’s website www.sagax.se. ation Committee and established by the Board at a scheduled
The Nomination Committee proposes, in accordance with Board meeting. The CEO does not participate in this decision.
the Audit Committee’s recommendation, that the AGM resolve The Board assigns the CEO the task of negotiating with other
to re-elect Ernst & Young Aktiebolag as its audit company for senior executives in accordance with the guidelines below. Agree-
the forthcoming one-year period, with Oskar Wall as the ments with other senior executives are reached by the CEO
auditor-in-charge. jointly with the Chairman of the Board.
The Company is to offer commercially competitive remuner-
Item 11 ation levels and terms and conditions of employment in order to
The Nomination Committee proposes that the AGM appoint a retain and, where necessary, recruit senior executives with the nec-
Nomination Committee according to the following principles. essary expertise and experience. Remuneration to the Company’s
The AGM assigns the Chairman of the Board to contact the management is to essentially take the form of cash salary. Remu-
three largest shareholders or groups of shareholders in terms of neration may comprise a combination of fixed and variable salary.
votes (this pertains to both directly registered shareholders and Remuneration is to mainly comprise fixed salary and be considered
nominee-registered shareholders), according to Euroclear’s tran- to correspond to commercially competitive compensation for doing
script of the shareholders’ register at 30 September 2019, who are an adequate job. The variable salary supplement is to pertain to
each to be asked to appoint one representative, plus the Chairman additional compensation for work that has been exceptionally well
of the Board, to constitute the Nomination Committee for the performed, an exceptional workload or another similar circum-
period until a new Nomination Committee has been appointed stance. Unless there are special reasons for not applying this rule,
according to authorisation from the next AGM. In the event that the variable salary supplement is not to exceed 50% of the fixed
one of the three largest shareholders or groups of shareholders does annual salary. In addition, the Board is to annually assess whether
not wish to appoint such a representative, the fourth largest share- or not a share-based or share-price-based incentive plan is to be
holder or group of shareholders is to be asked to do so, and so forth proposed to the AGM. Termination salary must not exceed six
until the Nomination Committee consists of four members. monthly salaries. Severance pay is not to be applied.
The majority of the members of the Nomination Committee The Board of Directors is entitled to deviate from the afore-
are to be independent in relation to the Company and executive mentioned guidelines if the Board finds specific reasons to moti-
management. At least one of the Nomination Committee’s mem- vate this in isolated cases. If the Board of Directors deviates from
bers must be independent in relation to the Company’s largest the remuneration guidelines for senior executives, a report on this
shareholder, or the group of shareholders, in terms of votes, that must be made to the immediately following AGM.
works together in respect of the administration of the Company.
Item 13 the Employee be reduced in proportion to the number of months

The Board of Directors proposes that the AGM resolve on the that the Employee has not rendered services to the Company. If
introduction of Incentive Plan 2019/2022, whereby the Company Employees do not subscribe for all of the warrants for which they
will implement an issue of warrants and transfer of warrants to are offered subscription, the Employees participating in Incentive
individuals who are or become employees of the Company or its Plan 2019/2022 could be offered an opportunity to acquire the
subsidiaries, except for the CEO of the Company (“Employees”), warrants that are offered but not subscribed for. In such cases,
subject to the terms and conditions specified below (“Incentive a llotment is to take place pro rata in relation to the number of
Plan 2019/2022”). warrants that the Employees were allotted in the initial allotment.
The warrants are to be offered to Employees at a price corre-
Issue of warrants to the Subsidiary sponding to the estimated market value of the warrants, applying
The Board of Directors proposes that the AGM resolve on an the options valuation model based on the Monte Carlo simula-
issue of a maximum of 400,000 warrants of the 2019/2022 series. tion. The calculation is to be based on a subscription price for
Disapplying the preferential rights of shareholders, subscription Class B common shares corresponding to the volume-weighted
entitlement will accrue to the wholly owned subsidiary, Satrap average purchase price during the period of 13 May 2019 through
Kapitalförvaltning AB, Corp. Reg. No. 556748-3309, (“the Sub- 20 May 2019 according to Nasdaq Stockholm.
sidiary”). The warrants will be issued free of charge. Each warrant Since the warrants are to be transferred to Employees at esti-
entitles the holder to subscribe for one (1) new Class B common mated market price, Incentive Plan 2019/2022 is not expected to
share in the Company. The warrants will be subscribable during result in any expenses, apart from certain minor costs for its estab-
the period starting on 7 May 2019 through 15 May 2019 on a sep- lishment and administration. On condition that this is one of the
arate subscription list. The Board of Directors is to be authorised three first times that the Employee participates in an incentive plan
to extend the subscription period. in the Company and the Employee’s annual salary does not exceed
When exercising warrants, the subscription price for a share SEK 500,000, the Employee will receive a premium subsidy in the
is to correspond to the average price of Class B common shares form of extra salary. The extra salary after tax, calculated using a
at the time of the issue of the warrants, adjusted upwards or tax rate of 50%, will correspond to 50% of the warrant premium.
downwards depending on the average performance of all publicly The cost of this premium subsidy, excluding social security contri-
traded property companies, measured in accordance with the butions, is estimated to amount to a maximum of SEK 600,000.
Carnegie Real Estate Index (CREX), during the period commenc- Nor will the warrants have any accounting consequences, other
ing 20 May 2019 through 3 June 2022. The average price of Class than the aforementioned premium subsidy. However, the dilution
B common shares at the time of the issue of the warrants corre- effect of the warrants could affect certain key data per share in
sponds to the volume-weighted average purchase price during the accordance with the accounting standard IAS 33.
period of 13 May 2019 through 20 May 2019 according to Nasdaq At an assumed price per warrant of SEK 14.40, existing
Stockholm. The subscription price may not be lower than the cur- Employees will be offered an opportunity to acquire a total of
rent quotient value of Class B common shares. 351,000 warrants. The Company will then receive a total warrant
The warrants will be exercisable through notification to sub- premium of SEK 5,054,400 (without deduction for the premium
scribe for new shares during the period 7 June 2022 through 20 June subsidy). Upon full exercise of the warrants and at an assumed
2022. Shares subscribed for through exercise of warrants will carry subscription price of SEK 162.20, the Company will also be cred-
entitlement to dividends for the first time on the record date for divi- ited with issue proceeds of about SEK 56.9 M. If, under these cir-
dends occurring immediately after subscription has occurred. cumstances, additional warrants were to be acquired by Employees
It is estimated that the maximum number of additional Class who join the Company during the year, the Company could
B common shares will not exceed 400,000, corresponding to receive an additional warrant premium of a maximum of SEK
approximately 0.27% of the total number of Class B common 705,600. Upon full exercise of the these warrants, the Company
shares in the Company, subject to full subscription and full could also receive additional issue proceeds of about SEK 7.9 M.
e xercise of all warrants. The increase in share capital in such a The warrants are to be transferred to Employees no later than
case will amount to a maximum of SEK 700,000. prior to the 2020 AGM, following which non-transferred war-
The reason for disapplying the shareholders’ preferential rants will be declared null and void.
rights is that the Board of Directors wishes to promote the Com- The reason for disapplying the shareholders’ preferential
pany’s long-term interests by giving Employees the opportunity to rights is that the Board of Directors wishes to promote the Com-
participate in a well-balanced incentive plan, thus providing them pany’s long-term interests by giving Employees the opportunity to
with an opportunity to participate in the Company’s long-term participate in a well-balanced incentive plan, thus providing them
value performance. with an opportunity to participate in the Company’s long-term
value performance.
B. A pproval of transfer of warrants to Employees
The Board of Directors also proposes that the AGM resolve to ap- Item 14
prove that the Subsidiary be permitted to transfer a maximum of The Board proposes that the AGM resolve to authorise the Board,
400,000 warrants in the Company, of the 2019/2022 series, to Em- within the framework of the applicable Articles of Association,
ployees, or to have control over the warrants in some other manner with or without disapplying the shareholders’ preferential rights,
in order to secure obligations pursuant to Incentive Plan 2019/2022. on one or more occasions prior to the next AGM, to make deci-
As part of Incentive Plan 2019/2022, each employee is to sions to increase the Company’s share capital on the basis of a new
be offered an opportunity to acquire warrants in an amount issue of Class A common shares, Class B common shares, prefer-
corresponding to a maximum of one twelfth (1/12) of the Em- ence shares, Class D common shares, warrants and/or convertibles
ployee’s annual salary before income tax. If the Employee has in the Company. The total number of shares encompassed by such
been on leave of absence, parental leave, long-term sick leave or new share issues may not exceed 10% of the number of votes in
similar during the 12-month period immediately prior to the the Company, based on the total number of votes in the Company
date on which the Employee is offered acquisition of warrants on the date when Board first utilises the authorisation. The shares
under the framework of Incentive Plan 2019/2022, the number are to be issued at market subscription price, subject to a market
of warrants that the Employee is offered is to be adjusted. Such issue discount, where applicable, and, in addition to cash payment,
adjustment is to entail that the number of warrants offered to payment for the shares in kind or by offsetting debt, or in some
other manner that complies with terms and conditions, is to be The bonus issue will reduce the price of the Class A and Class B
possible. The reason for the authorisation and for possibly dis common shares and increase the number of outstanding Class A
applying the shareholders’ preferential rights is to make it possible and Class B common shares, which is expected to improve liquid-
to issue shares for the financing of acquisitions of properties or ity. The record date is to be five (5) bank days after the day on
property companies, or parts of properties or property companies. which the Swedish Companies Registration Office registered the
bonus issue. The new Class A and Class B common shares provide
Item 15 entitlement to dividends for the first time on the record date for
The Board proposes that the AGM resolve to authorise the Board, dividends that falls immediately after the new share issue has
on one or more occasions prior to the next AGM, to make decisions been registered with the Swedish Companies Registration Office
to acquire a total of as many Class A common shares, Class B com- and the common shares have been entered in the shareholders’
mon shares, preference shares, Class D common shares, warrants register at Euroclear Sweden AB. The new Class A common
and/or convertibles as necessary so that the Company’s holdings at shares are to be encompassed by the share conversion clause stip-
any time do not exceed one tenth of the total number of shares in ulated in the company’s Articles of Association.
the Company. Acquisitions of treasury shares are to take place on It is noted that after the increase in share capital described
Nasdaq Stockholm and may only take place at a price within the above, the company’s share capital will amount to a maximum
price span applicable at any time, meaning the span between the of SEK 765,583,843.50 distributed between a maximum of
highest bid and lowest offer price, or on the basis of an acquisition 437,476,482 shares, of which a maximum of 26,833,644 Class
offering directed to all shareholders, whereby the acquisition is A common shares, a maximum of 291,958,810 Class B common
to take place at a price that on the decision date corresponds to a shares, 101,900,000 Class D common shares Class D common
minimum of the applicable share price and a maximum of 150% shares and 16,784,028 preference shares. All of the shares have a
of the applicable share price. Acquisition of treasury warrants and/ quotient value of SEK 1.75 per share.
or convertibles is to take place at a price that on the decision date The CEO, or the person appointed by the Board of Directors,
corresponds to a maximum of the market value. shall be entitled to undertake the minor adjustments that may be
The Board also proposes that the AGM resolve to authorise necessary in connection with registration of the decision with the
the Board, on one or more occasions prior to the next AGM, to Swedish Companies Registration Office or Euroclear Sweden AB.
make decisions to sell, with or without disapplying the sharehold-
ers’ preferential rights, all or portions of the Company’s holding MAJORITY REQUIREMENTS
of Class A treasury common shares, Class B common shares, For a valid resolution pursuant to the Board of Directors’ proposals
preference shares, Class D common shares and/or warrants as under Item 13, the resolution must have the support of not less
payment for acquisitions of properties or property companies, or than nine-tenths of both the votes cast and the number of shares
parts of properties or property companies, at a price correspond- represented at the Meeting. For valid resolutions pursuant to the
ing to the share price or, regarding warrants, the market value on Board of Directors’ proposals under Items 14 and 15 above, the res-
the date of sale. Transfer of all or portions of the Company’s hold- olutions must have the support of not less than two-thirds of both
ings of Class A treasury common shares, Class B common shares, the votes cast and the number of shares represented at the Meeting.
preference shares and/or Class D common shares may also occur,
on one or more occasions prior to the next AGM, to finance such INFORMATION ABOUT THE AGM
acquisitions, for which shares are to be sold on Nasdaq Stockholm The Board of Directors and the CEO must, if a shareholder so
at a price that is within the price span applicable at any time. requests and the Board of Directors considers it possible without
The main reason for the authorisation is to provide the Com- this resulting in material damage to the Company, provide infor-
pany with flexibility in connection with the financing of acquisi- mation concerning conditions that could influence the assessment
tions of properties or property companies, or parts of properties of an item on the agenda, conditions that could influence assess-
or property companies, while increasing the Board of Directors’ ments of the financial condition of the Company or subsidiaries
latitude in its efforts to optimise the Company’s capital structure. and the Company’s relationship to other Group companies.
Anyone who wants to submit questions in advance may do so to
Item 16 AB Sagax, attention: Coco Thorin, Engelbrektsplan 1, SE-114 34
The Board proposes that the AGM resolve that share capital be Stockholm or by e-mailing: arsstamma@sagax.se.
increased on the basis of a bonus issue as follows.
The Company’s share capital is to be increased by a max- OTHER
imum of SEK 278,943,397.25 on the basis of a bonus issue by The Annual Report and the Auditor’s Report, the Board’s com-
issuing a maximum of 13,416,822 new Class A common shares plete proposals for resolution according to the above, together
and 145,979,405 new Class B common shares. The amount with documents according to Chapter 18, Section 4 and Chapter
that the share capital is to be increased by is obtained by SEK 19, Section 22 of the Swedish Companies Act, as well as the
278,943,397.25 being transferred from unrestricted equity ac- Board of Directors’ evaluation of the Company’s guidelines for
cording to the most recently adopted balance sheet. The holder of remuneration of senior executives and the auditor’s opinion re-
one (1) existing Class A common share is entitled to receive one garding the application of the guidelines for remuneration of se-
(1) new Class A common share. The holder of one (1) existing nior executives are available at the Company’s office, at the above
Class B common share is entitled to receive one (1) new Class address, and on the Company’s website www.sagax.se no later
B common share. According to the provisions of the Articles of than as of Tuesday, 16 April 2019. Copies of said documentation
Association, holdings of Class D common shares and/or holdings will also be sent to shareholders who have requested such doc-
of preference shares do not provide entitlement to new Class A umentation and provided their postal address. The Nomination
common shares or to new Class B common shares. The purpose Committee’s reasoned statement concerning the proposed Board
of the bonus issue is to improve liquidity in Sagax’s existing Class of Directors, as well as a form for notifying power of attorney, are
A and Class B common shares since the relatively high share also available on the Company’s website.
prices are deemed to be a disadvantage for trading. To safeguard
the interests of current and potential new shareholders, Sagax Stockholm, April 2019
wishes to create the conditions for more appropriate trading by AB Sagax (publ)
carrying out a bonus issue of Class A and Class B common shares. Board of Directors
DEFINITIONER
Definitions
Sagax applies the European Securities and Market Authority’s (ESMA) Guidelines on the Alternative Performance Measures. Alterna-
tive performance measures refer to financial measures of historical or future earnings trends, financial position, financial results or cash
flows that are not defined or stated in the applicable rules for financial reporting, which in Sagax’s case is IFRS. The basis of the alter-
native performance measures provided is that they are used by company management to assess the financial performance and thus are
considered to provide valuable information to shareholders and other stakeholders.
The table below presents definitions of AB Sagax’s key performance indicators. The calculation of alternative performance measures is
described separately below.
Key performance indicators Description Reason for alternative performance measure

Return on equity Profit for the year in relation to average equity (IB+UB)/2 for the period. This key performance indicator shows how shareholders’
capital yields interest during the period.
Return on total capital Profit for the period after net financial items after reversal of financial expenses as This key performance indicator shows the ability to
a percentage of average total assets for the period. generate earnings on the Group’s assets, excluding
financing costs.
Occupancy rate by area Contracted area directly after the end of the period as a percentage of total This key performance indicator shows the occupancy
lettable area directly after the end of the period. situation.
Debt ratio Interest-bearing liabilities at the end of the period as a percentage of total assets This key performance indicator shows financial risk.
at the end of the period.
Yield Net operating income for the period (including property administration) adjusted The key performance indicator shows the earnings gen-
for the holding periods of the properties during the period as a percentage of the eration of the operations before financial expenses and
carrying amounts of the properties at the end of the period. central administration costs are taken into account.
EBITDA Net operating income less central administration costs plus dividends received Sagax uses EBITDA so that the EBITDA/Net debt key
from joint ventures and associated companies. performance indicator can show the company’s ability to
pay off its debts.
Equity per Class A and B share Equity at the end of the period in relation to the number of Class A and B shares The key performance indicator shows the owner’s share
at the end of the period after taking into account equity attributable to Class D of equity.
shares and preference shares.
Equity per Class D share Equity at the end of the period in relation to the number of common shares at the The key performance indicator shows the owner’s share
end of the period after taking into account equity attributable to preference shares. of equity.
Equity is restricted to SEK 35.00 per Class D share.
Equity per preference share Equity per preference share corresponds to the preferential right of the preference The key performance indicator shows the owner’s share
share on liquidation of the company (SEK 30 per preference share) and the share’s of equity.
accumulated preferential right to dividends (SEK 2 per year).
Economic occupancy rate Contractual annual rent directly after the end of the period as a percentage of This key performance indicator shows the effectiveness
rental value directly after the end of the period. of the company’s lease activities.
EURIBOR EURIBOR, or the Euro Interbank Offered Rate, is a daily reference rate based on the Not an alternative performance measure.
average of the interest rates at which euro interbank term deposits are being offered
by one prime bank to another within the EMU zone.
EPRA NAV Recognised equity according to the balance sheet with reversal of reserves for An established indicator of the Group’s net asset value
fixed-income derivatives, deferred tax on temporary differences on property val- that facilitates analyses and comparisons.
ues and deferred tax on reserves for fixed-income derivatives. EPRA NAV is a key
performance indicator defined by the European Public Real Estate Association.
Property Pertains to properties held under title or site leasehold. Not an alternative performance measure.
Financial derivatives Agreements on lending rates that may include the factors of time, inflation and/or Not an alternative performance measure.
maximum interest rates. Usually signed to hedge interest rates for interest-bearing
loans.
Profit from property Profit excluding changes in value and tax. An indicator of the earnings generation in the opera-
management tions, excluding changes in value.
Profit from property manage- Profit from property management for the period reduced by dividends on Class An indicator of the earnings generation of the assets,
ment per Class A and B share D shares and preference shares, divided by the average number of Class A and B excluding the changes in value accruing to holders of
after dilution shares after dilution. Class A and B shares.
Lease term Remaining term of a lease. The key performance indicator shows the risk of future
vacancies.
Rental value The contractual annual rent applicable directly after the end of the period, with The key performance indicator shows the Group’s
supplements for estimated market rents for vacant premises. income potential.
IFRS International Financial Reporting Standards. International Financial Reporting Not an alternative performance measure.
Standards (IFRS), to be applied for consolidated financial statements by listed
companies within the EU.
Joint venture Partnership form whereby several owners have a shared controlling influence. Not an alternative performance measure.
DEFINITIONER
Key performance indicators Description Reason for alternative performance measure

Cash flow per Class A and B Profit before tax adjusted for items not included in cash flow less tax paid in rela- The key performance indicator shows the ability of the
share tion to the average number of Class A and B shares. Dividends on Class D shares operations to generate liquidity and the ability to pay
and preference shares for the period have also been deducted from profit before dividends using this liquidity.
tax. Dividends received from joint ventures have been added to profit before tax.
Net debt Interest-bearing liabilities less interest-bearing assets, cash and cash equivalents, The key performance indicator shows the Group’s
and listed shares. indebtedness.
Net debt/total assets Interest-bearing liabilities less interest-bearing assets, cash and cash equivalents, This key performance indicator shows financial risk.
and listed shares as a percentage of total assets.
Preference equity Equity per preference share multiplied by the number of preference shares The key performance indicator shows equity attributable
outstanding. to preference shareholders.
Earnings per Class A and B Profit in relation to the average number of Class A and B shares after taking into Not an alternative performance measure.
share account the portion of profit for the period represented by dividends on Class D
shares and preference shares.
Earnings per Class D share Class D shares are entitled to five times the dividend on Class A and B shares, The key performance indicator shows the shareholders’
although not more than SEK 2.00 per share. share of profit.
Earnings per preference share Each preference share entails a preferential right to SEK 2.00 in annual dividends. The key performance indicator shows the preference
shareholders’ share of profit.
Interest-rate swaps An agreement between two parties to swap interest rate conditions on loans in Not an alternative performance measure.
the same currency. The swap entails that one party exchanges its floating interest
rate for a fixed rate, while the other party receives a fixed rate in exchange for a
floating rate. The purpose of an interest-rate swap is to reduce interest-rate risk.
Interest coverage ratio Profit from property management with reversal of financial expenses as a The key performance indicator shows the company’s
percentage of financial expenses. ability to pay interest.
Equity/assets ratio Equity in relation to total assets. This key performance indicator shows financial risk.
STIBOR STIBOR, or Stockholm Interbank Offered Rate, a daily reference rate based on Not an alternative performance measure.
the average of the interest rates at which banks offer to lend unsecured funds to
other banks in SEK in the Swedish wholesale money market.
Secured liabilities/total assets Liabilities secured with pledged assets as a percentage of total assets. This key performance indicator shows financial risk for
bond holders.
Total return on shares Total of the change in the share price during the period and the dividend paid The key performance indicator shows shareholders’ total
during the period as a percentage of the share price at the end of the preceding return on their shareholdings in the company.
year.
Total yield on property Total of net operating income and property revaluations during the period as a The key performance indicator shows earnings genera-
percentage of the average property value adjusted for revaluations for the period. tion and value growth for the properties for a period.
Triple net lease A type of lease whereby the tenant pays, in addition to the rent, all costs incurred Not an alternative performance measure.
on the property that would normally have been paid by the property owner.
These include operating expenses, maintenance, property tax, site leasehold fees,
insurance, property care-taking, etc.
Dilution Dilution due to outstanding warrants has been calculated, in line with IAS 33, as Not an alternative performance measure.
the number of Class A and B shares to be issued to cover the difference between
the strike price and share price for all potential Class A and B shares (warrants)
outstanding, insofar as it is probable that they will be utilised.
Surplus ratio Net operating income for the period as a percentage of rental revenue for the period. The key performance indicator shows the profitability of
the properties before financial expenses.
Calculation of alternative performance measures is presented in the tables below.
Amounts in SEK M Amounts in SEK M

unless otherwise stated 2018 2017 unless otherwise stated 2018 2017
Return on equity Debt ratio
Profit after tax 3,166 2,965 Interest-bearing liabilities 15,763 13,616
Average equity 13,386 10,033 Total assets 33,690 27,240
Return on equity 24% 30% Debt ratio 47% 50%
Return on total capital Yield

Profit from property management 1,603 1,334 Net operating income 1,869 1,558
Financial expenses 481 444 Holding adjustment, acquisitions/divestments 91 62
Profit before financial expenses 2,084 1,778 Currency translation to closing rate 2 21
Average total capital 30,465 25,172 Adjusted net operating income 1,962 1,641
Return on total capital 7% 7%
Carrying amount of properties 29,024 23,755
Occupancy rate by area Yield 6.8% 6.9%
Contracted area 2,708 2,359
EBITDA
Total lettable area 2,850 2,489
Net operating income 1,869 1,558
Occupancy rate by area 95% 95%
Central administration –132 –77
Dividends from joint ventures and associated
companies 254 139
EBITDA 1,991 1,620
DEFINITIONS
Calculation of alternative performance measures is presented in the tables below, cont’d.
Amounts in SEK M Amounts in SEK M

unless otherwise stated 2018 2017 unless otherwise stated 2018 2017
Equity per Class A and B share Net debt
Equity 15,416 11,356 Interest-bearing liabilities 15,763 13,691
Equity attributable to preference and Class D Interest-bearing assets –6 –7
shares –4,104 –2,762 Cash and cash equivalents and listed shares –945 –502
Corrected equity 11,312 8,594 Net debt 14,812 13,182
No. of shares 158,396,227 158,274,952
Number of shares after dilution 158,541,894 158,372,099 Net debt/EBITDA
Equity per Class A and B share, SEK 71.40 54.30 Net debt 14,812 13,182
Equity per Class A and B share EBITDA 1,991 1,620
after dilution, SEK 71.34 54.26 Net debt/EBITDA 7.4 x 8.1 x
Economic occupancy rate Net debt/Total assets

Contractual annual rent 2,374 1,974 Net debt 14,812 13,182
Rental value 2,510 2,099 Total assets 33,690 27,240
Economic occupancy rate 95% 94% Net debt/Total assets 44% 48%
Preference equity
EPRA NAV
Equity per preference share, SEK 32 32
Equity 15,416 11,356
Number of preference shares outstanding 16,784,028 16,784,028
Equity attributable to preference and Class D
shares –4,104 –2,762 Preference equity 537 537
Reversal of derivatives 117 422
Earnings per Class A and B share
Reversal of deferred tax, other temporary
differences 1,967 1,472 Profit after tax 3,166 2,965
Reversals due to joint ventures 627 610 Dividends attributable to preference and Class
D shares –237 –161
EPRA NAV 14,023 11,098
Corrected profit after tax 2,929 2,804
EPRA NAV per Class A and B share after dilution,
SEK 88.45 70.07 Earnings per Class A and B share, SEK 18.47 17.69
Profit from property management Interest coverage ratio
Profit after tax 3,166 2,965 Profit from property management 1,603 1,334
Tax 605 596 Financial expenses 481 444
Changes in value –2,168 –2,227 Corrected profit from property management 2,084 1,778
Profit from property management 1,603 1,334 Interest coverage ratio 4.3 x 4.0 x
Profit from property management per Equity/assets ratio

Class A and B share after dilution Equity 15,416 11,356
Profit from property management 1,603 1,334 Total assets 33,690 27,240
Dividends attributable to preference and Class Equity/assets ratio 46% 42%
D shares –237 –161
Reduced profit from property management 1,366 1,173 Secured liabilities/total assets
Profit from property management per Class A Secured liabilities 7,045 9,017
and B share after dilution, SEK 8.61 7.40 Total assets 33,690 27,240
Secured liabilities/total assets 21% 33%
Lease term
Contractual future rental revenue 14,251 13,070 Surplus ratio
Contractual annual rent 2,374 1,974 Net operating income 1,869 1,558
Lease term, years 6.0 6.6 Rental revenue 2,247 1,870
Surplus ratio 83% 83%
Cash flow per Class A and B share
Items not affecting cash flow –2,035 –2,185
Tax paid –87 –25
Dividends attributable to preference and Class
D shares –237 –161
Cash flow 1,252 1,034
Cash flow per Class A and B share
after dilution, SEK 7.89 6.52
PRESS RELEASES AND CALENDAR
Press releases
5 Apr 2019 Notice of the Annual General Meeting of AB Sagax (publ) 29 Jun 2018 Revised number of shares and voting rights
6 Mar 2019 Sagax issues bond loan in the European capital market 14 Jun 2018 Sagax conducts private placement of Class D common shares
totalling SEK 302 M
7 Feb 2019 Year-end report 2018
13 Jun 2018 Sagax examines conditions to conduct private placement of
25 Jan 2019 Sagax invests SEK 255 M Class D common shares
17 Jan 2019 Sagax joint venture Söderport conducts divestment 1 Jun 2018 Sagax’s rights issue of Class D common shares of SEK 656 M
oversubscribed
11 Jan 2019 Sagax invests SEK 200 M 30 May 2018 Sagax invests SEK 400 M in Stockholm
18 Dec 2018 Sagax acquires properties in France and Finland for SEK 176 M 21 May 2018 Sagax acquires property in Helsinki for SEK 116 M
30 Nov 2018 Revised number of shares and voting rights 17 May 2018 Sagax acquires property in Paris for SEK 101 M
22 Nov 2018 Sagax invests SEK 261 M 14 May 2018 Sagax publishes prospectus for the rights issue of Class D
31 Oct 2018 Sagax invests SEK 396 M and conducts private placement of common shares
Class D common shares in an amount of SEK 165 M 7 May 2018 Annual General Meeting of AB Sagax
30 Oct 2018 Sagax calls for redemption of SEK 550 M bond loan 7 May 2018 Interim report January-March 2018
25 Oct 2018 Sagax’s Nomination Committee appointed 4 May 2018 Sagax acquires properties in the Netherlands and Finland for
25 Oct 2018 Interim Report January-September 2018 SEK 131 M
16 Apr 2018 Annual Report 2017
10 Oct 2018 Sagax invests SEK 195 M
5 Apr 2018 Notice of the Annual General Meeting of AB Sagax (publ)
18 Sep 2018 Sagax receives Baa3 rating from Moody’s
5 Apr 2018 Sagax – rights issue of Class D common shares of SEK 656 M
13 Sep 2018 Sagax calls for redemption of EUR 60 M bond loan
21 Feb 2018 Sagax acquires properties in the Netherlands for SEK 214 M
10 Sep 2018 Sagax issues its first bond loan in the European capital market
8 Feb 2018 Year-end report 2017
30 Aug 2018 Sagax signs agreement to acquire properties in the Netherlands
for SEK 191 M 1 Feb 2018 Sagax acquires properties in Helsinki for SEK 92 M
29 Aug 2018 Sagax evaluates conditions to perform a bond issue following 31 Jan 2018 Sagax acquires properties for SEK 150 M
investment grade rating from Moody’s
13 Jul 2018 Interim report January-June 2018 15 Jan 2018 Sagax recruits a new CFO
5 Jul 2018 Sagax acquires properties in Finland and France for SEK 377 M 5 Jan 2018 Sagax publishes bond prospectus
Calendar
Interim report January-March 2019 7 May 2019
Annual General Meeting 2019 7 May 2019
Interim report January-June 2019 12 July 2019
Interim Report January-September 2019 24 October 2019
Schedule of dividend payments to holders of Class D shares

and preference shares
June 2019 December 2019
■■ F inal day for trading including dividend rights 26 June 2019 ■■ F inal day for trading including dividend rights 23 December 2019
■■ F irst day for trading excluding dividend rights 27 June 2019 ■■ F irst day for trading excluding dividend rights 27 December 2019
■■ Record date for dividend payment 28 June 2019 ■■ Record date for dividend payment 30 December 2019
■■ Expected payment date by Euroclear1) 3 July 2019 ■■ Expected payment date by Euroclear1) 7 January 2020
September 2019
March 2020
■■ F inal day for trading including dividend rights 26 September 2019
■■ F inal day for trading including dividend rights 27 March 2020
■■ F irst day for trading excluding dividend rights 27 September 2019
■■ F irst day for trading excluding dividend rights 30 March 2020
■■ Record date for dividend payment 30 September 2019
■■ Record date for dividend payment 31 March 2020
■■ Expected payment date by Euroclear1) 3 October 2019
■■ Expected payment date by Euroclear 1)
3 April 2020
1) Payment is made on the third bank day following the record date for Swedish issuers.
Sagax is unable to influence this date.
NORDIC ECOLABEL 3041 0001

Production: Sagax in cooperation with Addira. Printing: Åtta45, Sweden, 2019
Sustainability Report
2018
The Sustainability Report encompasses the AB Sagax and subsid- Overall, the company’s strategies are designed to ensure that
iaries. Joint ventures and associated companies are not included Sagax’s operations generate a long-term sustainable return and
in the Sustainability Report. Sustainability risks are described in strong cash flows. Regarding information to understand the
the sections where material risks have been identified, see pages company’s performance, position and earnings, refer to the 2018
50-53 and 116-119. Annual Report which includes a separate section describing the
Sagax follows the Swedish Companies Act’s main rule as re- company’s risks and risk management.
gards purpose and has therefore not stipulated any other purpose Sagax’s work with sustainability issues is a natural part of the
in the Articles of Association than to produce a profit for distri- company’s business model and helps to achieve the company’s
bution to shareholders, see Chapter 3, Section 3, of the Swedish goals. In 2018, Sagax has:
Companies Act. ■■ identified the properties where it is most suitable to initiate
In accordance with Chapter 6, Section 11 of the Swedish active work to reduce energy consumption,
Annual Accounts Act, Sagax has decided to prepare a statutory ■■ a nalysed the heating systems used in each property with the
Sustainability Report as a separate report to its Annual Report. aim of improving opportunities for efficient and green heating,
Page references in the range of page 1 to page 153 refers to Sagax ■■ identified 47 different properties with the potential to install
Annual Report 2018. The Board of Directors is ultimately solar collectors on the roof and begun the process to implement
responsible for Sagax’s sustainability work. these plans through dialogue with relevant county administra-
With the aim of improving the quality of Sagax’s sustainabil- tive boards and the Swedish Energy Agency,
ity reporting in terms of comparability, accuracy, immediacy and ■■ m inimised its environmental impact by purchasing 9,300 MW
clarity, Sagax has chosen to use the guidelines provided by the of electricity that is guaranteed from hydro power,
Global Reporting Initiative (GRI) for inspiration. The GRI con- ■■ continued the conversion process of heating systems that use
tent index is presented on pages 156-157. fossil fuel sources to district heating and heat pumps,
Sagax’s sustainability work, including the Sagax sustainability ■■ i nitiated a pilot project for charging points for electric cars,
policy, is based, for example, on the Global Compact’s ten princi- ■■ centralised the control of any soil contamination in properties
ples. Of the goals pursuant to the 2030 Agenda, Sagax’s sustainabil- by using the county administrative boards’ MIFO register, and
ity work aims to primarily fulfil the goals related to Good Health ■■ agreed with all main suppliers on a Code of Conduct to ensure
and Well-Being (Goal 3), Gender Equality (Goal 5), Affordable that working conditions at the companies that deliver products
and Clean Energy (Goal 7), Decent Work and Economic Growth and services to Sagax fulfil Sagax’s requirements in terms of
(Goal 8) and Sustainable Cities and Communities (Goal 11). health and safety and ethical standards as well as that the assign-
ment is conducted in an environmentally responsible manner.
Sagax’s sustainability work is a natural
part of the operations Sagax’s stakeholder analysis
Sagax’s overriding objective is the long-term generation of the Sagax’s operations affect and are affected by various groups of
maximum possible risk-adjusted return to the company’s own- stakeholders. Accordingly, the stakeholder perspective is also
ers. To achieve this goal the company operations are consistently incorporated into Sagax’s sustainability efforts. An internal stake-
conducted with a long-term perspective. holder analysis was conducted in 2018 to identify Sagax’s most
Sagax’s long-term approach is illustrated by the inclusion in important stakeholders. Subsequently, the sustainability areas
its management strategy to endeavour to sign long leases and to that are most significant for Sagax to focus on were evaluated.
limit the number of property transactions in the company’s oper- The areas deemed to be most relevant from the perspective of
ations. The company’s policy is to abstain from maximising rent both stakeholders and Sagax – compliance with laws and provi-
levels at all points of time in favour of signing leases of a longer sions including rules and regulations for proper market communi-
duration with solvent tenants. This reduces the risk of vacancies, cation and anti-corruption, customer satisfaction, energy use and
while leading to lower costs for letting premises and adapting climate impact and employment terms and conditions – are pri-
premises to tenant needs. oritised in sustainability activities. Identifying and analysing the
The company is dependent on highly skilled and professional expectations of stakeholders on Sagax’s operations offers better
employees. For this reason, it is important that the company is an preconditions to achieve our overriding objectives. This is why we
attractive employer that can attract and has the ability to retain also conduct regular dialogue with the most important stakehold-
highly skilled personnel in the long term. ers in the following ways:
154 This document is an in-house translation of the Swedish Annual Report. In the
Owners/investors Tenants
■■ B oard meetings, of which one meeting each year is a strategy ■■ Customer meetings
meeting ■■ Regular dialogue about property management with each
■■ M eetings with owner representatives for special discussions company maintaining the properties
about corporate governance ■■ D ialogue between tenants and a contact person
Employees specially appointed as manager for each property

■■ Employee appraisals
■■ Workshops Suppliers
■■ Business planning ■■ D uring procurement, following-up framework agreements and
■■ Annual conference for all employees purchase orders
■■ Regular reviews with all employees about the company’s ■■ During supplier meetings
policies
Partners
Lenders ■■ Attendance and involvement in meetings with interest and
■■ I ndividual meetings with banks and representatives from the trade organisations
capital markets ■■ Network meetings
■■ Dialogue when preparing financial statements
■■ Capital market presentations Other than internal assessments of our sustainability work and
approach, we follow our results in reports from external
organisations, analysts, investors and so forth.
A more detailed description of each sustainability area,
boundaries and approach is presented in the relevant section of
Sagax’s sustainability report for each respective aspect.
UN SUSTAINABLE DEVELOPMENT GOALS
The 2030 Agenda and the Sustainable Development Goals are an agenda for sustainable development agreed on by the world’s
countries. All players in society have a responsibility to ensure the goals are achieved by 2030. In Sagax’s operations, goals 3, 5,
7-8 and 11 are particularly important.
This document is an in-house translation of the Swedish Annual Report. In the 155
GRI CONTENT INDEX
GRI Standard number Reference Comment
ORGANISATION
102-1 Name of the organisation Page 88
102-2 Activities, brands, products Page 1-37
and services
102-3 Location of headquarters Page 60
102-4 Location of operations Page 60
102-5 Ownership and legal form Pages 55-57 and 60
102-6 Markets served Page 18 and 60
102-7 Scale of the organisation Pages 60-61 and
78-82
102-8 Information on employees and other workers Pages 60, 96-97 and
162
102-9 Supply chain Page 163
102-10 Significant changes to the organization and its supply chain No significant change have taken place in
the organisation or supply chain during the
accounting period.
102-11 Precautionary Principle or approach The precautionary approach is fundamental in
Sagax’s sustainability work and is included in
Sagax’s Sustainability Policy and Supplier Code
of Conduct.
102-12 External initiatives Pages 60-61 and 66-70 In its sustainability work, Sagax also uses the
principles of the UN Global Compact initiative.
102-13 Membership of associations Sagax is not a member of any organisations.
STRATEGY
102-14 Statement from senior decision-maker Page 4
ETHICS AND INTEGRITY

102-16 Values, principles, standards, and norms of behaviour Page 61, 70 and 163 See also Sagax’s Code of Conduct and
Sustainability Policy.
GOVERNANCE
102-18 Governance structure Pages 60-61 and 66-72
STAKEHOLDER ENGAGEMENT
102-40 List of stakeholder groups Page 154-155
102-41 Collective bargaining agreements No employees are covered by collective
agreements.
102-42 Identifying and selecting stakeholders Pages 54-56 and 154
102-43 Approach to stakeholder engagement Page 156
102-44 Key topics and concerns raised Page 156
REPORTING PRACTICE
102-45 Entities included in the consolidated financial statements Pages 45-47 and 60
102-46 Defining report content and topic Boundaries Page 89
102-47 List of material topics Page 89
102-48 Restatements of information The report for 2018 is the company’s first
GRI-inspired report.
102-49 Changes in reporting The report for 2018 is the company’s first
GRI-inspired report.
102-50 Reporting period Page 88 The same as for Sagax’s Annual Report.
102-51 Date of most recent report The sustainability section of the 2017 Annual
Report, though not GRI-inspired.
102-52 Reporting cycle Annually in conjunction with the annual report.
102-53 Contact point for questions regarding the report CEO
102-54 Claims of reporting in accordance with the GRI Standards Page 154
102-55 GRI content index Page 156-157
102-56 External assurance Page 165
GRI Standard number Reference Comment
FINANCIAL ACCOUNTABILITY
GRI 103 Management approach
GRI 201 Economic Performance
103-1 Explanation of the material topic and its Boundary Pages 8-9 and 158
103-2 The management approach and its components Pages 8-9 and 158
103-3 Evaluation of the management approach Pages 8-9 and 158
201-1 Direct economic value generated and distributed Pages 8-9 and 158

GRI 205 Anti-Corruption
103-1 Explanation of the material topic and its Boundary Page 70 and 158
103-2 The management approach and its components Page 70 and 158
103-3 Evaluation of the management approach Page 70 and 158
205-3 Confirmed incidents of corruption and actions taken Page 158 No cases of corruption involving Sagax were
reported during the year.
ENVRIONMENTAL RESPONSIBILITY
GRI 302 Energy
103-1 Explanation of the material topic and its Boundary Page 70 See also Sagax’s Sustainability Policy.
103-2 The management approach and its components Page 70
103-3 Evaluation of the management approach Page 70
302-1 Energy consumption within the organization Pages 70 and 159-161
– Energy savings Pages 70 and 159-161
– Use of land Pages 70 and 159-161
– Land surveys Pages 70 and 159-161
SOCIAL RESPONSIBILITY
GRI 401 Employment
103-1 Explanation of the material topic and its Boundary Page 161
401-1 New employee hires and employee turnover Page 161
401-2 Benefits provided to full-time employees that are not provided to temporary Page 97 and 162
or part-time employees
401-3 Parental leave Page 162

GRI 404 Training and Education
103-1 Explanation of the material topic and its Boundary Page 162
404-3 Percentage of employees receiving regular performance Page 162
and career development reviews

GRI 406 Non-discrimination
103-1 Explanation of the material topic and its Boundary Page 70 and 163
103-2 The management approach and its components Page 70 and 163
103-3 Evaluation of the management approach Page 70 and 163
406-1 Incidents of discrimination and corrective actions taken Page 163 No cases of discrimination were reported in
2018.
FINANCIAL ACCOUNTABILITY period is to be not less than 15% and profit from property man-
Business model agement per Class A and B share should increase by a minimum
Sagax is a listed property company whose business concept is to of 15% per year.
invest in commercial properties, primarily in the warehouse and The Board has overall responsibility for guiding operations to-
light industry segment. wards the financial targets allowed by the scope of the company’s
Sagax’s business model is characterised in all areas by a long- policies. The outcome is followed up every quarter in conjunction
term approach. Short-term gains are subordinate to the compa- with interim reports.
ny’s long-term value creation. Accordingly, sustainability work is Detailed information about Sagax’s financial position is avail-
integrated into the business model. able in the company’s financial statements on pages 78-121. The
Properties designed as warehouses and for light industries economic value generated amounted to SEK 4.8 billion in 2018
are attractive investment opportunities, since they generate a and mainly comprise rental revenue, profit from joint ventures
high yield combined with a low rate of new production and sta- and changes in the value of properties. The remaining value
ble occupancy rates. Sagax invests in add-on acquisitions and in amounted to SEK 2.6 billion. Value distributed to owners per-
existing properties. Property acquisitions and investments in the tains to the dividend paid to shareholders.
existing portfolio aim to increase cash flow and diversify rental
revenue, thereby reducing the company’s operational and financial
Economic value generated SEK M %
risks. Rental and other revenue 2,312 48%
Sagax’s financial structure is designed with a clear focus on Joint ventures, profit from property management 312 7%
operating cash flow and interest coverage ratio. This is expected Changes in value 2,167 45%
to create both excellent prerequisites for expansion and an attrac- Total 4,791 100%
tive return on equity.
Economic value distributed
Sagax pursues efficiency and sustainability in its management Operating expenses 360 8%
strategy. The management strategy includes working actively Employees 87 2%
to achieve long leases. The company’s policy is to abstain from Tax 698 15%
maximising rent levels at all points of time in favour of signing Creditors 481 10%
leases of a longer duration with solvent tenants. This is regarded Owners (proposed dividend) 554 12%
as being advantageous since it reduces the risk of vacancies, while Economic value retained 2,609 54%
leading to lower costs for letting premises and adapting premises
to tenant needs. Number of confirmed cases of corruption and action taken
Sagax endeavours to attract reputable and creditworthy ten- A high level of sound business ethics is fundamental to Sagax’s
ants. The company primarily signs leases that exclude the cost long-term maximisation of value. The company has an obligation
of heating and hot water under which the tenant pays property to act in compliance with respect to applicable law and regula-
expenses that would otherwise have been paid by the property tions in the company’s various markets. The company’s aim is to
owner. be transparent and credible.
Sagax invests primarily in regions experiencing stable popu- The anti-corruption policy has been adopted by the Sagax
lation growth and that have diversified business activities. Sagax’s Board and encompasses all employees. The company must never
greatest exposure to the rental market occurs in Stockholm and be involved in or permit corruption. The company does not accept
Helsinki, which are the markets in the Nordic region regarded as that employees allow themselves to be bribed or receive gifts that
offering the best potential for long-term growth. The risk of a de- can be equated with bribes. The limit for receiving and giving
cline in the occupancy rate and rent levels due to a weaker rental gifts follow the Swedish Tax Agency’s guidelines on gifts. The
market is regarded as low due to the stable population growth and anti-corruption policy is communicated to the organisation at the
the diversified business operations in these regions. annual employee conference and is always available to staff.
The company does not conduct any operations in countries
Direct value generated and distributed with extensive corruption problems. Corruption has not histori-
The financial results are crucial for the company’s existence. cally been a problem in operations.
Long-term value creation is key to the company’s strategy. Finan- Management is not aware of any incidents of corruption in
cial targets include that Sagax’s return on equity over a five-year 2018.
ENVIRONMENTAL RESPONSIBILITY In 2018, work mainly focused on the Swedish property portfolio
Energy use and climate impact to identify properties with high energy use. Additional analyses
Heating of premises and electricity use are considered to be the were carried out for a number of selected properties to identify
most import environment-related sustainability areas for Sagax. and perform simple measures that could result in a reduction in
Sagax has adopted a sustainability policy that includes environ- energy consumption. Examples of such measures are the installa-
mental issues. However, the climate impact from tenants’ use of tion of more efficient ventilation or heating system, replacing fuse
electricity and heating is something that the company has only ratings and adjusting light controls and light fittings. The analyses
limited control of. In its sustainability work, Sagax strives for include both properties in which Sagax pays the energy expenses
energy recovery from heating and a decrease in electricity con- and properties with leases that exclude the cost of heating and
sumption. hot water. Sagax identified 47 different properties with the poten-
Most of Sagax’s tenants, corresponding to 69% of the lettable tial to install solar collectors on the roof and in consultation with
area, are responsible for their own heating accounts. It is therefore the relevant county administrative boards applications have been
important that Sagax pursues a continuous dialogue with tenants sent to the Swedish Energy Agency on this matter.
to achieve energy savings and to enhance the efficiency of sustain-
ability efforts by tenants. Use of land
Changing to renewable sources of energy for electricity and Sagax’s own operations are not classified as environmentally
heating is another way of reducing the climate impact of the harmful under the Swedish Environmental Code. However,
properties. As one component of Sagax’s sustainability work, only Sagax’s tenants could conduct operations for which they have
green electricity is used in the Swedish property portfolio. The a duty to report or require a permit under the Environmental
use of district heating has increased in the past five years due to Code. The Environmental Code stipulates that the tenant (“the
the phasing out of oil heating, see bar graph on the next page. operator”) that carries out environmentally hazardous activities
At year-end 2018, district heating as a heating source had on Sagax’s property is responsible for any pollution arising. How-
increased to 82% of the company’s lettable area, while oil heating ever, the responsibility could fall on Sagax if a tenant does not
had decreased to 8% of the lettable area. The charts on the next have funds for performing the necessary sanitisation work. This is
page present the sources of heating for each market area. a risk that Sagax must take into consideration. The risk is reduced
In the company’s stakeholder dialogues, investors expressed by maintaining a constructive dialogue and cooperation with the
a wish for greater clarity in calculating and reporting Sagax’s operators regarding the environmental impact of their operations.
carbon emissions. In early 2019, Sagax engaged Carbon Footprint Sagax also adopts a preventive approach by considering the busi-
Ltd, a leading service provider in the area, to calculate Sagax’s ness activities of potential tenants when leasing, which reduces
climate footprint in the form of carbon emissions during the 2018 the risk of operations that cause pollution being conducted on
fiscal year. In total, Sagax was responsible for carbon emissions Sagax’s properties. Sagax also seeks to ensure that tenants do
of 252 tons, of which most were from company cars and business not conduct operations that contravene their leases or applicable
air travel. Sagax has compensated for the company’s emissions legislation or authority permits. Tenants that do not comply with
in 2018. As a means of reducing carbon emissions in 2019, Sagax laws and agreements may forfeit their lease.
will begin the replacement of the existing car fleet with green
cars and replace air travel with rail travel. Land surveys
Properties for warehousing and light industry are usually included
Energy savings in municipalities’ detailed development plans for industrial areas.
Energy saving in the properties is relatively low since Sagax This means that the same requirements for removing pollution
mainly leases premises for warehouse and light industry. Leases from acquired land are not imposed as they would be on, for
that exclude the cost of heating and hot water are usually applied, e xample, areas for residential properties. However, Sagax does
meaning that the tenant pays for electricity, heating and water. have a certain level of responsibility for investigating whether
Since tenants pay for these costs themselves, they are directly pollution is found on the land acquired. If pollution were to be
affected by any electricity and heating savings. Tenants are inter- detected at a later date, Sagax could be held responsible for pay-
ested in making energy savings since electricity and heating usu- ing for sanitisation, unless a claim can be made against the oper-
ally represent a large amount of customers’ operating expenses. ator that caused the pollution. Such sanitisation activities may be
According to the Swedish Energy Declaration of Buildings costly and environmental damage could have a detrimental effect
Act (2006:985), an energy declaration is to have been prepared on the Sagax brand. Accordingly, it is natural for the company to
when a building is constructed or sold in Sweden. Sagax prepares actively promote sustainable use of land in both acquisitions of
energy declarations when required, although workshop and indus- new properties and in existing properties.
trial properties are exempt from this requirement.
Heating sources in Sagax’s property
portfolio
Geothermal
Wood chips 4% heating
1%
Electricity 3%
Other form
Oil 8% of heating
2%
District
heating
82%
Stockholm Electricity 4% Helsinki

Geothermal Electricity 1% Geothermal
Oil 3% heating 2% heating 1%
District District
heating heating
91% 98%
Finland, university cities Paris

Electricity 1% Geothermal
Oil 1% heating
1%
District District
heating heating
97% 100%
Netherlands Rest of Sweden

Geothermal Other form
heating 2% of heating 8%
Wood District
chips heating
District 26% 31%
heating
100% Electricity Oil 24%
9%
Rest of Finland Rest of Europe

Electricity Other form
2% of heating 9%
Olja 12%
Oil 46% District
District heating
heating 54%
77%
Heating sources in the property portfolio
%
90
80
70
60
50
40
30
20
10
0
20 3
20 4
20 5
20 6
20 7
18
20 3
20 4
20 5
20 6
20 7
18
20 3
20 4
20 5
20 6
2017
18
20 3
20 4
20 5
20 6
20 7
18
20 3
20 4
20 5
20 6
20 7
18
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
20
20
20
20
20
District heating Oil Electricity Wood chips Other form

of heating
The company endeavours to avoid acquisitions of properties in ronment and anti-corruption, also provide guidelines for Sagax’s
the risk zone. Checks against the municipality’s list of polluted sustainability work.
areas are conducted when properties are acquired. For properties
on the municipality’s list, an assessment is carried out, if deemed Compliance with laws and provisions
necessary, to determine whether the property is to undergo a Compliance with applicable laws is a matter of course for the
Phase I investigation, which involves studying historical docu- organisation. Owners, lenders, employees and other stakeholders are
mentation about the property to analyse the risk of any pollution. expected to comply with applicable law. Non-compliance with laws
This includes checking the type of operations that were actively and rules risks damaging the company’s brand and financial position.
conducted on the properties in the past, if previous environmen- Sagax is continuously strengthening relevant knowledge within
tal investigations have been carried out and whether the property the organisation through internal seminars, lectures and other
is included in an environmental list. If the investigation concludes training of its employees, in order to ensure compliance with laws
that a further study is required, a Phase IU investigation may be and regulations as far as possible in the countries in which the
performed, whereby tests are taken in and around the property. company conducts operations. Additionally, Sagax engages pro-
Based on these investigations, an assessment is made of whether fessional expertise in the form of, for example, reputable lawyers
any additional measures are required. The procedure may differ in each country and in each field of law. It is natural in the areas
between the company’s various market areas, depending on legis- of lease law, tax law and contract law to use external experts that
lation and practical opportunities. the company has engaged for a long period of time and that have
No pollution on Sagax’s properties was detected in 2018 and acquired extensive knowledge of the company’s operations and
no sanitisation work was carried out. risks over the years. External legal expertise is regularly engaged in
refinancing and property transactions. Well-functioning communi-
SOCIAL RESPONSIBILITY cation with the company’s auditors also creates the conditions for
Human rights compliance with laws and provisions.
According to the UN guiding principles for companies and human There were no legal transgressions resulting in fines or
rights, the state has an obligation to protect human rights and non-monetary sanctions in 2018.
companies have a responsibility to respect human rights. States
and the companies that may have violated individual human Customer satisfaction
rights must offer individuals whose human rights have been The aim in relation to tenants is to strive for a situation whereby
v iolated an opportunity to seek redress. both parties are satisfied and want to continue their business rela-
Sagax shall respect human rights in all of its operations. This tionship. In the company’s experience, tenants want a professional
means the company’s operation must not give rise to, contribute counterparty and competitive rent levels.
to or be linked to violations of human rights and that Sagax shall A professional counterparty is one that is an accessible, com-
act to prevent such violations in its operations. Sagax is to address petent and attentive manager. Sagax’s aim is to meet customer
any negative impact on human rights if such still occur in opera- needs as far as possible and a specific manager is assigned as con-
tions that Sagax is responsible for. tact person for each property. Satisfied customers are a require-
Internationally accepted instruments offer guidance in ment for extending leases and accordingly an indicator of satisfac-
Sagax’s efforts to respect and support human rights. The leading tion is the turnover rate.
internationally acknowledged human rights that are relevant in The turnover rate in 2018 was 4.1% (3.2), see chart on page
this context consist of the UN Universal Declaration of Human 18, calculated as the contractual annual rent for vacating tenants
Rights, the International Covenant on Civil and Political Rights, during the year in relation to average contractual annual rent for
the International Covenant on Economic, Social and Cultural the year.
Rights, the eight fundamental ILO conventions and the European
C onvention on Human Rights, incorporated into Swedish law Employees
through SFS 1994:1219. The development of the company is dependent on highly skilled
For a company’s employees, human rights in the workplace and professional employees. For this reason, it is important that
are particularly important. The right to exercise freedom of asso- the company is an attractive employer that can attract and has the
ciation and equal opportunities are examples of such rights. ability to retain highly skilled personnel. In exchange, employees
As stipulated in Sagax’s Sustainability Policy, the ten prin- are expected to assume responsibility of their work duties and
ciples of the UN Global Compact, which in addition to human also serve as good representatives of the company’s values and
rights also touch on working and employment conditions, envi- culture.
Terms of employment parental leave. In 2018, six men and five women took parental
Sagax attaches great value to offering favourable terms of employ- leave a total of 413 days. Employee turnover can be seen as an in-
ment for its employees in the markets in which it operates. Since dicator of employee satisfaction and the company’s low employee
Sagax operates in different countries, the employment terms that turnover is deemed to be a sign that employees have high job sat-
an employer is normally expected to offer may vary, and thus isfaction and want to remain working at the company.
these terms may also differ, for example, regarding pension and
health care benefits. In addition to offering competitive terms of Skills development and provision of skills
employment, the company has, for a number of years, also offered An important aspect for the operations is ensuring that em-
all employees the opportunity to participate in an Incentive Plan, ployees have the right skills and opportunities to develop. The
refer to the 2018 Annual Report. The purpose of this Plan is that expertise of the organisation is central to the development of the
all employees should feel a sense of involvement in the develop- company and skills development is an aspect that could be crucial
ment of the company and to enhance understanding of sharehold- for retaining highly skilled employees. The risk that key personnel
ers’ interests. Sagax takes a positive view of employees owning leave the company is a natural operational risk for a company such
shares in the company and the diversity policy for the Sagax as Sagax. The company endeavours to minimise this risk through
Board highlights the importance of Board members also having market-based remuneration and a continuous dialogue with the
significant shareholdings in the company. company’s employees.
In 2018, 13 employee joined the company and five employees Appraisals were held with every employee in 2018. The topics
left the company. The Group had 59 employees at year end. No discussed at these appraisals included the employee’s develop-
employees were covered by collective agreements in 2018. ment during the year and the need for continued skills develop-
At the end of the year, four consultants were contracted in ment. Employees who express a wish to participate on courses
operations, mainly to replace regular staff during, for example, or otherwise develop their skills are encouraged to do so by the
company.
A conference for all Sagax employees is held every year. Top-
Number of employees Men Women Total ics addressed at the conference include the company’s continued
Sweden 17 12 29 development. The company’s policies that directly affect employ-
Finland 8 12 20 ees are presented and an opportunity is provided to ask questions
France 4 2 6 and discuss the content of such policies. The conference is an
Netherlands 4 0 4 opportunity to consolidate solidarity over country borders, and
Total 33 26 59 ensure a Group-wide corporate culture and values.
Board of Directors Management
Women 17%
Women 33%
Men 83% Men 67%
Other executives Others
Women 27% Women 49%
Men 73% Men 51%
Non-discrimination The responsibility for clearing snow, removing icicles and fire
Sagax has an anti-discrimination policy according to which Sagax protection could be Sagax’s, the external property manager’s or
must regularly take active measures to combat discrimination and the tenant’s, depending on the lease. If the responsibility falls on
victimisation and promote equal rights and opportunities regard- Sagax, each property manager is responsible for ensuring that the
less of gender, transgender identity or expression, ethnicity, reli- necessary inspections and other follow-up procedures are per-
gion or other expression of faith, disability, sexual orientation or formed. Sagax also usually responsible for ventilation and heating
age. This applies, for example, to salary structure, opportunities systems, and thus performs mandatory ventilation inspections and
for promotion and skills development. No reports of discrimina- checks refrigerants. With the introduction of a new system for
tion were made in 2018 property care-taking follow-up, as described, above, inspections
of management performed by external parties have improved in
Social responsibility and responsibility in the supplier chain 2018.
External suppliers are engaged to perform technical management. Incident reporting for tenants is conducted when each tenant
The company mainly engages well-known contractors. contacts his or her allocated manager if an incident that is under
General requirements regarding regulatory compliance and Sagax’s area of responsibility arises.
general good order are included in agreements with external No information has been presented suggesting that any seri-
managers and construction contractors. If it is discovered that a ous incidents occurred in 2018.
supplier contract has been breached, the company changes to a
different counterparty. Hazardous substances in buildings
When a property is to be demolished or renovated, Sagax checks
Code of Conduct and follow-up of supplier requirements whether there is any asbestos, for example, in the flooring or
A project was initiated in Sweden to develop a more structured the ventilation system. If asbestos is detected, sanitisation work
method for setting follow-up requirements on the management is performed in accordance with applicable legislation and local
and maintenance activities that the company outsources to exter- rules. Sagax also sanitises PCB that could exist in sealing com-
nal parties. One measure is that annual agreements are entered pounds, sealed insulating glass units and in some types of flooring
into with all suppliers. The agreements state that external man- materials. Any remediation measures have been completed or are
agers must carry out the stipulated inspections at the properties included in the company’s remediation plans.
within the correct time. Sagax has recruited an employee in
Sweden to work specifically on setting requirements on suppli- Correct market communication
ers. In 2018, Sagax agreed with all main suppliers in Sweden Since Sagax is a company listed on a regulated stock market, the
on a Code of Conduct to ensure that working conditions at the company must deliver correct, factual and relevant information
companies that deliver products and services to Sagax fulfil its to the capital market at all times. A condition for the company’s
requirements in terms of health and safety and ethical standards operations is compliance with laws, the Nasdaq Stockholm Rule
as well as that the assignment is conducted in an environmen- Book as regards how and when information is to be provided.
tally responsible manner. Suppliers are also to inform their sub- Creditability forms the basis of the brand and errors present
suppliers about the Code of Conduct. both a financial risk and the risk of a damaged brand. Accordingly,
Sagax’s Swedish operations is also implementing a special Sagax’s aim is to be as transparent as possible with respect to the
computer software to more easily follow up on whether external limitations dictated by regulations, business ethics, stakeholders
property managers perform the inspections and take the preven- and practical restrictions.
tive measures as required under applicable law and supplier agree- Sagax’s information and communication policy highlights the
ments. These include systematic fire safety measures, electricity importance of the correctness of the information that the com-
audits and inspections of ventilation and other equipment in pany provides to the public. This policy regulates the presentation
Sagax’s properties. The software will make it easier to follow up of the financial reporting and how communication on reporting is
property management. to be managed. This policy and its importance to individual em-
ployees are discussed at the annual employee conference.
Tenant health and safety No violations associated with incorrect market communica-
In addition to the direct harm that deficient property care-taking tion that resulted in fines, warnings or other non-monetary sanc-
could cause to peoples’ health, any injuries suffered by the tenants tions took place, neither historically nor in 2018.
could also have a negative impact on the company’s brand. Exam-
ples of relevant risks to consider are falling icicles, inadequate snow
clearing, mould, asbestos and insufficient fire protection.
CONFIRMATION
2018
This certificate confirms that
AB Sagax
has invested in
Volume Production Mix
9 300 MWh 100% Hydro

from
Scandinavia
It is hereby confirmed that 100% of the electricity volume as specified above is covered
by Guarantees of Origin for renewable energy according to the EU Renewables Directive.
The electricity production is certified according to the international EECS (European Energy Certificate System) standard
and documented by the issue of Guarantees of Origin (GoO). The GoOs are issued by Statnett after approval of
production facilities and registered by Kinect Energy in accordance with Norwegian and international law.
Kinect Energy is a registered user of the RECS Good Practice Standard
This certificate acknowledges that

AB Sagax
offset
252 tonnes of Carbon Dioxide
by supporting the VCS certified Solar Power project in India,
which will reduce carbon emissions via the displacement of
fossil fuels.
This helps to combat climate change

and sustain our environment for future generations.
John Buckley, Managing Director,

www.carbonfootprint.com 07 March 2019 Carbon Footprint Ltd.
Calculating the carbon footprint

Offsetting carbon emissions
Helping to combat climate change
The auditor’s report on the statutory
sustainability report
To the general meeting of AB Sagax, Corp. Reg. No. 556520-0028
ENGAGEMENT AND RESPONSIBILITY

The Board of Directors is responsible for that the statutory sustainability report on
pages 154-164 has been prepared in accordance with the Annual Accounts Act.
THE SCOPE OF THE AUDIT

Our examination of the statutory sustainability report has been conducted in
accordance with FAR’s auditing standard RevR 12 The auditor’s report on the
statutory sustainability report. This means that our examination of the statutory
sustainability report is different and substantially less in scope than an audit
conducted in accordance with International Standards on Auditing and generally
accepted auditing standards in Sweden. We believe that the examination has
provided us with sufficient basis for our opinions.
OPINION
A statutory sustainability report has been prepared.
Stockholm, 12 April 2019
Ernst & Young AB
Magnus Fredmer
Authorised Public Accountant
AB Sagax (publ), Engelbrektsplan 1, SE-114 34 Stockholm, Sweden
Corp. Reg. No. 556520-0028
Tel: +46 8 545 83 540, fax: +46 8 545 83 549
www.sagax.se

Sagax

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ANNUAL REPORT 2018

AB Sagax is a property company whose business

The year in brief 1 Financial statements

Sagax in brief 2 Consolidated statement of comprehensive income 78

Chief Executive Officer’s comments 4 Comments on the consolidated statement of

Consolidated statement of financial position 80

Market area Rest of Finland 33

The Sagax share and shareholders 54

Organisation and employees 60

Events after the end of the year 65

Corporate Governance Report 66

The year in brief

Profit from property management increased 20% to SEK 1,603 M.

Revenue increased 20% Profit after tax for the year

Selected key performance indicators

2018 2017 2016 2015 2014

Interest coverage ratio, multiple 4.3 4.0 3.7 3.3 2.9

Debt ratio 47% 50% 54% 59% 59%

Properties’ market value, SEK M 29,024 23,771 20,628 16,189 13,428

Multi-year summary, see page 62. «READ MORE

AB Sagax is a property company whose business concept is to invest in commercial properties,

PROPERTY PORTFOLIO FINANCING

Market value of properties Debt ratio and interest-coverage ratio

READ MORE » Business concept, goals and strategies, see page 8.

OPERATIONS of shares, profit from property management per Class A and

from 325 to 1,000. At the end of 2018, 82% of the rental

Business concept, goals and strategies

BUSINESS CONCEPT FINANCIAL TARGETS

READ MORE » Financing, see page 38.

Financing strategy Strategy for the rental market

1,500 2,400 24,000

Summary of property portfolio, see page 18. «READ MORE

Total yield on Class B Sagax share during the period 2009-20181) 2)

Sagax B (Total return) Carnegie Real Estate Index

2009 2010 2011 2012 2013

2014 2015 2016 2017 2018

Equity Profit from property management and cash flow

Profit from property management, rolling annual value

BACKGROUND In 2018, transaction volume in Finland decreased to approx-

Regional BNP and BNP/capita per region 2017

Regional GDP (EUR M)

Annual percentage population growth in Finland’s Percentage population growth in regions

120 largest labor markets in Europe

Market area Stockholm, see page 26. «READ MORE

Inner London (since 2002) 24 1.4 872,200 20,000

Brussels 26 1.3 309,300 10,000

Dublin (since 2012) 7 1.2 170,600 0

Cologne 4 0.2 199,100 BNP growth Source: Eurostat and Evidens

Source: Eurostat and Evidens

GDP per capita (EUR) Growth in regional GDP, %

Supply change 1998–2018 in Stockholm (area)

The change in the population during the period was +30%.

Warehouse/industry in Stockholm City Warehouses in Helsinki Source: Strateg, JLL

Summary of the Sagax property portfolio

Market value of properties Group’s rental value

Summary of property portfolio

31 Dec 2018 2018

Unallocated – – – – – – – – – –17 –6 –17 –

READ MORE » Market overview, see page 11.

Lease terms Specification of leases

Lease term Industry exposure

Risks and risk management, see page 50. «READ MORE

YIELD LEASE ACTIVITIES

Tenants, net occupancy Tenant turnover rate

a v acancy rate of 95%. Following the leases, the economic 1,400 12