Interim report January - June 2016

SUCCESSFUL SHARE ISSUE AND CONTINUED STREAMLINING

QUARTER APRIL-JUNE 2016

• Rental income amounted to MSEK 642 (615)

• Profit from property management totaled MSEK 352 (346), corresponding to SEK
2.23 per ordinary share (2.36)

• Profit after tax amounted to MSEK 703 (670), corresponding to SEK 4.62 per
ordinary share (4.62)

• Cash flow from operating activities was MSEK 121 (153), corresponding to SEK
0.64 per ordinary share (0.94)

INTERIM PERIOD JANUARY - JUNE 2016

• Rental income amounted to MSEK 1,292 (1,203)

• Profit from property management totaled MSEK 693 (613), corresponding to SEK
4.61 per ordinary share (4.13)

• Profit after tax amounted to MSEK 1,357 (1,177), corresponding to SEK 9.37 per
ordinary share (8.21)

• Recognized property value of SEK 31.9 billion (27.8) pertains to 417 (366)
directly owned properties

• Net asset value (EPRA NAV) per ordinary share was SEK 81.58 (65.43)

• Cash flow from operating activities was MSEK 414 (537), corresponding to SEK
2.60 per ordinary share (3.57)

SIGNIFICANT EVENTS DURING AND AFTER THE QUARTER

• In July, Joacim Sjöberg was appointed deputy CEO, taking office in October
2016. At the same time, CEO Jens Engwall announced that he planned to step down
from his operational position prior to the end of 2017.

• A successful new share issue, with preferential rights for holders of ordinary
Hemfosa shares, contributed approximately SEK 1.8 billion to the company.

• Hemfosa’s 2016 Annual General Meeting (AGM) was held on April 19. Motions
adopted by the AGM included payment of a dividend of SEK 4.20 per ordinary share
and of SEK 10.00 per preference share both to be paid quarterly.

• Hemfosa acquired 13 school properties properties at an underlying property
value of approximately MSEK 444. During the quarter, possession was taken of ten
of the properties.

• Söderport Fastigheter, a joint venture in which Hemfosa owns 50 percent,
divested a property at an underlying property value of MSEK 170.

• Hemfosa acquired a healthcare property in the Stockholm area at an underlying
property value of MSEK 195.

• Hemfosa took over an office property in the municipality of Fredrikstad Norway
at an underlying property value of MSEK 84.

COMMENTS FROM THE CEO

During the second quarter, Hemfosa implemented a rights issue of ordinary shares
that contributed just over SEK 1.8 billion to the company. Thanks to the rights
issue, we can take swifter action when we identify the right acquisition targets
and continue to grow our community service properties. To strengthen Hemfosa’s
management and ensure that the company’s long-term strategy is implemented
forcefully, we have employed Joacim Sjöberg as deputy CEO.

By focusing on community service properties, we are building a property
portfolio hallmarked by stable cash flows and long-term tenants. The major
acceptance of the rights issue among our shareholders was highly encouraging and
strengthens us in our conviction that we are thinking correctly and doing the
right things – and we now have a better platform for continuing to grow Hemfosa
in our three markets in the Nordic region. We are doing this with the distinct
objective of streamlining the portfolio so that community service properties
will account for at least 75 percent of the property value; today, they
represent 63 percent.

STRONGER PLATFORM IN THE NORDIC REGION

During the quarter, we implemented a number of favorable transactions and
strengthened our profit from property management. In Sweden, we acquired 13
school properties, primarily in the Stockholm region, at a value of MSEK 444,
with an exclusive option to sign an agreement in the third quarter of 2016 to
acquire an additional two schools. These are properties in good locations that
are fully leased to well-established school operators, and we are delighted to
be able to complement our portfolio with them. In June, we also signed an
agreement for the acquisition of a centrally located healthcare property in
Vällingby, western Stockholm, at a value of MSEK 195, with possession to be
taken in September. In the Norwegian market during the quarter, we acquired a 20
-percent stake in a property company focused on community service properties,
while also taking possession of the Ringstabekk senior citizens center in the
municipality of Bærum in the Oslo region. We are continuing our determined and
active efforts to build Hemfosa’s position as the specialist in community
service properties. It is gratifying that, despite intensifying competition not
least in Sweden, we are maintaining a high transaction tempo and completing
acquisitions on favorable terms – which was the precondition we set when
implementing the rights issue during the spring. A key prerequisite for this is
the expertise, determination and market familiarity possessed by Hemfosa’s
organization.

SAFEGUARDING COMPETENCIES AND SUCCESSION PLANNING

In Norway, we have continued to strengthen the organization through the
appointment of an experienced head of property operations, who will focus on
developing our property management, thus providing management in Norway with
better prerequisites to identify and implement attractive acquisitions and
projects. In Norway, we are now established with the strength we need to manage
a growing portfolio and, in Finland, we are working to get an optimal
organization in place. I am delighted that Joacim Sjöberg will be strengthening
Group Management as Deputy CEO starting this autumn, and will thus ensure the
continued building of Hemfosa Fastigheter. Joacim Sjöberg has been close to the
company as a financial adviser for many years; he possesses solid strategic
expertise and is highly familiar with Hemfosa’s corporate culture. With him in
the organization, we can continue our efforts to achieve our objectives and I
can start to plan an orderly succession and eventually focus on playing a freer
role as a major shareholder and ideally as a Board member.

Meanwhile, we will devote our full force to continuing to implement value
-creating business and developing the existing operations in our markets in the
Nordic region.

Jens Engwall, CEO






For further information, please contact:

Jens Engwall, CEO, jens.engwall@hemfosa.se, mobile +46 70 690 65 50

Karin Osslind, CFO, karin.osslind@hemfosa.se, mobile +46 70 794 93 37