Vasakronan - Sweden’s leading real estate company
Håkan BryngelsonPresident & CEO
Interim ReportJanuary-March 2008
Björn LindströmChief Financial Officer
Moderator
Tobias KajHandelsbanken
First quarter 2008
Vasakronan – Sweden’s leading real estate company
Håkan BryngelsonPresident & CEO
3
Change of ownership
• Resolution in the Swedish Parliament regarding sale on June 20, 2007
• Extent, method and date is a matter for the owners
• Advisors– JP Morgan Financial advisor
• Catella Property advisor, Sweden
– Cederquists Legal advisor, due diligence• WSP, Sweco Technical and
Environmental advisor– PWC Öhrlings Financial due diligence
• Vasakronan is prepared for a change of ownership – Market-leader in the property sector– One of Sweden’s most analyzed and transparent property
companies– Works according to high market standards for communication,
financial reporting and Codes
Agenda
• Summary Q1, 2008
• Market
• Strategic position–Customer orientation–Continued growth–Focus on cost
• Interim Report January-March 2008
Summary Q1, 2008
Market • Continued strong rental and property market
• Difficult to forecast economic development
SEK M%
Rental revenues 757 + 7
Operating surplus 518 + 10
Market value,
property portfolio 46,104 +0.4
Summary Q1, 2008
• Start of new projects – Heden 42:4, Göteborg SEK 580 M
– Lorensberg 45:16, Göteborg SEK 50 M
• Property acquisitions– Tigern 1, Malmö SEK 67 M
– Lorensberg 45:16, Göteborg SEK 125 M
• Major rental agreements– Tax Authority, Stockholm 13,200 m2
– BDO Nordic, Stockholm 2,800 m2
– TAT, Malmö 2,600 m2
• Great Communications Award
Swedish GDP
Sources: Swedish National Statistics och Ministry of Finance
7
• Difficult to forecast developments in the international economy
• Reduction of Swedish GDP-growth, but moderate slowdown of Swedish economy
0
1
2
3
4
5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F F F F
Market rentsOffices - City locations
Source: Jones Lang LaSalle
*Lund incl IDEON
8
Continued strong rental market• Increased market rents• Lower rate of increase
SEK/m2
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2003 2004 2005 2006 2007 2008
Stockholm
MalmöGöteborg
Lund*Uppsala
Market yield requirementsModern offices in prime locations
Source: Jones Lang LaSalle
9
Continued stable property market• Same level of transactions
during first quarter 2008 as first quarter 2007
• Unchanged yield requirements in Stockholm
• Slightly increased yield requirements on other markets
*Lund incl IDEON
%
0
1
2
3
4
5
6
7
8
9
10
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2003 2004 2005 2006 2007 2008
Stockholm
MalmöGöteborg
Lund*Uppsala
Market vacancy rateOffices - city locations
*Lund incl IDEON
Source: Jones Lang LaSalle
10
Continued low vacancy rates • Decline in Stockholm
and Uppsala• Moderate increases in
Malmö and Göteborg• Stable in Lund
0
5
10
15
20
25
30
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
%
2003 2004 2005 2006 2007 2008
StockholmMalmöGöteborg
Lund*Uppsala
Vasakronan today
• 46.1 billion in market value• SEK 2.9 billion in rental revenues• 172 properties• 395 employees
of which 159 in Vasakronan Service Partner
11
Rental revenues, %
StockholmGöteborg
Malmö
Uppsala 6 Lund 3
OfficeRetail
Residential 1 Other 6Garage/warehouse 4
6016
1576
13
99% commercial
Vasakronan’s key strategies
12
Rental market• Attractive premises and services
• Strong customer relationships
• Active market approach
Commercial properties
Attractive growth markets
Stockholm, Göteborg, Malmö,Uppsala and Lund
Real estate market• Project development
• Acquisitions and exchangedeals
Market-leading position
Financial trend
13
0
700
1400
2100
2800
3500
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080
300
600
900
1200
1500
1800
Income after net financial items, excl. change in market value
Rental revenues
Operating surplus
SEK M
Forecast
Breakdown of market value
14
Stockholm27,750
Göteborg8,271
Lund 1,906
Malmö5,921
Uppsala 2,256
60%18%
13%
5%4%
SEK M
Total SEK 46,104 M
Vasakronan’s strategic position
Strong corporate brand
Sweden’s leading real estate company
Focused growth
• Focus on offices in growth cities
• Strong property development portfolio
• Acquisitions and exchange deals
Strong corporateculture
• Most attractive employer in real estate industry
• Low employee turnover
• Focus on costs
Strong customerorientation
• Strong growth in rental revenues
• Most satisfied custo-mers in the industry
• Services for increased customer loyalty
• Environmental focus
Satisfied customersSatisfied Customer Index
16
Average Property
Sector
Vasakronan• Location• Handling complaints• Service• Adaptation of premises• Image
63
68
7372
69
75
72
7678
79 7981
71
687271
6968
6465
6765
68
6058
68
95 96 97 98 99 00 01 02 03 04 05 06 07
Customer orientation
• Restaurant• Conference facilities• Tenant service • Reception with RoomService• Telephony• Services through partners
Services to achieve increased customer loyalty
17
Meet customers
on a daily basis
10 years continuous growthEstablished in large property clusters
Customer orientation
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
2003 2004 2005 2006 2007 2008F
18
Vasakronan– first climate neutral real estate company
1818
Tons CO2
CO2 emissions from 29,000 ton to 1,500 ton
Reduction with over 90 % per m2 since 2003
Added emissions if deliveries had not been climate neutral
Real emissions
Customer orientation
Results of Vasakronan’s customer focus
19
02468
101214
03 04 05 06 07 08
%
Satisfied customers Low turnover of customers
Vacancy rate, rental loss Employee participation/motivation
0
20
40
60
80
100
95 96 97 98 99 00 01 02 03 04 05 06 07
%
0
20
40
60
80
100
95 96 97 98 99 00 01 02 03 04 05 06 07
%
Customer orientation
Strong project portfolio
20
• 88% leased • High increase of value• Long-term contracts • Strong customers
Projects in progress, SEK M
1 0581 410
2 8413 145
3 861
2004 2005 2006 2007 2008 Q1
Growth
Project development
Projects in progress SEK 3,9 billion
Large project potential SEK 6,1 billion
• Future projects• Development projects
- Detailed development plans but unutilized building rights
- Potential building rights
Growth
Projects in progress
Investment Floor Est. Vacancy rate,Location Property SEK M space m2 completion area, %Göteborg Heden 42:1, Polishuset 794 43,000 Dec. 2009 0Göteborg Heden 42:4, Kriminalvården 580 28,715 June 2010 0
Stockholm Fruktkorgen 1, Kungsholmen 550 23,910 Dec. 2009 0
Lund Nya Vattentornet 4 540 27,550 Dec. 2008 0
Stockholm Svea Artilleri 14, Östermalm 419 17,233 Dec. 2010 100
Göteborg Heden 46:1 Tingsrätten* 160 16,455 Dec. 2009 0
Göteborg Nordstan 8:27 135 16,260 Aug. 2008 0
Stockholm Beridarebanan 11, City 114 8,800 June 2008 25
Lund Spettet 3 108 8,680 Dec. 2008 0
Stockholm Vega 4, City 88 3,931 June 2008 55
Malmö Kronan 10 & 11 84 13,369 Dec. 2008 13
Göteborg Lorensberg 45:16 50 6,800 June 2009 0
Total 3,622 214,903 12
Other minor projects 102
Total 3,861 * Jointly owned with NCC
22
Growth
Ullevi, Göteborg
23
Police Headquarters• New construction of 30,000 m²• Remodeling of 13,000 m²• SEK 794 M
Prison and Probation Service• New construction and
remodeling of 28,715 m2
• SEK 580 M
City Court• New construction of 16,500 m² • NCC owns 50 %• SEK 160 M, Vasakronan’s share
Growth
24
Projects Stockholm
Svea Artilleri• Remodeling of
17,233 m2
• Signed first tenant
• Completion 2010
• SEK 419 M
Rådhuset• Remodeling and
new construcition of 23,900 m²
• Completion 2009
• SEK 550 M
Fourth Hötorg Building• Remodeling of 8,800 m2
– 75 % leased– SEK 3,900 – 5,000/m²
• Completion 2008
• SEK 114 M
Growth
Brunnshög, Lund
• New construction of 27,550 m2 for Sony Ericsson
• 1,600 workplaces
• Occupancy Q2 2008
• SEK 540 M
25
Ericsson Mobile Platform
Business Park Project owned by Vasakronan
Sony Ericsson owned by
Vasakronan
Sony Ericsson owned by
Vasakronan
Growth
Strong corporate culture
• Most attractive employer in the real estate industry
– First choice for university students in real estate economics
• High employee rating on commitment, job satisfaction and pride
• Low employee turnover
Corporate culture
Focus on cost
• Focus on procurement• Insourcing
100
120
140
160
180
200
220
240
Q12005
Q2 Q3 Q4 Q12006
Q2 Q3 Q4 Q12007
Q2 Q3 Q4 Q12008
Operating expense and maintenance RollingSEK M
Corporate culture
28
Vasakronan’s future focus!
• Customer orientation
• Focused property portfolio and growth through projects and exchange deals
• Strong corporate culture and focus on cost
• Unique, leading and strong operation provides added value for customers and owners
– Own management organization with a high level of expertise
– The market’s most attractive employer
– The market’s highest customer satisfaction and lowest vacancy rate in the market
– Strong corporate brand
Interim Report January-March 2008
Björn Lindström Chief Financial Officer
Increased rental revenues + 7 %
Contracted / reported annual rent + 15 %
Vacancy rate declined to 5 %
Operating expenses and maintenance - 7 %
Value growth property portfolio + 0.4 %
Current tax SEK 0 M
Project portfolio increased to SEK 3.9 billion
30
Summary Interim Report January - March 2008
Rental revenues Jan-March
31
% 2008 2007 2006
Change in comparable + 3 + 6 + 4property portfolio
Acquisitions, new + 4 + 2 - 5construction & divestments
Total change in + 7 + 8 - 1 rental revenues
600
620
640
660
680
700
720
740
Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08
Rental revenues Rental revenues, rollingSEK M
Negotiation and renegotiation of rental portfolio Jan-March
32
% 2008 2007 2006
Average rental change +9 +3 +3
Share of rental portfolio 2 2 1
Average rental term, years 4.9 4.5 4.0
Rental revenues – future growth March 31
SEK M 2008 2007 2006
Contracted annual rent 3,358 3,057 2,767
Reported 12-month rent 2,923 2,757 2,681
Rental growth 435 300 86
Rental growth, % 15 11 3
33
Vacancy rate March 31
2008 2007 2006
Rental value , % 5 6 7
- SEK M 157 173 199
Floor space, % 6 7 8
- 000 m2 115 115 136
Rental value, % 2008 2007Central Stockholm 4 6Greater Stockholm 11 11Uppsala 5 5Göteborg 2 2Malmö 3 3Lund 1 1Total 5 6
0
2
4
6
8
10
12
14
03 04 05 06 07 08
% Vacancy rate, rent
34
Operating expenses and maintenance Jan-March
35
% 2008 2007 2006
Change in comparable - 7 -4 -12property portfolio
Acquisitions, newconstruction & divestments 0 +1 +7
Total change - 7 -3 - 5
100
120
140
160
180
200
220
240
Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08
Operating expenses and maintenance RollingSEK M
SEK M 2008 2007 2006
Net interest-bearing liabilities 12,891 11,331 11,036
Interest rate %, 4.4 3.3 3.7
Net financial items 123 89 99
Market rate comparable portfolio 2008-03-31 5.2 %
Financial itemsMarch 31
36
37
Market value 31 March
SEK M 2008-03-31 2007-03-31 2006-03-31
Market value at January 1 45,236 38,122 32,827
Investments 508 250 171
Acquired properties 198 97 1,025
Divested properties - -36 -
Unrealized change in value 162 + 0,4% 497 +1,3 % 321 +1,0 %
Market value, March 31 46,104 38,930 34, 344
Market value Q1, 2008• Internal update of previous quarter external appraisal• Market value is affected by changes in market rent and
yield requirements after reconciliation with DTZ and Newsec• Market value is influenced by specific property occurrences
Unrealized change in value March 31, 2008
• Newly signed contracts
• Investment profit in projects
38
-5138
360 365 321
1 199
47
1 686
497
1 925
1 223 1 105
162
Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08
Unrealized change in value per quarter, SEK M
SEK M 2008 2007 2006
Current tax 0 0 -54
Deferred tax -147 -239 -155
39
TaxJan-March
Income statement January-March
40
ChangeSEK M 2008 2007 SEK M %Rental revenues 757 708 +49 +7Operating expenses -156 -160 +4 -3Maintenance -9 -17 +8 +47Site leasehold fee -22 -17 -5 -29Property tax -52 -45 -7 -16Operating surplus 518 469 +49 +10Income building rights 0 0 0Income associated companies -1 0 -1 Income service operations 2 0 +2Central administration and marketing -17 -19 +2Operating income 502 450 +52 +12Financial net -123 -89 -34Income after financial net 379 361 +18 +5Change in values 149 502 -353Current tax 0 0 0Deferred tax -147 -239 +92Income after tax 381 624 -243 -39
% 2008 2007 2006
Operating surplus margin 68 66 63
Interest-coverage ratio, multiple 4.1 5.1 4.5
Return on shareholders’ equity 18 17 11
Key ratios Jan-March
41
50
55
60
65
70
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Q107
Q207
Q307
Q407
Q108
0
1
2
3
4
5
6
Q105
Q205
Q305
Q405
Q106
Q206
Q306
Q406
Q107
Q207
Q307
Q407
Q108
% MultipleOperating surplus margin Interest-coverage ratio
Cash flow Jan-March
42
SEK M 2008 2007 2006
Current operations 330 262 -107
Investing operations -704 -307 672
Dividend - - -
Total cash flow -374 -45 565
-150-5050
150250350450550650750
Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08
Cash flow, Current operations Cash flow, rollingSEK M
Ongoing property projects March 31
43
SEK M 2008 2007 2006
Property projects 3,861 2,995 1,450
Investment in projects 506 256 165
212244
356
469
2007 2008 2009 2010
Development operating surplus,ongoing projects, SEK M
Balance sheet
44
SEK M 2008-03-31 2007-03-31 Change
Investment properties 46,180 38,988 +7,192
Deferred tax claims 210 355 -145
Financial assets 281 523 -242
Current receivables 678 902 -224
Cash and bank 455 5 +450
Total assets 47,804 40,773 +7,031
Shareholders’ equity 26,110 22,430 +3,680
Deferred tax liabilities 6,263 4,789 +1,474
Interest-bearing liabilities 13,525 11,719 +1,806
Non-interest-bearing liabilities 1,906 1,835 +71
Total Shareholders’ equity and liabilities 47,804 40,773 +7,031
Key ratios
45
% 2008 2007 2006
Equity/assets ratio 55 55 52
Loan to market value 28 29 32
30
35
40
45
50
55
60
Q4 2003 Q4 2004 Q4 2005 Q4 2006 Q4 2007 Q1 2008
% Equity/assets ratio
Financing – Sources 2008-03-31
of whichShare, % SEK M Limit
utilized
Commercial paper 5,000 2,71520
MTN program 20,000 5,42440
EMTN program 9,374 921
Bank loans 11,272 5,26239
Total – 13,493100
Vasakronan have unutilized bank loans amounting to SEK 6,010 M
46
SEK M 2008 2007
Income afterfinancial items excl. income from 1,500 1,477building rights
Unchanged forecast
+ Increased rental revenues
+ Improved operating surplus
- Increased interest expenses
+ Increased investments
47
Tobias KajHandelsbanken
Moderator
49
Real offices for real people
