Press release Kungsleden 8 July 2020

Revenue increased by 6 per cent to SEK 1,265 million (1,192).

• Profit from property management increased by 6 per cent to SEK 611 million (579). The increase is mainly due to higher rental revenue in like-for-like portfolio terms and completed projects. Profit from property management for the second quarter was SEK 301 million (312). The decrease is explained by higher interest costs of SEK 12 million, mainly due to higher market interest rates compared to the previous year.

• New leasing was SEK 73 million (93), and net leasing was SEK 8 million (10).

• After investments of SEK 774 million and value changes, total property value was SEK 39,387 million, compared to SEK 38,310 million at the beginning of the year.

• Unrealised value changes on properties amounted to SEK 304 million (848), which corresponds to 0.8 per cent. The value increase is mainly due to higher rental revenue, but also to some extent a reduction in the required yield of 3 basis points.

• Current net asset value increased to SEK 94.18 per share (83.89).

Significant events during and after the second quarter

• The Swedish Prison & Probation Service’s custodial and probationary premises in Östersund, which Kungsleden has developed, opened at the end of April.

• Major new leases in the second quarter include a lease contract on 3,000 sq.m. with Padel Performance AB in Umeå, a lease contract on 6,400 sq.m. of premises with Englagård AB in Malmö, and a lease contract on 2,000 sq.m. with The Brick Gym AB in Gothenburg.

• Moody’s confirmed Kungsleden’s Investment Grade rating Baa3 with stable outlook.

• In June, Kungsleden signed a contract with the City of Stockholm on a land allocation on building rights for 14,000 sq.m. of office and hotel premises in Västberga. Kungsleden already owns the neighbouring property, which with this transaction, will enable development of a total of 22,500 sq.m. of offices.

• Agreement was signed to sell the vacant property Fräsen 1 in Täby, near Stockholm, at a price exceeding book value by about SEK 2 million.

• In June, a bond of SEK 300 million was issued with a five-year maturity. In July, bonds of 250 million maturing in January 2021 were repurchased by extending a green bond maturing in June 2023. Both issues were carried out at a significantly lower pricing compared to what has prevailed in the market since the end of the first quarter and contributes to improving Kungsleden's already good liquidity position.

CEO´s statement

“Kungsleden is reporting strong earnings in the first half-year, in uncertain times. We increased our revenue by 6 per cent, and our operating net improved by 6 per cent compared to the first half-year 2019, which was a very strong half-year. Our profit from property management was up by 6 per cent to SEK 611 million, thanks to completed projects and successful work on new leasing and renegotiations. The effects of the virus pandemic are limited.

Since mid-May, the rental market has re-gathered momentum after a somewhat awaiting start to the quarter. We now see good activity in all our four main markets - Stockholm, Gothenburg, Malmö and Västerås. New leasing for the first half-year was SEK 73 million, and net leasing was SEK 8 million. We successfully renegotiated existing lease contracts worth SEK 94 million in the first half-year, generating rent increases of SEK 9.4 million or an average of 10 per cent. On a rolling 12-month basis, the average rent for the whole investment property portfolio as of 30 June increased by 7 per cent on the corresponding period of the previous year. Thanks to improved rental revenue in our property portfolio, the increase in value was over SEK 300 million.

Close customer dialogue

We have a good and close dialogue with all our customers and in various ways we support those who have been hit hardest by the pandemic. Since May, and even more clearly in June, we have seen a positive development as countries and operations open up and get going again. The number of customer enquiries regarding rent relief has reduced.

Limited effects of Covid-19

For third-quarter rents, we’ve reached agreements on monthly instead of quarterly rent payments corresponding to SEK 30 million. We’ve granted rent discounts of SEK 16 million against extended lease contracts and/or higher rents for the remaining lease term in return. We’ve allowed deferrals on SEK 4 million of rent payments for the third quarter, against 12 to 24-month repayment plans. Rent discounts granted correspond to just under 3 per cent of third-quarter rent, which is less than rent discounts for the second quarter. The payment inflows of third-quarter rent were consistent with previous quarters.

Stable financial position

Kungsleden is financially stable with an equity ratio of 44.1 per cent as of 30 June and a loan-to-value (LTV) ratio of 45.3 per cent. We have no bond or bank loan maturities in 2020, while also possessing cash and available credit facilities of SEK 2.8 billion to enable us to deal with all remaining maturities on the capital markets in 2021. At the end of June, Moody’s confirmed our Investment Grade rating with unchanged stable outlook.

Kungsleden’s property portfolio, now worth SEK 39 billion, consists 75 per cent of Offices and 15 per cent of Logistics, Warehouse and Industrial premises. Some 4 per cent of property value consists of Retail, the majority of this being food, discount retail, as well as building supplies and furniture retailing. We have a well-diversified customer mix, and our customers represent a cross-section of Sweden’s business community. The average remaining lease term for our 10 largest tenants is 5.6 years. For the whole portfolio, public sector tenants represent some 15 per cent of rental value and the average remaining lease term is just over four years.

Gradual market recovery

We think that the recovery we’re witnessing on the market will be cautious and gradual. We are starting at a lower level, with most commentators forecasting negative GDP growth of 4 to 6 per cent in 2020. We’re following market progress closely, focusing on the risks and their management.

At present, we’re seeing good demand in the rental market for office, warehouse and industrial properties and we have a strong pipeline of potential new leases for the second half-year.

All our current projects are progressing well, within their stated schedules and investment budgets. We are continuing to make profitable investments in our projects and investment properties as they are leased at good rent levels. Once these investments are completed, they will contribute to Kungsleden’s growing rent, operating net and property value going forward.It has been a challenging time for many since the virus outbreak and we now hope that we can gradually return to normal. I’d like to express my thanks to our customers and tenants, colleagues and shareholders for their commitment, loyalty and trust.”

Presentation of interim report

Kungsleden presents the interim report on 8 July 2020 at 08.45. The presentation is available from 08.00 at: https://www.kungsleden.se/en/investors/reports-and-presentations/

The presentation will be held in English and is available on: https://www.kungsleden.se/en/investors/calendar/2020/Release-of-Interim-report-january-june-2020/

Phone number to the conference:

SE: +46 8 505 583 75

UK: +44 333 300 92 63

US: +1 83 324 984 03

For more information, please contact:

Biljana Pehrsson, CEO Kungsleden | +46 8 503 052 04 | biljana.pehrsson@kungsleden.se

Ylva Sarby Westman, Deputy CEO/CFO Kungsleden | 08-503 052 27 | ylva.sarby.westman@kungsleden.se

This information is mandatory for Kungsleden AB to publish pursuant to the Swedish Securities Markets Act. This information was submitted for publication at 7:00 a.m. CET on 8 July 2020.

About Kungsleden. We are people that create places and experiences for people. By developing and managing attractive and sustainable places, we offer people better and more inspiring work experience. We are a long-term property owner focused on commercial properties in Sweden’s growth regions. As of 30 June 2020, we owned 210 properties with total value of SEK 39,387 m. Kungsleden (KLED) is listed on the Nasdaq Stockholm Large Cap. Read more at www.kungsleden.se