INTERIM REPORT JANUARY–SEPTEMBER 20 06 • Income totalled SEK 589 million (467) • Net profit for the period increased to SEK 427 million (267) • Earnings per share increased to SEK 3.55 (2.34) • SEK 204 million (127) of the profit consists of changes in value of properties • Klövern has signed an agreement for acquisition of properties in Kista and Täby for a total of SEK 4 billion • The full-year forecast is being adjusted upwards; profit before tax is expected to exceed SEK 300 million excluding changes in value of properties. Previous forecast was SEK 250 million

Statement by CEO Increased profit and continued expansion in Business and Science Parks “Demand for premises has continued to be high during the third quarter of the year. We have noted the highest net new letting ever, especially educational premises which account for over a third of the quarter’s total net new letting. The process with the property acquisitions in Kista and Täby for approximately SEK 4 billion are proceeding according to plan and are expected to be completed during the fourth quarter. Klövern’s ambition in Kista and Täby is the same as in other markets; to contribute to the development of the local business sector. Through these acquisitions, we strengthen our role as partner of companies and organisations that look for an environment in Business and Science Parks that promotes development”, says Klövern’s CEO Gustaf Hermelin.

vacancy ratio as a result of acquisitions and the unusually cold and snowy start of the year. Demand for premises continued to be high and the number of enquiries has increased compared with the previous quarter and the third quarter of 2005. There has been a weak increase in rental income on most market segments compared with the corresponding period last year. The financial occupancy ratio was 83 per cent, which is one percentage point lower compared with the end of the second quarter this year. Net new letting amounted to SEK 7 million in the third quarter, making a total amount of SEK 14 million for the first three quarters of the year. The Graph Net new letting shows ongoing changes for tenants moving in and out. Accordingly, effects generated by the tenants who have moved during the respective quarter after lump sum payments are not included.

Earnings Net profit for the period totalled SEK 427 million (267). This improvement is mainly due to a considerably larger portfolio of properties and an increase in unrealised changes in value. The profit includes realised changes in value from property sales at SEK 24 million (19) and unrealised changes in value of properties at SEK 179 million (107). Net financial income was SEK –97 million (–125), of which changes in financial instruments and securities amounted to SEK 19 million (–6).

Cash flow and financial position The cash flow for the period was SEK –17 million (–1). The equity ratio at the end of the period was 35.8 per cent, compared with 34.8 per cent at the beginning of the year. Equity increased to SEK 2,571 million compared with SEK 2,264 million at the beginning of the year. Liquid funds amounted to SEK 125 million (141) and interest-bearing liabilities SEK 4,339 million (3,987).

The third quarter of 2006 Net profit in the third quarter was SEK 113 million (103). Total income amounted to SEK 214 million (165), of which rental income was SEK 206 million (163) and other income SEK 8 million (2). Rental income during the quarter included lump sum payments from tenants moving out at approximately SEK 16 million. The profit includes realised changes in value from property sales at SEK 1 million (10) and unrealised changes in value of properties at SEK 28 million (38). The operating surplus amounted to SEK 137 million (108), net financial income to SEK –43 million (–43), of which changes in value of financial instruments and securities totalled SEK –2 million (1). Cash flow for the quarter was SEK 48 million (–55).

Income and property costs Income during the period increased to SEK 589 million (467), of which rental income amounted to SEK 570 million (465). This increase is mainly due to an increase in the size of the property portfolio. Other income, consisting of income from customers who are not tenants and income from rental guarantees, totalled SEK 19 million (2). Property costs amounted to SEK 231 million (175). The operating surplus was SEK 358 million (292), corresponding to an operating margin of 61 per cent (63). The decrease of the operating margin is mainly due to an increase in the

2

Property holdings

CONTRACT STRUCTURE 30.09.2006

On 30 September 2006, Klövern’s property holdings consisted of 162 properties, which was the same amount as at the beginning of the year. The rental value amounted to SEK 885 million (798) and the fair value was SEK 6,596 million (5,968). The total lettable area was 1,104,000 sq.m. (1,042,000).

No. of Area, properties 2) 000 sq.m.

Area, 000 sq.m.

Contract value, SEKm

Share of contract value, %

Commercial premises

PROPERTY PORTFOLIO 30.09.2006 Type of premises

No. of contracts

Maturity year 1)

Rental value, SEKm

Fin. occupancy rate, %

393

81

2006

294

61

43

6

2007

683

229

177

24

2008

479

190

166

23

2009

341

175

150

20

2010

79

84

66

9

2011–

100

125

110

15

1,976

864

712

97

Sum

Offices

70

418

Industry/warehouse

48

432

215

83

Retail

24

86

103

95

Education/lab/ health care/recreation

8

106

109

76

Garages/parking spaces

1,085

—

9

1

Restaurant/hotel

5

43

37

91

Total

3,292

882

736

100

Residential

1

19

16

94

Other 1)

6

—

12

88

162

1,104

885

83

Total 1) 2)

Residential Sum

1)

231

18

15

2

2,207

882

727

99

The average contract time was 2.6 years as per 30 September 2006

Acquisitions and investments During the period, 15 properties (43) for a total of SEK 574 million (1,509) have been acquired with a total area of approximately 101,000 sq.m. (246,000). The major part of the acquired properties are located in Nyköping and Uppsala. Investments in refurbishment during the period totalled SEK 106 million (22) relating to properties primarily in Eskilstuna, Karlstad, Linköping, Nyköping and Örebro.

Refers to leaseholds, garages, parking spaces, sign areas, sites and telecom masts. Property portfolio adjustments during the first six month of 2006 mean that the number of properties has been reduced by a total of three.

Net new letting SEK 000

Moving in

Net new letting

Moving out

SEK 000

20,000

20,000

10,000

10,000

0

0

-10,000

-10,000

-20,000

-20,000 2004: Q1 2004: Q2

2004: Q3

2004: Q4

2005: Q1

2005: Q2

Positive net new letting: Positive net new letting totalled SEK 14 million during 2006.

3

2005: Q3

2005: Q4

2006: Q1

2006:Q2

2006:Q3

The average period of tied-up capital was 3.9 years (4.6). SEK 1,929 million of the loans with short maturities have been interest-capped. Of the interest caps, SEK 330 million mature in 2009, SEK 599 million in 2010, SEK 500 million in 2011 and SEK 500 million in 2012. During the first three quarters of the year, the unrealised changes in value of Klövern’s financial instruments and securities, which are reported under net financial income, amounted to SEK 19 million (–6).

Property sales During the period, 11 properties (32) have been sold for a total sales price of SEK 256 million (504), which exceeded the most recently reported fair value by SEK 24 million (19). Of the sold properties, totalling around 39,000 sq.m. (88,000), three are located in Västerås, two in Linköping and one each in Karlstad, Motala, Norrköping, Nyköping, Tranås and Uppsala.

Valuation of properties INTEREST RATE AND LOAN MATURITY STRUCTURE 30.09.2006

Every quarter, Klövern values 100 per cent of the property portfolio. 25 per cent of the valuations are carried out by an external valuation company and the rest are valued internally. This means that every property in the portfolio is externally valued during a rolling 12-month period. The external valuations have been carried out by DTZ Sweden. All valuations have been performed using the same method as in 2005. See Klövern’s annual report for 2005 for a detailed description of the valuation principles.

Interest maturity structure Interest Average maturity, interest SEKm rate, %

Year

3,142

3.3

2006

3

3.3

147

147

2007

257

4.7

335

335

2008

534

5.1

184

184

2009

63

5.1

753

653

Variable 1)

Unrealised changes in value in the properties The fair value of Klövern’s properties was SEK 6,596 million as per 30 September 2006. The unrealised change in value during the first nine months of 2006 was SEK 179 million (107).

—

—

2010

32

3.7

762

705

2011–

308

6.5

2,537

2,315

4,339

3.8

4,718

4,339

Total 1)

Financing

Loan maturity structure Credit agreement, Utilised, SEKm SEKm

Variable loans are loans with a maturity of 90 days or shorter. SEK 1,929 million of these loans have been provided with interest caps.

The share and shareholders

At the end of the period, the interest-bearing liabilities totalled SEK 4,339 million, compared with SEK 3,987 million at the beginning of the year. The average interest rate was 3.8 per cent (3.5) and the average period of fixed interest 0.7 years (1.0). The loans, including variable loans, which mature during 2006 had, at the end of the period, an average fixed-interest period of 4 days (49).

The Klövern share is listed on the Stockholm Stock Exchange’s Nordic list for medium-sized companies. The closing price as per 29 September 2006 was SEK 23.00, which corresponds to a market capitalisation of SEK 2.8 billion.

The Klövern share Klövern OMX Stockholm_PI

Carnegie Real Estate Index

Share turnover 000s (incl. subsequent notification)

35 30 25 20

20,000 16,000

15

12,000 8,000 10 4,000 8 2003

2004

2005

2006 (c) SIX

4

million. During October, Klövern has announced the holding of an extraordinary shareholders’ meeting to decide on the new issue.

LARGEST OWNERS 30.09.2006 No. of shares, million

Holding, %

Arvid Svensson Invest

17.0

14.1

Lantbrukarnas Riksförbund

15.6

13.0

Investment AB Öresund

8.6

7.1

Skandia Liv

8.0

6.7

HQ Fonder

4.1

3.4

Länsförsäkringar Fastighetsfonden

3.9

3.3

Fortis Banque Luxembourg

3.8

3.2

Länsförsäkringar Södermanland

3.7

3.1

SEB Fonder

2.7

2.2

Robur Fonder

2.3

1.9

Total largest owners

69.7

58.0

Other owners

50.7

42.0

120.4

100.0

Total all owners

Trading in the Klövern share free of brokerage At the annual general meeting on 5 April 2006, it was decided that Klövern would offer shareholders whose holdings did not amount to whole trading lots (a trading lot = 500 Klövern shares) the opportunity of either buying or selling shares, to obtain round trading lots without having to pay brokerage. This offer was implemented in September and in all around 8,000 transactions took place. Overall, the notifications led to net purchases of 474,009 Klövern shares. The price was SEK 22.90 per share, which is the same as the average price for all transactions carried out within the framework of the programme.

Nominations committee In accordance with the decision of Klövern’s annual general meeting on 5 April 2006, a nominations committee is to be appointed annually, consisting of the chairman of the board, a representative for each owner whose holding in the company exceeds five per cent of the shares and votes in the company as at 31 August, and a representative of the other shareholders. The nominations committee consists of the following representatives: Rickard Svensson – Arvid Svensson Invest, Göran Almberg – The Federation of Swedish Farmer (LRF), Bo Jansson – Skandia Liv, Erik Törnberg – Investment AB Öresund, Klas Andersson, representing other shareholders and Stefan Dahlbo, Klövern’s Chairman of the Board. The representatives can be contacted by e-mail at [email protected] or by phone via Klövern +46-(0)155 44 33 12.

Central administration Central administration expenses for the period totalled SEK 35 million (25). SEK 7 million (2) of the amount consisted of fees to advisors in Klövern’s taxation case for reconsideration of the tax assessment for 2003.

Accounting principles This interim report has been prepared in compliance with IAS 34 Interim Financial Reporting, which is in accordance with the requirements made in the Swedish Financial Accounting Standards Council’s recommendation RR 31 Interim reports for groups. The accounting principles applied in this interim report are described in Klövern’s annual report for 2005, note 1. According to this note among other things, the International Financial Reporting Standards (IFRS) have been applied since and including 2005. The most important effect of the transition to IFRS relates to the reporting of properties. Properties are classified as investment properties and valued at fair value in the balance sheet with unrealised changes in value in the income statement. Previously, properties have been reported as properties for resale (inventories) at the lowest of acquisition value and fair value.

Reconsideration of taxation for 2003 At the end of 2003, Klövern requested that the tax assessment for that year be reconsidered. The intention was to examine whether Klövern was entitled to additional tax loss carryforwards of SEK 5 billion, due to a loss which the company, and indirectly the shareholders, had made in its earlier business as an IT company. In May 2006, the Tax Agency decided to impose a tax surcharge of SEK 493 million on Klövern. The Tax Agency’s decision has been appealed against to the County Administrative Court and Klövern has furthermore submitted a request for new reconsideration of taxation for 2003. Klövern has been granted a respite with payment of the tax surcharge imposed by the Tax Agency, which has therefore been reported as a contingent liability. Klövern has established tax loss carryforwards and depreciation for tax purposes, in addition to book depreciation, for the 2004 taxation year, totalling SEK 2,153 million together.

Acquisition of properties in Kista and Täby In September Klövern and Fabege signed a declaration of intent and subsequently an agreement for Klövern to acquire 20 properties in Kista, 24 properties in Täby and one property in Sigtuna from Fabege. The acquisition price was SEK 4,027 million, of which approximately SEK 3,500 million was for Kista. As a result of this acquisition, Klövern establishes units in Kista and Täby. The properties, which are acquired in corporate form, will be taken possession of on 20 November 2006. The initial occupancy ratio in the acquisition amounts to around 80 per cent. Initial direct yield, including the rental guarantee of SEK 45 million, totals approximately 6.4 per cent. The acquisition is financed partly by a directed new issue of around 46.2 million shares at a price of SEK 23.68, totalling approximately SEK 1,094 million, to Fabege, and partly by taking up new loans totalling approximately SEK 2,933

Full-year forecast for 2006 Klövern’s forecast for 2006 is being adjusted upwards, mainly due to additional property acquisitions. The fullyear forecast is that Klövern’s net profit before tax is expected to exceed SEK 300 million excluding changes in value of properties. Compared with the previous forecast, this is an increase of SEK 50 million.

5

Events after the end of the period covered by the report

Review report We have reviewed the interim report for Klövern AB as at 30 September 2006 and the nine-month period which ended on that date. The board of directors and the CEO are responsible for preparing and presenting this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express an opinion on this interim report based on our review. We have performed this review in accordance with the standard for review SÖG 2410 Review of financial interim report information performed by the auditor appointed by the company (in Swedish) published by FAR. A review consists of making enquiries, in the first place to persons who are responsible for financial issues and accounting matters, performing an analytical review and undertaking other general review measures. A review has a different focus and a considerably reduced scope compared with the focus and scope of an audit in accordance with Auditing Standards in Sweden, RS (in Swedish) and generally accepted accounting standards otherwise in Sweden. The review measures undertaken in a general review have not made it possible for us to acquire such certainty as to be aware of all important circumstances that could have been identified in the performance of an audit. The conclusion stated is based on a general review and does not therefore have the same degree of certainty as a statement based on an audit. On the basis of our general review, no circumstances have emerged which would lead us to consider that the interim report is not, in all substantials, prepared in accordance with IAS 34 and the Annual Accounts Act.

Property acquisition and property sale Klövern has acquired one property in Västerås for a purchase price of SEK 14 million. Klövern has sold one property in Västerås for SEK 71 million. The sale exceeds the most recently reported fair value by SEK 13 million, which will affect Klövern’s income for the fourth quarter of 2006.

Notice of Extraordinary General Meeting of Shareholders Klövern has notified that an extraordinary general meeting of shareholders would be held on Friday, 17 November 2006. The shareholders’ meeting will consider the board’s proposal on a new issue of shares due to the property acquisitions in Kista and Täby from Fabege.

Calendar 2006–2007 Year-end report 2006 Tuesday, 6 February 2007 Annual Report 2006 March 2007 Annual General Meeting 2007 Wednesday, 28 March 2007

Reports are available on Klövern’s website www.klovern.se, where it is also possible to subscribe to annual reports, interim reports and press releases. Nyköping, 26 October 2006 Gustaf Hermelin CEO

Stockholm, 26 October 2006 Ernst & Young AB Björn Fernström Authorised public accountant

6

Groups’ Income of Statements SEK m

Rental income Other income

2006 3 months Jul–Sep

2005 3 months Jul–Sep

2006 9 months Jan–Sep

2005 9 months Jan–Sep

2005 12 months Jan–Dec

Rolling 12 months Oct–Sep

205.9

163.2

569.6

465.1

634.8

739.3

8.4

1.9

19.5

1.9

3.9

21.5

Total income

214.3

165.1

589.1

467.0

638.7

760.8

Property costs

–76.9

–57.6

–231.2

–175.0

–247.4

–303.6

Operating surplus

137.4

107.5

357.9

292.0

391.3

457.2

1)

Changes in value properties, realised

1.3

9.5

24.4

19.4

25.2

30.2

Changes in value properties, unrealised

27.5

37.9

179.3

107.3

132.5

204.5

Depreciation of equipments

–0.7

–0.3

–2.0

–1.5

–1.8

–2.3

Central administration

–10.0

–8.0

–34.9

–25.2

–35.1

–44.8

Operating profit

155.5

146.6

524.7

392.0

512.1

644.8

Financial income

0.4

–0.3

1.2

3.0

3.7

1.9

Financial costs 2)

–40.9

–43.9

–117.1

–122.4

–182.2

–176.9

–8.8

0.9

2.2

–5.5

–2.7

5.0

Changes in value financial items, unrealised Changes in value securities, unrealised

6.4

0.0

16.4

0.0

0.0

16.4

Profit after financial items

112.6

103.3

427.4

267.1

330.9

491.2

Profit before tax

112.6

103.3

427.4

267.1

330.9

491.2

Current tax 3)

0.0

0.0

0.0

0.0

–0.2

–0.2

Deferred tax 4)

0.0

0.0

0.0

0.0

48.0

48.0

Net profit for the period

112.6

103.3

427.4

267.1

378.7

539.0

Earnings per share, SEK

0.94

0.86

3.55

2.34

3.27

4.48

Number of shares outstanding at the end of the period, million

120.4

120.4

120.4

120.4

120.4

120.4

Average number of shares, million

120.4

120.4

120.4

114.3

115.8

120.4

There are no outstanding warrants or convertibles. 1) Other income consists of income from customers who are not tenants and income from rental guarantees. 2) The amounts for 2005 and rolling 12 months include one-off costs for redemption of loans at SEK 24 million. 3) Current tax on acquisition of subsidiaries in 2005 totals SEK –0.2 million. 4) Re-taxation of deferred tax claim affected the profit for 2005 by SEK 48 million.

Consolidated Balance Sheets SEK m

30.09.2006

30.09.2005

31.12.2005

Properties

6,595.9

5,365.9

5,967.9

Equipment

13.6

6.6

4.9

Deferred tax claim

279.0

231.0

279.0

Short-term receivables etc 1)

156.1

113.4

97.3

Assets

Blocked accounts

2)

Liquid funds Total assets

3.8

22.3

16.3

124.6

108.9

141.3

7,173.0

5,848.1

6,506.7

2,571.4

2,152.8

2,264.4

7.0

11.2

7.1

4,338.8

3,406.5

3,987.4

50.7

29.2

35.0

Shareholder’s equity and liabilities Shareholder’s equity Provisions Interest-bearing liabilities Accounts payable Other liabilities Accrued expenses and prepaid income Total shareholder’s equity and liabilities 1)

2)

7.5

20.9

7.2

197.6

227.5

205.6

7,173.0

5,848.1

6,506.7

SEK 63 million of the amount as per 30 September 2006 consists of shares in Diös, which were received as part payment for property sales during the third quarter 2005. Consists of amounts in blocked accounts as collateral for repayment of loans or to be used for financing of investments in properties.

7

Groups’ changes in shareholder’s equity SEK m

Shareholder’s equity

Shareholder’s equity 31.12.2005

2,264.4

Dividend

–120.4

Net profit for the period

427.4

Shareholder’s equity 30.09.2006

2,571.4

Consolidated Statements of Cash Flow SEK m

2006 3 months Jul–Sep

2005 3 months Jul–Sep

2006 9 months Jan–Sep

2005 9 months Jan–Sep

2005 12 months Jan–Dec

Rolling 12 months Oct–Sep

86.9

55.3

207.1

147.4

177.7

237.4

Current operations Profit after financial items excluding depreciation and changes in value Realised changes in value, properties

1.3

9.5

24.4

19.4

25.2

30.2

Income tax paid

0.0

0.0

0.0

0.0

–0.2

–0.2

88.2

64.8

231.5

166.8

202.7

267.4

Change in operating receivables

–6.4

–57.3

–40.3

–50.5

–34.2

–24.0

Change in operating liabilities

–8.3

0.8

7.2

84.1

59.9

–17.0

Total change in working capital

–14.7

–56.5

–33.1

33.6

25.7

–41.0

73.5

8.3

198.4

200.4

228.4

226.4

Cash flow from current operations before change in working capital Change in working capital

Cash flow from current operations Investment operations Sale of properties

7.7

213.0

231.5

484.9

532.1

278.7

–24.1

–122.8

–680.2

–1,281.4

–1,905.4

–1,304.2

–1.6

–0.1

–10.7

–2.4

–3.6

–11.9

0.1

–15.5

12.6

–21.3

–15.3

18.6

–17.9

74.6

–446.8

–820.2

–1,392.2

–1,018.8

–7.6

–137.9

352.1

703.0

1,279.4

928.5

0.0

0.0

–120.4

–84.3

–84.3

–120.4

Cash flow from financing operations

–7.6

–137.9

231.7

618.7

1,195.1

808.1

Cash flow for the period

48.0

–55.0

–16.7

–1.1

31.3

15.7

Liquid funds at the beginning of the period

76.6

163.9

141.3

110.0

110.0

108.9

124.6

108.9

124.6

108.9

141.3

124.6

Acquisition of properties 1) Acquisition of tangible fixed assets Change in amounts in blocked accounts Cash flow from investment operations Financing operations Change in long-term liabilities Dividend

Liquid funds at the end of the period 1)

The property acquisitions have been partly financed by issues in kind, totalling SEK 269 million during the first six months, 2005.

Key financial indicators Return on equity, % Return on total capital, % Equity ratio, % Interest coverage ratio, times

2006 3 months Jul–Sep

2005 3 months Jul–Sep

2006 9 months Jan–Sep

2005 9 months Jan–Sep

2005 12 months Jan–Dec

Rolling 12 months Oct–Sep

4.5

4.9

17.7

13.9

19.1

22.8

2.2

2.5

7.7

7.5

9.2

9.9

35.8

36.8

35.8

36.8

34.8

35.8

3.8

3.4

4.6

3.2

2.8

3.8

21.4

17.9

21.4

17.9

18.8

21.4

Debt-equity ratio, times

1.7

1.6

1.7

1.6

1.8

1.7

Financial occupancy rate, %

83

87

83

87

87

83

Operating margin, %

64

65

61

63

61

60

Equity per share, SEK

8

Definitions Key ratios based on average number of shares have been calculated on the basis of weighted averages.

Occupancy ratio – financial Rental income in relation to the rental value at the end of the period.

Debt-equity ratio Interest-bearing liabilities in relation to equity at the end of the period.

Operating margin Operating surplus as a percentage of rental income.

Earnings per share Profit for the period in relation to the average number of shares.

Operating surplus Total income minus property costs.

Equity per share Reported equity in relation to the number of shares at the end of the period.

Realised change in value, properties Property sales during the period after deduction for the fair value of the properties.

Equity ratio Reported equity in relation to the reported total assets at the end of the period.

Rental value Rental income plus assessed market rent for unlet areas.

Interest coverage ratio Profit after net financial items plus financial expense in relation to financial expense. Leverage, real estate Interest-bearing liabilities as a percentage of the reported value of the properties.

Return on equity Net profit in relation to average equity. Return on total assets Operating profit in relation to average total assets. Unrealised change in value, properties Change in fair value of the property holding at the end of each quarter.

For further information, please contact Gustaf Hermelin, CEO tel +46-(0)155-44 33 10, +46-(0)70-560 00 00 [email protected] Anders Lundquist, CFO tel +46-(0)155-44 33 20, +46-(0)70-528 43 33 [email protected] Britt-Marie Einar, Corporate Communications Officer tel +46-(0)155-44 33 12, +46-(0)70-224 29 35 [email protected]

Klövern AB (publ), Box 1024, SE-611 29 Nyköping, Sweden • Tel +46-(0)155-44 33 00 • Fax +46-(0)155-44 33 22 Company registration no: 556482-5833 • Registered office: Nyköping • Website: www.klovern.se