Company Description

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Company Description

Published as a part of Västsvensk Logistik AB (publ)’s application for listing on AktieTorget

Västsvensk Logistik AB (publ)

AktieTorget

AktieTorget is a trademark held by ATS Finans AB, which is a company under the supervision of Finansinspektionen (Sweden's financial supervisory authority). AktieTorget operates a multilateral trading platform (an “MTF”). Companies listed on AktieTorget have undertaken to comply with AktieTorget’s listing rules, which implies that companies listed on AktieTorget must ensure that shareholders and other market participants receive accurate, immediate and simultaneous information about any circumstances that may affect the company's share price. The listing agreement is found on AktieTorget's website, see https://ir.aktietorget.se/media/2367/aktietorget-_listing_agreement_160703.pdf. In addition, the companies are obliged to follow other applicable laws, regulations and recommendations that apply to companies listed on AktieTorget

The legislative listing requirements for companies listed on unregulated market places, as MTFs, are lower than for companies listed on regulated market places. A large part of the legislated requirements for companies listed on regulated market places are however also applicable on AktieTorget, through regulations in the listing agreement. Investors should be aware that trading with shares listed on unregulated market places may involve more risks than trading with shares listed on regulated market places.

AktieTorget provides a trading system that is available to the banks and brokers connected to Nordic Growth Market ("NGM"). NGM is a Swedish stock exchange under the supervision of Finansinspektionen that provides marketplaces in Sweden, Norway, Finland and Denmark. The company was founded in 1999 and is a fully owned subsidiary of Börse Stuttgarts. NGM offers trading in all types of securities and all trading occurs in the self-developed trading system Elasticia. Investors that want to buy or sell shares listed on AktieTorget can use their usual bank or stockbroker. Share prices for companies listed on AktieTorget can be followed on AktieTorget's website (www.aktietorget.se) and through most Internet brokers and websites with financial information. Stock prices are also published in newspapers.

Arranger:

This Company Description is dated 25 January 2018

2 IMPORTANT INFORMATION

This Company Description with appendices (jointly referred to as the "Company Description") has been prepared by Västsvensk Logistik AB (publ), company registration number 559132-1145 (the "Company") in connection with listing of the Company's shares on AktieTorget. Arctic Securites AS, Sweden Branch has been engaged as the Company's financial advisor (the "Arranger" or "Arctic"). See section 1 (List of Definitions) for an explanation of words and terms used throughout the Company Description. This Company Description is not approved by or registered with the Swedish Financial Supervisory Authority (Sw. Finansinspektionen).

This Company Description has been reviewed and approved by AktieTorget.

Sources and disclaimer of liability

The information in the Company Description has been prepared to the best of our judgement and reasonable steps have been taken to ensure that information included in the Company Description is not incorrect in any material respect and does not entail any material omissions that can be expected to affect the meaning of its contents.

The information includes industry market data in the public domain, as well as estimates obtained from several third-party sources, including from the Vendor (as defined below), the Vendor’s subsidiaries and industry publications. The Arranger believes that its industry data is accurate and that its estimates and assumptions are reasonable, but there can be no assurance as to the accuracy or completeness of the Vendors' data. Financial information in this Company Description has not been audited and/or reviewed by auditors unless otherwise stated. The Arranger disclaims, to the extent permissible under applicable legislation, any liability for any loss as the result of any of the information given being misleading, incorrect or incomplete, as well as for any loss otherwise incurred as the result of an investment in the Company.

The Company Description includes and is based on, among other things, forward-looking information and statements relating to the activities, financial position and earnings of the Company and/or the industry in which the Company operates. The forward-looking statements include assumptions, estimates and expectations on the part of the Company and the Arranger and are based mainly on information provided by the Vendors, or reasonable assumptions based on information available to the Arranger. Such forward- looking information and statements reflect current views with respect to future events and are subject to risks and uncertainties that may cause actual events to differ materially from any anticipated development, with the implication that final earnings or developments on the part of the Company may deviate materially from the estimates presented herein. Neither the Arranger nor the Company can guarantee the correctness or quality of the suppositions underpinning any assumptions, estimates and expectations, nor can they accept any liability in relation to whether any assumptions, estimates and expectations are actually correct or realised. All investors will need to perform their own independent assessment of such estimates/expectations, and all investors must themselves verify the assumptions which form the basis for the forward-looking statements. Neither the Company nor the Arranger can give any assurance as to the correctness of such information and statements or the correctness of the assumptions on which such information and statements are based. Any reader of this Company Description should be aware that this information may not be used for any other purpose than to evaluate a possible investment in the Company.

The information included in the Company Description cannot be used for any other purpose than the assessment of an investment in the Shares in the Company.

The contents of the Company Description shall not be construed as legal advice, investment advice or tax advice. All investors are encouraged to seek such advice from their own advisors. Services provided by the Arranger that has been engaged as the Company’s financial advisor does not render – and shall not be

3 deemed to render – any advice or recommendations as to an investment in Shares. The information regarding the Property has been collected and processed by Cushman & Wakefield Sweden AB company registration number 556311-3017 (the "Vendor’s Representative"), the Vendor´s estate agent.

Any investors in this Company must on his/her own ensure that the information presented is up to date and correct. If an acquisition at a later date is based on the information in the Company Description, it is necessary to verify that all relevant and updated information has been obtained. The information presented in the Company Description is up to date as at the date specified on its front page, and the Company has no responsibility to update or supplement any information presented in this Company Description. Potential investors must read through the Company Description.

The Company Description is based on information received from the Vendor and the Vendor’s Representatives, as well as information obtained by Arctic, and limited legal, financial and technical due diligence investigations.

Information on conflicts of interest

Potential investors are hereby informed that all the interim board members of the Company are employees of the Arranger as at the date of the Company Description. The Company was owned by the Arranger until the implementation of the Equity Issue in the Company and the cancellation of the Arranger’s shares of the Company. The employees of the Arranger involved in the Transaction have contributed, inter alia, to the negotiation of the Share Purchase Agreement acceptance with the Vendor, the term sheet for the Debt Facility, the Asset Management Agreement, the Mandate Agreement (each as defined below) for the Equity Issue as well as for future financial services.

The Arranger has incurred, and will incur, costs on behalf of the Company in relation to the Transaction (such as for example costs relating to legal and technical assistance). The Arranger has identified that the foregoing may represent a conflict of interest, and even if such conflicts of interests are deemed to be limited, has addressed this by monitoring the Transaction and the work conducted relating thereto with a view to address and mitigate potential conflicts of interest, focusing on the best interests of the Company.

All inquiries relating to this Company Description should be directed to the Arranger. No other person has been authorised to give any information about, or make any representation on behalf of, the Company in connection with the subject-matter of this Company Description and, if given or made, such other information or representation must not be relied upon as having been authorised by the Company or the Arranger.

To the extent that the Arranger collaborates with other subsidiaries to Arctic Securities AS in connection with the placement of the Shares of the Company, these will jointly with the Arranger be considered the

"Arranger" for purposes of the Company Description. Such collaboration with other companies in the Arctic Group shall not entitle the Arranger to any additional fee.

Risk

The Shares may not be a suitable investment for all investors. Each potential investor in the Shares must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:

 have sufficient knowledge and experience to make a meaningful evaluation of the Shares, the merits and risks of investing in the Shares and the information contained or incorporated by reference in this Company Description (including the risk factors herein) or any applicable supplement;

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 have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Shares and the impact that an investment in the Shares will have on its overall investment portfolio;

 have sufficient financial resources and liquidity to bear all of the risks of an investment in the Shares;

and

 be able to evaluate (either alone or with the help of a financial or other adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

It is emphasised that investments in real estate projects can involve great risks, and that any investment in shares will always be associated with risk. All investors must acknowledge the possibility that such investment may result in the loss of all or part of the invested amount. Any investors that either cannot, or does not want to assume such risk should refrain from acquiring shares of the Company; see risk factors associated with investment in the Company in section 4 (Risk factors) for further details.

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TABLE OF CONTENTS

1 LIST OF DEFINITIONS ... 8

2 RESPONSIBILITY STATEMENT ... 10

3 INVESTMENT SUMMARY ... 11

3.1 SUMMARY OF THE COMPANY, THE TENANT AND THE PROPERTY ... 11

3.2 SUMMARY OF FINANCIAL INFORMATION ... 12

3.3 SUMMARY OF THE EQUITY ISSUE ... 12

4 RISK FACTORS ... 13

4.1 LIMITED OR NO SUBSTANTIAL OPERATING HISTORY ... 13

4.2 MARKET RISK ... 13

4.3 TRANSACTION RISK ... 13

4.4 OPERATIONAL RISK ... 13

4.5 FINANCIAL RISK ... 14

4.6 FINANCING RISK ... 14

4.7 REFINANCING RISK ... 14

4.8 COMPLIANCE WITH LOAN AGREEMENTS ... 14

4.9 INCREASED MAINTENANCE COSTS ... 15

4.10 GEOGRAPHIC RISK ... 15

4.11 MANAGEMENT RISK ... 15

4.12 PROPERTY RISK ... 15

4.13 RISK RELATING TO FUTURE COSTS REGARDING THE PROPERTY ... 16

4.14 RISKS RELATING TO THE BOMB SHELTER ... 16

4.15 RISKS RELATED TO RENTAL INCOME ... 16

4.16 ENVIRONMENTAL AND TECHNICAL RISK ... 17

4.17 POTENTIAL LACK OF PROTECTION UNDER LEASE GUARANTEE ... 17

4.18 TERMINAL VALUE RISK ... 17

4.19 RISK RELATED TO FUTURE SHARE ISSUES ... 17

4.20 LEGAL AND REGULATORY RISKS ... 18

4.21 RISKS RELATING TO THE SHARES ... 18

4.22 RISK RELATING TO TAX ON ADVERTISING ... 18

4.23 RISK RELATED TO THE PROPERTY’S TAX RESIDUAL VALUE AND TAX DEPRECIATIONS ... 18

4.24 AIFM RISK ... 18

4.25 TAX RISKS AND CHANGES IN TAX LEGISLATION ... 19

5 THE RECENT EQUITY ISSUE, ALLOTMENT AND PAYMENT OF SHARES, ETC. ... 20

5.1 THE EQUITY ISSUE AND SUBSCRIPTION PRICE ... 20

5.2 COSTS ... 20

5.3 GOVERNING LAW AND DISPUTE RESOLUTION ... 20

6 THE COMPANY AND THE TRANSACTION ... 21

6.1 THE COMPANY ... 21

6.2 THE SHARES ... 24

6.3 THE SUBSIDIARY ... 24

6.4 THE TARGET ... 24

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6.5 TRANSACTION AND GROUP STRUCTURE ... 25

6.6 CONTACT INFORMATION ... 26

7 THE PROPERTY ... 27

7.1 GENERAL OVERVIEW ... 27

7.2 THE PROPERTY ... 28

7.3 THE PROPERTY –LOGISTICS PREMISES... 29

7.4 THE PROPERTY –OFFICE PREMISES ... 32

8 LOCATION ... 35

8.1 GREATER GOTHENBURG AREA ... 35

8.2 MÖLNDAL –MICRO LOCATION ... 36

8.3 MÖLNDAL –DEMOGRAPHICS ... 37

8.4 MÖLNDAL –RESIDENTIAL DEVELOPMENTS ... 38

9 THE TENANT ... 41

9.1 KAPPAHL AB(PUBL)-GROUP ... 41

9.2 FINANCIAL OVERVIEW FOR KAPPAHL SVERIGE AB ... 42

9.3 SUMMARY OF THE LEASE AGREEMENT... 43

9.4 DETAILS IN THE LEASE AGREEMENTS ... 44

9.5 RENT LEVELS ... 46

10 FINANCIAL INFORMATION ... 48

10.1 TRANSACTION FINANCING ... 48

10.2 KEY FIGURES ... 49

10.3 PRO FORMA BALANCE SHEET AS OF 11JANUARY 2018 ... 50

10.4 FINANCIAL CALENDAR ... 50

10.5 OWNERS AND SHARE CAPITAL ... 51

10.6 DESCRIPTION OF DEBT FINANCING ... 51

10.7 FINANCIAL PROJECTIONS ... 53

10.8 DIVIDENDS ... 54

10.9 ESTIMATED OWNER COSTS ... 54

10.10 ESTIMATED TAX RESIDUAL VALUE ... 55

10.11 INVESTMENT SCENARIO ANALYSIS ... 56

11 THE MANAGEMENT OF THE COMPANY... 58

11.1 BOARD OF DIRECTORS, MANAGEMENT AND OWNERSHIP STRUCTURE ... 58

11.2 THE ASSET MANAGEMENT AGREEMENT ... 58

11.3 ABOUT THE ASSET MANAGER ... 59

11.4 OTHER FUTURE FEES TO THE ARRANGER ... 59

11.5 AUDITOR ... 60

11.6 EMPLOYEES ... 60

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APPENDICES

Appendix 1: Draft articles of association of the Company

Appendix 2: The interim and proposed board of directors' current and former holdings in other companies

In addition, the following documents can be obtained upon request from Arctic:

- Mandate agreement for Equity Issue between Arctic and the Company (the "Mandate Agreement")

- Asset Management Agreement between the Asset Manager and the Company - Project Budget

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1 LIST OF DEFINITIONS

Arranger or Arctic Arctic Securities AS, Sweden Branch, corporate identification number 516408-5366

Asset Management Agreement The asset management agreement between the Asset Manager and the Company regarding the management of the Group

Asset Manager Hestia Fastighetsförvaltning AB, corporate identification number 556763-1048

CAPEX Capital Expenditure

Cash Flow To Equity Yield Annualised total cash dividend payments to the shareholders of the Shares plus annualised cash amortisation divided by the total amount raised through the Equity Issue

Closing The consummation of the acquisition of the Target

Company Västsvensk Logistik AB (publ), corporate identification number 559132-1145

Company Description This corporate description, dated 25 January 2018

CPI Swedish consumer price index (Sw. Konsumentprisindex), published

by Statistics Sweden (Sw. Statistiska Centralbyrån)

Debt Facility Debt facility of SEK 400,000,000, used to finance the Transaction, together with the capital raised in the Equity Issue

Dividend Yield Annualised total cash dividend payments to the holders of the Shares divided by the total amount raised through the Equity Issue

EBITDA The Group’s earnings on a consolidated basis before interest, taxes, depreciation, value adjustments, amortisation of eventual goodwill and capital gains/losses

EBITDA Yield Annualised EBITDA divided by Gross Real Estate Value Equity Issue The issuance of 2,450,000 new Shares in the Company.

Gross Real Estate Value SEK 643,000,000

Group The Company and all its subsidiaries from time to time, including the Subsidiary and the Target

Group Costs Annual costs associated with the Group’s operations, including fee to the Asset Manager, auditing fee, listing fee and fee to the board of directors of the Company

ICR Interest Cover Ratio. The proportion (expressed as a percentage) that the Net Operating Income bears to the finance costs, over a forward- looking 12-month period

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IRR Internal rate of return, the annualised effective compounded return

rate

Landlord means the Target in its capacity as landlord under the Lease Agreements

Lease Agreements The Tenants' lease agreements in relation to the Property

LTV Loan to value (outstanding loan amount under the Debt Facility to market value of the Property)

Merger The downstream merger whereby the Subsidiary is merged with the

Target, with the Target as surviving entity

Money Laundering Act The Swedish Act on measures against money laundering and terrorist financing (Sw. lag (2009:62) om åtgärder mot penningtvätt och finansiering av terrorism)

MTF Multilateral trading facility

Net Operating Income All amounts payable to the Group arising from or in connection with any lease, less any Property Related Costs

Net Real Estate Yield Annualised Net Operating Income, divided by Gross Real Estate Value

Property Mölndal Hästägaren 3 in Mölndal Municipality

Property Related Costs All operating costs (excluding Group Costs and CAPEX) connected to the handling of the Property, excluding CAPEX (annualised)

Share Purchase Agreement The share purchase agreement signed in December 2017 between the Subsidiary as purchaser and the Vendor as seller regarding the purchase of all shares in the Target, being the direct owners of the Property.

Shares The 2,450,000 shares in the Company. BTA ISIN number

SE0010714436. Share ISIN number SE0010662437. BTAs are to be converted to shares on 2018-01-26.

Subsidiary Västsvensk Bidco AB, corporate identification number 559129-3807

Target Klövern Helge AB (under name change to Västsvensk Logistik Propco

AB), corporate identification number 556905-3977

Tenants KappAhl Sverige AB, corporate identification number 556060-4158, Jan Håkansson Byggplanering AB, corporate identification number 556319-7531 and Technology Solution & Integration Sverige AB, corporate identification number 556977-2667

Transaction All transactions, including but not limited to the transfers under the Share Purchase Agreement

Vendor WSP

Klövern Helmut AB, corporate identification number 556634-5731 WSP Sverige AB, corporate identification number 556057-4880

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2 RESPONSIBILITY STATEMENT

The board of directors in the Company is responsible for the information given in this Company Description. The Company confirms that, having taken all reasonable care to ensure that such is the case, the information contained in this Company Description is, to the best of the Company’s knowledge, in accordance with the facts and contains no omissions likely to affect its import. Any information in this Company Description and in the documents incorporated by reference which derive from the Vendor and other third parties have, as far as the Company is aware and can be judged on the basis of other information made public by that third party, been correctly represented and no information has been omitted which may serve to render the information misleading or incorrect. The board of directors confirms that, having taken all reasonable care to ensure that such is the case, the information in this Company Description is, to the best of the board member’s knowledge, in accordance with the facts and contains no omission likely to affect its import.

The board of directors in Västsvensk Logistik AB

Rebecka Hermansson, Daniel Andersson and Johan Ekman

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3 INVESTMENT SUMMARY

This summary should be read as an introduction to the Company Description, and is in its entirety subordinated to the more detailed information contained in this Company Description including its appendices. Any decision to invest in the Shares should be based on an assessment of all information contained in this Company Description, its appendices and any other relevant information. In particular, potential investors should carefully consider the risk factors mentioned in section 4 (Risk factors).

3.1 Summary of the Company, the Tenant and the Property

The Company is a Swedish limited liability company which has, through the Subsidiary, acquired all shares in the Target, which is the sole owner of the Property.

The Property consists of a prime logistics and office building located in Mölndal, approximately 12 km south of central Gothenburg. The Property is strategically located with close proximity to the majority of end customers, supported by an excellent micro-location along the E6 and E20 motorways, allowing easy access by road, rail, sea, and air.

The Property is let to three tenants, with KappAhl Sverige AB as the anchor tenant accounting for 97% of the rent and two smaller office tenants accounting for the remaining 3% of rent. The weighted average unexpired lease term amounts to approximately 9.5 years.

The total rent for 2018 is estimated to approximately SEK 39,742,747 (base rent + indexation + supplements) on a full year basis.

The building on the Property has a total lettable area amounting to approximately 48,064 sqm and the total site area amounts to 53,192 sqm. The Property is a held by way of freehold.

12 3.2 Summary of financial information

The purchase price was based on the Gross Real Estate Value and was financed with the Equity Issue of SEK 245,000,000 and the Debt Facility of SEK 400,000,000.

Key financial figures include:

 Net Real Estate Yield of approximately 5.8%¹

 EBITDA Yield of approximately 5.5%²

 Estimated average long-term Dividend Yield of approximately 8.1%

 Estimated average Cash Flow to Equity Yield of approximately 8.9%

 Estimated IRR of approximately 9.5% (if sold after 10 years at an exit yield of approximately 6.0%)

 Initial LTV of approximately 62%, with 1.0% annual amortisation on the Debt Facility

3.3 Summary of the Equity Issue

The Company issued a total of 2,450,000 Share during January 2018, at a price of SEK 100 per Share. The formal resolution to issue a total of maximum 2,450,000 new shares in the Company was taken by the general meeting on 4 December 2017, and the resolution of the general meeting was, in accordance with the Swedish Companies Act (Sw. Aktiebolagslagen (2005:551)), based upon the board of directors' proposal.

The general meeting also resolved to redeem the previously existing 500,000 shares in the Company which were held by the Arranger, at a redemption price of SEK 1 per share, and for this purpose reduced the share capital with an aggregated amount of SEK 500,000.

1 The day one NIY is 5.9% due to a lower repairs budget in 2018, compensated by a high capex allocation

2 The day one EBITDA Yield is 5.6% due to a lower repairs budget in 2018, compensated by a high capex allocation

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4 RISK FACTORS

Prospective investors should be aware that investments in shares are always associated with risks. The financial performance of the Group and the risks associated with the Group’s business are important when making a decision to invest in the Shares. There can be no guarantees or assurances that the Company’s objectives are met and that an investment in turn will generate a positive return for the investor.

A number of factors influence and could influence the Group’s operations and financial performance and ultimately the Company’s ability to pay dividends. In this section a number of risk factors are illustrated and discussed, both general risks pertaining to the Company’s operations and material risks related to the Shares as financial instruments. The risks described below are not the only ones the Group is exposed to. Additional risks that are not currently known to the Company, or that the Company currently considers to be immaterial, could have a material adverse effect on the Group’s business. The order in which the risks are presented is not intended to provide an indication of the likelihood of their occurrence or of their relative significance.

4.1 Limited or no substantial operating history

The Company is in a development stage and has recently been formed for the purpose of carrying out the business plan contained in this Company Description. Although the Asset Manager has many years’ experience in the business sector, the Company is new and as such has no operating history. The Company is therefore depending on the Asset Manager in order to carry out its business plan and conduct its day-to-day business.

4.2 Market risk

Real estate investment risk is linked to the value of the real estate. This risk can thus be defined as those factors that influence property valuations. The main factors are the supply and demand for commercial properties, as well as the yield that investors are willing to accept when purchasing real estate. The real estate market is influenced by the vacancy rate in the market. The vacancy rate is influenced by several factors on both a micro and macro level. Negative changes in the general economic situation, including business and private spending, may adversely affect the demand for commercial premises. The free capacity is also influenced by construction and refurbishment activity. Further, the real estate market is influenced by the demand for the type of real estate that the Group owns. During certain periods there might be fierce competition for a few real estate objects, and it might be difficult to purchase desired objects at the desired price. In other periods, it might be difficult to sell real estate objects at the desired price. A decrease in the value of the Property would adversely affect the valuation of the Group's property portfolio and hence the Group's financial condition negatively.

4.3 Transaction risk

The Share Purchase Agreement contains customary limitations as to which claims can be made against the Vendor and at what point in time these claims can be made. In addition, the Target may also have hidden liabilities which do not relate to the Property and there is a risk that any potential losses incurred due to such liabilities cannot be possible to claim from the Vendor, and may therefore have a negative effect on the Group’s financial condition and the equity returns.

4.4 Operational risk

The financial status and strength of the tenants of the relevant property, and thus their ability to service the rent etc., will always be a decisive factor when evaluating the risk of property companies. Operational risk also include risk related to restrictions in the Lease Agreements, risk related to legal claims from the Tenants or authorities,

14 including tax authorities and other third parties, risk for increased maintenance costs, risk for decreased technical conditions and risk for hidden defects and emissions.

Approximately 98% of the Property's premises are let to KappAhl Sverige AB (97% of the income), having the effect that the Group is highly dependent on the income under such lease agreements and the financial strength of KappAhl Sverige AB. In the event that KappAhl Sverige AB is not able to pay rent under its lease agreements, this could have a material adverse effect on the Group's financial position.

The current lease agreements with KappAhl Sverige AB run until 30 October 2027 and the lease agreement with Technology Solutions & Integration Sverige AB runs until 30 June 2018. The lease agreement with Jan Håkansson Byggplanering AB runs until 30 April 2020, and the Target has been informed that this lease agreement may be subject to termination for vacation. There are certain risks involved with obtaining new tenants, such as a potential higher counterparty risks and increased costs due to renovations or adjustments, which could affect the Group’s financial condition negatively. In addition, the Group's successfulness in negotiating new lease agreements on favorable terms is dependent upon the general condition of the real estate market at such time.

4.5 Financial risk

Financial risk includes, but is not limited to, risk of not achieving the desired leverage ratio, not fulfilling loan obligations, interest rate fluctuations, risk related to effects of fair value adjustments and changes in laws and rules regarding tax and duties. The lease agreements with KappAhl Sverige AB is adjusted annually with 90% of Swedish CPI and the lease agreement with Jan Håkansson Byggplanering AB with 100% of Swedish CPI. Deviations from the estimated CPI may have a negative effect on the Group's liquidity, dividends and expected equity returns.

4.6 Financing risk

The Group is deemed to be sufficiently funded. However, additional capital needs, due to for example unforeseen costs and/or larger capital expenditures than expected, cannot be ruled out. There is a risk that the Group cannot satisfy such additional capital need on favorable terms, or at all, which could have an adverse effect on the Group’s business, financial condition and equity returns.

4.7 Refinancing risk

At maturity of the Group’s debts, the Group will be required to refinance such debt. The Group’s ability to successfully refinance such debt is dependent on the conditions of the financial markets in general at such time.

As a result, there is a risk that the Group’s access to financing sources at a particular time may not be available on favorable terms, or available at all.

The Group will also, in connection with a refinancing of its debts, be exposed to interest risks on interest bearing current and non-current liabilities. Changes in interest rates on the Group’s liabilities will affect the Group’s cash flow and liquidity, and could hence potentially adversely affect the Group's financial conditions and equity returns. The Group’s inability to refinance its debt obligations on favorable terms, or at all, could have a material adverse effect on the Group’s business, financial condition and results of operations. According to the indicated terms of the loan agreement, the loan under the loan agreement assumes a maturity of five years.

4.8 Compliance with loan agreements

The Group's loan agreement is subject to a number of covenants dictating what actions the Group may and may not take. Should the Group breach these covenants, it may trigger increased amortisation and an up-streaming restriction. Further, additional financing costs may incur and the loan may be accelerated for immediate payment,

15 which could ultimately result in bankruptcy and liquidation of the Group. Such events would negatively affect the Group’s financial condition and equity returns.

The loan agreement contains an ownership clause (i.e. change of control). Such ownership clause restricts any legal person’s right to acquire or control more than a certain agreed share of the capital and/or voting rights of the Company. Should any person acquire or obtain ownership or control exceeding 50 per cent or more of the shares, the full amount outstanding under the loan agreement may be declared due and payable at short notice.

There is a risk that a refinancing in connection with such event would lead to increased costs and could therefore affect the Group’s financial conditions and equity returns negatively.

4.9 Increased maintenance costs

The estimated maintenance and capital expenses on which the forward-looking statements have been calculated are based upon information from the Vendor, historic maintenance costs for the Property and a draft technical due diligence conducted on the Property. There is a risk that the maintenance costs and capital expenses for various reasons may exceed the estimated maintenance costs and capital expenses presented herein, and could therefore adversely affect the Group’s financial condition and equity returns.

4.10 Geographic risk

This Company Description contains certain market information relating to the property market in Sweden in general, and in the Greater Gothenburg area in particular. Market values of properties in such area may decline in the future and negatively impact the equity returns.

4.11 Management risk

The Group is initially dependent upon the Asset Manager for the implementation of its strategy and the operation of its activities. The Asset Management Agreement has an initial termination date as of 11 January 2023, and will unless terminated 3 months prior to such termination date, be prolonged with 4 years at the time until terminated (with a notice period of 3 months). The Company has a right to terminate the Asset Management Agreement at any time during the term of the agreement with a notice period of 6 months. Although the Asset Management Agreement as a main principle is non-terminable from the Asset Manager's side, there is a risk that an event of default occurs from the Company's side which will give the Asset Manager a right to terminate the agreement.

There is an uncertainty with regard to the management of the Group in the event of a termination of the Asset Management Agreement. In addition, the Group will depend upon the services and products of certain other consultants, contractors and other service providers in order to successfully pursue the Group’s business plan.

There is a risk that the Group cannot purchase new management services or other necessary services or products on favorable terms which could have an adverse effect on the Group’s business and financial condition.

Finally, there is a risk that the fees payable to Asset Manager, as well as other arrangements with the Asset Manager, could have an adverse effect on the Group’s financial condition.

4.12 Property risk

Returns from the Property will depend largely upon the amount of rental income generated from the Property, the costs and expenses incurred in the maintenance and management of the Property, necessary investments in the Property and upon changes in its market value. Rental income and the market value for properties are generally affected by overall conditions in the economy, such as growth in gross domestic product, employment trends, inflation and changes of interest rates. Both property values and rental income may also be affected by competition from other property owners, or the perceptions of prospective buyers and/or the attractiveness from tenants, convenience and safety of the Property.

16 4.13 Risk relating to future costs regarding the Property

There is a risk that members of the Group, in their capacity as property owners, will be liable for future costs regarding the Property. The responsibility for costs relating to maintenance as well as investments and repairs at the Property is not fully regulated in the lease agreements with KappAhl Sverige AB. For example, the Vendor has informed that KappAhl Sverige AB has carried out and borne the costs for snow clearance of the roof, however the responsibility for such snow clearance is not clearly allocated in the lease agreements. Without any specific provision in the Lease Agreements allocating the costs for snow clearance of the roof, there is a risk that members of the Group, in their capacity as property owners, will need to carry out and bear the costs for such snow clearance.

Furthermore, the Landlord has undertaken to perform certain construction works and adjustments at the Property. The Landlord has agreed to exchange existing luminaires (Sw. armaturer), to replace a gate and to repair a heat exchanger (Sw. värmeväxlare). The Landlord has also undertaken to repair roof drains.. The Vendor has agreed to bear the costs relating to the exchange of existing luminaires.

In addition, a basin has to be installed in connection to the sprinkler system at the Property, according to a decision by the municipality of Mölndal in 2009. The basin has to be in place prior to 1 July 2019.

There is a risk that the above mentioned implications would lead to the Target, in its capacity as property owner, being liable to pay for maintenance, repairs or investments at the Property, which could risk having a negative effect on the Group’s financial condition.

4.14 Risks relating to the bomb shelter

There is a bomb shelter (Sw. skyddsrum) located within one of the buildings on the Property. According to information from WSP, the roof of the bomb shelter has been cut open and a staircase has been installed. A property owner is responsible for maintenance of bomb shelter within the property, meaning that the property owner shall ensure that the bomb shelter maintains the standard it had when it was newly built or the standard it has received through modernizations. The Civil Protection and Emergency Authority (Sw. Myndigheten för samhällsskydd och beredskap) carries out a control of active bomb shelters every ten years. Since the bomb shelter has been tampered with, there is a risk that the Target in its capacity as property owner will be imposed to restore the bomb shelter and there is also a risk that the Target will be charged with a penalty if the bomb shelter is not restored within a certain period of time. Should the mentioned risks be materialized, this would have an adverse effect on the Group’s financial condition.

4.15 Risks related to rental income

Jan Håkansson Byggplanering AB and Technology Solution & Integration Sverige AB have been paying a monthly rental supplement for electricity to the Landlord, in accordance with the terms of their lease agreements.

Furthermore, other media, such as heat and cooling, are included in the rents. However, KappAhl Sverige AB is paying for the electricity subscription and other media for the entire Property and has not been reimbursed for the media costs relating to the premises of Jan Håkansson Byggplanering AB and Technology Solution &

Integration Sverige AB. There is a risk that KappAhl Sverige AB could turn to the Target, in its capacity as property owner, for compensation regarding the costs for electricity and other media relating to the premises of the other tenants. A claim on compensation could apply to future costs for electricity and other media, but KappAhl Sverige AB could also claim payment for previous costs in relation hereto. If KappAhl Sverige AB would succeed in such a claim, the Vendor would be liable to reimburse KappAhl Sverige AB to the extent the claim relates to the period up until the date of the Closing. For any successful claim relating to the period after the date of the Closing, the Target would be liable to reimburse KappAhl Sverige AB, which could have a negative effect on the Group’s financial condition.

17 Technology Solution & Integration Sverige AB has been late in paying its rent during the third quarter of 2017.

However, Technology Solution & Integration Sverige AB has confirmed that the debt will be paid during November and that future rent will be paid in time. There is a risk that tenants being late in their payment of rent could have a negative effect on the Group’s financial condition and liquidity, and could in a worst case scenario be an indication of financial difficulties for the relevant tenant.

Furthermore, if the Property is damaged to such extent it can no longer be used for the intended purpose, or if the authorities due to the Property's condition issue a prohibition to use the premises for the intended purpose, or if other obstacles occur which affect the Tenants' right to use the premises, there is a risk that the Lease Agreements may expire in advance. If the Property is damaged or the use of the Property is limited due to a decision by the authorities, there is also a risk that the Tenants, under certain circumstances, may have right to pay a lower rent than agreed in the Lease Agreements. If some or all lease agreements would expire in advance, or if the rents would be subject to a material reduction, this could have an adverse effect on the Group’s financial condition.

4.16 Environmental and technical risk

According to the polluter pays-principle established under Swedish environmental law, the operator who has contributed to pollution will be responsible for remediation. However, should it not be possible to locate the polluter, the property owner is subsidiary responsible for remediation and associated costs. Accordingly, there is a risk that the members of the Group in their capacity as property owners may be held responsible for costly remediation.

According to the Vendor, no environmental investigations have been carried out on the Property. The Vendor has no knowledge of any environmental matters relating to the Property. Nonetheless, there might still be environmental issues on the Property, causing a risk that the Group will be subject to claims by public authorities or third parties as a result of environmental, technical or other damages related to the land and the Property.

4.17 Potential lack of protection under lease guarantee

KappAhl AB has provided a guarantee to KappAhl Sverige AB under the lease agreements relating to the Property, under which KappAhl AB, as for its own account, has guaranteed the tenant's fulfilment of its rent payments under the lease agreement. However, the guarantee lacks the customary condition that the undertaking shall also extend to other obligations according to the Swedish Lease Act (Sw. hyreslagen). The guarantee is also limited to an amount equivalent to one year's rent. In the event the Group would have to claim fulfillment under the guarantee, there is a risk that the Group would have insufficient coverage in this respect, which could imply a financial exposure on the Group.

4.18 Terminal value risk

Property and property related assets are inherently difficult to appraise due to the individual nature of each property and due to the fact that there is not necessarily a liquid market or clear price mechanism. As a result, valuations may be subject to substantial uncertainties. There is a risk that the estimates resulting from the valuation process will not reflect the actual sales price. Any future property market recession could materially adversely affect the value of the Property.

4.19 Risk related to future share issues

If the Company would need additional capital in the future, lack of participation from investors pose a risk to the Company’s financial position until such further issue is completed. Investors who do not participate in future issues will risk having their ownership diluted.

18 4.20 Legal and regulatory risks

Investments in the Shares involve certain risks, including the risk that a party may successfully litigate against the Group, which may result in a reduction in the assets of the Group. However, the directors and the relevant managers of the Vendor are on the date hereof not aware of any pending litigation against the Target. Changes in laws relating to ownership of land could have an adverse effect on the value of Shares. New laws may be introduced which may be retrospective and affect environmental planning, land use and/or development regulations.

Government authorities at all levels are actively involved in the promulgation and enforcement of regulations relating to taxation, land use and zoning and planning restrictions, environmental protection and safety and other matters. The institution and enforcement of such regulations could have the effect of increasing the expense and lowering the income or rate of return from the Company, as well as adversely affecting the value of the Property.

Government authorities could use the right of expropriation of the Property if the requirements for expropriations are satisfied. Any expropriation will entitle the Group to compensation but the Group’s financial condition may, irrespective of such compensation, be negatively affected.

4.21 Risks relating to the Shares

Real estate is considered an illiquid asset, and normally it takes months to invest in and realize direct investments in property. The Shares’ liquidity are uncertain, and it can be difficult to sell the Shares in the secondary market.

An investor can only exit the investment through a sale of the Shares in the secondary market or if the Company sells any of the Property. Investments in the Shares are only suitable for investors who can bear the risks associated with a lack of liquidity in the Shares.

4.22 Risk relating to tax on advertising

The lease agreements with KappAhl Sverige AB do not contain any provision allocating the responsibility of paying a potential tax on advertising. Without any provision in the lease agreements establishing who carries the responsibility of paying a potential tax on advertising, it cannot be excluded that the Target, in its capacity as property owner, will be liable to pay such tax. The imposing of a tax on advertising would have an adverse effect on the Target's financial condition and result of operation.

4.23 Risk related to the Property’s tax residual value and tax depreciations

The Targets’ tax residual value of the Property per 30 September 2017 amounted to approximately SEK 121,182,000. Approximately SEK 24,133,000 of the Target’s tax residual value is attributable to land, SEK 1,868,000 is attributable to building equipment (Sw. Byggnadsinventarier), SEK 308,000 is attributable to land improvements (Sw. Markanläggningar) and the rest, equalling approximately SEK 94,872,000 is attributable to the buildings on the Property. The Company has assumed a tax depreciation rate of 4% of the depreciation base assumed to be attributable to buildings, 5% to land improvements (Sw. Markanläggningar) and 10% to building equipment (Sw. Byggnadsinventarier). There is a risk that a discrepancy from the above could affect the Group’s financials.

4.24 AIFM risk

The Alternative Investment Fund Managers Directive 2011/61/EU is recent, and there are still some unresolved/unclear issues regarding how to interpret the directive. The directive is implemented in Sweden. The Company has deemed itself to fall outside of the scope of the AIFM Directive due to its industrial purpose, i.e.

because the Company shall indirectly generate returns through the Property operations in the market and not

19 necessarily by divesting the Property. However, there is a risk that the Company may be considered an AIFM, which would among other result in additional costs to a depositary and a manager.

4.25 Tax risks and changes in tax legislation

The Group’s operations, results and financial position are affected by the tax rules in force from time to time in Sweden. Changes in legislation regarding company and property taxation, VAT, as well as other tax rules, government charges and contributions, may affect the conditions for the Group’s business activities. Since these rules have historically been subject to frequent changes, further changes are expected in the future, potentially with retroactive effect. Such changes may have a material negative effect on the Group’s operations, results and financial position.

For example, in June 2017, the Swedish government proposed changes to the interest deduction limitation rules.

The proposal is based on the Directive 2016/1164 that was presented by the Council of the European Union in July 2016. Under the proposal, a general limitation for interest deductions in the corporate sector is suggested either by way of an EBIT-rule or an EBITDA-rule. The primary proposal is that net interest expenses, i.e. the difference between the taxpayer’s interest income and deductible interest expenses, should only be deductible up to 35% of the taxpayer’s EBIT for tax purposes. As an alternative proposal, the net interest expenses should instead be deductible up to 25% of the taxpayer’s EBITDA for tax purposes. The rules are proposed to enter into force the first income year that starts on or after 1 July 2018. The proposal has been circulated for formal consultation and the consultation period ended on 26 September 2017. It is currently unclear how the final proposal will be drafted.

Also, in June 2015 the Swedish Government appointed a committee to analyse the possibility to divest properties through tax exempt disposals of shares in companies holding properties and, if considered necessary, to propose new legislation to prevent such transactions. The investigation also reviewed whether acquisitions through land parcelling procedure are being abused to avoid stamp duty. The result of the review was presented on March 30, 2017. The committee’s main proposal is that upon a change of control in a company holding assets that mainly consist of properties, the properties will be considered as divested and re-acquired for a price corresponding to the market value of the properties. The divested real estate company should also report a taxable notional income (instead of stamp duty) corresponding to 7.09% of the highest amount of the market value and the tax assessment value of the properties. Further, stamp duty is proposed to be introduced on acquisitions of properties by land parcelling procedures. The rules are proposed to enter into force 1 July 2018. The proposals by the committee have been circulated for formal consultation and the consultation period ended on 15 September 2017. It is currently unclear if, and to what extent, the proposals will result in new legislation.

If any of these proposals are enacted, it could have a material negative effect on the Group’s operations, results and financial position.

The factors mentioned above are not comprehensive and there may be other risks that relate to or may be associated with an investment in the Company.

20

5 THE RECENT EQUITY ISSUE, ALLOTMENT AND PAYMENT OF SHARES, ETC.

5.1 The Equity Issue and subscription price

The Company has, through the Subsidiary, acquired 100% of the shares in the Target from the Vendor. The Target owns the registered property Hästägaren 3 in Mölndal Municipality. The purchase price for the Target was based on the Gross Real Estate Value of SEK 643,000,000, subject to customary purchase price adjustments.

Against this background and to partially finance the acquisition, the Company raised equity in the amount of SEK 245,000,000 by way of an equity issue in which the Company issued 2,450,000 new shares at a price of SEK 100 per share.

SEK 245,000,000 of proceeds from the Equity Issue was, together with the Debt Facility of SEK 400,000,000, exclusively applied towards fully funding the acquisition of the Target, including transaction costs and working capital requirements.

The board of directors of the Company issued 2,450,000 Shares in the Company. The formal resolution to issue up to 2,450,000 new shares in the Company was taken by the general meeting on 4 December 2017, and the resolution of the general meeting was, in accordance with the Swedish Companies Act, based upon the proposal from the board of directors.

In addition, the general meeting resolved to redeem the previously existing 500,000 shares in the Company, which were held by the Arranger, at a redemption price of SEK 1 per share, and for this purpose reduced the share capital with an aggregated amount of SEK 500,000. Following the redemption of such shares the registered share capital of the Company amounts to SEK 2,450,000.

5.2 Costs

The total costs associated with the acquisition of the Target, listing of the Company's shares on AktieTorget and the start-up of the Company is estimated to a total of approximately SEK 22,170,000. Of this, the Arranger received approximately SEK 800,000 as an arrangement fee for the debt arrangement and SEK 12,860,000 for work relating to capital raising, structuring of the investment, advisory services, services in connection with the incurrence of the Debt Facility and the listing of the Shares.

5.3 Governing law and dispute resolution

This Company Description is subject to Swedish law. Any disputes regarding this Company Description which cannot be solved amicably, shall be referred to the ordinary courts of Sweden and the applicant accepts the non- exclusive jurisdiction of the Stockholm District Court.