Yet another quarter of strong growth in earnings and shareholders' equity

D. Carnegie & Co AB (publ) reports for the first quarter of 2016 a sharp
increase in profit before tax of SEK 263 million - up 446 percent compared with
the same quarter last year. Also income from property management was
considerably higher, SEK 37 million, compared with SEK 2 million for the first
quarter of last year .
Earnings per share after tax were SEK 3.47 (0.69). The adjusted equity
(EPRA/NAV) increased 47 percent compared to the same quarter 2015 and at 31 of
March 2016 amounted to SEK 79.79/share (54.25).
FIRST QUARTER Q1, JANUARY – MARCH 2016

  · Rental income increased to SEK 309 million (296)
  · Net operating income of SEK 118 million (120)
  · Income from property management increased to SEK 37 million (2)
  · Changes in the value of investment properties of SEK 363 million (133)
  · Changes in the value of derivatives of SEK -76 million (-75)
  · Profit before tax increased to SEK 263 million (59)
  · Profit after tax increased to SEK 246 million (47)
  · Earnings per share increased to SEK 3.47 (0.69) before dilution and
increased to SEK 2.92 (0.67) after dilution*

* Upon calculation of earnings per share after dilution, the annual interest
payment savings on the convertible debenture in the amount of

SEK 51 million have been taken into consideration. The effect of the savings per
share is SEK 0.72/year.

Significant events during the first quarter

  · Completed the sale of Hammarkullen in Gothenburg with 890 apartments and an
agreed property value of SEK 493 million, strengthening cash on account by SEK
281 million
  · Entered into an agreement regarding the repayment of convertible
subordinated debentures, reducing the dilution effect and improving net
financial items
  · Acquisition of a property in Uppsala with an underlying property value of
SEK 78 million, while at the same time selling potential construction rights in
Solna with an underlying value of SEK 49 million
  · At an extraordinary general meeting of the shareholders held on 23 March
2016, the Board of Directors was authorized to carry out a private placement
issue of class B shares

Significant events after the first quarter

  · D. Carnegie & Co carried out a private placement of 6,559,900 class B
shares, providing SEK 476 million in shareholders’ equity prior to issue
expenses
  · Entered into an agreement to acquire a property portfolio in Katrineholm
with an agreed property value of SEK 619 million
  · Entered into an agreement to acquire a property portfolio in Eskilstuna with
an agreed property value of SEK 116 million
  · D. Carnegie & Co issued an unsecured bond in the amount of SEK 1,000 million

Statement from the CEO

We continued our journey during the first quarter as one of Sweden’s largest
residential property companies, focusing on improving our property portfolio.
The refurbishment work continues to be intensive and 251 apartments were
refurbished during the period.

The extensive improvement work leads to substantial increases in values, which
is apparent from the increase in the adjusted shareholders' equity by 9% during
the quarter. The earnings capacity also increased – up SEK 73 million or 27% –
to SEK 311 million on a rolling 12-month basis as compared with the end of March
one year earlier.

Increased rents and lower costs mean that net operating income will continuously
improve. However, during the period, a record number of apartments were turned
over for refurbishment, which temporarily increased the costs of refurbishment
vacancies by SEK 9 million for the quarter. Thanks to the increased
refurbishment pace, work has commenced on over 450 apartments in addition to the
251 apartments completed during the period. This means that we will have at
least 700 apartments renovated during the first half of the year, even if this
affects the net operating income in the short term. With the same rate of
refurbishment vacancies as one year ago, the net operating income would have
been SEK 127 million for the first quarter. Instead, the figure is SEK 118
million, in line with the same quarter of last year (SEK 120 million). It should
be notified that the first quater, due to high cost for heating, normally is the
worst considering net operating income. However, the faster pace of
refurbishment has created significant increases in value during the quarter: SEK
511 million and SEK 363 million following deductions for investments.

Taken as a whole, the improvements have resulted in a strong increase in
reported earnings. The profit for the quarter before tax was SEK 263 million,
which can be compared with SEK 59 million for the first quarter of 2015. Broken
down to earnings per share after taxes, the figure is SEK 3.47, as compared with
SEK 0.69 for the same period in 2015.

In order to simplify the capital structure, clarify the ownership structure, and
reduce financing costs, during the quarter we entered into agreements governing
the repayment of three convertible debentures totalling SEK 1,020 million which
were issued in July 2014 as partial payment when a large property portfolio was
acquired from Svensk Bolig Holding. We have now been able to eliminate the
uncertainty which a potential dilution entailed for investors. In order to
ensure that the capital structure was improved, part of the financing consists
of a private share placement which was carried out in the beginning of April.
The remainder is financed by a new unsecured three-year bond which was issued in
the middle of April. Both of the issues were well received and oversubscribed.

During the year, we will continue on the path chosen of finding additional
acquisitions in the Stockholm region and continuing the work of renovating our
portfolio, which will create the foundation for continued sound growth in our
profitability. After the close of the period, agreements are entered into
regarding the acquisition of a total of 853 additional apartments in two
transactions. Yet another measure to increase our profitability is to stimulate
the development of construction rights so that we can commence new construction
next year.

Stockholm, 26 April 2016

ULF NILSSON
CEO, D. Carnegie & Co