Quartiers Properties year-end report – January to December 2018

• Net sales amounted to SEK 29,098 thousand (SEK 9,494 thousand), of which H2 accounted for SEK 25,856 thousand (SEK 4,261 thousand). The reason for the major increase in net sales in H2 was that the company’s sales of project properties began in 2018 and the first six buyers took up occupancy in 2018. Only properties where payment has been made in full and ownership rights have been transferred are recognised in earnings.

• Operating earnings totalled SEK 23,255 thousand (SEK 28,363 thousand), of which H2 accounted for SEK 15,128 thousand (SEK 32,781 thousand).

• Changes in the value of investment properties totalled SEK 45,567 thousand (SEK 39,042 thousand), of which H2 accounted for SEK 26,717 thousand (SEK 39,042 thousand).

• Post-tax earnings amounted to SEK 10,158 thousand (SEK 14,285 thousand), of which H2 accounted for SEK 8,474 thousand (SEK 21,873 thousand).

• Basic earnings per share for the period totalled SEK 0.35 (SEK 0.40).

• Equity totalled SEK 373,172 thousand (SEK 344,157 thousand).

• The net value of the company’s properties (market value less loans associated with the property) is SEK 479.2 million (402.9 million).

Significant events during the second half of the year

• Acquisition of two sites ready for development in Los Flamingos, with an underlying value of around SEK 16.4 million. The transaction was conducted in corporate form via the acquisition of all shares outstanding in Wecap Spain SL. The purchase consideration totalled an amount corresponding to SEK 7.2 million.

• The first phase of project 22byQuartiers was completed in the autumn. The new owners of the apartments sold began taking up occupancy on 28 September. The sales value realised, based on apartments where payment had been made in full and occupancy had been taken up on 31 December 2018, totalled SEK 23.9 million, representing 6 out of a total of 22 apartments in the process of being sold.

Significant events after the end of the period

• On 1 January 2019, the company took over the rental business from the former operator of the company’s investment properties. Termination of the agreement with the operator resulted in an impairment of rent income amounting to SEK 2,577 thousand for H2. Due to assuming control of the rental business, an improvement in rent earnings is expected.

• The current sales status for project 22byQuartiers is that 16 out of 22 apartments have been sold. Occupancy is being taken up on a continuous basis in H1 2019.

Board of Directors’ proposal to the 2019 AGM

• That no dividend be paid for the ordinary share.

• That a dividend of SEK 0.96 be paid per preference share.

• To authorise the Board of Directors for the period extending up until the next AGM, on one or more occasions, to resolve on the issue of new preference and/or ordinary shares, as well as convertibles and/or warrants. It should be possible to subscribe for the shares against a cash payment, via assets contributed in kind and/or via offsetting, or otherwise according to conditions.

• The company reserves the right to propose additional decision points ahead of the notice convening the AGM.

• The Annual Report will be made available on the company’s website by no later than 8 May 2019.

Message from the CEO

Anyone who has followed Quartiers’ progress since we launched on the stock market in early summer 2016 can see that the company has achieved robust growth. As with all growth companies, expansion is taking place in phases in which capital acquisitions are alternated with investments and sales. We remain in a growth phase and are pleased to be able to confirm that in 2018 we successfully launched our first project for sale, 22byQuartiers. To take the company to the next level, in the second half of 2018 we invested time and resources in recruiting qualified personnel and building up an effective organisation. Today, we have a basic team who will enable us to scale up the business via existing and new projects.

One of the organisational changes that we have made is to take over operation and management of the now 101 apartments that form our apartment complex Hacienda del Señorio de Cifuentes at Benahavís. Serving as manager responsible for the apartment complex, which has also been renamed Marbella Apartment Hotel & Resort, is Henric Persson. Henric has a solid background in the hotel industry and joins us from a position as hotel manager at the Falkenberg Strandbad hotel, part of the ESS Group. In addition to taking a number of purely operational rationalisations, we can already report today that the reservation situation for 2019 is considerably better than last year, and in January we were nominated by Expedia as the fastest-growing hotel in southern Spain, measured by growth in the number of reservations. By taking over operations, we have also been able to gain synergies through the ability of our operating company to offer buyers in the 22byQuartiers and Ocean View projects a hotel-standard concierge service.

Our jointly owned sales company Quartiers Estates, with a sales office in Puerto Banús, represents another step in building a stable organisational structure. Since being established in summer 2018, the company has performed well and the team has, in addition to closing several external sales, achieved excellent results in sales of 22byQuartiers, where we now only have six apartments left to sell. It is estimated that occupancy of phase 2 will take place in March 2019.

Most recently, we succeeded last week in selling two apartments at a price of EUR 435,000 each. This gives us a clear indication that prices in Hacienda del Señorio de Cifuentes are on the way up. Our existing 101 apartments, which are located in the same area, are currently valued at an average of EUR 343,500, while in the Ocean View project, which is being developed next door to 22by Quartiers, we have forecast an average selling price of

EUR 460,000 per apartment. Ocean View is being developed in association with one of Sweden’s leading concept developers, Whyte Lilja, and will be built in a considerably more modern style than 22byQuartiers. High-end choices of materials will set the project apart from the region’s otherwise relatively homogeneous property market.

Like other growth companies, one of our major challenges lies in financing new and existing projects. Against that background, in the autumn we linked up with Antonio Diaz-Barceló, who has broad experience of the Spanish financial and capital markets. With Antonio, we have extended our network of contacts beyond our Swedish investors to sources of finance above all in Madrid and are continuing to work proactively on an ongoing basis on identifying financing solutions that are compatible with our short- and long-term needs. This is an initiative that will enable continued growth over the next few years.

We anticipate strong growth in the Marbella market, where developments in IT in particular have made it possible for more people to move to the Costa del Sol and enjoy its benefits without having to give up their jobs or businesses at home. This is a highly interesting development that we believe will continue, going forward.

For those not wanting to stay very long when visiting the Costa del Sol, we are progressing our Boho Club hotel project on Marbella’s Golden Mile. The last details of the project are currently being finalised.

We have entered into a collaboration with the share trading and investment site Trade Venue and in association with the site have recorded a video showing our properties and describing our current activities and plans for the future. If you do not personally have the opportunity to visit us in Marbella, I can wholeheartedly recommend viewing the video, which is available on our website.

With an eventful year in 2018 behind us, we are now looking forward to 2019, with business opportunities to develop that are at least as attractive.