Nine-month report 2000

Nine-month report 2000 * Cash flow increased 17% as a result of a 6% rise in rents in the identical portfolio and other factors * Continuing focus on growth markets as reflected in acquisitions of SEK 14 billion and sales of SEK 3 billion * Pretax profit for the period: SEK 1,043 M * Forecast for 2000: - pretax profit from current real estate management operations expected to exceed SEK 800 M - in addition, gains are expected from sales, etc., which as of October 31, amounted SEK 425 M before tax Drott AB (publ) is one of the largest publicly traded real estate companies in Europe. The Company's mission is to acquire, develop and manage commercial properties and housing in Swedish growth markets. Annual rental revenues (including vacant premises) total SEK 3.9 billion, of which the Stockholm region accounts for 60%. - Comments - I. Continuing strong rental trend For the eighth consecutive quarter, the Drott Group reports a rising annual cash flow (four rolling quarters). A major factor underlying this development is the Company's greater exposure to growth markets. Since its stock exchange listing in September 1998, Drott has made net investments of slightly more than SEK 22 billion in the three major metropolitan regions, and these regions now account for 82% of the Group's annual rental revenues. During this two-year period, market rents for commercial premises have risen sharply, and office rents have even doubled in certain sub-markets. This trend is steadily reflecting itself in Drott's income statement via the renegotiating of existing and the signing of new leases. In the Stockholm region, office rents differ sharply depending on location, and this differential continues to widen. The peak rents noted, which exceed SEK 6,000/sq. m., apply only to a limited area within the district known as the Golden Triangle. Lease periods are becoming shorter, whereby three-year rather than five-year leases are becoming more common. Currently, Drott's commercial rents amount to SEK 2 billion in the Stockholm region (inc. vacant premises), and each year about 25% of leases are renegotiated. Current office leases range from a little more than SEK 1,000 to slightly more than SEK 5,000/sq. m. per year (rent for unheated premises, excl. property tax). The project portfolio includes almost exclusively Stockholm projects, and a number of projects will be finalized in the immediate future (from autumn 2000 to the end of next year, additional investment properties will add approximately SEK 150 M to annual rental revenues.) Drott believes that the new production that is about to enter market will not threaten current market rents, since the demand for commercial premises is also expected to grow. Although extensive amounts of speculative new production could adversely affect the rent trend, the risk of such a sharp rise in the supply of commercial space without contracted tenants is regarded as limited. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/10/31/20001031BIT00800/bit0001.doc The full report http://www.bit.se/bitonline/2000/10/31/20001031BIT00800/bit0002.pdf The full report