Press releaseMarch 18 2005

Kungsleden forms new business area – acquires care properties for SEK 1 billion

Kungsleden is forming a new business area, Care Properties, and is acquiring 44 properties for a total of approximately SEK 1,045 million in Västra Götaland and Greater Stockholm. Kungsleden intends to continue to invest in care properties, a real estate category that fits in well with the company’s business concept of owning and managing properties generating high and stable returns. Kungsleden is also acquiring two retirement home properties for SEK 250 million.

Kungsleden is initiating its investment in properties in the care sector and is forming the Care Properties business area. The background is the implementation of the previously announced acquisition of 33 care properties for approximately SEK 645 million from the Västra Götaland Region in parallel with the acquisition from Stena Fastigheter of care and retirement home properties in Greater Stockholm for SEK approximately 400 million. The return on all the acquired care properties is 8.50 percent.

Care properties offering attractive risk and return levels
Care properties situated in attractive locations, with healthcare centres for example, represent a real estate category offering attractive risk and return levels, which is fully in line with Kungsleden’s business concept. These are properties subject to particular requirements in terms of management and development. As a result of the company's experience, in the retirement home segment for example, and its organization, Kungsleden has excellent potential to successfully implement acquisitions of care properties and to manage the properties efficiently.

Care sector under transformation creates opportunities
Major structural changes are under way in the care sector, including a concentration of the activities of county councils to specialist and emergency care. Many hospital properties owned by county councils currently contain large amounts of healthcare centres and premises for dental care, rehabilitation and similar purposes, as well as privately operated medical care and other related activities. Kungs¬leden has concluded that county councils are increasingly considering abandoning their role as a property owner, in part to release capital for their core activities, and in part because properties with large amounts of external tenants require the type of management in which county councils are not prepared to invest resources, since it is considered to be outside their sphere of activities.

“During recent years, our investments in properties used as retirement homes have been highly successful. Similarly, care properties – with stable tenants, long-term customer relationships and attractive locations, combined with their specific management requirements – offer considerable potential. These are buildings that are needed, regardless of the structural transformation currently in progress in the healthcare sector. Our ambition is to grow within this sector”, says Jens Engwall, Kungsleden’s Chief Executive Officer, commenting on the transactions.

Acquisition of care properties in Västra Götaland
Kungsleden has reached an agreement with the Västra Götaland Region regarding the previously announced acquisition of 33 care properties for a total purchase consideration of approximately SEK 645 million. The properties are situated in 20 of the Region’s 49 municipalities and contain a total of 150,000 square metres of lettable floor space. The rental value is about SEK 129 million, of which 60 percent derives from the Region’s own activities, such as primary and dental care, physiotherapy and administration, while 40 percent is generated from external tenants, mainly municipalities. Completion will take place on 2 May 2005.

The acquisition affects 27 employees in Västfastigheter, the Region’s property management company. These employees will be offered employment within Kungsleden.

Acquisition of care and retirement home properties in Greater Stockholm
Kungsleden has also reached an agreement with Stena Fastigheter regarding the acquisition of 11 healthcare centres with a total of 37,900 square metres of lettable floor space in various suburbs of Greater Stockholm for a total purchase consideration of SEK approximately 400 million. The largest tenant is Stockholm County Council. Completion will take place on 15 April 2005.

At the same time, Kungsleden has acquired two retirement home properties from Stena Fastigheter, one in central Täby and the other in central Stockholm, as well as a development right in Täby, where the intention is to build a new retirement home. The acquisition comprised total lettable floor space of 20,900 square metres. The purchase consideration is approximately SEK 250 million.

For more information, please contact:
Jens Engwall, Kungsleden’s CEO, tel: +46 (0)8 503 05204, mobile +46 (0)70 690 6550
Johan Risberg, Kungsleden’s CFO, tel: +46 (0)8 503 05206, mobile +46 (0)70 690 6565

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