KUNGSLEDEN AB (publ) Prospectus regarding the admission to trading on Nasdaq Stockholm of. SEK 375,000,000 Senior unsecured fixed rate notes 2015/2017

Transcription

1 LEGAL# v7 KUNGSLEDEN AB (publ) Prospectus regarding the admission to trading on Nasdaq Stockholm of SEK 375,000,000 Senior unsecured fixed rate notes 2015/2017 ISIN: SE Lead Manager

2 2(49) Important information In this prospectus, the Issuer or Kungsleden means Kungsleden AB (publ) or, depending on the context, the group in which Kungsleden AB (publ) presently is a parent company. The Group means the Issuer with all its subsidiaries from time to time (each a Group Company ). The Lead Manager or the Issuing Agent means Nordic Fixed Income AB. The Agent means Nordic Trustee & Agency AB (publ). The CSD refers to Euroclear Sweden AB. SEK refers to Swedish kronor. Words and expressions defined in the Terms and Conditions beginning on page 25 have the same meanings when used in this prospectus (the Prospectus ), unless expressly stated otherwise follow from the context. Notice to investors On 4 May 2015 (the Issue Date ) the Issuer issued SEK 375,000,000 senior unsecured notes (the Notes ). The nominal amount of each note is SEK 1,000,000. This Prospectus has been prepared for the listing of the Notes on Nasdaq Stockholm. This Prospectus does not contain and does not constitute an offer or a solicitation to buy or sell Notes. The Prospectus has been approved and registered by the Swedish Financial Supervisory Authority (Finansinspektionen) (the SFSA ) pursuant to the provisions of Chapter 2, Sections 25 and 26 of the Swedish Financial Instruments Trading Act (lagen (1991:980) om handel med finansiella instrument) (the Trading Act ). Approval and registration by the SFSA do not imply that the SFSA guarantees that the information provided in the Prospectus is correct and complete. This Prospectus is governed by Swedish law. The courts of Sweden have exclusive jurisdiction to settle any dispute arising out of or in connection with this Prospectus. This Prospectus may not be distributed in any jurisdiction where such distribution would require any additional prospectus, registration or measures other than those required under Swedish law, or otherwise would conflict with regulations in such jurisdiction. Persons into whose possession this Prospectus may come are required to inform themselves about, and comply with such restrictions. Any failure to comply with such restrictions may result in a violation of applicable securities regulations. Subject to certain exemptions, the Notes may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons. The Notes have not been, and will not be, registered under the United States Securities Act of 1933 (the Securities Act ) or the securities laws of any state or other jurisdiction outside Sweden. No person has been authorised to provide any information or make any statements other than those contained in this Prospectus. Should such information or statements nevertheless be furnished, it/they must not be relied upon as having been authorised or approved by the Issuer and the Issuer assumes no responsibility for such information or statements. Neither the publication of this Prospectus nor the offering, sale or delivery of any Note implies that the information in this Prospectus is correct and current as at any date other than the date of this Prospectus or that there have not been any changes in the Issuer s or the Group s business since the date of this Prospectus. If the information in this Prospectus becomes subject to any material change, such material change will be made public in accordance with the provisions governing the publication of supplements to prospectuses in the Trading Act. Forward-looking statements and market data The Prospectus contains certain forward-looking statements that reflect the Issuer s current views or expectations with respect to future events and financial and operational performance. The words intend, estimate, expect, may, plan, anticipate or similar expressions regarding indications or forecasts of future developments or trends, which are not statements based on historical facts, constitute forward-looking information. Although the Issuer believes that these statements are based on reasonable assumptions and expectations, the Issuer cannot give any assurances that such statements will materialise. Because these forwardlooking statements involve known and unknown risks and uncertainties, the outcome could differ materially from those set out in the forward-looking statement. Factors that could cause the Issuer s and the Group s actual operations, result or performance to differ from the forward-looking statements include, but are not limited to, those described in Risk factors. The forward-looking statements included in this Prospectus apply only to the date of the Prospectus. The Issuer undertakes no obligation to publicly update or revise any forwardlooking statements, whether as a result of new information, future events or otherwise, other than as required by law. Any subsequent forward-looking information that can be ascribed to the Issuer and the Group or persons acting on the Issuer behalf is subject to the reservations in or referred to in this section. The Prospectus contains market data and industry forecasts, including information related to the sizes of the markets in which the Group participates. The information has been extracted from a number of sources. Although the Issuer regards these sources as reliable, the information contained in them has not been independently verified and therefore it cannot be guaranteed that this information is accurate and complete. However, as far as the Issuer is aware and can assure by comparison with other information made public by these sources, no information has been omitted in such a way as to render the information reproduced incorrect or misleading. In addition to the above, certain data in the Prospectus is also derived from estimates made by the Issuer. Presentation of financial information This Prospectus contains the Issuer s consolidated historical financial statements for 2014 and 2015, which have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as adopted by the EU and have been audited by the Issuer s auditor. Certain financial and other information presented in this Prospectus has been rounded off for the purpose of making this Prospectus more easily accessible for the reader. As a result, the figures in tables may not tally with the stated totals. With the exception of the Issuer s consolidated historical financial statements for 2014 and 2015, no information in this Prospectus has been audited or reviewed by the Issuer s auditor. Financial data in this Prospectus that have not been audited by the Issuer s auditor stem from internal accounting and reporting systems.

3 3(49) TABLE OF CONTENTS RISK FACTORS... 4 DESCRIPTION OF THE NOTES AND USE OF PROCEEDS DESCRIPTION OF THE ISSUER THE BOARD OF DIRECTORS, SENIOR MANAGEMENT AND AUDITORS LEGAL CONSIDERATIONS AND SUPPLEMENTARY INFORMATION TERMS AND CONDITIONS OF THE NOTES ADDRESSES... 48

4 4(49) RISK FACTORS Risk and risk-taking are inevitable parts of investing in the Notes. There are risks both regarding circumstances linked to the Issuer and those which bear no specific relation to the Issuer. In addition to the other information in this Prospectus as well as a general evaluation of external factors, investors should carefully consider the following risk factors before making any investment decision. The occurrence of any of the events discussed below could materially adversely affect the Issuer s and/or the Group s operations, financial position and results of operations. Moreover, the trading price of the Notes could decline and the Issuer may not be able to pay Interest or principal on Notes when due, and investors could lose all or part of their investment. The risks described below are not the only ones the Issuer and the Group is exposed to. Additional risks that are not currently known to the Issuer, or that the Issuer currently considers to be immaterial, could have a material adverse effect on the Issuer s and or the Group s business and the Issuer s ability to fulfil its obligations under the Notes. 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. Risks relating to the Issuer Macroeconomic factors The Issuer s result is affected by the long-term demand for premises, the properties occupancy rate and the rent levels. The rent levels and the occupancy rate are affected by, among other things, the economic growth in Sweden, the rate of production of new premises, changes in infrastructure, level of employment and population structure. Economic growth affects the level of employment, which is an essential basis for supply and demand of the rental market and thus is expected to result in an increased demand for premises, less vacancies, increased production of new premises and potentially increased market rents. Economic stagnation is expected to result in the opposite. Inflation also affects the Issuer s property costs. In addition, changes in interest rates and inflation also affect yield requirements and therefore the properties market value. There is a risk that higher vacancy, higher interest rates, increased costs and lower rent levels will adversely affect the Issuer s operations, result and financial position. Competition The Issuer operates in a competitive sector. The Issuer s future competitiveness is dependent on, among other things, the Issuer s ability to quickly respond to present and future market needs. Consequently, there is a risk that it will become necessary for the Issuer to make costly investments, restructurings and/or price reductions in order to adapt to a new competitive situation. There is a risk that increased competition will adversely affect the Issuer s operations, result and financial position. Rental income Rents as well as vacancies are strongly influenced by the growth in the Swedish economy as a whole, but also by the growth of the regional and local levels where the Issuer operates. Economic growth leads to increased demand for facilities with a potential for higher rent levels and lower vacancy. Economic stagnation has the opposite effect. The level of new construction of properties in the local markets has an impact on rent levels and vacancies. Rental income is also affected by any financial difficulties for tenants. The risk of rental losses and vacancies is affected by the tenant structure. Having large commercial tenants may result in reduced credit risk, but there is also a risk that it will result in concentration risks. There is a risk that the Issuer s tenants fail to fulfil their obligations to pay the agreed rents and that reduced rental income will adversely affect the Issuer s operations, financial position and result. If tenants do not fulfil their obligations at all under the lease agreement, for example in connection with a bankruptcy, or fulfil them after collection measures, there is a risk that it will also result in an increase in vacancies with lower property values as a result, which will adversely affect the Issuer s operations, financial position and result. In a situation where one or more of the Issuer s major tenants do not renew or extend their lease agreements when they expire can result in reduced rental income and/or higher vacancies if the Issuer cannot obtain the corresponding income from new tenants. The general rent level risk is attributable to the development of current market rents. The Issuer s aim is to sign lease agreements with market terms and that the due dates of the rental agreements, viewed throughout the total property portfolio, are distributed evenly over time. Nevertheless, there is a risk that a long-term declining trend of the current market rents will adversely affect the Issuer s operations, result and financial position.

5 5(49) Operational and maintenance costs Operational and maintenance costs are mainly costs for electricity, cleaning, water, heating and snow removal. Some of these services can only be purchased from a few operators, which can affect the price. Further, the costs for electricity, heating and snow removal are affected by weather conditions. The leasehold rent of the Issuer s properties with leasehold rights agreements are normally renegotiated at an interval of years. The leasehold rent is currently calculated in a way that aims to provide a reasonable real interest rate to the municipality of the assessed value of the land. There is a risk that the basis of the calculation of such leasehold rent is changed in future renegotiations. The property tax, which is based on the assessed value of the property, is based on political decisions. This applies both to the basis of the calculation, the assessed value and the tax level. The property tax is normally charged to the tenants for leased areas, whereas the tax for vacant areas is carried by the Issuer. To the extent the Issuer is not compensated for increased operating costs or losses in income, there is a risk that the Issuer s operations, result and financial position is adversely affected. There is also a risk that unforeseen events, such as damages to properties or extreme weather conditions, will also adversely affect the Issuer s operations, financial position and result. Technical risks Technical risks imply the risk associated with the technical operation of properties, such as the risk of construction defects, other hidden defects or shortages, damages and contamination. Although the Issuer invests in properties with high technical standards, there is a risk that unexpected costs can arise. There is a risk that the Issuer s operations, financial position and result is adversely affected if such technical problems occur. Divestment of assets for implementation of the Issuer s strategy The Issuer may divest subsidiaries (pursuant to the Swedish Companies Act (aktiebolagslagen (2005:551)) from time to time, associated companies and other assets that are not part of the Issuer s strategic holdings. There is a risk that such divestments will not be made at prices equal to or exceeding the assets book values, consequently adversely affecting the Issuer s financial position and result. Property transactions A part of the Issuer s operating activities consist of acquiring and divesting properties and property-owning companies, which can be associated with risks. Suitable investment targets for sale at reasonable prices are required in order for transactions to be implemented. When the demand is high for the investment targets that the Issuer focuses on, the number of companies and property portfolios for sale can be limited or only available on unfavourable terms for the Issuer. In addition, there is a risk that competitors with similar investment strategies will have access to greater financial resources and have lower costs of capital than the Issuer. Future vacancies, tenants inability to pay, environmental conditions and technical defects are other examples of transaction related risks. Furthermore, the acquisition of companies incorporates legal and tax risks related to the historical conditions of the companies. It is therefore vital that the organisation has appropriate experience of property transactions and that external advisors with relevant skills are appointed when deemed necessary. Although the Issuer prior to each investment makes an evaluation which aims to identify the risks that may be associated with the acquisition, there is a risk that the acquired businesses or properties will adversely affect the Issuer s operations, financial position and result. In several of the Issuer s divestment contracts in respect of divestment of properties and property-owning companies it is possible for each buyer to invoke warranty claims. Although no significant outstanding claims exist as regards to guarantees for the divested properties and companies, there is a risk that claims will arise in the future and that such claims will adversely affect the Issuer s operations, financial position and result. Fluctuations in property value The Issuer reports its property holdings at fair value, which for properties imply market value. The fair value is based on internal valuations carried out continuously and the properties are, in addition, valued on a regular basis by external evaluators. The result and financial position of the Issuer are therefore exposed to changes in the property portfolio s market value. The value of the properties is, assuming a fully functioning credit market and transaction market, affected by supply and demand, where the price is mainly dependent on the expected operational result of the properties and yield requirements of the buyer. An increased demand, lower yield requirements and positive development of the

6 6(49) actual operational result lead to an increased market value, whereas a reduced demand, higher yield requirements and negative growth result in a decreased market value. The Issuer s reported book value is based on an internal valuation of each property, where an individual assessment is carried out of the price at which it is considered possible to sell the property. However, a property s market value could be difficult to assess in a market with low turn-over. There is a risk that a negative development of the properties value will adversely affect the Issuer s operations, financial position and result. Project development Construction of new buildings and reconstructions and refurbishments of existing buildings are associated with risks. The Issuer is dependent on receiving relevant approvals from authorities to carry out such projects. Major tailor-made projects entail substantial investments. There is a risk that such investments result in an increased credit risk if tenants are unable to fulfil their obligation to pay rent and the Issuer is unable to find other tenants for such premises. Further, there is a risk that major constructions, reconstructions or refurbishments is delayed and/or become more expensive than initially expected where tenants are not able to use the premises from the expected date, which in turn will result in increased costs and/or decreased income. To the extent the Issuer is not compensated for such increased costs or losses in income, there is a risk that the Issuer s operations, financial position and result will be adversely affected. Environmental risk Properties have environmental impact in connection with, among other things, their construction, management, maintenance and the operations carried out in the property. The Issuer has an environmental policy and is actively working with sustainability issues. Under the Swedish Environmental Code (miljöbalken (1998:808)), anyone whose operations have contributed to pollution is responsible for after-treatment. If the operator is unable to carry out or pay for the after-treatment, whoever acquired the property and was aware of the pollution at the time of acquisition or ought to have detected it then shall be liable. As such, there is a risk that in certain circumstances, liability to decontaminate the pollution will be directed towards the Issuer to restore the property in a condition required by the Swedish Environmental Code. No comprehensive survey of possible environmental pollutants in the Issuer s property portfolio has been made. In connection with acquisitions, the Issuer normally carries out an analysis and risk assessment of environmental risks. However, there is a risk that environmental pollutions causing costs for the Issuer exist, which in turn will adversely affect the Issuer s operations, financial position and result. There is a risk that natural disasters such as floods, storms and fires will cause damages to the properties that the Issuer owns as well as on the infrastructure the Issuer is dependent on, which will adversely affect the Issuer s operations, financial position and result. Organisational risk The Issuer s future development is to a large extent dependent on the experience, knowledge and commitment of the management and other key personnel. There is a risk that the Issuer is adversely affected should one or several of such key personnel terminate their employment. There is also a risk that the Issuer over time will not be able to recruit new skilled personnel to the extent necessary for, or desired by, the Issuer. There is a risk that an imbalance in the organization, for example due to employment terminations of key personnel, results for example in an impaired ability for the Issuer to handle risks in its operations, which adversely affects the Issuer s operations, financial position and result. Tax risks The Issuer conducts and reports its transactions in accordance with the Issuer s interpretation of statutes and case law applicable at each tax return period. Nevertheless, the Swedish Tax Agency and the courts might be of a different opinion and there is a risk that decisions and actions carried out will entail negative tax implications that adversely affect the Issuer s operations, financial position and result. The government is evaluating the need for changes in taxation of income for companies. There is a risk that such changes and other changes in the laws governing corporate, real estate and other taxes will affect the conditions for the Issuer s business. There is also a risk that such decisions and changes will adversely affect the Issuer s profit and financials. Disputes The Issuer is from time to time subject to litigation, claims and administrative proceedings as a part of its operating activities. The is a risk that the Issuer will become involved in future disputes, claims and

7 7(49) administrative procedures. The Issuer will not know how any pending or future investigations, disputes, court proceedings or arbitrations will end. There is a risk that an unfavourable decision will result in significant fines, damages and/or negative publicity which will adversely affect the Issuer s operations, financial position and result. Credit risk A credit risk is mainly defined as the risk of the Issuer s counterparties not fulfilling their obligations to pay agreed rent or purchase price. The Issuer depends on its tenants to pay the agreed rent when due. There is a risk that the Issuer s counterparties default on their payments or otherwise fail to meet their obligations. Furthermore, there is a risk that the Issuer s counterparties cannot meet their obligations pursuant to loan agreements, derivative contracts or financing agreements arising from property transactions. If the Issuer s measures to counter the loss of rental, sales or other revenue proceeds are insufficient, there is a risk that this will adversely affect the Issuer s operations, financial position and result. Financing risk A financing risk is defined as the risk of lack of funding or the ability to achieve funding only under disadvantageous conditions. There is a risk that financing cannot be obtained at all, or refinancing cannot be obtained with reasonable terms or only at a materially increased cost, and that this adversely affects the Issuer s operations, financial position and result. Liquidity risk The Issuer is dependent on its ability to refinance existing facilities at their due date and to obtain additional financing at market terms in connection with for example property acquisitions. In case the Issuer is unable to refinance existing facilities or obtain additional financing at market terms, as a result of a deficiency in the capital markets or for any other reason, there is a risk that this will adversely affect the Issuer s operations, financial position and result. Interest rate risk The Issuer s capital structure results in interest expenses being one of the main cost items. An interest rate risk is defined as the risk of an effect on the result and cash flow due to changes in the market interest rate. With the current derivatives portfolio, the Issuer s short-term interest costs are moderately affected by fluctuations in the market interest rate. The Issuer s derivatives portfolio can be changed and an increased share of the Issuer s loans can become subject to short-term interest fixation periods, which in turn results in the Group becoming more sensitive towards changes in the short-term market interest rates. There is a risk that this in turn will result in an unfavourable interest rate development, which will adversely affect the Issuer s operations, financial position and result. There is also a risk that increased market interest rates will result in increased interest expenses for the Issuer which will adversely affect the Group s operations, financial position and result. Risks related to the value of the derivatives A large share of the Issuer s loans has a short-term interest fixation period. As part of managing the interest rate risk, the Issuer uses interest rate derivatives, primarily interest rate swaps. The interest rate derivatives are reported on-going at their fair value in the balance sheet and changes in the fair value are reported in the income statement. Further, an extension of the duration of the interest fixation period would increase the Issuer s sensitivity to market interest rate changes. As market interest rate changes, the fair value of derivatives also change. There is a risk that such changes in turn adversely affects the Issuer s operations, financial position and result.. Risks relating to the Notes Credit risk If the Issuer s financial position deteriorates it is likely that the credit risk associated with the Notes will increase, given that there would be an increased risk that the Issuer cannot fulfil its obligations under the Terms and Conditions. The Issuer s financial position is affected by numerous risk factors, some of which have been outlined above. There is a risk that an increased credit risk will result in the market pricing the Notes with a higher risk premium and that such higher premium will adversely affect the value of the Notes. There is also a risk that a deteriorated financial position will result in a lower credit worthiness, and affect the Issuer s ability to refinance the Notes and other existing debt. This will adversely affect the Issuer s operations, result and financial position.

8 8(49) Certain material interests The Lead Manager has engaged in, and may in the future engage in, investment banking and/or commercial banking or other services for the Issuer in the ordinary course of business. Therefore, there is a risk that conflicts of interest exist or will arise as a result of the Lead Manager having previously engaged, or will in the future engage, in transactions with other parties, having multiple roles or carrying out other transactions for third parties with conflicting interests. Interest rate risk The value of the Notes is dependent on several factors, one of the most significant over time being the level of market interest rates. Investments in the Notes involve a risk that the market value of the Notes is adversely affected by changes in market interest rates. Noteholders meeting The Terms and Conditions include certain provisions regarding a Noteholders meeting, which may be held in order to resolve on matters relating to the Noteholders interests. Such provisions allow for designated majorities to bind all Noteholders, including Noteholders who have not participated in or voted at the actual meeting or who have voted differently than the required majority, to decisions that have been taken at a duly convened and conducted Noteholders meeting. Noteholders representation Pursuant to the Terms and Conditions the Agent represents all Noteholders in all matters relating to the Notes. However, this does not rule out the possibility that the Noteholders, in certain situations, will bring their own action against the Issuer. To enable the Agent to represent the Noteholders in court, there is a risk that Noteholders will have to submit a written power of attorney for legal proceedings. There is a risk that the failure of all Noteholders to submit such a power of attorney will adversely affect the enforcement of the Notes. Under the Terms and Conditions, the Agent has the right in some cases to make decisions and take measures that bind all Noteholders. Transferability of the Notes Pursuant to the Terms and Conditions, the Issuer shall apply for registration of the Notes on the regulated market of Nasdaq Stockholm but there can be no assurance that the Notes are approved for admission of trading. There is a risk that a failure to obtain such listing will have a negative impact on the market value of the Notes. Even if a listing will occur, there can be no assurance that an active market for the Notes will evolve, and even if such would evolve that it lasts. There is a risk that the Nominal Amount of the Notes will not be indicative of their market value after being admitted for trading on Nasdaq Stockholm. In addition, following listing of the Notes, there is a risk that the liquidity and trading price of the Notes will vary substantially as a result of numerous factors, including general market movements and irrespective of the Issuer s performance. Clearing and settlement in the CSD s account-based system The Notes are affiliated to and will continue to be affiliated to a central securities depository of notes, currently the CSD s account-based system, why no physical notes have been or will be issued. Clearing and settlement relating to the Notes, as well as payment of interest and redemption of principal amounts, will be performed within the CSD s account-based system. The Noteholders are therefore dependent on the functionality of the CSD s account-based system. Structural subordination The Issuer holds no significant assets other than certain claims and the shares in its direct and indirect subsidiaries and as such the Issuer is reliant on the ability of other entities within the Group to advance loans or make dividend distributions to the Issuer so as to enable it to make payments under the Notes. The Issuer is thus dependent upon receipt of sufficient income arising from the operations of the Group. Preferential right The Issuer normally finances a large portion of its operations through bank loans or other debt instruments, often via subsidiaries, with security interest over properties normally constituting a preferential claim on the borrower. The Notes represent an unsecured obligation of the Issuer. This means that in the event of the Issuer s liquidation, company reorganisation or bankruptcy the Noteholders normally receive payment after any prioritised creditors with security over certain assets have been paid in full. Furthermore, as all of the Issuer s subsidiaries obligations must first be satisfied, potentially leaving little or no remaining assets in such

9 9(49) companies, the Noteholders will also be subordinated, by way of so called structural subordination, to the creditors of such subsidiaries. The Issuer cannot make any assurance that the remaining assets would be sufficient to satisfy all unsecured claims on the Issuer in full or that any such assets will exist. Every investor should be aware that by investing in the Notes, it risks losing the entire or parts of its investment in the event of the Issuer s liquidation, company reorganisation or bankruptcy. Changes in legislation The Terms and Conditions are based on Swedish legislation applicable at the date hereof. There is a risk that any future change in legislation or administrative practice will adversely affect the ability of the Issuer to make payments under the Notes.

10 10(49) DESCRIPTION OF THE NOTES AND USE OF PROCEEDS The following is a description of the terms and conditions of the Notes and is qualified in its entirety by the full Terms and Conditions included in the section Terms and conditions of the Notes. The Notes The Notes have a Nominal Amount of 1,000,000 each and are denominated in Swedish kronor. The aggregate nominal amount of the Notes is SEK 375,000,000. In total, 375 Notes have been issued. ISIN and ticker The Notes have been allocated the ISIN code SE The Notes will also be allocated a ticker upon admission to trading. Such ticker has not been allocated at the date of this Prospectus. Form of the Notes The Notes are issued in dematerialised book-entry form and registered on a Securities Account on behalf of the relevant Noteholder. Hence, no physical notes have been issued. The Notes are registered in accordance with the Financial Instruments Accounts Act and registration requests relating to the Notes shall be directed to an Account Operator. Status of the Notes The Notes constitute direct, unconditional, unsecured and unsubordinated obligations of the Issuer and shall at all times rank pari passu and without any preference among them and at least pari passu with all other direct, unconditional, unsecured and unsubordinated obligations of the Issuer, except those obligations which are mandatorily preferred by law. Issuance, repurchase and redemption Issue Date and Final Maturity Date The Notes were issued on 4 May 2015.Unless previously redeemed or repurchased and cancelled in accordance with the Terms and Conditions, the Issuer shall redeem all, but not some only, of the outstanding Notes in full with an amount per Note equal to the Nominal Amount together with accrued but unpaid Interest on 4 May 2017 (the Final Maturity Date ). Subject to applicable law, any Group Company may at any time and at any price purchase Notes on the market or in any other way. Notes held by a Group Company may at such Group Company s discretion be retained or sold and, if held by the Issuer, cancelled by the Issuer. Voluntary total redemption (call option) The Issuer may redeem all, but not some only, of the outstanding Notes in full any time from an including the first Business Day falling three (3) months prior to the Final Maturity Date, to but excluding the Final Maturity Date, at an amount equal to 100 per cent. of the Nominal Amount together with accrued but unpaid Interest, provided that the redemption is financed in whole or in part by way of an issue of Debt Instruments. The Issuer can exercise its option by giving the Noteholders and the Agent not less than fifteen (15) Business Days notice in accordance with the Terms and Conditions. Early redemption due to illegality (call option) The Issuer may redeem all, but not some only, of the outstanding Notes at an amount per Note equal to the Nominal Amount together with accrued but unpaid Interest if it is or becomes unlawful for the Issuer to perform its obligations under the Finance Documents. The Issuer shall give notice of redemption no later than twenty (20) Business Days after having received actual knowledge of any event specified above (after which time period such right shall lapse). Repurchase upon a Change of Control Event Upon the occurrence of a Change of Control Event, each Noteholder shall have the right to request that all, or some only, of its Notes be repurchased at a price per Note equal to 101 per cent. of the Nominal Amount together with accrued but unpaid Interest, during a period of twenty (20) Business Days following a notice from

11 11(49) the Issuer of the Change of Control Event pursuant to the Terms and Conditions (after which time period such right shall lapse). Change of Control Event means that there is a change in ownership of the shares in the Issuer pursuant to which a mandatory bid under the Public Stock Market Takeover Act (lag (2006:451) om offentliga uppköpserbjudanden på aktiemarknaden) must be made. If a Noteholder has so requested, and acted in accordance with the instructions in the notice from the Issuer, the Issuer, or a person designated by the Issuer, shall repurchase the relevant Notes and the repurchase amount shall fall due on the repurchase date specified in the notice given by the Issuer. The repurchase date must fall no later than forty (40) Business Days after the end of the twenty (20) Business Days period following the notice from the Issuer. If Noteholders representing more than 80 per cent. of the Total Nominal Amount have requested that Notes held by them are repurchased, the Issuer shall send a notice to the remaining Noteholders, if any, giving them a further opportunity to request that Notes held by them be repurchased on the same terms during a period of twenty (20) Business Days following such notice. Such notice shall specify the repurchase date and include instructions about the actions that a Noteholder needs to take if it wants Notes held by it to be repurchased. If a Noteholder has so requested, and acted in accordance with the instructions in the notice from the Issuer, the Issuer, or a person designated by the Issuer, shall repurchase the relevant Notes and the repurchase amount shall fall due on the repurchase date specified in the notice given by the Issuer. The repurchase date must fall no later than forty (40) Business Days after the end of the period of twenty (20) Business Days. The Issuer shall comply with the requirements of any applicable securities laws or regulations in connection with the repurchase of Notes. To the extent that the provisions of such laws and regulations conflict with the Terms and Conditions relating to the repurchase in the event of a Change of Control Event, the Issuer shall comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under such relevant provisions in the Terms and Conditions by virtue of the conflict. Any Notes repurchased by the Issuer pursuant to the Terms and Conditions relating to a repurchase in the event of a Change of Control Event may at the Issuer s discretion be retained, sold or cancelled. The Issuer shall not be required to repurchase any Notes pursuant to the Terms and Conditions, if a third party in connection with the occurrence of a Change of Control Event offers to purchase the Notes in the manner and on the terms set out in such provisions (or on terms more favourable to the Noteholders) and purchases all Notes validly tendered in accordance with such offer. If Notes tendered are not purchased within the time limits stipulated in the Terms and Conditions, the Issuer shall repurchase any such Notes within five (5) Business Days after the expiry of the time limit. Payments in respect of the Notes Any payment or repayment under the Finance Documents, or any amount due in respect of a repurchase of any Notes shall be made to such person who is registered as a Noteholder on the Record Date prior to an Interest Payment Date or other relevant due date, or to such other person who is registered with the CSD on such date as being entitled to receive the relevant payment, repayment or repurchase amount. Interest and default interest Each Note carries Interest at the Interest Rate applied to the Nominal Amount from (but excluding) the Issue Date up to (and including) the relevant Redemption Date. Interest shall be calculated on the basis of a 360-day year comprised of twelve months of 30 days each and, in case of an incomplete month, the actual number of days elapsed (30/360-days basis). Interest accrues during an Interest Period. Payment of Interest in respect of the Notes shall be made to the Noteholders on each Interest Payment Date. Interest Payment Date means 30 March, 30 June, 30 September and 30 December of each year or, to the extent such day is not a Business Day, the Business Day following from an application of the Business Day Convention. The first Interest Payment Date for the Notes was on 30 June 2015 and the last Interest Payment Date shall be the relevant Redemption Date. If the Issuer fails to pay any amount payable by it on its due date, default interest shall accrue on the overdue amount from (but excluding) the due date up to (and including) the date of actual payment at a rate which is two (2) percentage units higher than the Interest Rate. Accrued default interest shall not be capitalised. No default

12 12(49) interest shall accrue where the failure to pay was solely attributable to the Agent or the CSD, in which case the Interest Rate shall apply instead. Acceleration and prepayment of the Notes The Agent is entitled to, and shall following a demand in writing from a Noteholder (or Noteholders) in accordance with the Terms and Conditions (i) by notice to the Issuer, declare all, but not some only, of the outstanding Notes due and payable together with any other amounts payable under the Finance Documents, immediately or at such later date as the Agent determines, and (ii) exercise any or all of its rights, remedies, powers and discretions under the Finance Documents, if: (a) the Issuer does not pay on the due date any amount payable by it under the Finance Documents, unless the non-payment: (i) (ii) is caused by technical or administrative error; and is remedied within five (5) Business Days from the due date; (b) (c) the Issuer does not comply with the financial undertakings set out in the Terms and Conditions; the Issuer does not comply with any terms or conditions of the Finance Documents to which it is a party (other than those terms referred to in paragraph (a) or (b) above), unless the non-compliance: (i) (ii) is capable of remedy; and is remedied within ten (10) Business Days of the earlier of the Agent giving notice and the Issuer becoming aware of the non-compliance; (d) (e) (f) (g) any Finance Document becomes invalid, ineffective or varied (other than in accordance with the provisions of the Finance Documents), and such invalidity, ineffectiveness or variation has a detrimental effect on the interests of the Noteholders; any Group Company is, or is deemed for the purposes of any applicable law to be, Insolvent; any attachment, sequestration, distress or execution, or any analogous process in any jurisdiction, affects any asset of a Group Company having an aggregate value equal to or exceeding SEK 10,000,000 and is not discharged within forty (40) Business Days; or any Financial Indebtedness of a Group Company is not paid when due nor within any originally applicable grace period, or is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described), provided that no Event of Default will occur under this paragraph (g) if the aggregate amount of Financial Indebtedness referred to herein is less than SEK 50,000,000; For further detail on the provisions for acceleration and prepayment of the Notes, see Clause 13 of the Terms and Conditions. Undertakings The Issuer makes certain undertakings in the Terms and Conditions. These include undertakings and limitations relating to: (a) (b) (c) (d) (e) (f) compliance with laws; change of business; mergers; disposals; admission to trading; undertakings relating to the Agency Agreement; and

13 13(49) (g) financial undertakings, some of which are elaborated on below. The undertakings are subject to qualifications. See Section 11 and 12 of the Terms and Conditions. Financial undertakings Equity to Total Assets shall on each Reference Date not be less than 0.15:1. The calculation of Equity to Total Assets shall be adjusted for market values, regardless of if the Accounting Principles would cease to accept or demand such adjustment. Interest Cover shall on each Reference Date not be less than 1.20:1. Admission to trading The Issuer shall use its best efforts to ensure that the loan constituted by the Terms and Conditions is admitted to trading on the Regulated Market of Nasdaq Stockholm within twelve (12) months after the Issue Date, and that it remains admitted or, if such admission to trading is not possible to obtain or maintain, admitted to trading on another Regulated Market. Following an admission to trading, the Issuer shall take all actions on its part to maintain the admission as long as any Notes are outstanding, but not longer than up to and including the last day on which the admission reasonably can, pursuant to the then applicable regulations of the Regulated Market and the CSD, subsist. It is estimated that the Issuer s costs in conjunction with the admission to trading will be no higher than SEK 150,000. Decisions by Noteholders A request by the Agent for a decision by the Noteholders on a matter relating to the Finance Documents shall (at the option of the Agent) be dealt with at a Noteholders Meeting or by way of a Written Procedure. Only a person who is, or who has been provided with a power of attorney in accordance with the Terms and Conditions from a person who is, registered as a Noteholder: (a) (b) on the Business Day prior to the date of the Noteholders Meeting, in respect of a Noteholders Meeting or on the Business Day specified in the communication pursuant to the Terms and Conditions, in respect of a Written Procedure; may exercise voting rights as a Noteholder at such Noteholders Meeting or in such Written Procedure, provided that the relevant Notes are included in the definition of Adjusted Nominal Amount. A matter decided at a duly convened and held Noteholders Meeting or by way of Written Procedure is binding on all Noteholders, irrespective of them being present or represented at the Noteholders Meeting or responding in the Written Procedure. The Noteholders that have not adopted or voted for a decision shall not be liable for any damages that this may cause other Noteholders. Information about decisions taken at a Noteholders Meeting or by way of a Written Procedure shall promptly be sent by notice to the Noteholders and published on the websites of the Issuer and the Agent, provided that a failure to do so shall not invalidate any decision made or voting result achieved. The minutes from the relevant Noteholders Meeting or Written Procedure shall at the request of a Noteholder be sent to it by the Issuer or the Agent, as applicable. No direct action by Noteholders Subject to certain exemptions set out in the Terms and Conditions, a Noteholder may not take any steps whatsoever against the Issuer to enforce or recover any amount due or owing to it pursuant to the Finance Documents, or to initiate, support or procure the winding-up, dissolution, liquidation, company reorganisation (företagsrekonstruktion) or bankruptcy (konkurs) (or its equivalent in any other jurisdiction) of the Issuer in relation to any of the obligations and liabilities of the Issuer under the Finance Documents.

14 14(49) Prescription The right to receive repayment of the principal of the Notes shall be prescribed and become void ten (10) years from the Redemption Date. The right to receive payment of interest (excluding any capitalised interest) shall be prescribed and become void three (3) years from the relevant due date for payment. The Issuer is entitled to any funds set aside for payments in respect of which the Noteholders right to receive payment has been prescribed and has become void. Governing law The Terms and Conditions of the Notes and any non-contractual obligations arising out of or in connection therewith are governed by and construed in accordance with the laws of Sweden. The Issuer submits to the nonexclusive jurisdiction of the City Court of Stockholm (Stockholms tingsrätt). The CSD Euroclear Sweden AB, Swedish Corporate ID No , P.O. Box 191, Stockholm, Sweden, is initially acting as the CSD and registrar in respect of the Notes. The Issuer (and the Agent when permitted under the CSD s applicable regulations) shall be entitled to obtain information from the debt register (skuldbok) kept by the CSD in respect of the Notes. For the purpose of or in connection with any Noteholders Meeting or any Written Procedure, the Issuing Agent shall be entitled to obtain information from the debt register kept by the CSD in respect of the Notes. The Agent Nordic Trustee & Agency AB (publ), Swedish Reg. No , P.O. Box 7329, Stockholm, Sweden, is initially acting as Agent on behalf of the Noteholders in accordance with the Terms and Conditions. The Agency Agreement is available to the Noteholders at the office of the Agent during normal business hours and also on display at the office of the Issuer, see Legal considerations and supplementary information - Documents on display. The Issuing Agent and the Lead Manager Nordic Fixed Income AB, Swedish Reg. No , Biblioteksgatan 8, Stockholm, Sweden, is initially acting as Issuing Agent in accordance with the Terms and Conditions of the Notes and as Lead Manager in conjunction with the issuance of the Notes. Use of proceeds The Issuer shall use the proceeds from the issue of the Notes, less the costs and expenses incurred by the Issuer in connection with the issue of the Notes, for general corporate purposes.

15 15(49) DESCRIPTION OF THE ISSUER General corporate and Group information The Issuer The Issuer s legal and commercial name is Kungsleden AB (publ), and its Swedish Corporate ID No. is The registered postal address is at P.O. Box 70414, Stockholm, Sweden. The Issuer was incorporated in Sweden on 1 August 1997 and registered with the Swedish Companies Registration Office (Bolagsverket) on 14 August The Issuer is a public limited liability company (publikt aktiebolag) regulated by the Swedish Companies Act (aktiebolagslagen (2005:551)). Pursuant to the Issuer s Articles of Association, the object of the Issuer s business shall be to own and manage shares in companies with business in the real estate sector, and other business incidental thereto. Under its current Articles of Association, the Issuer s share capital shall be not less than SEK 32,000,000 and not more than SEK 128,000,000, divided into not fewer than 76,800,000 shares and not more than 307,200,000 shares. The Issuer has two classes of shares. As at the date of this Prospectus, the Issuer s registered share capital is SEK 75,834,480 represented by 182,002,752 shares. Each share has a quota value of SEK The Issuer s shares are listed on the Regulated Market of Nasdaq Stockholm AB since June Legal Group structure Kungsleden AB (publ) is part of a corporate group in which it is the ultimate parent. The Issuer s operations mainly consist of owning shares in the operating subsidiaries, why it is reliant on the direct and indirect subsidiaries ability to generate surplus. The Issuer s shareholding of directly owned subsidiaries at 31 December 2015 is outlined in the table below. Name of directly owned subsidiary, registered office Registration number Shareholding and votes Kungsleden Fastighets AB, Stockholm (Sweden) % Kungsleden Tegel AB, Stockholm (Sweden) % Realia AB, Stockholm (Sweden) % Kungsleden Norrlandsfastigheter AB, Stockholm (Sweden) % Kungsleden Syd AB, Stockholm (Sweden) % Bovård i Sverige AB, Stockholm (Sweden) % KL Äldre B AB, Stockholm (Sweden) % Kungsleden Real Estate BV (the Netherlands) % Kungsleden Service AB, Stockholm (Sweden) % Realia International BV (the Netherlands) BV % Kungsleden Mattan AB, Stockholm (Sweden) % Kungsleden Friab AB, Stockholm (Sweden) % Kungsleden Norge Holding AB, Stockholm (Sweden) % Kungsleden Kalinka Holding AB, Stockholm (Sweden) % Kungsleden Holding GmBH, Munich (Germany) HRB % Kungsleden Balsberget AB, Stockholm (Sweden) % Kungsleden Tannberget AB, Stockholm (Sweden) % Kungsleden Alsberget AB, Stockholm (Sweden) % Kungsleden Mariaberget AB, Stockholm (Sweden) % Kungsleden Vegaholding AB, Stockholm (Sweden) % Kungsleden Holdmix AB, Stockholm (Sweden) %

16 16(49) Name of directly owned subsidiary, registered office Registration number Shareholding and votes Kungsleden Holdmix 2 AB, Stockholm (Sweden) % Kungsleden Holdmix 3 AB, Stockholm (Sweden) % Kungsleden Kebnekaise AB, Stockholm (Sweden) % Kungsleden Grönberget Holding AB, Stockholm (Sweden) % Kungsleden Grönberget AB, Stockholm (Sweden) % Principal shareholders As at 29 February 2016, the Issuer had 21,842 shareholders. Largest shareholders as at 29 February 2016 Name of shareholder Number of shares Percentage of votes and share capital Gösta Welandson Länsförsäkringar Funds Olle Florén Handelsbanken Funds Norges Bank TR Property Investment Trust Andra AP-Fonden Swedbank Robur Funds ishares Europe ETF DNB Funds SEB Funds Vanguard Funds Lannebo Funds Tredje AP-Fonden Prudential Funds DFA Funds ,7 Sten Dybeck, including companies and family Illmarinen Mutual Pension Insurance Fidelity Funds Skandia Funds Other shareholders Total Business of the Group Business idea and strategy Kungsleden s business concept is to long-term own, actively manage, improve and develop commercial, properties in growth regions in Sweden. Kungsleden s customers are a cross section of Swedish private and

17 17(49) public sector companies ranging from small to larger enterprises, local authorities and county councils. Kungsleden s strategy is to offer suitable properties with attractive rents, maintaining a close dialogue and long term relationships with customers and meeting different customer preferences via innovative and practical solutions. Kungsleden manages and improves its property portfolio by making regular investments in properties, by ensuring that all property holdings are of a quality and standard that will reward long-term and sustainable management and by having good knowledge of the potential of each property. The long-term goal of Kungsleden is to be the most profitable and successful property company in Sweden. History Kungsleden was founded in the context of the banking crisis of the 1990s. When the property bubble burst, banks found themselves with substantial property portfolios which needed to be disposed. Kungsleden was formed as a temporary crisis solution to manage Gota Bank AB s property assets. Gota Bank formed a subsidiary grouping, Retriva, with Kungsleden as this group s property company. Kungsleden was bought in 1997 by some of the market s biggest institutional investors and the business concept was realigned to its current orientation. Kungsleden was listed on the stock market in Business areas The Group s core business, Property Management, is divided in four regions, each with a regional manager who is responsible for the daily management and leasing operations within their region. The Property Management organization also includes market asset managers and leasing managers. They are supported by a number of group functions based at the head office in Stockholm, such as Property Development and Transactions & Analysis. The four regional managers report directly to the CEO. Properties As at 31 December 2015, the property holdings of the Issuer consisted of 291 properties. The total book value was SEK 27,470 billion and the leasable area was 2,7 million square meters. The property portfolio is organised into four categories Office, Industrial/Warehouse, Retail and Other. As at 31 December 2015, Office accounted for 64 per cent of the book value of the property portfolio, Industrial/Warehouse accounted for 26 per cent, Retail accounted for 9 per cent and Other accounted for 1 per cent. The Group is organised into four geographic regions - Stockholm, Mälardalen, Gothenburg and Malmö. As at 31 December 2015, the book value of the property portfolio by region was 49 percent in Stockholm, 21 percent in Mälardalen, 16 percent in Gothenburg and 14 percent in Malmö. 1 1 Estimated by Kungsleden s management (such information has not been audited or reviewed by the Issuer s auditor).

18 18(49) THE BOARD OF DIRECTORS, SENIOR MANAGEMENT AND AUDITORS Board of directors Pursuant to the Issuer s Articles of Association, the Board shall consist of no less than three and no more than eight members, with no more than two deputy members, elected by the general meeting of the shareholders. The Board currently consists of seven members elected by the general meeting of the shareholders (elected on the annual general meeting in 2015 until the annual general meeting in 2016). The table below sets forth the name and current position of each Board member. The details of shareholdings below relate to holdings as per 31 December 2015 and include holdings through companies and related parties. Name Position Board member since Göran Larsson Chairman 2013 Charlotte Axelsson Member 2014 Joachim Gahm Member 2011 Liselotte Hjorth Member 2014 Lars Holmgren Member 2011 Kia Orback Pettersson Member 2010 Charlotta Wikström Member 2009 Göran Larsson Born Chairman of the Board since 2013 and Board member since Principal education: MSc in Political Science. Other on-going principal assignments: Chairman HESTRA-Handsken AB, Hestraviken AB and Mappa Invest AB. Board Member Bratt International AB. Shareholding: 20,000 shares. Charlotte Axelsson Born Board member since Principal education: BSc in Economics and Social Studies. Other on-going principal assignments: Chairman AFF Service AB, Slättö Förvaltning AB and Vasallen AB. Board member in the Foundation MHS-bostäder. Shareholding: 1,333 shares. Joachim Gahm Born Board member since Principal education: MSc in Business and Economics. Other on-going principal assignments: Chairman Arise AB. Board Member Catella AB. Shareholding: 2,666 shares. Liselotte Hjorth Born Board member since Principal education: BSc Business Administration and Economics. Other on-going principal assignments: Board Member East Capital Explorer AB, Hoist Finance AB and White Arkitekter Aktiebolag. Shareholding: 6,666 shares. Lars Holmgren Born Board member since Principal education: Master s Degree in Chemistry and Industrial Management. Other on-going principal assignments: Board Member Cliens Kapitalförvaltning AB and Nordic Modular Group AB. Shareholding: 6,666 shares.

19 19(49) Kia Orback Pettersson Born Board member since Principal education: MSc in Business and Economics. Other on-going principal assignments: Chairman Fastighetsbolaget Riksdalen, Svefa Holding AB and Teracom Boxer Group. Board Member JM AB and Odd Molly International AB. Chairman of the non-profit association Friskis&Svettis Riks. Shareholding: 2,266 shares. Charlotta Wikström Born Board member since Principal education: MSc in Business and Economics. Other on-going principal assignments: Board Member Botrygg AB and Forsen Aktiebolag. Shareholding: 14,666 shares. Senior Management The Senior Management consist of a team of 11 persons. The table below sets forth the name and current position of each member of the Senior Management. The details of shareholdings below relate to holdings as per 31 December 2015 and include holdings through companies and related parties. Name Position Member of Senior Management since Biljana Pehrsson CEO 2013 Anders Kvist CFO and Deputy CEO 2012 Marie Mannholt Ylva Sarby Westman Head of Marketing & Communications Chief Investment Officer and Deputy CEO Frida Stannow Lind Head of Development 2013 Nicklas Arfvidsson Regional Manager Gothenburg 2008 Gert Ternström Regional Manager Malmö 2003 Sven Stork Regional Manager Stockholm 2014 Mats Eriksson Regional Manager Mälardalen 2015 Malin Axland Head of Legal Biljana Pehrsson Born CEO since Prior experience: Deputy CEO/Head of Real Estate at East Capital Private Equity, CEO Centrumutveckling. Other on-going principal assignments: Board member of East Capital Baltic Property Fund AB and Vasallen AB. 2 Shareholding: 25,000 shares. Anders Kvist Born 1958.CFO and Deputy CEO since Prior experience: Head of Group Treasury at SEB, manager of asset management activities at DnB and Skandia and CEO of Skandia Liv. Other on-going principal assignments: Board member of the Swedish Financial Supervisory Authority (Finansinspektionen). Shareholding: 40,333 shares. 2 The Einar Mattson group announced by press release on the 25 February 2016 that Biljana Pehrsson is intended to be appointed as board member of Einar Mattson AB at the annual general meeting in May 2016.

20 20(49) Marie Mannholt Born Head of Marketing & Communications since Prior experience: Senior consultant in property development at Mannholt Consulting, Marketing Manager/Senior Project Manager at Centrumutveckling, Marketing Manager at BMW/Rover, Regional Manager at Volvo Cars. Other on-going principal assignments: - Shareholding: 2,666 shares. Ylva Sarby Westman Born Chief Investment Officer since 2009 and Deputy CEO since Prior experience: Deputy CEO at Newsec Investment AB, Real Estate Development Manager at NCC Property Development AB. Other on-going principal assignments: - Shareholding: 3,333 shares. Frida Stannow Lind Born Head of Development since Prior experience: Property Manager at Drott, Investment Manager at Niam, Property Manager at Ebab. Other on-going principal assignments: - Shareholding: 2,953 shares. Nicklas Arfvidsson Born Regional Manager Gothenburg since Prior experience: Manager at Vasakronan, District Manager at ISS Facility Services. Other on-going principal assignments: - Shareholding: 366 shares. Gert Ternström Born Regional Manager Malmö since Prior experience: Supervisor at Skanska AB and AB Interoc, construction engineer at JM Bygg AB, manager at JM Industrifastigheter AB. Other on-going principal assignments: - Shareholding: 9,333 shares. Sven Stork Born Regional Manager Stockholm since Prior experience: Key Account Manager at Newsec Asset Management, Asset Managerat Niam AB, Project Manager at NCC Property Development AB. Other on-going principal assignments: Limited partner in Niam IV Investments Kommanditbolag. Shareholding: - Mats Eriksson Born Regional Manager Mälardalen since Prior experience: Business Manager Retail Newsec Asset Management, Head of Property Development ICA Fastigheter AB, Business Area Manager at NIAM AB and Property Manager at Siab AB. Other on-going principal assignments: - Shareholding: -