In light of complaints from tenants and indications of operational problems related to Prime Living's properties located in Oxie the board has ordered an inspection review by the technical manager in Oxie. The report shows a number of serious and systematic technical deficiencies regarding, among other things, ground and ground work, heating systems, ventilation, drains, execution of the original contract and problems with moisture. All in all, the investment cost is estimated to correct the shortcomings of the Board of Directors at approximately SEK 60 million. The amount is significant for the Company and substantially exceeds the Board's previous calculations regarding the investment cost.

Against this background, there is uncertainty about the economic life of the buildings erected. A valuation calculation has been prepared based on the implementation of the investment program and an assumption of an economic life of 25 years. In total, the Board of Directors estimates that Oxie Properties has a market value of SEK 259 million, compared with the current book value of SEK 513 million. Therefore, Prime Living has today decided to write down the book value of the Oxie properties totaling approximately SEK 254 million. The write-down is not affecting cash flow but is charged to earnings in quarter 4 2019. This means that the annual report for 2019 will deviate from the year-end report published on 19 February 2020.

Prime Living has also noted increasing problems with missing rental payments, which are believed to be linked to the ongoing Corona pandemic. The missed rental payments negatively affect the Company's cash flow from the Oxie properties and the Board of Directors estimates that the net income from the Oxie properties will not amount to budgeted amounts.

The impairment loss and the related deterioration in earnings are expected to be able to affect Prime Living's conditions in order to be able to fulfill the terms of its existing bond financing. Prime Living will therefore immediately initiate contact with the Company's bondholders to address any impact on the terms of the external financing.