Welcome to the Investor Presentation For The Annual Results of Heimar Real Estate Company For The Year 2025. Earlier today, the Board of the Directors approved the financial accounts for the year 2025, and the documentation and all the relevant presentations are available on Nasdaq OMX website and as well on the Heimar website. For the next 15 minutes or so, I will go through the annual accounts and the highlights of the results for the year. The top-line growth came in at roughly 9.6% revenue growth, following significant investments. We saw new high-quality assets strengthen the stable operations in our core areas. Rental income was growing by 9.6%, and the real growth within the year came in around 5.4%.
EBITDA came in just shy of ISK 11 billion, which is a 9.3% nominal growth from last year. Net profit came in at ISK 8.4 billion, and we saw record leasing volumes achieved during the year. We have made significant investments in our portfolio this year. Total investments in the portfolio amounted to ISK 27 billion. Thereof, ISK 21 billion was in new assets that were consolidated into our accounts in June 2025. We see strong momentum in new development projects, which will create further long-term growth opportunities for the company. We pride ourselves of a strong financial position that continued to strengthen throughout the year. The equity ratio increased by 1.3% and came in at 33.1% at year-end.
We have said this time and again, our short-term and medium-term goal is to lower the debt ratio, which will increase the equity ratio, which stands, as I said, at 33.1% at year-end. The LTV ratio decreases by roughly 2.2%, year-on-year, and came in at 60.3% at the end of 2025. As we published six months ago or so, we secured our first international financing last year on ISK 4.5 billion loan agreement with the Nordic Investment Bank in Finland. In addition, we underwent the largest share capital increase in the company's history in connection with the acquisition of Gróska. To cut a long story short, we say that our strategy is clear, both in word and in action.
We have finalized, in 2025, acquisitions of high-quality assets and significant investments in existing properties within core areas, as I mentioned in the beginning. We went into repurchase of treasury shares with nominal value of ISK 55.4 million at the average price of ISK 36.6, which means that the total purchase price of treasury shares was approximately ISK 2 billion last year. This was an eventful year. It was challenging in financial markets, but we crossed many milestones in our operations. It was the best results to date, both in customer and employee services. We saw record leasing in our portfolio, approximately 51,000 sq m. As mentioned before, we finalized the first financing from an international bank in our portfolio. We underwent the largest share capital increase in the company's history.
We went through a rebranding process, and we're and Heimar was awarded the Rebranding of the Year. Another accolade is that Heimar was selected the Environmental Company of the Year in the Icelandic market, and we saw a strong momentum being gained in new development projects, creating, again, long-term growth opportunities within our portfolio. This slide says, "Promises kept." It means we had stated objectives that we went through in presentations like this on a quarterly basis, and then what we delivered. Just out of random, the first point and the last point, we told the market that we would initiate a share buyback program, and we fulfilled that promise in the year-end when we had finalized share buybacks in the amount of ISK 2 billion.
The bottom part, in the short term, we have continued to realize that we are stating that we want to reduce the company's leverage. Sorry about that. And as mentioned before, our equity ratio has been rising, stands at 33.1%, and the leverage ratio has been decreasing and comes at 60.3% at year-end. Heimar is a attractive investment opportunity with solid fundamentals from left to right. We are a reliable and responsible investment opportunity. You see that the EBITDA of the company has been growing significantly in the last few years, and the EBITDA percentage has been more or less flat throughout the growth period. We operate in core areas in the city of Reykjavík and the adjacent municipalities.
We have clear strategy and strong execution, which you can see that 74% of our rental income comes from properties located in these core areas in Iceland. We have a moderate LTV ratio that's going down, currently stands at 60.3%, as mentioned before. Sustainability and social responsibility is at the forefront of our operations, and 42% of our portfolio is green buildings. 40% of our financing is within our Green Financing Framework, and we saw a 10% change in carbon footprint in our portfolio for the last six years. Looking into the numbers for the year, we see strong revenue growth, which has translated into 5.4 real growth year-on-year. You see that the rental income is increasing by roughly 9.6%.
EBITDA is up by 9.3%, and the EBITDA percentage of rental income is just north of 71%, comes in at 71.3%. The occupancy rate remains high. It's around 96.2%, was 97% in the year before, but that it is natural that it fluctuates around 1% back and forth. Profit after tax came in at ISK 8.4 billion, an increase from last year, and the fair value adjustment of investment properties was roughly ISK 7.5 billion this year. The yield on the investment properties came in at 5.4%, which is the same as we registered for the year 2024, and return on equity was roughly around 12%.
Looking at our investment properties, they're booked at just shy of ISK 230 billion, and the interest-bearing liabilities stand at ISK 135 billion at year-end. Taking a step back, we have roughly 97 assets in our portfolio, and the occupancy rate remains extremely high at 96%. It will change a bit from year to year. It has highest been around 97.5%, and then it fluctuates around the 96%-97% mark. Within our portfolio, 69% of all square meters are located within well-defined core areas. The portfolio comprises just shy of 400,000 sq m , and the rental income from these core areas is around 74% of all rental income in the portfolio.
Our customer base is diverse, w e have 430 customers, thereof, public entities and listed companies amount to around 44% of revenue. The average lease term is around 6 years, and again, around 40% of our building are green and we have a Green Financing Framework that is around 40% of our debt. Again, core areas, 74% of rental income, long-term goal, between 70% and 80%. Listed companies register around 14% of our rental income. We are reaching the upper range of the long-term goal, which is 10%-15%, and public entities, 30%. So if you put them together, around half of our revenue stem from listed companies and public entities.
Looking into the finance and the operations that we're publishing today, we see that rental income is growing by 9.6%. EBITDA is up by 9.3%, as in the previous year, and our share in profits of associates stands at ISK 844 million, which is the similar level as yet last year. Profit for the period comes in at ISK 8.4 billion, and you see the pictorial overview of rental income, EBITDA, and the operating cost of investment properties on the lower right-hand side of the slide. The board is proposing for the AGM that profit allocation is in line with the company's dividend policy. That means that one-third of net profit will be distributed through dividends or share buybacks.
That translates into ISK 0.4 per share, roughly around ISK 700 million in dividend payment. T hen, according to the dividend policy, shareholders can expect that share buybacks in the rough amount of ISK 2 billion will be initiated this year, but that, of course, will be based on market conditions. If we look at the real revenue growth, we see that Gróska and Exeter, the two largest investments, totaling ISK 21 billion in 2025, came into our consolidated accounts in June 2025. We're seeing a 9.6% nominal growth, and price levels increased by 4.2% year-on-year, which leads to the real growth of 5.4%.
We signed 23 lease agreements in the last quarter for just under 7,000 square meters, and I reiterate, this was a record level this year. We signed new lease agreements for roughly 51,000 square meters throughout 2025. We say that our operating assets are generating strong cash flow, equity adjusted for non-operating assets. From left to right, if you look at the cash flow from operations in 2025, from left to right, we have EBITDA coming in around ISK 11 billion, and then paid this interest around ISK 4.9 billion. That leaves cash flow from operations in the vicinity of ISK 6.1 billion, and these funds can be used for payments or of debts or installments, for new investments, for dividend payments, or for share buybacks.
If you look at the operational equity on the right-hand side, we see that equity at year-end 2024 stood at ISK 64.5 billion. Then there was impact of share capital increase following the Gróska acquisition. That leads to operational equity of roughly ISK 62 billion. Putting the left-hand side on top and the right-hand side on the bottom, that leads to return on operational equity of roughly 9.8%. B ear in mind that we have been lowering our debt structure, increasing equity, so this is a, this is a very high base, almost 10%, with less risk than a year ago, when we had more debt and lower equity ratio. If you look at the accounts receivable, we do this every now and then. I, I think it's suitable to do this at year-end.
We see that our extremely strong tenant mix is mitigating risks in the portfolio. We have a high-quality tenant base with listed companies and governmental entities of roughly 45% of our revenue. Y ou see that the accounts receivable overdue by more than 30 days on the left-hand side are still a minuscule part, 0.95% and we can derive that from high-quality properties, from reliable tenants, and virtually no write-offs that come into question on the right-hand side of the slide. There, we're depicting accounts receivable and how they've been developing since 2022, and we see that accounts receivable are roughly around ISK 832 million at the year-end 2025, and thereof, ISK 146 million is more than 30 days overdue. But remember, our top line is somewhere in the vicinity of ISK 15 billion.
Write-offs in the year 2025 amounted to ISK 35 million out of ISK 15 billion in revenue. As I've said to you before, we have a rising equity ratio and decreasing leverage ratio, which is depicted on the pictures on the right-hand side. In the upper right-hand side, you see the equity ratio development that since year-end 2023 has increased from 30%- 33.1%, and the leverage ratio, conversely, has gone from 64.8% down to 60.3%. And remember, we said two years ago, we will continue to increase the equity ratio and decrease the leverage ratio, and these pictures depict exactly that.
If you look at the bottom half of the balance sheet, you see that the equity of the company stands at roughly ISK 79.5 billion at the end of 2025 and increased by 23% from year-end 2024. We are registering a positive fair value adjustment of ISK 7.5 billion in 2025. Inflation is the primary driver of valuation changes. The cost of capital at year-end 2025 is 6.48%, as compared to 6.46% at the year-end 2024. Total investment, as I've mentioned before, in the portfolio, amounted to ISK 27 billion over the period. If you look at the what interest rate reductions will positively impact our portfolio valuations, we see that inflation is still rather high in Iceland.
It was rising in January and February, but market participants are expecting inflation to come down in the next few quarters, and conversely, interest rates are expected to follow. The question is this: What impact would a declining interest rate have on the operations, on the financial position of Heimar? From left to right, on the left-hand side, we see the balance sheet. Impact of the value or on investment properties. If interest rates go down, that leads to lower yield requirements, and if the cost of capital goes down by 0.5%, the valuation of investment properties in our portfolio will go up by ISK 14 billion. On the right-hand side, we see the impact of interest paying, interest payments of variable interest rates.
For each 1% that interest rates go down, it affects its effects will be roughly ISK 362 million in paid interest on an annual basis going forward. So summing this together, we are expecting interest rates to come down in the next few quarters, and that will positively impact the portfolio and the interest payments of Heimar. If you look at the refinancing structure of the company, we have no refinancing need in 2026. We had two new green bond issues issued during the year. We have some refinancing in 2027, but new borrowings in 2025 amounted to roughly ISK 19 billion, while repayments of older debt totaled around ISK 13 billion.
Green Financing, as I've mentioned before, accounts for roughly 40% of total interest-bearing debt, approximately 29% of interest-bearing loans or bank loans, and importantly, the effective average interest rates on indexed loans came in at 3.44% at year-end 2025. We've been focusing on ancillary revenues within our portfolio this year, and it's, it has come from a pilot project to a standalone indexed revenue stream. In the beginning, very low figures, annualized ancillary revenues at the beginning of 2025 were somewhere in the vicinity of ISK 35 million. The year came in at ISK 100 million, but as of today, we've already signed agreements that will guarantee us ISK 170 million in annualized ancillary revenues. This is an important factor because we will continue on this path in the next few quarters and years.
On the right-hand side, you see the ancillary revenue forecast going forward, and we anticipate that it will be around 2%-3% of total revenue from year 2028 and forward. This has importance as increased ancillary revenues flow directly to profit and enhance the free cash flow of the company. On the left-hand side, you have EBITDA, then you had paid interest. We went through this earlier in the presentation and then we see significant opportunities in growing ancillary revenues that will lead to better use of existing assets and investments, driving higher portfolio returns, minimal additional investment and, but a strong cash flow. W e see that in the next few years, we anticipate this to sum up to 2%-3% of our total revenue on an annual basis.
The way we expect investors to look at the company is to look at the core operations, the real estate company itself. Then to add on to it, the ancillary revenues that will continue to grow significantly over the next few quarters and years, and then our associate company, Klasi, which is our development arm, we own 1/3 of the company and put together, we expect that ancillary revenues will be contributing ISK 100 million-ISK 500 million to net profit each year on an annualized basis, and we see that the, ownership in Klasi is expected to return around ISK 700 million-ISK 900 million on an annual basis. This year, it came in at ISK 844 million. Briefly about sustainability, the top line says it all.
Heimar was selected the Environmental Company of the Year in Iceland in 2025, and that is the highest environmental recognition in the Icelandic business sector. The award is presented to companies that excel in environmental and climate matters, and we have also received a score of 84 in sustainability assessment, ranking above average across all categories. Again, this is a focus we have on the financing side, but also on the construction and the operational side, where roughly 40% of our portfolio has green certificates. Briefly in the end, regarding shareholders, we are publishing today on earning guidance for 2026. We are expecting rental income to, for the year 2026, to be in the vicinity of ISK 16.6 million-ISK 16.95 million.
So ISK 16.6 billion-ISK 16.95 billion, and the estimated EBITDA projection for the year is from ISK 11.8 billion- ISK 12.15 billion. These projections are put forward on a basis of a 4% year inflation. We are a shareholder-focused company. Intrinsic value has been the benchmark for buybacks, and as described earlier in the presentation, we expect buybacks in 2026 to be in line with the buyback program in 2025, coming in around ISK 2 billion. We say that, while the share is being traded below intrinsic value, which means the book value of equity plus deferred tax liability, we see massive opportunity in buyback programs, and we will continue to deliver so in the year 2026. This lists the 20 largest shareholder of Heimar, and it's in...
It is good to see that most of the largest shareholder increased their share throughout the year. This was a challenging year in the financial markets, as you all know. Share price was down by roughly 4%, but we were still one of the most actively traded shares on Nasdaq Iceland, coming in tenth place, as is depicted on the right-hand side. F inally, the financial calendar for next year, we will next meet on the annual general meeting that will be held on Monday, March 9, and then the Q1 results will be presented on May-