Good morning, and welcome to Entra's Q1 presentation, brought to you here from Oslo on a crispy and sunny morning. Let me start with some highlights in the quarter. Rental income this quarter at NOK 591 million.
That's up from NOK 587 in the same quarter last year. Net income from property management of NOK 370 million, and in the quarter, our external appraisers have increased the valuations of our properties with 1.4%, leaving us then with a net value changes of NOK 880 million in the quarter.
Profit before tax of NOK 1.2 billion and NOK 90. We've had a good quarter also in respect of letting, a net letting of NOK 18 million. That's taking into account that Norway also went into a partial lockdown in the quarter, slowing down the pace, of course, in the letting market.
Much of the same effect as we saw in the first or Q2 last year, and we expect it to pick up again as soon as society reopens. We have started up two new development projects in the quarter. We have acquired three properties and also divested one. We have proposed a semi-annual dividend of NOK 2.50 per share for the second half of 2020, to be paid out on May 4th.
Remains to be approved at the General Assembly later today, that would leave us then with a total dividend for the 2020 year of NOK 4.9, with a 4% dividend growth than last year. A few words on the letting and occupancy in the portfolio. As I said, we had an active quarter. We signed leases of NOK 57 million, around 37,000 sq m, and a few contracts terminated, only NOK 1 million this quarter.
Net letting of NOK 18 million. Our occupancy is currently at 98.1%. That's about as close as you can get to fully let, meaning also that net letting going forward predominantly, of course, will be driven by our ongoing project pipeline. Average lease duration currently at 6.7 years, or 6.9 if you include the project portfolio.
The largest contract signed in this quarter was with the Police of Norway in Stavanger, where we signed a prolongation in their building, Lagårdsveien six, which was acquired in the quarter. We also signed two contracts in Holtermannsveien 1- 13 with Volue and WSP, which was also the basis for us deciding to start the project in this building. In Bergen, Nygårdsgaten 91- 93, we signed a contract with the law firm SANDS of 1,400 sq m. Also that, the basis for starting a project.
At Lillet orget in Oslo, we renegotiated a contract with Alternativ til Vold of 1,100 sq m. As mentioned, we decided to start a project in Trondheim. This is Holtermannsveien 1- 13. It's a larger development, which has been split into three phases. If you take a look at the picture here, you can see phase II marked with the white line in the picture, and the building to the right of that was phase I in this project, which was completed one year ago.
That building is now fully let, and the higher building on the left in the photo is then going to be phase III. phase II is a fairly large volume for the Trondheim market. Being a regional city, the typical normal lease size in Trondheim is somewhere between 500 and 1,000 sq m, and a large contract is more around 2,000 sq m.
Naturally, that also means that you would have to bundle up quite a few contracts to reach normal pre-let ratios, which we tend to go for. Seeing also that these smaller tenants normally sign leases closer to completion, we decided to start the project on the basis of the two contracts we have signed. This building has a very attractive location. It's located right next to the University of Science and Technology in Trondheim, close to the city center.
This is a part of the city which has currently low vacancy, around 6%. The overall vacancy in the Trondheim market being around 10%. The product has been designed in a very modern, attractive building with flexibility, enabling us to attract both smaller tenants and also large tenants. We're confident that we will see pre-let ratios here pick up towards completion.
Estimated project cost here at NOK 703 million, attractive yield on cost of 5.7%. Fully let, this is a building which should have a market yield somewhere around 4.5%. We're targeting a BREEAM-NOR Excellent environmental classification for this building, which will be completed in the Q2 of 2023. The second project we started in the quarter is located in Bergen.
This is a building which is located right in the city center of Bergen, next to our existing building, Media City Bergen, which is then close to the bus central station in Bergen. The situation in Bergen is that you have very few new build opportunities in the city center. In the pre-marketing phase, we've had pretty strong interest for this project. It's going to be a prime project targeting prime rents in Bergen.
We decided to start the project on the basis on the first contract signed with the law firm SANDS, also confirming that we're achieving the rents we're targeting. This is a building which has an estimated project cost of NOK 619 million. Estimated yield on cost here, 5.3%, and prime yield currently in Bergen is around 3.75%. The building should be completed in the Q4 of 2022, and also here, BREEAM-NOR Excellent environmental classification.
In respect of the market in Bergen, vacancies in Bergen currently around 9%. However, in the city center, vacancy is below 5%, so an attractive marketplace to work in with good products. Moving on then to our list of ongoing projects. As you can see, the list is growing, and we've added then the two new build projects on the middle here of the table.
The ongoing redevelopments, you can see that we have two arrows here marking the changes since our last reporting in February. Occupancy is slightly up in our Rebel project from 52%-54%, and also at Schweigaards gate 15 from 31%-34% occupancy. The total project area under development currently at 180,000 sq m, and average occupancy on all the projects currently at 59%.
Once these projects are fully let, they should add revenues of NOK 530 million over the next years. We also acquired one building in the quarter, which we previously haven't presented. This is a building which was acquired through our JV Hinna Park, 50/50 owned by Entra and Camar.
It's a building of 26,000 sq m located at Hinna Park. We currently own the two neighboring buildings to this one, and there are some operational synergies for us in holding also this asset.
The building currently is 60% let to solid tenants with a seven-year average lease duration. The transaction value here was NOK 375 million, leaving us with initially yield based on the passing rent around 4.8%. However, we see a substantial value uplift potential in working on the vacancy, and we're well set to work on that with our local team at Hinna Park.
Our base case here is that we should be able to achieve a yield on cost somewhere between 7% and 7.5% once we have solved the vacancy. This transaction closed on April 15th this year. We have been active in the transaction market in the Q1 . In total, we've acquired three assets and sold two. We have previously spoken about Møllendalsveien 1 and Lagårdsveien 6 and Tollbodallmenningen 2 on our Q4 presentation.
I just went through Kanalpiren, and Nytorget is an asset we hold in the city center of Bergen. This is a building which is going to go through a development over the coming years, and we have now sold this building to our JV Hinna park, enabling us to make better use of the organization there at Hinna park in the coming years.
A few words on the acquisitions. They're all representing a value add dimension for us. Starting with Møllendalsveien 1. This is a building which is located next to our ongoing project in Møllendalsveien 6- 8. The building has a short lease duration around two and a half year, and we see that there is a rent uplift potential in this building.
Lagårdsveien, as I mentioned, we had an option to acquire this building from the current owner at the price of NOK 126 million. It was valued at NOK 313 when we did the transaction. Following that, we've also prolonged the lease contract, and there is still rent uplift potential and some development potential in this building. At Kanalpiren, as I said, vacancy to be solved representing value uplift potential for us.
On the sales side, we continue to rotate out smaller assets and also assets of non-strategic interest for us. A few words on the market situation. Starting with COVID, of course, we did see then a third wave of infection coming in in the Q1 and experienced new lockdowns from January and also heavy travel restrictions. However, from an overall perspective, Norway has handled the epidemic fairly well.
We've had a few casualties, total of 708 casualties so far, and currently around 750 people in intensive care. Infection rates are declining, our R is currently below one at 0.8. Vaccination levels are picking up.
Currently around 20% of the population has received the first shot, estimates are that the adult population should have received a first shot of vaccination somewhere between July and August, thereby also reopening society and kickstarting economy.
A few words on the office market. As you can see from our consensus report, the graphs to the top right, vacancy is expected to increase slightly towards 7.6% this year. The picture is fairly nuanced. The highest vacancy levels we see then in the West Corridor of Oslo, somewhere around 10%, and also in the northeastern fringe of Oslo, around 10%.
Moving into the city center of Oslo, the vacancies are currently much lower, below 5%, and that is also where we have our ongoing projects, and we see few new build volumes coming into the market here, which are not already pre-let. A few words on the market rent situation. As you also can see from the consensus report, we are back on the rent growth track, expected rent growth to be around 1.8% this year.
Our experience in the marketplace is that rents are holding up very well. We're not seeing any downward pressure in respect of rent levels. A few words also on the transaction market. It's been a very continued high interest for property investments through the quarter, particularly for office and logistics buildings, and also strong demand for attractive properties with long leases and solid tenants, which is also then reflected in Entra's valuations.
Things do, however, take more time. It's more challenging to go through with site visits and the full process of a transaction under the current restrictions. Interest for property investments is still very strong in the marketplace. The sentiment seems to be both amongst investors and tenants that activity is going to pick up and continue with strength as soon as society opens up again.
Entra has been active in the transaction market through the quarter. We've also experienced that there's been a lot of competition and strong interest in the processes we've been involved in. Prime yield currently at 3.3%, expected to stay there also going forward. The yield spreads to the regional cities have been narrowing in.
Financing markets are well functioning and open. Interest swap rates have increased in the quarter. However, that's not put or reduced the interest for property investments.
We can see that the increase in interest rates have somewhat also been offset by reducing credit margins. I think that's it on the market situation, and let's move to the financial numbers. Over to you, Anders.
Morning. 2021 started on a good note for us. Except for slightly higher uplifting valuations, the P&L is pretty much as we expected. With this very strong net letting of NOK 18 million, strong balance sheet, debt capital markets coming into action again for us, and a strong project pipeline, it is clearly a good start. Revenues coming in at NOK 591, so pretty much exactly as we expected them to be.
Up NOK 1 million from the Q4 and up NOK 4 million from the Q1 2020. Into the uplift from 2020, we acquired one asset in Stavanger, giving us NOK 3 million in extra or additional revenues. We have taken out a number of assets for redevelopment, which had a negative impact of NOK 20 million in the quarter. This was more than offset by the CPI, which came in at 0.7% for 2020, so unusually low for Norway.
March to March CPI this year is at 3.1%, actually it's higher than the sort of normalized 2% that we expect. Nevertheless, very strong like-for-like growth in the quarter at 3.2%. Of that, 0.7% is CPI, the remaining 2.5% is coming from our operations. A very strong net like-for-like growth this quarter. Net income from NOK 370, up NOK 88 and NOK 13 million from fourth and the Q1 respectively. You see great volatility in the profit before tax coming in at NOK 1,290.
You will recall that in the Q4 , we wrote up our assets by almost NOK 4.5 Billion, while in the Q1 to 2020, due to the COVID-19 pandemic that just was at the start, we did not take any value uplifts in our P&L at all. That sort of explains the volatility in the P&L.
I'll come back to the cost side in later exhibits. Cash earnings coming in flat at NOK 8 per share as expected. NRV continuing to grow, now at NOK 194. EPRA installed three new measurements, replacing NAV and triple net. Last year, up until the Q4 , we provided figures on all those five different asset specifics, NRV, NTA, and NDV. We are now leaving NAV and triple net and only continue with the new three ones from EPRA.
NRV is shown in this exhibit, showing a 15% CAGR. If we include the dividends that we have paid out since 2015 of NOK 24 or NOK 65, the CAGR is a solid 17%. A note on the NTA and the NDV is enclosed in the back of the quarterly report.
NDV is not a relevant figure for Norwegian commercial real estate, as the tax treatment in the NDV is based on asset sales, while in Norway all assets are sold through SPVs, and thus with a very different or very marginal tax effect. Looking at the P&L. Operational cost coming in at NOK 51 million. We're up from the NOK 42 million Q1 last year, and down from the NOK 57 million that we had in the Q4 .
We believe that the NOK 51 million now annualized is a good proxy for the full year. Net other revenues, other costs coming in at NOK 6 million as compared to NOK 9 million the Q1 last year and NOK 7 million in the Q4 . Admin cost at NOK 49 million. On par with Q1 last year and down from NOK 55 million in the Q4 .
We expect that admin cost will come somewhat down in the next three quarters. We should end up not far away from the 2020 figures. One note on the tax payable. Entra has one subsidiary, partly owned, that is in a tax payable position. We normally pay around 12- 14, NOK 15 million per year in taxes on that subsidiary.
Last year, Entra as a group also came into a tax payable position including the subsidiary, we had a NOK 26 million tax payable. For 2021 and at least the two to three years to come, the group as such, we do not expect us to come in a tax payable position. As such, we will only have back to the, again, give or take NOK 12- 5 million in tax payable for the year.
Looking at the sort of expected future revenues the next six quarter based on communicated events, including project starts, assets taken out of production for redevelopment, known acquisitions, and net letting announced. We do see that from this quarter- next- quarter, we will increase it by close to NOK 600 million, primarily due to the acquisition of the small asset in Bergen and the small asset in Stavanger.
Finally, we're starting to see the effect and the impact of the assets that we have taken out for development and that will be put back into operations. Starting off with Øvre Slottsgate 2 and Øvre Slottsgate 7-9 in the Q3 this year. Following up with the Møllendalsveien 6-8 in the Q4 . The CPI adjustment for the Q1 2022. We have put that possibly a bit conservative at 1.7%.
We will see if we'll update that throughout the year. Then finally, in the Q3 of 2022, we get the effect from Tordenskiolds gate 12 and St. Olavs plass 5. Then the other projects will follow. As Sonja mentioned, the 11 projects that we are currently working on, they would lead fully let to a net revenue of NOK 530 million, which will be phased in sequentially over the next two to three years. In this overview, we only show the signed contracts.
As such, if you look at the table of projects, we are now at 59% pre-let. Then there is some upside in the revenue figures as we continue to sign up new tenants. It's good to see that we are back on a growth trajectory again. Looking at the property value development, starting at NOK 56.9 million. Invested NOK 390 million in the project.
That will increase over the next three quarters. We expect to invest probably at least NOK 5 billion in the next two years. The value changes came in at NOK 781 million. If you look at the circle on the very right-hand of the exhibit, you will see that the bulk of that at 34%, let me just check my numbers, came from the projects. 22%, NOK 174 million coming from transactions.
The reason is the acquisition of the small asset in Stavanger, where we had an old option to buy that asset at a very favorable price. In our NAV calculation, it was included as a financial asset, but as we acquired the asset, it was then moved into the inventory or the investment portfolio, i.e. the investment portfolio came up with about NOK 174 million.
You see there's a healthy further write-up stemming from the letting as the smallest project and the yields and market rents. It's a fairly widespread reasoning for the value uplift this quarter. On the financial side, it was a very quiet Q1 . Most of our debt capital markets investors looked from the sideline at the strategic interest in Entra, and they were worried that we would be acquired by a company with a lesser credit quality than of Entra.
As such, they would have a lower counterparty quality. The only thing we did on the financing side was basically to roll a small commercial paper. If you look at the as is status as at quarter end, we have around 70% in market-based debt. Basically, pretty much similar to the previous quarters.
We have now, with the two new bond taps that we did in April, a bit more than 50% of our financing as green financing. A combination of green bonds and green bank debt. As we talked about before, this has positive implication both on the pricing that we pay for our financing and also on the debt and the wideness of our investor base.
LTV getting lower now to 36.4%, which gives us a significant war chest in terms of both financing the portfolio but also looking selectively at acquisitions. With the ICR at 3.6, again, it's a very solid ship that we're running on that part. Interest cost at NOK 237. You will see that will increase somewhat during the following quarters due to the higher long-term interest rate. If that should end up as the forward curve now is looking. Status on the financing market.
The CP market is active, it's attractive. We're typically doing now six months CPs at around 20%-22% margin. Bond market is getting increasingly attractive. We added another two taps now of total of NOK 750 million. seven-year bonds in the high 70s. Very attractive pricing on the bond. We continue to have the same good, open, long-lasting relationship with our five banks. On the financing side, it's pretty much business as usual for Entra. Thank you.
There you are. Thank you, Anders. Moving on to some closing remarks from us. First of all, solid market fundamentals. We are experiencing that the rental market is holding up well, and also, transaction market, very active and strong through the quarter. COVID-19 uncertainty prevails. We are, however, seeing that new cases are dropping and the vaccination program is picking up, currently at 20% vaccinated with first shot.
Fair to say also that it's had a very marginal effect on the operating results for Entra. Very pleased to see that Entra now is back on the growth track, and we have a strong balance sheet and also financial capacity to support further growth. We continue to build our project pipeline. Currently, we have 180,000 sq m ongoing, and that will add, once fully let, NOK 530 million to our rental income.
We continue to work selectively also with acquisitions. That was all from me now, and I think we would have some questions from the audience, Tone. Tone, any questions?
Yes, we have some questions. Rental growth in Oslo is mentioned as a reason for value changes. However, certain market reports state that market rents are falling. Could you please comment?
Yes. What we've seen is that Statistics Norway has a database suggesting that some areas have seen declining rents. However, what we experience is that the data points there are very different from quarter- to- quarter. If you look at changes from one quarter to the next, it could very well be that the product qualities and micro locations are different between the quarters.
We work in the market with the same products over time and clearly see that we're not experiencing any declining rent or downward pressure on these products. I think it's fair to say also that Entra's products are in the not high-end prime yield or rent segments, so less also exposed there. We also hear the same goals also from the landlords working in the prime segment.
If you look at the same database, the rents in Oslo were up 12% in the Q4 and then down 9% in the Q1 . We didn't see the prices go up by 12% in our figures in the Q4 , and we didn't see them go down again the 9% this quarter. There's clearly quite a bit of noise in this.
When we look at the data sets from brokers and companies like Arealstatistikk , we tend to take a longer view and average it out because it's just plain wrong to do it on a quarter-by-quarter basis. It creates headlines in newspapers, and you get bipolar in terms of looking at them. But it's not the way you can run a business. We have to look at the longer lines than basically on a quarter-by-quarter basis.
Yeah. Good.
Are the interest costs on developments, are they included in the development overview? Is the interest rate taken of the P&L, or is it capitalized?
The interest cost on the project. That's a good question. The interest cost on the projects are capitalized on the balance sheet, but they are not included in the table on the project overview. Basically what we include there is the initial cost of the land and the CapEx that we will spend on the projects.
When we IPO'd in 2014, we went through the natural peers in Europe and especially the Nordics to understand how they presented their figures, and basic standard was that one did not include the capitalized interest cost in those tables.
That said, when we look at the project from our internal, when we evaluate the projects, we do include the interest cost on that in the IRR calculations, and it doesn't really change much. For this year, we say we expect to have a CapEx of NOK 3 billion this year.
The capitalized interest cost on those projects is around NOK 40 million. It could have been in there, but it has no material effect anyway. It is in a footnote now on the project table that it is not included in the project overview but is capitalized on the balance sheet.
Can you comment on what dialogues are being run with the new owners of Entra, Balder, Castellum, and SBB?
Well, we are talking to them the same as we do with all our investors. Have good discussions with them. Very interesting parties to discuss with. We look forward to having close contact with them also going forward.
That was the last question.
Thank you. Okay. That's it from here. Wrap it up here, we'll see you again next quarter. Thank you. Bye.