Good morning welcome to Entra's second quarter presentation brought to you from Oslo. Let me start with some highlights in the quarter. Rental income of NOK 602 million in the quarter versus NOK 587 million same quarter 2020 . Net income from property management, NOK 370 million, and our external appraisers have increased the value of our property portfolio with 1.3% in the quarter. Net value changes of NOK 756 million. Profit before tax thus of NOK 1.126 billion in the quarter. It's been a busy quarter for us. We have rented out 36,600 sq m, leaving us with a net letting of NOK 13 million. We've also acquired two properties and increased our stake in Oslo S Utvikling in the quarter. Very different transactions also with a slightly different strategic rationale. One acquisition was increasing and strengthening and growing our presence at the health care portfolio, acquiring a high-quality asset there.
One acquisition was a value-add investment in one of our existing clusters in Bergen and increasing our stake at Oslo S Utvikling, securing and strengthening also our role as an urban developer in the Bjørvika area and the area around the Central Station. In addition, we also, in July, announced that we have acquired a small hotel in the Tullin cluster in Oslo. Seeing that this also is an important part of our plan for urban development in this area of the city. We have also finalized one of our projects in the quarter, and we have decided to pay out a semi-annual dividend of NOK 2.50, to be paid out on October 12th, 2021. Moving on to operations. As we mentioned last quarter, activity in the letting market slowed down through the first quarter following the lockdown.
We did have experience that activity picked up again in May. May, June, July have been very busy months for us, continuing also in July. We do expect to see that the letting activity in the market will be very high in the second half of this year. In July, we also announced this week that we've signed two large contracts, one in Bergen, 7,400 sq m with the Bergen municipality in our project in Møllendalsveien 68. Just today also, we announced that we have renegotiated a contract of 13,200 sq m with the Norwegian planning and building authorities in Oslo, meaning that we will also now start refurbishment of that building in Vahls gate shortly. In the second quarter, we signed a total of 36,600 sq m or NOK 93 million of rental income. Out of that, NOK 6 million was in our ongoing projects.
Terminated contracts in the quarter of NOK 38 million, leaving us then with a net letting of NOK 13 million. As you can see from the table here, the largest contract in the quarter was a renegotiation with the Western Police District in Bergen of 14,100 square meters. We also renegotiated with Station one in Drammensveien at Skøyen for 2,300 square meters, pleased to see that SAP Norway has chosen to move into our ongoing project in Universitetsgata 7, signing 1,700 square meters there. In Trondheim, the Directorate of Immigration has signed 1,400 square meters renegotiation there, in our project St. Olavs plass 5, Geelmuyden Kiese has signed 1,100 square meters. The occupancy is currently at 97.4% in our portfolio and average lease duration including projects of 6.9 years. We finalized this project in Grønland 32 in Drammen.
This is a refurbishment of 5,000 sq m for a public tenant in this building of 7,400 sq m. The project was completed on time and cost with a yield- on- cost there of 7%. We currently have 10 projects ongoing in our project portfolio. Let me start by saying that all our projects are progressing according to plan on time, quality, and cost. As you can see from the list, we have four green arrows on the occupancy in the quarter. At Universitetsgata 7-9, occupancy has increased from 86% to 97% in the quarter. We're close to fully let one quarter ahead of completion. In Universitetsgata 2, this is where we are creating a Rebel, a hub for technology with flexible lease contracts. We were pleased to see that occupancy increased from 54% to 73% in the quarter.
This is fully in line with what we have communicated since we started the project that this building will pick up in occupancy closer to completion, seeing that we are targeting smaller tenants and also offering flexible lease contracts. In St. Olavs plass, occupancy has increased from 60%- 68%, and in Bergen, occupancy increased from 44%- 95% following the contract with the Bergen municipality. Here you can also see that this project has, from the start, been planned in two phases, where the first contract we signed will be completed refurbishment in the fourth quarter of this year. The second contract signed with the Bergen municipality will be then completed one year later in the fourth quarter of 2022. Complete occupancy on the entire portfolio currently at 67%.
The remaining project in Oslo are either close to fully let or they have a long time until completion. We are on track on letting there. In Bergen, we have also a very strong interest for our project in Nygårdsgaten 91- 93. We do expect to see occupancy pick up here in the next couple of quarters. In Trondheim, as we communicated when starting the project, we do expect to see occupancy to pick up closer to completion. As you probably also are aware of, building materials costs have increased quite a lot through the past nine months, specifically on steel and wood. Please take note that we have fixed- price contracts on materials in our ongoing project pipeline. A few words on the acquisitions we have done.
Firstly, to grow and strengthen our presence at our Helsfyr cluster, we have acquired this asset, Fyrstikkalléen 1 at Helsfyr in Oslo. Helsfyr is a large and well-established office cluster in Oslo, located on a central communication hub just seven minutes metro ride from the Central Station of Oslo. It's one of the main hubs for public tenants in Oslo due to its excellent access to public transportation. The surrounding area of Helsfyr is currently undergoing development with a strong also pipeline of residential development ongoing. We do expect to see that the urban qualities will further enhance the attractiveness of this cluster in the future. Prior to this acquisition, Entra had three assets under management here, around 80,000 sq m there, in addition to a project where we can develop 20,000 sq m.
Following this acquisition, we will have a presence of 110,000 sq m in this cluster, bringing us up to a market share close to 30%, which means that we will be a strong player in this cluster going forward. Fyrstikkalléen 1 is a building of around 40,000 sq m, consisting of three building bodies joined together with a common atrium where you also have the shared services. It's a large, high-quality, modern, flexible office building. It's fully let to three public tenants with an average lease duration of 9.4 years, 12 months rolling rent currently at NOK 95 million, and the total transaction value of NOK 2.4 billion. This transaction closed in June this year. In Bergen, we acquired a value-add property in one of our existing clusters. As you can see from this picture, you have the central bus station in Bergen here with a large white rooftop.
The blue buildings are Entra's buildings in this area. At the bottom here you can see Nygårdsgaten, which is our ongoing project in Bergen. Here we are currently targeting record high levels of rent in Bergen, and the last building to target these rents was this building, Media City in Bergen. We also have a plot here, Lars Hilles Gate 25, undergoing zoning. This is an area where Entra is working on the transformation, and we do expect to see that rental levels will pick up in the years to come also in the neighboring buildings. We definitely expect to see that we should be able to pick up on rent when renegotiating contracts in this building. The building is 5,900 sq m, fully let, 5.4 years WALT, and a total transaction value here of NOK 298 million, closing also in June this year.
We announced last week that we have also acquired Hotel Savoy in the Tullin Quarter. This is an area in the city center of Oslo where Entra has been working with the transformation for the past five years. You can see all the buildings here marked with pale blue have already been developed or currently is under development by Entra. When transforming this area from a rather sleepy part of the city into an attractive destination, we also need to add an offering, keeping activity up outside normal office hours. Meaning that ground floors, retail, restaurants, residential, and also hotels is an important part of that urban development. We believe this transaction is a good example on how we can strengthen Entra's urban development in a cluster by adding the hotel.
We clearly also see synergies in respect of bundling and cross-marketing the hotel to visitors to our university office building, and also the conferences which will be held at Rebel in this cluster. The building is of 5,500 sq m, currently has 93 hotel rooms. It's operated by Nordic Choice on a four-year lease contract, and we will consider redeveloping this into a small boutique hotel, potentially also ahead of the lease contract expiring in close contact then with Choice. We also clearly see that the building suits well as an office building if that should be a preferred development. The transaction value is of NOK 185 million, and this transaction closed today. We announced in June that we have increased our stake in Oslo S Utvikling from 1/3 to 50% ownership.
This is a company which Entra has held a stake of 1/3 in since 2004, together with two equal partners, Linstow family-owned company, and also Bane NOR Eiendom, a government-owned real estate developer. OSU has developed the Barcode area here between the Central Station of Oslo and the seafront into becoming the CBD east of Oslo. A total of 12 high-rise buildings here have already been developed and sold. That's around 150,000 sq m. OSU has also developed this area here with 1,100 residential units and ground floor with services, retail, restaurants of 12,500 sq m. Now, the remaining development in OSU is this area here within the stapled line, where we can develop 800 residential units also then with the services on the ground floor.
OSU also has 72% ownership in this land plot A, which is currently undergoing zoning for commercial purposes and also has an opportunity to acquire 25% stake in this land plot here at favorable terms. This plot is currently undergoing zoning for somewhere between 45,000 sq m-55,000 sq m, mainly commercial purposes. If you take a look at this snapshot here, it shows the residential development, where you can develop the 800 resi units. The first project has already been started. This part here of 265 units is currently under construction, and 76% of those units have already been sold. This is the first resi part which will be completed in the second quarter of 2023, and then the sea front here and this final building stage will be following that.
The transaction value for Entra's share here was NOK 475 million. This transaction also closed today, on July 14th. A few words on the market situation. The COVID-19 situation is currently under control in Norway. Society has gradually opened up. We are in stage three out of the government's four stages in the reopening plan. Around 69% of the adult population has currently received the first shot of vaccine. 37% of our population is fully vaccinated. We have seen that employment levels have been less affected by COVID-19 than what was expected. We're now seeing a strong pickup in activity and also expectations of employment growth going forward. Rent development has been stable through the pandemic. Entra has not seen any negative impact on the leases signed by us through the 2020 . Activity level in the first quarter was slowed down by lockdowns.
We have, however, seen an increase in the amount of new searches for offices which have come out through the second quarter and also continued into the second half of 2021. According to Entra's consensus report, rental growth is expected to be around 3% for the next couple of years. However, we clearly also see that some of the leading property houses in Oslo are much more bullish in respect of rental growth for the next couple of years, particularly for the city center of Oslo. Vacancies are expected to come down and decrease as a result of employment growth, and also the fact that the new build pipeline is limited for the next couple of years. We are thus optimistic about the letting market in the years to come.
In the regional cities also, we're seeing stable terms both in respect of rent levels and vacancies. The transaction market has been very strong in the first half of this year. A total of NOK 70 billion was sold in the first half, meaning that we're probably going to see record levels in the full year of 2021. Entra has been active in the transaction market in the first half. We see very strong competition for all kinds of transaction. Very strong interest both for long secure cash flows, for value add opportunities, and also for development sites. The financing markets continue to be favorable. Expectations for rental growth have balancing effects on rising interest rates in the long term. The strong interest and competition in the transaction market shows that investors clearly also have a positive view on the future.
Prime yield has remained stable on around 325- 330 following the yield compression we experienced in the second half of 2020. Moving on to Anders and our financial update.
Good morning. I think there are five key takeaways from the financial side for this quarter. Revenues coming in as expected. Costs are slightly higher than we expected. Reasoning being, the driver being that we had set provisions for a total of NOK 10 million on restructuring from an organizational project that we completed in Entra during the quarter, and also the final part of the cost from the strategic interest in the company. Third is that the value changes came in very strong. The fourth, we have been able to utilize a very attractive financing market to secure about almost NOK 4 billion in new funding. Finally, five is basically we're back on the growth trajectory in terms of our revenues. Looking at the actual figures. Revenues coming in at NOK 602, so up NOK 11 million from NOK 591 in the first quarter.
The key driver is the M&As that we've done in the first quarter, contributing some NOK 8 million to the P&L. If you compare to the second quarter 2020 at NOK 587 million, we're up NOK 15 million. Again, acquisitions contribute about NOK 11 million. Those have been done through the 2020 . We have a net negative contribution from projects of NOK 15 million, as we have taken out assets from production and into project that then will be come back into cash flow generating activity over the next couple of years. That has been offset by also for this quarter, a very strong like-for-like growth at 2.9%. This has to be compared with the CPI for 2020, which ended up at 0.7%. The underlying like-for-like growth in excess of CPI is 2.2%.
Please bear in mind that about 90% or 86% of our contracts are basically being CPI- adjusted every year because they are not up for any negotiations. It's the remaining 14% that will drive that strong like-for-like growth in total. That's why we're saying the like-for-like growth of 2.9% or 2.2% post CPI is very strong. Net income from property management coming in at NOK 370 million, on par with the first quarter and also NOK 20 million up from the second quarter 2020 . I'll come back into the details on that one. Again, that gives profit for tax at NOK 1,126 million. Again, a strong quarter on the numbers side. Looking at the Cash Earnings analyzed four quarters rolling up at 8.2%, 11% CAGR since the IPO back in 2014. NRV ending up at NOK 198. NTA at correspondingly at NOK 196.
The NRV growth, again, CAGR is 15% since 2014. If we include that we have paid out NOK 27.15 on dividends since then, the CAGR is 17%. Again, a strong underlying growth in values. In terms of the P&L. Operating costs coming in at NOK 63 million, basically on par with the second quarter 2020 , a bit up from the first quarter. Otherwise, net other income, other costs at NOK 4 million, basically as expected. We have admin cost of NOK 47 million. Of those NOK 47 million, NOK 7 million is attributable to the restructuring and the strategic interest in the company. Basically underlying admin cost now at around NOK 40 million. The associated companies at NOK 1 million, significantly down from 2020 . The reason is that the main part of that is Oslo S Utvikling, the company that we agreed to acquire 17% of just now.
They are primarily a residency company, and they will book their gains when the apartments are being delivered over to the buyers. That means for the next 18-24 months, results will be flat again, and then they will pick up when the next residential project is being delivered. Financing cost at 128. Basically, we're leveraging the very good financing market at the moment. Worthwhile saying that the payable tax is NOK 4 million on the quarter. The group as such is not in a tax payable position, so this is all attributable to the subsidiary that we own in Drammen, where a 60% ownership, and we're not able to leverage our tax loss carry forward. Going in and looking at the next six quarters revenues, we see that starting at NOK 1,602, NOK 26 million increase comes from the acquisitions that we made or closed in the second quarter.
Most of them, especially the big one up at Helsfyr, was closed at the very end of June, and that it will then give a solid growth in the third quarter. The full revenues on that asset is NOK 94 million on a full year basis. In the third quarter, we will finally get two of our large projects, U2 and U7-9 into production. They will start off slow at the end of the quarter, but they will contribute some NOK 6 million in revenues for the third quarter isolated. We have a small negative net letting of NOK 3 million, actually yielding then full revenues of around NOK 630 million for the third quarter. We will see it will gradually pick up following the introduction of the projects being put into operations.
Again, Entra is back on the growth track for the 3rd quarter is driven primarily by the acquisitions that we've done. From the 4th quarter onwards, you will see that the existing product pipeline, currently 10 projects yielding fully rented around a bit more than NOK 500 million in revenues, in annual revenues that is, will start being feeding into our P&L. Again, a solid growth trajectory going forward. Moving on to the balance sheet, starting at NOK 58 million. We invested some NOK 3.2 billion in the quarter in acquisitions. We put around NOK 561 million in our project development. As discussed earlier, we are ramping up the project development part. Then we have a very solid also this quarter of NOK 724 million in value changes.
If you look at the pie chart on the right-hand side of the exhibit, you will see that 37% or about NOK 297 million comes from yield effects. Those yield effects are primarily on the fringe areas of Oslo where up at Helsfyr also we bought that large asset just in the quarter, in Bergen and in Trondheim. We see a 33% of the NOK 724 million, or basically NOK 265 million coming from project. The third contributor is the market rent, NOK 108 million or 14%. Again, a strong value uplift also this quarter. If we're adding then the value of the portfolio that we own up at Bryn, which will be converted to resi and sold to a third party on a prearranged price of NOK 400 million plus, adding the value of OSU 860, it gives us now a balance sheet of NOK 64 billion.
Quite significant, at least on our scale. On the financial side, while the first quarter was a very quiet quarter, basically we were in a standstill period given the strategic interest in Entra. The second quarter really loosened up and we were able to utilize a very attractive financing market. We issued three new green bonds and also tapped, did three taps. A total of NOK 3.8 billion was secured in the bond market at very attractive prices. We also were able to extend the duration a bit longer than we usually. We usually find that the sweet spot is around five to seven years in our bonds. We now took it a little bit longer, but still on very attractive terms. We also rolled our CP portfolio of NOK 1.2 billion.
This gives us a total debt as of the second quarter of NOK 25.2 billion. Of that is 72% market-based, bonds and CPs. The rest is bank finance. The green part of our financing is currently 55%. Up from 39.5% last quarter. Everything we do now in bonds is green bonds. They are green bonds supported by our BREEAM-certified asset portfolio. Looking at the LTV, now it is going up to 40.2%, interest coverage three and a half. Which basically gives us still very solid shape and with a good capacity for further growth if we so desire. Average rent as end of quarter ended up at 2.12%, really driven by the extremely low NIBOR.
I mean, if the three months NIBOR now is what, 23, 24 basis points. We will expect on a normalized level, as you can see on the dotted line, to end up around 230, 240 somewhere. If we did a new bond today, a new five-year bond, typically. We would do that at a margin of about 73, 74 basis points. 3-month NIBOR, if you want to do a floater, is currently at 23, 24 basis points, but the swap rate, five-year swap, is around 135. Which basically gives it a marginal cost of a fully set five-year bond would be in the range of 210. A very attractive financing market. We do find that the bond market is very liquid, very open, very receptive to the Entra bonds, and also at very good prices.
CP market, it's a small market for us, about NOK 1.2 billion, but it's an important part because the prices are so good. Really. We get about a 20 bps margin on the CPs, and if you add a backstopping on the bank facility, it's still in the range of 35 to 45 bps. The bank market, we've maintained our close relationship with our five partner banks, and we find them supportive of Entra's needs both now and into the future. All in all, both on the P&L side and on the balance sheet, we are happy with the situation. Thank you.
Okay, a few closing remarks from me. First of all, we see clearly very solid market fundamentals. Rental market is picking up and we are expecting high activity in the letting market also going forward. Expectations also for reduced vacancies and rental growth in the years to come. The transaction market continues to be very strong and prime yields remain around 3.25%-3.30%. In Entra, we expect a fairly strong growth ahead. As Anders said, our current project portfolio will add more than NOK 500 million of rental income when fully let. We've also closed 6 transactions in the first half, adding some NOK 150 million of rental income and also some long-term value- add potential. Going forward, we will continue to actively use our balance sheet and access to funding to add further growth.
We have also had a review of Entra's strategy and how to best position Entra in the future. The headlines are that we will continue to optimize and grow our portfolio of high-quality offices. We will also continue to build and progress our development pipeline, and we will increase our focus on urban development dimension and our ability to create attractive places to both work and live. We will also actively use our competitive advantages in respect of competencies, scale, network, and ESG leadership. That's all from us today, and we'll open up for some questions, Tone.
What is the rationale for buying a new full let building on long-term leases, sub 4% gross yield? Is there a value creation plan?
As I mentioned, we acquired the asset at Helsfyr to both strengthen and grow our presence in that cluster.
It's a cluster where we are seeing that there's a development ongoing, enhancing the urban qualities of the area. We have a very positive outlook on Helsfyr as a destination. It's a high-quality building which fits well into our portfolio and obviously, operational synergies for us in that cluster. Have the now 2 large shareholders, Balder and Castellum, changed the strategy at all? Have these parties had any influence on the decision to increase acquisition activity and increase leverage? Well, as I said, we have been working on reshaping a bit our strategy independent on those 2 shareholders. We do have a very regular dialogue with all our shareholders, taking in input. What we've focused on in Entra through 2019 and most parts of 2020 has been to get started our project pipeline.
Seeing that we now have so many projects ongoing, we also found it right to be more active in the transaction market, filling up our pipeline going forward. We've definitely increased our focus, seeing that we now also are back on track with our project pipeline.
Would you like to add something? How much of the Q2 value uplifts relates to the market effects where Entra has been a counterparty in a transaction?
We had value uplifts of NOK 724 million. The only place where we saw a notable write-up was at the Bryn/Helsfyr area, where with Fyrstikkalléen 1, the large acquisition was taking place. That came in Bryn and Helsfyr, the total value change on that area was NOK 294 million. Of those NOK 294, NOK 168 comes from yield compression, and remaining is pretty much increased market rent. I think in terms of the actual yield reduction, it's about NOK 164 million out of the NOK 724. I think it's worthwhile mentioning that when we acquired that asset at Helsfyr at NOK 2.3 billion, that was a competitive process. There were several bidders into that process, and I guess all of us were pretty much on the same levels. I think, yes, it was not a cheap asset, but it was a fairly priced asset.
When we compare that to other transactions in the same area, especially there was one big asset being sold out at Hasle, a bit further northwest of our cluster. That was done at net yield of 3.9, and ours were done at 3.75. Any day of the week, we would choose the asset that we bought. The 3.9 net yield asset is worse quality, the tenant is worse quality, and the area is not as nice as the one that was in Helsfyr. Clearly, the one we bought was not a cheap asset to buy. It was fairly priced, but it was a reasonably priced asset.
The vacancy rate increased quarter-over-quarter by 70 basis points and most in Stavanger. Can you please comment?
Yeah.
Stavanger.
Running such a big portfolio as we have, or by big in our view at least, at a vacancy of less than 3% is really good. You do have some frictional vacancy in the portfolio. Tenants are moving in, tenants are moving out, having less than 3% is just very low. Just to put that straight. In terms of Stavanger, that is driven singularly by one asset, the Kanalpiren that we acquired some months back, which basically had a vacancy of 42%. That is the key driver. Even with a 42% vacancy, we did that at a net yield of 4.8%. If we are able to rent the remaining part of that asset, it will yield revenues of about NOK 31 billion and take up the net yield to about 7.5%.
We knew all the way that when we bought that asset, it would have a negative impact on the overall occupancy on the portfolio, but that was going to be a good acquisition. It's slightly optimistic, but we feel it's going to end up somewhere between good and very good.
You just announced a large renewal in Vahls gate 1-3. How much CapEx are planned in the refurbishment, and how is the rental levels versus the old lease?
Good one.
Good one.
Rent levels are on par with the existing lease. It is an option that the tenant has to extend. We will put quite a bit of CapEx into that. It's not firmly set, but up to about NOK 14,000 per square meter. Maybe NOK 14,000, NOK 15,000 per square meter. It is quite a big CapEx, but the asset is now about 20 years old. It needs an upgrade, especially on the technical part in the ventilation systems. It will be a profitable project for us. It wouldn't have the super profit that we've seen in the other projects that we're doing now lately. It's a good project. We love to have a public tenant renegotiating for 10 years and doing that on a profitable way for us, including the CapEx.
In that particular area, there aren't many places in Central Oslo where basically have new build activity. In that area, there will be some 10,000 new sq m coming into the market, which would otherwise have been competing with our asset. We're very happy that we were able to agree with the tenant to renegotiate that on good terms. We will come out next quarter, probably next quarter, I guess, with a full project overview of that. It's fair to say it's a profitable project.
Could you please comment on the property costs? The letting and property admin seems to be NOK 10 million higher than the normal level.
Yep. It is a bit high this quarter. I think NOK 3 million of that comes from the restructuring part because we also had some restructuring in the operational organization. Some more costs on the IT side. We are implementing a new HR system, which allocated to that part. We also, in the previous quarters, especially on the Q1, we had a reversal of the provisions for the COVID-19 effects that we were a bit pessimistic in the second quarter and 2020 , it basically didn't hit us at all. There are several smaller factors contributing. I think in terms of the one-off factor there is the NOK 3 million restructuring costs that were basically put on that quarter alone. I'm happy to go into some details with the person that questioned, it's a bit too much detail to put on the web like this.
Are we seeing a strategic shift in Entra? More development of areas including hotels and residential?
What we are seeing is that if we are to be the best office provider in the future, developing destinations with high urban qualities is important. We see that it's natural for us to also take a space in respect of developing the ground source and the residences, and the hotels, which is part of urban development.
We are an office company.
For sure.
We will continue to be an office company.
Yeah.
There's no doubt about that. We are an office company. This had to do with adding value to our office business in those clusters. In that way, we will still have the option to, for example, on the resi part, like we did up at Bryn, have an agreement with a resi developer, prearranged price, which we find very attractive. This basically gives us an alternative C. We like to have optionality on our side, and this sort of move yields or gives us optionality. On that hotel part, we're not going to run the hotel. We're going to own the hotel. We're also looking at plan A is to continue having it as a hotel. Plan B, it can be converted into an office as well, with reasonably good or a good yield on costs.
This is more so optionality than anything else.
What are you seeing with your letting negotiations? Are tenants talking about any downsizing or expansion plans?
Very little downsizing discussions currently. It's more providing optionality again. If typically you rent a large space, maybe you would want some 10, 20% of that space to be more flexible in terms, in duration. We're experiencing that most of our companies do expect to use the same amount of space as they have been, but maybe rearrange how they use space more.
If I can add there. We had a discussion with the lead state agency in Norway about the trends that they are seeing because they are negotiating for a number of state tenants. They do cooperate with a lot of European peers. What our Statsbygg, our Norwegian company was saying is that in most European countries or many European countries, people are talking about downscaling. They haven't seen that trend in Norway. We have seen two tenant cases, not in our portfolio, but in other places, where they basically have come out to saying, "We would like to reduce our space, and work from home on a more permanent basis for certain parts of the week." What we see from both our private tenants and public tenants is that, yes, they will probably work from home somewhat.
Pre-COVID-19, it could be up to one day a week in Norway. Maybe it's 2 days a week. What we do see is that it's basically Fridays and then Mondays, which are the preferred day of working from home. If all employees still have to be in the office on Tuesday, Wednesday, and Thursdays, it doesn't really change the space required from our tenants. It's more a matter of having more empty spaces on Mondays and Fridays. It is still early to tell. At least we haven't seen it in our negotiations. We haven't seen it in the surveys done in Norway among tenants. We have not seen it or heard it from our discussions with the state enterprise basically managing a number of state contracts.
Prior to COVID, we could also clearly see that the public tenants were having discussions on whether they still should have one separate desk each, and that might change. If they wanted to have a home office flexibility, they might have to share their desk with other people. It's still a discussion going on in the public sector.
Given your plans to progress the development pipeline, should we expect more development starts in the coming 12 months?
We have 2 projects in the marketing phase. If we find the right tenants, we are ready to start more projects, definitely.
The final question. With the number of development starts and the hotel acquisition, will the new strategy of Entra remain higher up the risk curve going forward?
Well, I think as Anders clearly stated here, we are still an office company, and we will be continuing working with that as a core. It's more a question of using our capabilities, our competitive advantages also to taking a larger part of the development in the urban dimension in the clusters where we already are. From a risk perspective, if you look at the ongoing projects, we see that we have started some more projects at a lower occupancy rate. Also seeing that we are delivering on the letting side and having some projects ongoing with lower pre-let ratios in different cities. We're very comfortable with seeing also our strong balance sheet and the fact that we have very strong market fundamentals in the cities we are in.
That concludes the Q&A.
Okay. Thank you all for very good questions, have a great summer. See you again next quarter. Bye.