Good morning, and welcome to Entra's 2nd quarter presentation brought to you from Oslo. Let me start with some highlights in the quarter. Rental income of NOK602,000,000 in the quarter versus €587,000,000 same quarter last year. Net income from Property Management, euros 370,000,000 And our external appraisers have increased the value of our property portfolio with 1.3% in the quarter net value changes of SEK756,000,000 Profit before tax was of SEK 1,000,000,000 €126,000,000 in the quarter. It's been a busy quarter from us.
We have rented out 36,600 square meters, leaving us with a net letting of 13,000,000. We've also acquired 2 properties and increased our stake in Oslo S Utvikling in the quarter. Very different transactions also with slightly different strategic rationale. 1 acquisition was increasing and strengthening and growing our presence at the HealthSphere portfolio, acquiring a high quality asset there. One acquisition was a value add investment in 1 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 Bylvika area and the area around the central station.
In addition, we also, in July, announced that we I acquired a small hotel in the Tullin cluster in Oslo. Seeing that this also is an important part of our a 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 semiannual dividend of NOK 2.50 to be paid out on October 12. Moving on to operations. As we mentioned last quarter, activity in the letting It slowed down through the Q1 following the lockdown.
We did have our experience that activity picked up again in May May, June, July have been very busy months for us, continuing also in July, and 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 2 large contracts, 1 in Bergen, 7,400 square meters with the Bergen municipality in our project in Mullenalsvein 628. And just today also, we announced that we have renegotiated the contract of 13200 Square Meters with the Norwegian Planning and Building Authorities in Oslo, meaning that we will also now start refurbishment of that building in Valsgaard shortly. In the Q2, we signed a total of 36,600 square meters or NOK 93,000,000 of rental income. Out of that, euros 6,000,000 was in our ongoing projects.
Terminated contracts in the quarter of €38,000,000 and leaving us then with a net letting of €13,000,000 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 1 in at SKAGEN for 2,300 square meters. And pleased to see that SAP Norway has chosen to move into our ongoing project in Uni Vazhetescata 7, signing 1700 Square Meters there. In Trondheim, the Director of Immigration has signed 1400 square meters renegotiation there. And in our project, St.
Olavs Plus 5, Gilman Kiese has signed 1100 square meters. The occupancy is currently at 97.4% in our portfolio and average lease including projects of 6.9 years. We finalized this project in Grenland 32 in Drammen. This is a refurbishment of 5,000 square meter for a public tenant in this building of 7,400 square meters. 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. And let me start by saying that all our projects are progressing according to plan on time, quality and cost. And as you can see from the list, we have 4 green arrows on the occupancy in the quarter. At Universite Tetzkata 7% to 9%, occupancy has increased from 84% to 97% 86%, sorry, to 97% in the quarter, and we're close to fully let, 1 quarter ahead of completion. In Inogeneskata 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 Santoulas Plus, occupancy has increased from 60% to 68%. And in Bergen, Occupancy increased from 44% to 95% following the contract with the Bergen Municipality. Here, you can also see that this project has, from the start, been planned in 2 phases, where the first contract we signed will be completed refurbishment in the Q4 this year.
The second contract signed with the Bergen Municipality will be then completed 1 year later in the Q4 of 2022. So 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, so we are on track on letting there. In Bergen, we have also a very strong Interest for our project in Njigorskarten 91 to 93. We do expect to see occupancy pick up here in the next couple of quarters.
In Turonheim, as we communicated, when starting the project, we do expect to see occupancy to pick up closer to completion. Now as you probably also are aware of, building materials costs have increased quite a lot through the past 9 months, specifically on steel and wood. And 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 Helsvir cluster, we have acquired this asset, Fystrik Aleen, 1 at Helsvir in Oslo.
Helsvir is a large and well established office cluster in Oslo located on a central communication hub, just 7 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. And the surrounding area of Hilsfir is currently undergoing development with a strong also pipeline of residential development ongoing. And 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 3 assets under management here, around 80,000 square meters there, in addition to a project where we can develop 20,000 square meters.
Now following this acquisition, we will have a presence of 110,000 square meter in this cluster, bringing as up to a market share close to 30%, which means that we will be a strong player in this cluster going forward. Fisktikalen 1 is a building of around 40,000 square meter consisting of 3 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 3 public tenants with an average lease duration of 9.4 years, 12 months rolling rent currently at SEK 95,000,000 and the total transaction value of SEK 2,400,000,000. 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, the you have the central A bus station in Bergen here with a large white rooftop. The blue buildings are entrance buildings in this area. And at the bottom here, you can see Nighurskarten, 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, Menel City in Bergen. And we also have a plot here, Lars Hilskate 25 undergoing zoning. So this is an area where Entre is working on the transformation, We do expect to see that rental levels will pick up in the years to come also in the neighboring buildings. So we definitely expect to see that we should be able to pick up on rent when renegotiating contracts in this building. The building is of 5,900 square meters, fully let, 5.4 years vault and a total transaction value here of 2 98,000,000 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 Entre has been working with the transformation for the past 5 years. And you can see all the buildings here marked with pale blue has already been developed or currently is under development by Entra. And 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. So we believe this transaction is a good example on how we can strengthen and Trust Urban Development in a cluster by adding the hotel.
And 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 the Red Bull in this cluster. The building is of 5,500 square meters, currently has 93 hotel rooms. It's operated by Nordic Choice on a 4 year lease contract, And we will consider redeveloping this into a small boutique hotel, potentially also ahead of the lease contract expiring and plus contact then with Choice. But 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 SEK 185 €1,000,000 and this transaction closed today.
We announced in June that we have increased our stake in Oslo S. Utvikling from onethree to 50% Ownership. This is a company which Entra has held a stake of 1 third in since 2004 together with 2 equal partners, Lindstel, family owned company and also Barnenor Eindom, a government owned real estate developer. Oslo 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 square meters. And Oslo has also developed this area here with 1100 residential units and ground floor with services, retail, restaurants of 12,500 square meters. 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 and Oslo 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 40 5,000 to 55,000 square meters, mainly commercial purposes. Now 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. So this is the 1st resi part, which will be completed in the Q2 of 2023. And then the Sea Frontier This final building stage will be following that. The transaction value for Entrance share here was EUR 475,000,000 and this transaction also closed today on July 14.
A few words on the market situation. The COVID-nineteen situation is currently under control in Norway. Society has gradually opened up, And we are in Stage 3 out of the government's 4 stages in the reopening plan. Around 69% of the adult population has currently received their first shot of vaccine, and 37% of our population is fully vaccinated. We have seen that employment levels have been less affected by COVID-nineteen than what was expected.
And we're now seeing a strong pickup in activity and also patience of employment growth going forward. Rent development has been stable through the pandemic, And Entra has not seen any negative impact on the leases signed by us through the last year. Activity level in the Q1 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. And 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. So 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 second sorry, first half of this year.
A total of NOK 70,000,000,000 NOKs was sold in the first half, meaning that we're probably going to see record levels in the full year of 2021. Entre has been active in the transaction market in the first half, and we see very strong competition for all kinds of transaction. There is strong interest both for long secured cash flows, for value add opportunities and also for development sites. The financing markets continue to be favorable, and expectations for rental growth have seeing effects on rising interest rates in the long term. The strong interest and the competition in the transaction market shows that investors clearly also have a positive view on the future.
And prime yield has remained stable around €325,000,000 to €330,000,000 following the yield compression we experienced in the second half of twenty twenty. So moving on to Anders and our financial update.
Good morning. I think there are 5 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 SEK 10,000,000 on restructuring From an organizational project that we completed in Entrlu in the quarter and also the final part of the cost from the strategic interest in the company.
3rd is that the value changes came in very strong. The 4th, we have been able to utilize a very attractive financing market to secure about almost to secure about almost SEK 4,000,000,000 in new funding. And finally, 5 It's basically we're back on the growth trajectory in terms of our revenues. Looking at the actual figures, Revenue is coming at €602,000,000 so up €11,000,000 from €591,000,000 in the first quarter. The key driver is the M and A that we've done in the Q1, contributing some SEK8 1,000,000 to the P and L.
If we compare To the Q2 last year at €587,000,000 were up €15,000,000 And again, acquisitions contributed about SEK 11,000,000. Those have been done through the last year. We have a net negative contribution from projects of SEK 15,000,000 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. And that has been offset by also for this quarter a very strong like for like growth at 2.9%. And this has to be compared with the CPI for 2020, which ended up at 0.7%.
So the underlying like for like growth In excess of CPI is 2.2%. And please bear in mind that about 90% or 86% of our contracts are basically being SEKA adjusted every year because they're not operating negotiations. So it's the remaining 14% that will drive that strong like for like growth in total. So that's why we're seeing the like for like growth of 2.9% We're 2.2% post CPI is very strong. Net income for Corporate Management coming €370,000,000 on par with the Q1 and also €20,000,000 up from the Q2 last year.
I'll come back into the details on that one. And again, that gives profit for tax at €11.26 So again, a strong quarter on the numbers side. Looking at the cash earnings annualized 4 quarters rolling at up at 8.2%, 11% CAGR on Since the IPO back in 2014. NRV ending up at €1.98, NTA At correspondingly at 196%. The NRV growth, again, CAGR is 15% since 2014.
If we include that we have paid out NOK 27.15 dividends since then, The CAGR is 17%. So again, a strong underlying growth in values. In terms of the P and L, operating costs coming at 63,000,000, so basically on par with the Q2 last year, a bit up from the Q1. Otherwise, net other income other costs at SEK 4,000,000, basically As expected, we have admin cost of SEK 47,000,000. Of those SEK 47,000,000, SEK 7,000,000 is attributable to the restructuring and the strategic interest The company.
So basically underlying admin cost now at around €40,000,000 The assorted companies at €1,000,000 So significantly down from last year. The reason is that the main part of that is Uchwasser Zutikling, the company that we Agreed to acquire 17% of just now. They are primary resi company And they will book their gains when the apartments are being delivered over to the buyers. That means for the next 18 to 24 months, results will be flat again. And then they will pick up when the next residential project is being delivered.
Financing cost at SEK 128,000,000 Basically, we're leveraging sort of the very good Financing market at the moment. Worthwhile saying that the payable tax is SEK 4,000,000 on the quarter. The group as such is not in a tax payable position. So this is all contributable to the The subsidiary that we own in Drummond, we have 60% ownership, and we're not able to leverage our tax loss carry forward. Going in and looking at the next 6 quarters revenues, we see that the Starting at €602,000,000 26,000,000 increase comes from the acquisitions that we made or closed In the Q2.
Most of them, especially the big one up at HealthFair, was closed at the very end of June And that it will then give a solid growth in the Q3. The full revenues on that asset is NOK 94,000,000 on a full year basis. Then in the Q3, we will finally get 2 of our large projects, U2 and U729 into production. They will start off slow at the end of the quarter, but they will contribute some SEK6 1,000,000 in revenues for the Q3 isolated. And then we have a small negative net letting of SEK 3,000,000 Actually yielding then full revenues of around SEK630 1,000,000 for the Q3.
And then we will see it will gradually pick up following the introduction on the projects being put into operations. So Again, it's we're back Entra is back on the growth track. For the Q3, it's driven primarily by the acquisitions that we've done. And from the Q4 onwards, you will see that the existing product pipeline, Currently, 10 projects yielding fully rented around a bit more than SEK 500,000,000 in revenues will start and annual revenues that is will start feeding into our P and L. So again, a solid growth trajectory going forward.
Moving on to the balance sheet, starting off with €58,000,000 we invested some €3,200,000,000 in the quarter. In acquisitions, We put around €561,000,000 in our project development. As discussed earlier, we are ramping up the project development part. And then we have a very solid also this quarter of SEK 724,000,000 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 SEK297,000,000 comes from yield effects.
And those yield effects are primarily in on the fringe areas of Oslo, We're up at Brien Helzberg also we bought that large asset just in the quarter in Bergen and in Trondheim. Then we see a 33% of the SEK 7,024,000,000 or about to basically SEK 265,000,000 coming from project. And then the 3rd contributor is the market rent of €108,000,000 or 14%. So again, a strong Value uplift also in this quarter. If we're adding then the value of the A portfolio that you own up at Bergin, which will be converted to resi and sold to a third party on the prearranged price Of €400,000,000 plus adding the value of Oslo €860,000,000 it gives us now a balance sheet of €64,000,000,000 So quite significant at least on our scale.
Finally, on the financial side, Well, the Q1 was a very quiet quarter. Basically, the we were in a standstill period given the strategic interest in Antra. The Q2 really loosened up and we were able to utilize a very attractive financing market. So we issued 3 new green bonds and also TEP did 3 taps. So a total of NOK 3,800,000,000 was secured on the bond in the bond market at very attractive prices.
And we also were able to extend the duration a bit longer than we We usually find that the sweet spot is around 5 to 7 years in our bonds. We now took it a little bit longer and but still on very attractive terms. And we also rolled our CP portfolio of SEK 1,200,000,000. This gives us a total debt As of the Q2 of SEK 25,200,000,000 and of that is 72% market based bonds and CPs and the rest is bank finance. The green part of our financing is currently 55%, so up from 49.5% 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 corporate 3.5%, so which basically gives us still very solid ship And with a good sort of 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 3 months NIBOR now It was about 23, 24 basis points.
And we will expect on sort of on a normalized level, As you can see on the dotted line to end up around 2.30, 2.40 somewhere. If we did a new bond today, a new fiber bond typically, We do that at a margin of about 73, 74 bps. Fremont's NIBOR, if you want to do a floater, is Currently, that's 23, 34 basis points, but the swap rate, fiber swap is around 135,000,000. So which basically gives it a marginal cost of a Fully set fiber bond would be in the range of 210,000,000. So a very attractive financing market.
And 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, but it was SEK 1,200,000,000, but it's an important part because 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. And then the bank market, we've maintained our close relationship with our 5 partner banks And we find them supportive of Entrance needs both now and into the future.
So all in all, on the Both on the P and L side and on the balance sheet, we are happy with the situation. Thank you.
Okay. So 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% to 3.30%. In Entra, we expect a fairly strong growth ahead. As Anders said, our current project portfolio will add more than €500,000,000 of rental income when fully let. We've also closed 6 transactions in the first half, adding some €150,000,000 of rental income and also some long term value add potential. And going forward, we will continue to actively use our balance sheet and access to funding to add further growth.
And 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. And we will also actively use our competitive advantages in respect of competencies, Scale, Network and ESG Leadership. So that's all from us today, And we'll open up for some questions, Tuna.
What is the rationale for buying a new fully let building on long term leases, Sub-four percent cross yield, is there a value creation plan?
As I mentioned, we acquired the asset at Helfver 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, and we have a very positive outlook on Helfver as a destination. And 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, Baldur and Constellum, 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 our reshaping a bit our strategy, independent on those 2 shareholders. But We do have a very regular dialogue with all our shareholders taking in inputs. What we've focused on in Enfran through 2019 and most parts of 'twenty has been to get started our project pipeline. And 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. So 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 counterpart in a transaction?
We had value uplifts of 724,000,000 The only place where we saw a notable write up was at the Brien Helzver area where we first did a large acquisition Taking place. That came in at in Bruns and Helfver. The total value change on that area It was SEK294,000,000. And of those SEK 294,000,000, SEK168,000,000 comes from yield compression and remaining is pretty much increased market rent. So I think in terms of the Actual yield reduction, it's about SEK 164,000,000 out of the SEK 724,000,000.
But I think it's worthwhile mentioning that the When we acquired that asset at HealthSphere at SEK 2,300,000,000, that That was a competitive process. There were several bidders into that process. And I guess all of us were pretty much on pretty much the same levels. So I think, yes, it was not a cheap asset, but it was a fair price fairly priced asset. And When we compare that to other transactions in the same area, especially there was one big asset being sold out at Harsle, a bit further The northwest of our cluster, that was done at 3 net yield of 3.9 And ours were down at SEK 3.75.
And I mean, any day of the week, we would choose the asset that we bought. The SEK 3.9 Net yield asset is worse quality. The tenant is worse quality and the area is not such not as nice as the one that we see in HealthFair. So Clearly, that asset was not the one we bought was not a cheap asset to buy. It was a fairly priced and but it was a reasonably priced asset.
The vacancy rate increased quarter on quarter by 70 bps and most in Stavanger. Can you please comment?
Firstly, Running such a big portfolio as we have or by being in our view at least At a vacancy of less than 3% is really, really good. I mean, you do have some frictional vacancy in the portfolio. Tenants are moving in, tenants are moving out and having less than 3% is just very, very low. So just to put that straight. In terms of Stavanger, that is driven primarily not primarily, but singular by one asset, the Canalpirn that we acquired in some months back, Which basically had a vacancy of 42%.
So That is a key driver. And even with a 42% vacancy, It's we did that at the net yield of 4.8%. If we are able to rent the remaining part of that asset, It will yield revenues about SEK 31,000,000,000 and take up the net yield to about SEK 7,500,000,000 So 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 it's going to be a good 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 Wellskott 1, 2, 3. How much CapEx is planned in the refurbishment? And how is the rental versus the old lease?
Rent levels are on par with the existing Lease, it's an option that the tenant has to extend. We will put quite a bit of CapEx into that. I don't think the number is we haven't really it's not firmly set. So but up to about 14,000 per square meter, Maybe 15,000 14,000, 15,000 Hoppers per square meter. So it is quite a big CapEx, but the asset is now about 20 years old.
It needs an upgrade For especially on the technical part in the ventilation systems. And it will be a profitable project for us. And but it wouldn't have the super profit that we've seen in the other profits that we're doing now lately. But it's a good project. It's I mean, we love to have a public tenant renegotiating for 10 years And doing that on a profitable way for us, including the CapEx.
And in that particular area, There aren't many places in Oslo where in Central Oslo where basically we have newbuild activity. In that area, There will be some 10,000 square new square meters coming into the market and which would otherwise have been competing with our asset. So we're very happy that the tenant decided to or that we were able to agree with the tenant to renegotiate that on good terms. We will come out next quarter with a full probably next quarter, I guess, in with a full project overview of that. But it's Fair to say, it's a profit project, but
Could you please comment on the property costs? Letting in property admin seems to be SEK 10,000,000 higher than the normal level.
Yes, yes. There are it is a bit high This quarter. I'd say SEK 3,000,000 of that comes from the restructuring part because we also had some restructuring in the operational organization. We have some more costs on the IT side. We're implementing a new HR system, which allocated to that part.
And we also in the previous quarters, we have especially on the Q1, we had a reversal of the provisions for the COVID-nineteen effects that we were sort of We I were probably a bit pessimistic in the Q2 and last year, and it basically didn't hit us at all. So there are several smaller factors contributing. But I think in terms of the one off factor there It's the SEK 3,000,000 restructuring costs that were basically put on that quarter alone. But happy to go into some details with the person that But it's a bit too much detail to put on the web like this.
Are we seeing a strategic shift in Entre, more development of areas including hotels and residential?
What we're clearly seeing is that if we are to be the best office provider in the future, developing Destinations with high urban qualities is important, and we see that It's natural for us to also take a space in respect of developing the ground source and the resis and the hotels, which is part of Urban Development.
We are an office company.
For sure.
And we will continue to be an office company. Yes. So There's no doubt about that. We are an office company. This has had to do with adding value to our office business in those clusters.
And in that way, we will still have the option to, for example, on the Resi part, like we did up at Berun, have an agreement with A resi developer, prearranged price, which we find very attractive. So this basically gives us Alternative C in terms of and we like to have optionality on our side and this sort of move Yields or gives us optionality, but it's we're not going to be we're not on that hotel part, we're not going to run the hotel. We're going to own the hotel. And we're also looking at plan A is to continue having it as hotel. Plan B is to It can be converted into an office as well with reasonably good or good yield on costs.
So it's this is more sort of 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. That's if typically you rent a large space, maybe you would want some 10%, 20% of that space to be more flexible in terms and in duration. But 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 the 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 for because they are negotiating for a number of state tenants. And they do cooperate with a lot of European Peers. And what our Stadtspig, our Norwegian company was saying is that They in most European countries or many European countries, people are talking about downscaling. They haven't seen that trend in Norway.
We have seen 2 tenant cases, not in our Port of Olar, but in other places where they basically have come out to say, we would like to reduce our space and work from home on a more permanent basis for certain parts of the week. But what we see from both our private tenants and public tenants Is that, yes, they will probably work from home somewhat. I mean pre COVID-nineteen, it could be up to one day a week in Norway. Maybe it's 2 days a week. What we do see is that the it's basically Fridays and then Mondays, which are the preferred Day of working from home.
And if everybody all employees still have to be in the office on Tuesday, Wednesday, Thursday, it doesn't really Change the space required from our tenants. It's more a matter of having More empty spaces on Mondays Fridays. But it is still early to tell. But at least we haven't seen in our negotiations. We haven't seen in the service done In Norway among tenants, and we have not seen it or heard it from our discussions with the state enterprise basically managing a number of state contracts.
But prior to COVID, We could also clearly see that the public tenants were having discussions on whether they still should have 1 separate desk each, and that might change. That if they want to have home office flexibility, they might have to share their desk with other people. But 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?
Well, we have a couple of projects in the marketing phase. So if we find the right tenants, We are ready to start more projects, definitely.
And the final question. With the
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. So 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, but 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
That concludes the Q and A. Okay. Thank you all for
very good questions, and have a great summer, and see you again next quarter.
Bye.