Hi, and welcome to our Q2 results presentation. My name is Liv Malvik, and I'm the CEO of KMC Properties. With me today, I have our CFO, Kristoffer Holmen, who a bit later will take you through our financials. First, let's go through the highlights from the Q2, where we spent a huge part of our time in the successful refinancing of our senior secured bond and a revolving credit facility at improved terms. In the Q2, our rental income increased 60% compared to the same period last year. Our net income from property management increased 42%. 7.5% of the top line growth came from CPI adjustments, effective on approximately 99% of our rental income from January 1st.
The rest of the growth came from value-accretive acquisitions and investments, of which NOK 50 million was invested in existing properties in the Q2 at an attractive yield on cost of 7.6%, 0.7 percentage points above our net yield. As always, we maintain our OpEx stable and low at NOK 10 million, expecting limited additions going forward. As already mentioned, we successfully refinanced our NOK 1,850 million bond and NOK 200 million revolving credit facility in the Q2. The refinancing was effective from July. In that process, we reduced our overall net interest rates by 0.43 percentage points to 6.02%, 0.9 percentage points below our net yield. As a company, we have, with our refinancing, taken another leap forward in shaping a robust real estate company.
I think it is fair to say that we have moved closer to our vision to become the preferred real estate partner for logistic and industrial companies. To prove that point, I want to take a look in the rear mirror on the development since our listing on Oslo Stock Exchange at the end of 2020. The history of our 2 largest tenants, BEWI and Insula, goes way back with over 40 years of industrial experience. Both companies established stand-alone real estate companies, which merged in 2020, shaping KMC Properties. We listed this company in December 2020 and have now grown our asset base twofold, from NOK 3 billion in December 2020 to NOK 6 billion by the end of June 2023. Approximately half of that growth comes from totally new tenants, diversifying our exposure.
Over the same period, we have grown our rental income more than twofold and established long-term contractual rent, stretching all the way to 2040. Back in December 2020, our balance sheet was dominated by a secured bond. Now, the majority of our debt is with banks. We are continuing to build our portfolio and expect to reach NOK 8 billion gross asset value by the end of 2024. Based on this more than 40 years of industrial know-how, we keep our focus on our 4 key areas: acquisition, CapEx projects in our existing portfolio, greenfield projects for existing and new tenants, and capital optimization. We combine these 4 elements to grow our portfolio, creating value for our stakeholders. We are now exposed to 17 different tenants.
We have 65 properties, 572,000 square meters in 5 countries. We have a vault of impressing 11 years. We are proud of what we have achieved in these 2.5 years. Let's have a look at our acquisitions so far this year. In 2023, we have purchased 5 properties in Norway, Denmark, and Finland for a total of NOK 400 million, with a yield of 8.10%. These properties follow our investment criteria, including our location, location restrictions, being close to either natural resources and/or key customers and/or in an industrial cluster. This, combined with locations being of strategic importance to our financially robust tenants, we feel confident when we say that our risk is lower than what our yield implies. To give even more comfort to that statement, I want to highlight our contractual structure.
We form triple-net bare rent contracts with our tenants, where the tenants are responsible for the rent, the taxes, the insurance, and all the maintenance of our property. This is limiting our exposure to property-related costs, which currently affects 1.2% of our rental income on a run rate basis. Almost 100% of our contracts are CPI adjusted, effective from January 1st each year. One of the most important effects of this is that in combination, this structure limits the inflation impact on us as a company. We have, during the same 2.5 years, managed to fundamentally change the debt structure of our company. We are, as I said earlier, very pleased to secure full refinancing of our bond loan well ahead of the maturity date.
At the same time, we have reduced the overall interest margin and improved our debt structure in a very challenging macro environment. The accomplishments are a result of an expansion strategy with well-rooted investment criterias and dedicated work over the past 12 months. The new financing framework converted more than half of our current bond loan to low-margin bank debt, representing a step change for our company and a strong platform for further growth. Looking 12 months ahead on our current, on our annualized run rate, we expect rental income of NOK 424 million. By reinvesting excess capital in new accretive opportunities, we will be able to increase this income run rate for the coming years. We convert NOK 165 million of the rental income to net income from property management.
This represents 0.48 NOK per share, compared to our current share price of 5.5 NOK per share. Due to our refinancing, we reduced our overall interest margin. Further reduction of our overall interest margin will be a focus area for KMC going forward. We have high visibility on both administration expenses and property-related expenses. Our administration costs will increase in a much lower ratio than our income, giving KMC economics of scale in this matter. We have also reduced the variable floating interest rate using swaps. All in all, we have a robust headroom to overall interest cost and financial flexibility to continue our growth. Kristoffer, will you please take us through the financials?
Yes. Thank you so much, Liv. Yep, let's start with our P&L. In the Q2, we continued to grow our rental income significantly through new investments. Since Q22022, rental income is up 60%, still, we have very low property-related costs due to our triple net warehouse contracts. Even though we had a 60% increase in rental income, our EBITDA is up 69% due to a more efficient organization. We believe this efficiency will grow with the growing portfolio, keeping operational expenses stable. The interest expense for the quarter was NOK 51.7 million, up from NOK 26.9 million in Q22022, due to increased in-depth related to new investments and increased floating interest. However, as Liv mentioned, interest margins have improved the last 12 months.
The value of our swap agreements increased by NOK 70 million in the quarter due to increased floating interests. We had a net change in fair value of our investment properties of minus NOK 52 million, reflecting the negative outlook, in the market. Tax payable in Q2 was NOK 2 million. For the H1 of 2023, tax expenses amounted to NOK 70 million, of which NOK 15 million is tax payable and remaining NOK 2 million is change in deferred tax. This left us with profit from continued operations at NOK 6 million in the Q2 2023.
On a per-- on a per share basis, as you see on this slide, the net income from property management after tax, representing the net cash earnings, was at NOK 0.33 per share the last 12 months, up from NOK 0.29 per share last quarter, a 13.8% increase. The adjusted EPRA earnings per share was at NOK 0.63 per share, down from NOK 0.76 per share last quarter, but still an 11.5% return, given the current share price of NOK 5.5 per share. If we look at the annual run rates, you see that we have significantly increased rental income in Q2, driven by new investments, but also completion, or parts of the Greenfield projects at Hitra in the near future.
The property-related expenses are still very low, as mentioned, due to our triple net warehouse contracts. We expect flat operational expenses going forward, this all results in an EBITDA improvement of NOK 12 million compared to Q1 this year. With net realized financials at NOK 210 million after the refinancing, we get a net income for property management before tax of NOK 165 million, up NOK 6 million from last quarter. However, I must emphasize that the net realized financials in the run rate does not reflect extraordinary ex- interest expenses in July related to the refinancing. The new interest-bearing debt, including the NOK 900 new NOK 900 million bond, came in place on the 6th of July.
However, the previous NOK 1,850 million bond was not repaid until the 20th of July, due to a standard 10 working days call notice. This gave a double interest expense in this period. Over to more details on the refinancing. In the table to the left, you see the effects of the refinancing, of the composition of the interest-bearing debt, and also the interest rates. As you can see, our bond financing has been reduced significantly from NOK 1,850 million to NOK 900 million after the refinancing. Bank loans have increased significantly from approximately NOK 1,300 million to approximately NOK 2.4 billion.
The construction loan is stable, and the previous revolving credit facility has been cleaned down completely, and also canceled. We now have a share loan of NOK 100 billion. If we look at the interest rates, the overall interest has improved as a consequence of the refinancing. It is down 19 basis points from 7.76, I think it is. 76, 7.76% down to 7.59%. As I mentioned, 19 basis points. If we include the swap agreements, the interest rate is down from 6.45% to 6.02%, a decline of 43 basis points.
As you can see, in the graph to the right, the refinancing reduces the run rate interest expense by NOK 13 million, improving the EBITDA to interest gap from Q1. If you look at the maturity profile on the next slide, you see that we have. You see that the refinancing risk is significantly reduced. As you can see in the interim report, our swap agreements have a long duration. If we analyze our interest coverage ratio, you see that we have a comfortable headroom to our covenants going forward, given the current current forward interest rates. The drop in Q3 is due to the extraordinary interest expenses that I mentioned earlier. Hence, the refinancing has put KMC Properties in a much better financial position.
That being said, the results are not entirely in line with the previous communication. We secured and completed the refinancing within the estimated time frame. During the refinancing, we communicated an estimated interest margin on the financing package required to repay the bond loan between 300 to 330 basis points. The final results was 365 basis points and 386 basis points when adjusting for the underpricing on the bond loan. During June, we were in process, we were in processes with the bank and several private debt providers to secure the remaining NOK 900 million of the refinancing, which could have yielded the desired interest margin.
However, we paused these processes and decided to try to place a new bond instead, because, one, a placement of a NOK 900 million bond would most likely put us in a solid financial position, which is also the case, as we have shown. However, we thought the interest margin would be lower. Second, we did not want to take further market risk in a declining market. Hence, we wanted to secure the refinancing by the end of Q2. Thirdly, we wanted to keep building strong relationships with bond investors. KMC Properties has a long-term goal of being a frequent, frequent issuer of unsecured bonds, as mentioned several times earlier. Lastly, the new bond can be called or refinanced after only 1.5 years.
The new bond may act as a bridge finance, as may act as bridge financing, until cheaper financing is in place. Okay, over to you, Liv.
Thank you, Kristoffer. During the 2.5 years since the listing of KMC Properties, we have focused on and succeeded in building a robust platform for continued value accretive growth. We have diversified our tenant base. Our tenants are solid actors in attractive industries. Our properties are business-critical for our tenants, which gives low sensitivity to rental costs and investment opportunities for KMC in specific infrastructure investments for our tenants. With our low property value compared to new build cost, our rent level below market rents, the alternative use of our properties, we have a very solid downside protection regarding the residual value of our portfolio. We also have the contractual frameworks in place to reduce risks provided by our hedging strategy, our triple net contracts, our CPI adjustments, and our long WALE.
Our ambition is, as earlier said, to reach NOK 8 billion gross asset value by the end of 2024. We aim to do so creating value for all our stakeholders. The current investment pipeline in 2023 will bring us from NOK 6 billion up to approximately NOK 7 billion by the end of 2023. A further NOK 1 billion in additional growth in 2024 will be needed to reach NOK 8 billion by the end of the year. Increased size and diversification are key elements when refinancing the NOK 1.85 billion bond. Beyond that, we will continue accretive activities based on a defined set of criteria, based on more than 40 years of industry know-how. Thank you for listening in. We will now open up for Q&A. Kristoffer, will you join me?
Yes.
There are currently no questions. However, if you are watching the webcast, you may enter any questions that you may have in the webcast. There is a slight delay on the questions that you may have entered, so we will give that a few moments. Still no questions? We received one question from Pål Dahl: "Can you give more color on the BEWI purchase option negotiations?
As we have said since we went into the deal with BEWI over one year ago, our intention has always been to take out all the properties in the option. Today we have 7 properties left of the whole transaction, and our intention is giving the right price and the right financing of these properties, also to take out the last properties in this transaction.
One question from Tor: "Can you say something about Slakteriet, and what do you expect there?
We are still working on the Slakteriet case. They have not yet been made the final decisions of the, the building of the, the property. We are still in this process. The same there as in the Bevetrans, with the right, right, financing and the right price, we intend to, to also to, to fulfill this LOI. It depends on pricing and, and, and financing.
A question from Sondre: "What is our read on the transaction market, the next 6 months, and how actively will we pursue new deals?
We think that there can be large possibilities in the transaction markets in the next 6 months, and we are already looking into some possibilities. We will look into the possibilities that we have going forward the next 6 months.
Yeah, I can also add that we considered ourselves to be a good platform now for further growth. We definitely want to take advantage of the potential good deals that's out there. It obviously depends on the price and financing. We see now that there still is quite a large distance between sellers and buyers, but hopefully we can make some good deals in the months to come.
Good. That was it. If you have any further follow-up questions, feel free to reach out to us.
Okay. Thank you so much.
Thank you.