Hi, and welcome to half-year result presentation with Public Property Invest. My name is Ilija Batljan, and I am Interim CEO of the company, and I will be presenting today's report together with my colleagues, Ylva and Marianne. Let me start with the agenda. We will go through highlights, then look at operations, continue with financial update, and summarize through concluding remarks. And after this, we will have a Q&A. We have also asked to get questions sent to us, so we will try to address as many questions as possible. Let me start with the key figures. Rental income for the first half of 2024 was NOK 320 million.
We have a strong NOI of NOK 279 million with NOI margin of 89.4%. Strong cash flow. Adjusted cash flow from operations was NOK 254 million and 92% of our income is coming from public tenants. Ultimately, Norwegian Government, which is AAA-rated credit. We do have some negative portfolio valuations for the first half of 2024, but those negative value changes have happened in the first quarter. Valuations in the second quarter were flat. We have done a large amount of work during the first half of 2024, including IPO, SBB acquisition and refinancing.
And, we are now presenting a report with, strong balance sheet, with, run rate net debt to EBITDA of 7.8 times, and LTV of 40%. If you look at the next slide, our normalized annual run rate, we do count to do NOK 692 million in rental income. After cost of NOK 69 million, we will have net operating income on a run rate basis, NOK 623 million. Run rate EBITDA, NOK 575 million, and after financial cost, we do have, annual run rate of net income from property management of, NOK 310 million per year. Net income from property management per share, is estimated to be 1.49 NOK per share.
At the next slide, you can see our message, that we are trying to be very clear with. We have a strong balance sheet with low leverage. Our LTV was 40%, EPRA LTV 45%. Strong net debt to EBITDA of 7.8 times on run rate basis. We have an opportunistic growth strategy and good pipeline to continue to grow in the Nordics, and we have said, in connection to IPO, that we will be dividend company. If I go to operations, I can start saying a few words about our portfolio. As you can see on the slide, we have well-diversified portfolio throughout Norway. Our properties are all often in very good micro locations, strategic locations in local communities.
92% of our income is coming from publicly backed tenants by AAA-rated credit. You see also that our median lease is around 1.1% of the total portfolio, and we have evenly distributed lease maturity profile. But on the next side you see one of the main messages from the first half of the year, that we have been strong on letting. We have signed new and renewed leases of NOK 67.9 million, and we do not have any terminated contracts for the first half of year, and we have a positive net letting with NOK 10.8 million. You can also see that our rents are relatively low, which is giving extra value to our portfolio.
For example, if you compare the rent for OsloMet, that landed at 1,996 NOK per sq m, comparing to a newly built building will require 4,000 NOK per year, and 6,000 NOK per year and sq m. A part of our work with the properties is also continuing focus on ESG as a central part of our property management. There we are actually now waiting to get one of our buildings in Fredrikstad certified as BREEAM In-Use Excellent. We are from the already from the last year certified as Eco-Lighthouse, and that work with improving our properties is continuing.
I will then stay there, and I will ask our CFO, Ylva Göransson, to continue with financial update.
Thank you, Ilija. It has been an eventful half year in many ways. Let me summarize the key events, which impacted both the P&L and the balance sheet. First, we made a full refinancing of our debt, both bank and bond loans. The weighted average time to maturity for all interest-bearing debt is now 3.1 years. Second, we acquired a portfolio consisting of 13 properties with attractive locations in Lillestrøm, Tønsberg, Fredrikstad, and Kirkenes. The annualized rental income for these properties is around NOK 99 million. The acquisition was settled in shares. Third, we successfully listed the company at Oslo Stock Exchange on the 29th of April. The public offering with cash proceeds from the IPO amounted to approximately NOK 1.5 billion, of which around NOK 1 billion is or will be used to repay existing debt.
400 is already repaid, and the rest, NOK 664 million, will be repaid in September. The completion of all these events has provided the company with a total new equity of approximately NOK 2.8 billion. The company also shows a strong operational performance during first half year. Net operating income amounted to NOK 279 million, with an NOI margin of 89.4%. EBITDA, adjusted for non-recurring administrative expenses relating to the IPO, was NOK 263 million. Cash flow from operations was NOK 262 million when excluding non-recurring costs coming from the IPO process. We can go to the next slide. Rental income was NOK 312 million, which equals an increase of NOK 23 million compared to the same period in previous year. The increase was driven by new acquisitions and CPI adjustments.
Net operating income was NOK 279 million, with an NOI margin at 89.4%. Total administrative expenses amounted to NOK 28 million, of which a major part is non-recurring expenses related to the preparation for the listing of the company, as well as cost for converting to IFRS. Excluding non-recurring costs and reduction of the income from managing properties not owned by the group, the administrative expenses are NOK 17 million during first half year. Net realized financials are just slightly up compared to the same period last year. Three-month NIBOR is up 1% compared to last year, but the impact is limited, as we have around 70% secured interest at fixed rate. Transaction costs are all due to the IPO process in first half year and are all non-recurring costs. We mean the development is on track and on the right way.
So we can go to the next page and have a look at the balance sheets and key figures. All our properties are valuated by an external appraiser. The value of the properties at the end of first half year was NOK 9.8 billion, corresponding to a decrease of less than 2% since year-end, and a flat development in second quarter. The value of the like for like portfolio is down 22% from peak, and we believe the bottom is reached. Approximately NOK 86 million is CapEx during the first half year. Most of the investments are related to committed tenant alterations, technical upgrades, and ESG initiatives for Anton Jenssens gate in Tønsberg. Assets included more than NOK 1.1 billion in cash, of which then NOK 664 million will be used to repay bonds in September.
As I said earlier, we have raised new equity of approximately NOK 2.8 billion during the first half year. Interest-bearing debt by end of period is NOK 5.5 billion, but will then be reduced by NOK 664 million in September. All in all, this shows a very strong balance sheet, and we have improved key figures. Net debt to EBITDA is at 7.8 times. Interest coverage rate is at 2.1 times when we exclude non-recurring IPO costs of NOK 8 million. Loan to value is at 40%. Now, my colleague Marianne will give you more details about our funding.
Good morning. My name is Marianne Aalby. I joined the company in June as Executive Vice President in charge of Finance and ESG. As you know, the company was listed on the Oslo Stock Exchange just over two months ago. We are positioning the company for growth and have a finance policy that reflects that, while at the same time giving us the financial capacity to do so. As you can see on the slides, we have a strong balance sheet with 45% EPRA LTV and prudent financial policy. Our current average interest rate is 4.92%.... In the finance policy, the company is to have credit lines of liquidity to cover debts maturing within the next 12 months. The cash balance is currently more than sufficient to meet this policy requirement.
Although PPI does have a solid cash position, we would like to secure future liquidity and flexibility. We will therefore initiate work on establishing a multi-currency revolving credit facility in August. The work on establishing our EMTN program is well underway. We have chosen J.P. Morgan as arranger and Deutsche Bank as trustee, and the prospectus is nearly finished. We expect the program to be launched within the next couple of months. As PPI continues to deliver strong results while keeping a healthy capital structure, we are confident that it will be deemed as a low-risk issuer, with decreasing margins as a result. So PPI's finance policy reflects its aim to be a low-risk, long-term property owner and manager. As such, we will seek to mitigate any risks that can be mitigated through capital markets instruments, including foreign exchange risk and interest rate risk.
The company currently has limited to no foreign exchange exposure. To reduce its interest rate risk, the group has issued fixed-rate bonds. To further strengthen the company's financial position in conjunction with the IPO, a partial repayment and a new fixed interest was agreed to be implemented on September 23rd of this year on two of its bonds. The fixed-rate bonds and the hedging agreements on our bank loan result in a total rate of 70% interest rate risk being hedged. In conjunction with the IPO, the maturities were also extended on the bank loan, and also extension options were agreed upon on two of the bonds and as well as the bank loan. The bank loan consists of three tranches, and the first tranche matures in June of 2026, but can be extended for one year.
Similarly, the second two tranches, B and C, of NOK 485 million and NOK 1.8 billion, respectively, can each be extended by one year. This concludes my remarks, and I will give the podium back to our CEO, Ilija.
Thanks, Marianne, and now we will conclude the presentation. As you have seen through the report and through presentation, we are delivering strong operational performance with, among others, NOK 10 million in net leasing. We have a strong balance sheet and available liquidity. We have used proceeds from IPO to improve our debt metric significantly. We have prudent valuations. PPI has taken fair value adjustments of approximately 22% since peak in 2022, and that is substantially more than peers. If you look at the valuations for the first half of the year, the first quarter, we had the negative valuation, but the second quarter is now flat, and we are expecting that the negative valuation trend is stopped.
Finally, we do have good pipeline with possible transactions to further grow the company, both in Norway and the Nordics. With that, I will conclude our presentation, and we will move to Q&A.
Welcome to the Q&A session for the results for the first half year, 2024, with the PPI. With me, I have the CEO, Ilija Batljan, and CFO, Ylva Göransson, who will answer some of the questions that we have received from you in advance. The first question we have received is: How do you expect occupancy to evolve in the near to midterm? Do you expect any significant departures?
No, nothing since what has been communicated in connection to IPO, rather the opposite. We are having some promising negotiation to get new tenants in our buildings.
Okay, what is the status of the discussions or bids for the Terningen Invest?
Public Property Invest has one of the strongest balance sheet in European real estate market with net run rate net debt to EBITDA of 7.8 times, and LTV of slightly above 40%. So we have time to wait, and we are moving forward, and we will see to do that deal or other deals.
Any comments on other acquisition opportunities or discussions you have in the market?
As we have said before, we have a strong pipeline, and there are different actors that want to sell to us, and we are working and trying to find the deal that is best suited for PPI.
... On that note, there is a question of, on investment strategy. What type of assets are you looking at?
Our investment strategy is very straightforward. We are looking to buy government backed income. We are already today probably the player in Europe that has highest share of its income that is coming from the government. In our case, 92% of our income is coming from the government of Norway, which is probably the strongest credit in the world with triple A rating.
Please comment on your administrative expenses.
Yes, that's a good question. In the first half year, we had an income from managing properties not owned by the group. That actually has to be reduced, the administrative expenses, and we also have non-recurring expenses among the administrative costs for preparation of the IPO and converting to IFRS. If we adjust for these effects, administrative expenses is NOK 17 million in the first half year, and approximately 5% of the rental income.
Okay, this is a Norwegian question, so I'll translate. "So how do you look at the market going forward in general?
The real estate market has started to slightly improve. The financing is readily available. Capital markets are open. So we see that. We also see that valuations are bottomed. PPI, all of the decrease in value for PPI was for the first quarter. Our second quarter was flat on valuation.
Do you expect a further write-down of your properties in the third quarter?
No, rather, rather the opposite. We are expecting that we have seen bottom on valuations, and we also see signals on decreasing interest rates. That means also decreasing financial cost, and that means also positive effect on the valuation in long run.
Can you elaborate on run rate figures relative to what you guided on at the IPO?
Yeah, it's the same as in the guidance before the IPO, and we have a very stable business.
Wonderful. What is the rental income for Q2, for example, in terms of how much the SBB portfolio accounts for?
Yeah. The properties acquired from SBB had a rental income of NOK 17 million in May and June, and we will have a full effect in the coming quarters. And for the next half year, the rental income from these properties will be NOK 49.5 million.
Great. Let's see. What is actual market rent on the portfolio relative to your reported NOK 1,872 per BTA or gross area?
Our market rate on our rents is significantly higher, and I can just give you an example. We, in the beginning of this year, we prolonged our lease with OsloMet just outside of the Gardermoen Airport, for those of you that are not from Norway. And in that case, our final rent to the government and to the university was slightly below NOK 2,000 per square meter. Replacement cost or the market rents that the university should need to pay in the case that they choose a new building will be about double of that. That means NOK 4,000.
Our rents are probably at levels 50%-60% below market on average.
The final question: How much committed CapEx for 2024, and what is already accounted for in the first half year of that?
Historically, this type of assets, we have 0.4-0.5% of the property value that will be CapEx. And it's basically value created CapEx. In this case, we bought some properties from SBB in the first half of year, and one of those is Anton Jenssens gate. And there, we have slightly larger investments that is also creating opportunity for two public tenants to move in. So, that is really value-creating investment. And I think the total investment was NOK 86 million. We have probably NOK 20 million left for the second half of the year.
When this is finished, probably in Q4, we will get two new public tenants at long leases.
Thank you. That's all we had. Thank you for joining us, and have a great summer.