Good morning, everyone, and welcome to PPI's presentation of our first quarter in 2025. My name is André Gaden, CEO of PPI, and together with me to present the results is our CFO, Ylva Göransson, and our CIO, Ilija Batljan. If we first look at today's agenda, we will go through some highlights for the quarter, then move on to operations, and Ylva will go through our financials before we give our summary and concluding remarks. We will end the presentation with a Q&A session. Let's first look at some highlights. Going into 2025, we have continued to deliver on our growth ambitions. We have closed four transactions in the first quarter and taken our first steps outside Norway by entering the Finnish and the Swedish markets. Additionally, we have maintained solid operations and further improved our credit margins.
In the quarter, our rental income came in at NOK 205 million, an increase of 38.5% from the same quarter last year. Our net income from property management amounted to NOK 92 million, which is up from NOK 52 million same quarter last year. If we then look at our estimated run rate, net income from property management per share, we increased with 9.4% from NOK 1.59 to NOK 1.74 in the quarter. This is mainly due to transactions and better financing terms. We also see positive portfolio value changes in this quarter with an increase of NOK 71 million, and our property management team signed leases with an annual rent of approximately NOK 28.3 million. It's also been another busy quarter when it comes to our transactions. Five new properties have been included in our portfolio in the first quarter, adding almost 21,000 sq m to the portfolio.
In addition, we have notified six transactions so far in the second quarter, of which one is a large transaction with Aker that includes eight properties. These eight properties will be the beginning of a new segment in PPI, critical industrial infrastructure properties. Let's look at some portfolio highlights. By the end of March, our portfolio includes 77 properties with a total BTA of 415,000 sq m. Our assets are mainly social infrastructure properties, where 92% of our income is backed by the government. We have maintained a high occupancy of 97%, and our WAULT continued to improve due to new properties and letting, and increased from 5.1 to 5.6 years. Our normalized gross rental income is currently NOK 823 million, up from NOK 774 million in the fourth quarter. Our average rent per sq m increased slightly to just above NOK 2,000.
The portfolio value stands at NOK 11.7 billion, up from NOK 10.9 billion, and the portfolio yield is currently 6.4%. Our EPRA NRV per share is calculated at NOK 28, which is up from NOK 27.2 in the fourth quarter. Let's move on to operations. In the first quarter, our property management team signed leases with an annual rent of NOK 28.3 million, covering almost 15,000 sq m. Our occupancy rate remained strong at 97%, and we improved our WAULT to 5.6 years, mainly due to the new properties and letting. Our largest signing for the quarter is a 10-year lease renewal with the Courts of Norway for 5,600 sq m in Skien. We have also signed a new 10-year lease with the tax agency in Tønsberg. They will temporarily move out after summer and stay for one year in Olav Tryggvasons gate 4 [guess] before they move back in.
Another contract that also was signed with the tax agency was in Leikanger, and that was a renewal of 2,000 sq m for five years. Our net letting came in slightly negative as a result of Kristiansand Kommune has decided to move out of the remaining area in Gylden Gården in Kristiansand. Their contract will expire in February 2026. For the last 12 months, our net letting is positive by NOK 14.1 million. PPI is building a Nordic presence. We have acquired a preschool in Sweden with long WAULT and attractive yield in the first quarter, and acquired four very centrally located and attractive properties in Finland, which Ilija will get back to shortly. We are, as such, in process of building Nordic presence.
We find the Finnish market very attractive as we are currently closing attractive transactions on very central locations with a yield gap of 250-300 basis points. During the last decade, a total of 41 institutional investors have been active within the social infrastructure market in Finland, and the total transaction volume amounted to approximately EUR 8.8 billion. Special investment funds, who accounted for nearly 25% of the volume during the past decade, are still facing divestment pressure due to ongoing redemptions, very similar to the syndicate market in Norway. More traditional investor groups also continue to be inactive, though it is a very limited buyer universe and attractive properties and projects that are available at high yield gap. I believe the word to Ilija, who will take you through our transactions.
Thanks, André. Let us go to the next slide that is describing our growth delivery. As André said in the beginning of 2025, we became a real Nordic business by establishing PPI both in Sweden and Finland. Another important point that characterized the first few months of 2025, including first quarter, is our strong focus on Bergen, which is the second largest city in Norway, and Helsinki, which is the capital of Finland. If you look at this slide, you will see the transactions that we did in the first quarter. In total, we increased our rental income with NOK 68 million on a 12-month running basis through transactions in Q1.
If you look then at the next slide showing the transactions that have been executing after the end of Q1, you will see a strong focus on long leases, and in total, those transactions will deliver an increase in rental income of NOK 108.5 million. That means NOK 68 million in Q1, NOK 108.5 million in Q2. Let me now, on the next slide, describe the milestone transaction that has been announced a few days ago, where Aker makes strategic investment in PPI and where also at the same time PPI acquires a NOK 1.5 billion portfolio of critical industrial infrastructure assets. Aker is investing in PPI NOK 2.3 billion, and for that, PPI is issuing NOK 124.4 million new shares in PPI. Price per share was set at NOK 18.69 per share. Of those NOK 124.4 million shares, Aker has agreed to transfer the right to those shares to SBB.
That means after the transactions, if you look at our capital structure, SBB will have 33.5% of the shares in PPI, and Aker Property Group becomes PPI's second largest shareholder with approximately 24.6% of the outstanding PPI shares. For those of you that are not from Norway, let me just say a few words about Aker before I go to describing the property portfolio that PPI is buying. Aker ASA is one of the Norwegian blue-chip companies. This is an industrial investment company that develops robust businesses and exercises active ownership to create value for shareholders and society at large. Aker has been founded in 1841. The company combines in-depth industrial competence with capital market expertise and financial strength. Aker invests actively along key global megatrends with significant potential for growth and profitability, and we think that PPI is a very good match for this focus.
PPI's focus on, among others, trends in aging society and long leases for social infrastructure, combined with this new segment of critical industrial infrastructure assets, are in line with global megatrends. If I go to the next slide and look at the portfolio, you will see that we are buying 150,000 sq m real estate and 870,000 sq m land in strategic location coupled with mission critical infrastructure. You will also see that those assets are 100% let to solid tenants. The leases are triple net contracts. We have a 15 years WAULT and NOI yield of 7%. The total increase in income will be NOK 106.5 million, and on top of that, we will acquire potential for two small planned development projects with additional NOK 11.2 million in income. Just to sum it up, in Q1, we increased income on a 12-month rolling basis with NOK 68 million.
From transactions in Q2, in the beginning of Q2, we continue to increase income with NOK 108.5 million. Some of those properties will be finished in 2026. However, the rental income on a 12-month rolling basis is NOK 108.5 million. On top of that, we are, through the Aker transaction, increasing our rental income with NOK 106.5 million, plus development potential with increased income of NOK 11.2 million on a yearly basis. All in all, we are continuing to deliver very strong growth through transactions. I will stay there, and I will give the floor to our CFO, Ylva Göransson. Ylva, please.
Thank you, Ilija. As you can see on this page, our rental income was NOK 205 million in the first quarter, representing an increase of 38% compared to the same quarter last year. This growth reflects strong occupancy rate, index-linked rent increases, and a contribution from acquired properties. The five properties acquired in the first quarter contributed to an increase in rental income with approximately NOK 11 million. Net income from property management was NOK 92 million, an increase of 78% compared to the same quarter last year, showing a strong underlying operational performance for PPI. Our EPRA NRV per share is increased to NOK 28, reflecting a continued improvement of the underlying retained earnings. The next page shows our P&L, and I jump down to the net operating income, which came in at NOK 189 million compared to NOK 128 million in the same quarter last year, a 48% increase.
Our NOI margin was 92%, slightly above our guidance, but this is mainly due to the rate of maintenance performed in the first quarter. Administration expenses amounted to NOK 26 million in the first quarter. These administrative expenses include some one-offs associated with PPI's adoption to the structure and systems. However, these expenses were offset by reimbursed property management of NOK 5 million, giving us a net administration cost of NOK 21 million. Net realized financials were NOK 76 million in the quarter. As I mentioned, net income from property management increased significantly to NOK 92 million from NOK 52 million in the first quarter last year. This is an improvement of 78%. Net unrealized financial expenses amounted to NOK 47 million in the first quarter, mainly a positive effect due to exchange rate effects for our bond loan in EUR.
Value changes in investment properties had a positive impact on net profit of NOK 71 million compared to a negative effect of NOK 273 million in the same quarter last year. Net profit for the quarter was NOK 161 million compared to a net loss of NOK 219 million in the same quarter last year. We can go to the next slide and have a quick look at our balance sheet. By the end of the first quarter, the value of our portfolio was NOK 11.7 billion, up from NOK 10.9 billion in the last quarter. This change is mainly a result of acquired properties, which had a book value of approximately NOK 736 million by the end of this quarter. Notice that one of the acquired properties in Finland is under construction and will be finished by the end of 2026.
The value of this building is based on completion stage and amounts to NOK 58 million. Like-for-like change from the first quarter last year to this quarter is 2.2%. As earlier, all our properties are valuated by an external appraiser. The net yield of our management portfolio was 6.4% by the end of this quarter. Investments in our properties amounted to NOK 9 million in the quarter for our Norwegian properties. In this quarter, we issued two new bonds under our EMTN program with a three-year maturity. The first was a SEK 250 million bond priced at three-month STIBOR plus a margin of 174. The second was a NOK 200 million bond priced at three-month NIBOR plus a margin of 175. These placements demonstrate continued access to the Nordic capital markets and a strong investor demand in both Sweden and Norway.
In the quarter, we have also prepaid NOK 485 million of bank loan releasing pledged assets. Our gross interest-bearing debt at the end of the quarter was NOK 6 billion, and net interest-bearing debt was NOK 5.7 billion, giving us a loan-to-value ratio of 46.6%. Our interest coverage ratio was 2.1, and our net debt-to-run rate EBITDA is 8.6x . I will come back to this later in this presentation. On the next page and on the chart to the left, our maturities of our interest-bearing debt are illustrated. Debt maturing in 2025 totals approximately NOK 288 million and will be repaid with cash on maturity. Our average debt maturity is slightly reduced from 4.4 years to four years, mainly due to the issue of the two new bonds with a three-year maturity.
As the company and our asset portfolio continue to grow and assisting debt facilities reach maturity, we will actively pursue funding with longer tenors. Our long-term objective is to maintain a weighted average debt of more than five years. Our average interest rate has decreased from 5.18% to 5.05%. It continues to trend downwards, reflecting improved financing terms. The share of fixed-rate debt remains high at 88%, slightly down from 90%, but still ensuring stability in interest payments. Unencumbered asset ratio has declined from 2.45x to 2.21x , but remains at a strong level supporting our financial flexibility. Looking ahead, we will continue our efforts on lowering our margin curve. Given our solid financial position and BBB credit rating, we see significant potential for further lowering our financing costs.
PPI remains focused on pursuing growth while maintaining our financial policy targets, including low leverage and a net debt-to-EBITDA ratio below 9x . We can go to the next page and have a look at our normalized annual run rate. All these figures refer to the property and debt portfolio by the end of the first quarter. We expect rental income of NOK 823 million based on the properties owned by the end of March. Our property expenses are expected to be approximately 10% of rental income, resulting in an NOI of NOK 736 million. Our normalized administration expenses increase slightly with the growth of the group, mostly due to the management agreement for Finnish properties. Reimbursed property management fee is reduced due to a termination of the management agreement with Nordicus.
After deducting expected net administration expenses of NOK 73 million, the run rate EBITDA is expected to be NOK 663 million. Net financial expenses for the existing debt portfolio at the end of March are calculated at NOK 290 million, leading to a net income from property management of NOK 373 million. This corresponds to a net income from property management of NOK 1.74 per share, representing an increase of approximately 9% since last quarter. With a strong balance sheet, we expect a net debt-to-run-rate EBITDA ratio of 8.6x . Now I will hand over to André, who will show you effects of our transactions after the quarter.
Thank you, Ylva. Let's move on to summary and concluding remarks. We believe that we so far can say that we are delivering on the strategy of being a leading consolidator with an opportunistic growth strategy. The graph to the left, it sums up our reported annualized run rate rental income that we have reported since the second quarter in 2024, meaning after the IPO. As you can see from the graph, we have grown the run rate with 19% since the second quarter in 2024. If you include the transactions that have been done in the second quarter this year that Ilija just presented, the top line has grown by 55% when the development projects are completed. We are also working continuously to improve our financing structure and finance margins.
We have obtained a BBB flat rating from Fitch, and we aim for key figures that will be strong enough to potentially defend an upgrade. Our average interest rate at the quarter end was 5.05%, and we see potential to continue to improve our credit margins and average interest cost. To summarize, we have delivered a strong quarter and present strong rental income and margin development. Our rental income increased by 38.5%, and our net income from property management increased by 76% since first quarter in 2024. The transaction activity in the first quarter and so far in the second quarter has been very high. We have acquired five properties in the first quarter, and in the second quarter, acquired four properties and one assisted living services portfolio.
We have signed a milestone transaction, adding a portfolio of NOK 1.5 billion in infrastructure assets, NOK 800 million in cash, and Aker as a new blue chip cornerstone investor. As a consequence, we have established a Nordic presence and will establish a new critical industrial infrastructure segment. Our operations continue to be solid, and we have a stable underlying cash flow. We have signed leases for a total of NOK 28 million in the quarter, covering approximately 15,000 sq m. Our portfolio occupancy stands at 97%, and we have increased our WAULT to 5.6 years. Going forward, we will continue to deliver on our strategy of being a leading consolidator with an opportunistic growth strategy. We still consider the current timing to be very attractive, and we look at attractive market opportunities in all the Nordic countries. We will continue chasing potential for improved credit rating, financing structure, and margins.
We are becoming a dividend company. As earlier informed, the board is proposing a dividend of NOK 0.5 per share for 2024, split in four quarterly payments to the general meeting to be held later on today. Because of everything that has happened over the last weeks, we have decided to postpone the secondary listing process until the second half of 2025. That was all from our side, and we will move on to the Q&A session. Ilija and Ylva, please join me on stage.
We have received quite a few questions, and Ylva, I will start with one for you. The NOI margin in Q1 is higher than the guided run rate NOI margin. Can you give some comments on this and how it will be affected, also considering the properties to be included post Q1?
Yes, our NOI margin is higher in Q1 than our guidance, mainly because the maintenance hasn't started up so far this year. Post Q1 transaction will have a positive effect on our NOI margin because the big arcade transaction is assets with triple net leases.
How will the occupancy rate be affected by the property Otterveien going out after Q2? Is this included in your run rate figures?
Otterveien constitutes for approximately NOK 17 million in annual rent. It is included in our annual run rate for this quarter based on how we have defined the annual run rate.
Can you say something about the risk profile of near to medium-term lease expires, 2025 to 2027? Are there any other significant contracts expiring?
As mentioned in the IPO, we have three expiries in 2025, which is Otterveien, which I just mentioned. We also have the police station in Halden and also a courthouse in Tønsberg that will expire by year-end. Apart from that, we have good progress on all renegotiations in 2025. We also have the same picture in 2026. However, as mentioned in the report, Kristiansand kommune will leave a part of Gylden Gården in February 2026. In 2027, some contracts we have already started to renegotiate and good progress on that. We have a couple of competitions coming up with the police station in Fredrikstad and also the police station in Sarpsborg. Apart from that, I think we have good progress on the leasing part.
When will the Aker properties be consolidated, and when will the development projects here be completed?
The Aker transaction will be consolidated in the second quarter, and the development potential we will continue to work on and probably be finalized in 2026.
The reimbursed property management fee is a bit lower than after Q4, going from NOK 16 to NOK 11. Can you give some comments on this?
Yes, this income is reduced due to a termination of the management agreement regarding the Norwegian Nordicus properties.
A long one on the Aker transaction. You issue 55% more shares for about 13% growth in rental income in addition to NOK 800 million in cash. It is a strong dilution to short-term earnings per share and value per share. How do you expect to deploy your balance sheet in a value-creative manner?
This is a central question for the transaction. If you think that we have pure triple net bear house leases that will deliver clean earnings of like NOK 105.5 million on top of that NOK 11.2 million in NOI from the projects, that is NOK 116.7 million. At the same time, we are taking in NOK 800 million in cash. With those, we should be able to increase NOI with additional NOK 50 million-NOK 56 million, which in total sum it up to NOK 172 million. This is improving our key ratios and giving us opportunity to also leverage this strong equity issue. From that part of the transaction, we are expecting to deliver additional NOK 70 million in profit. All in all, we are expecting NOK 230 million-NOK 242 million, which is, if you look at our earnings capacity from Q4, that was NOK 342 million.
NOK 242 million increase is corresponding to 70%. We are taking in dilution of 55% to increase income with 70%. That means this is a very good transaction for PPI shareholders.
How do you think that Aker's investment will affect your funding costs?
We saw already the first day or two that our credit margins improved, and the improvement, which means decreasing credit margins, was directly with 12 basis points. We are also expecting that our credit rating will improve, and this will continue to be to large benefit to all shareholders.
The administration cost is NOK 26 million in the quarter, an annualized run rate of NOK 104 million versus your annual run rate level of NOK 84 million. Or annualized run rate, this gives NOK 104 million versus your reported annual run rate level of NOK 84 million. Please explain the high level, and is this the actual run rate going forward?
Yes, we have some in first quarter, we have some extra one-offs due to adapting the company to all new structure and systems and so on. We do not expect that to be coming in going forward. NOK 84 million is our best guess for annualized expenses.
Can you elaborate a bit more on Gylden Gården? When will the municipality move out, and what is the effect on vacancy?
Yeah, we can do that. The municipality, they will move out in February 2026. However, as reported last quarter, we have already signed a new lease with NAB of approximately 6,000 sq m. The remaining vacancy in Gylden Gården will be approximately just 4,400 sq m.
You report property value changes of positive NOK 71 million. Can you give some flavor as to where they come from?
Yes. Change from the fourth quarter last year until this quarter for the like-for-like portfolio is approximately NOK 66 million, mostly coming from letting activities. We have in the first quarter a couple of new lease contracts with the Norwegian tax administration and the Courts of Norway giving an effect.
You have stated that the Finnish development projects will yield 6.2% through the development phase. Can you comment?
Yes, it is agreed, a yield of 6.2% of invested capital to be paid monthly. For Q1, we have just a smaller amount of NOK 300,000, because we acquired this school late in March. We are in a dialogue how this will affect our P&L or the balance sheet, and we will come back to that in next quarter.
How are the Finnish properties included in the estimated annual run rate estimate?
Okay, the first acquisition of two schools in Espoo, they are included in our annual run rate, and the Finnish project is not included.
The final question, can you give some more flavor on why you choose to enter this new segment, the industrial infrastructure with the industrial infrastructure properties?
PPI is an infrastructure company. We have historically focused on social infrastructure, and we now see that there is a large need for critical industrial infrastructure. This is our first step. We also are looking at data centers and other types of mission-critical industrial infrastructure.
Thank you very much. That concludes the presentation.