Good morning, everyone, and welcome to Public Property Invest ASA's presentation of our second quarter and half-year report for 2025. My name is André Gaden, CEO of the company, and to present the results together with me is our CFO, Ylva Göransson, and our CIO, Ilija Batljan. Let's first have a look at today's agenda. We will start with some highlights from the quarter before we move on to operations. Ylva will go through our financials before we give our summary and concluding remarks. We will end the presentation with a Q&A session. Going into the second quarter of 2025, we marked our first anniversary as a listed company, and it has been another eventful quarter for PPI. We have continued to deliver on our growth ambitions, with 19 new properties added to our portfolio, eight of them through our milestone transaction with Aker.
We have maintained solid operations while growing, and our occupancy remains high. We have yet again proven our strong standing in the capital markets by successfully issuing our second Eurobond transaction. In the second quarter, rental income came in at NOK 233 million, an increase of 42% compared to the same quarter last year. Looking at our first half-year, rental income grew by 39% compared to 2024. Net income from property management increased by 51% to NOK 160 million from the same quarter last year. Compared to the first half of 2024, the increase was 61% and came in at NOK 208 million. We had positive value changes also this quarter, with an increase of NOK 203 million. We are happy to see that our property management team delivered a strong quarter and signed leases with an annual rent of approximately NOK 40 million.
As mentioned, transaction activity has been high, and we have added almost 200,000 new sq m to our portfolio through the acquisition of 19 properties. Through these transactions, we have issued approximately NOK 2.4 billion in new equity, mainly with the transaction with Aker. In June, we successfully placed a EUR350 million Eurobond with a wide group of international investors. This senior unsecured fixed-rate bond matures in October 2032 and pays a fixed coupon of 4.375%. The average maturity of our long-term debt now stands at five years, and the average interest rate by the end of the quarter has improved to 4.97%. As a result of new bond issues and capital increase, our balance sheet by the end of June includes NOK 4.8 billion of cash. Let's move on to portfolio highlights.
By the end of June, our portfolio includes 96 properties with a total BTA of 613,000 sq m. In terms of rental income, 90% of the assets are mainly social infrastructure properties that house functions of essential importance to society, and where approximately 90% of the income is backed by the government. The remaining 10% of our portfolio consists of eight critical industrial infrastructure properties that were acquired in this quarter from Aker. These properties are characterized by solid counterparts, long lease contracts, and stable cash flow, similar to our social infrastructure assets. For the total portfolio, our share of rent backed by government budgets summarized to 80%. The portfolio also includes a substantial development potential. After our screening of the portfolio, looking into existing zoning plans, risk, and potential for the properties, we have estimated a total gross development potential of 270,000 sq m.
I will come back to that a little later in the presentation. Normalized gross rental income is now slightly above NOK 1 billion, up from NOK 823 million in the first quarter. Average rent per square meter dropped from just above NOK 2,000 to NOK 1,757 per square meter, mainly as a result of the acquisition of the industrial portfolio. Portfolio occupancy has increased to 98%, and the vault continued to improve. As a result of new properties and re-letting, the portfolio vault has increased from 5.6 to 6.8 years. The total portfolio value has increased to NOK 14.9 billion, up from NOK 11.7 billion in the end of last quarter, and the portfolio yield is currently at 6.5%. EPR NAV per share is calculated at NOK 24.5. The second quarter was strong when it comes to our letting activity.
Our property management team signed leases with an annual rent of NOK 39.8 million, covering almost 23,000 sq m. Our occupancy rate improved from 97% to 98%, and we improved our vault from 5.6 to 6.8 years, mainly due to the new properties and the letting. Our largest signings in this quarter were renewals of the Norwegian Welfare and Labour Administration in Bodø, a renewal of the police in Søbardkvartalet in Sandefjord, and a renewal with the Norwegian Tax Administration in Skien. We also prolonged one contract with the municipality in Bergen, in Damsgårdsvegen, a property that we acquired in the first quarter. The remaining expiring contracts for 2025 now mainly consist of the earlier announced expiry in Otervegen, where Statistics Norway will move out in July, the police in Olav Vs gate in Halden, and the courthouse in Anton Jenssens gate 9.
Net letting came in positive with NOK 1.7 million in the quarter, mainly due to new letting in Karl Gulbrandsen's gate in Namsos, which had been vacant for a long time. We also did a new short-term contract in Otervegen. For the last 12 months, our net letting is positive by NOK 15.3 million. PPI is a full property house with all the necessary functions in-house and has a strong and experienced organization in place that also covers project and development. On this slide, you can see our largest ongoing projects. To the left are our, at the moment, two largest projects in the Norwegian portfolio. GyllenGården is under refurbishment as a result of the new contract with the Norwegian Labour and Welfare Administration. In Anton Jenssens gate 8, we are building new offices for the Norwegian Tax Agency.
Both projects will be completed early 2026, and the tenants have signed new 10-year leases on both properties. To the right, you can see our Finnish projects, Metallum and Maurinkatu, both located in attractive parts of Helsinki. These properties are going through extensive redevelopment, which also includes new sq m. Both projects are without any project risk for PPI and will pay yield on investor capital under the construction period until they are completed in the end of 2026. We are also working actively with creating value-add potential to our existing portfolio. As you can see to the left, we have close to 30,000 sq m of zoned area that is ready to be utilized. In addition, we have three major ongoing zoning processes, which are Otervegen in Kongsvinger, Statens Park in Tønsberg, and Fuktsgata in Moss.
The combined potential for these projects summarized to 57,200 sq m, whereas 25,000 is residential. In this quarter, we have also done substantial work when it comes to screening additional potential within our portfolio. Together with external architects, we have identified a gross potential of approximately 187,000 sq m in connection with our existing properties. As mentioned, one of the development projects that is ongoing is our earlier mentioned transformation of in Otervegen Kongsvinger. Our tenant, Statistics of Norway, will move out of these premises in July this year, and we are working actively with our plans for the existing building, but also to add potential to the surrounding area. Our main target is to transform the existing office building into a nursing home or apartments and add a new generation-friendly neighborhood to the surrounding area.
Nursing homes and residentials adapted to elderly are already a demand and a big concern for Norwegian municipalities, and a concern that will continue to grow going forward. By transforming an existing office building into a nursing home, we can both address the concern of the municipality but also contribute to lower CO2 emissions by reusing the building instead of demolition and new construction. The zoning process is ongoing, and we recently submitted our plan program where we cooperate with the municipality of Kongsvinger, as they are our closest neighbor. We are now in a consultation phase where the local community is invited to provide their comments. I will leave the word to Ilija, who will take you through our transactions.
Thanks, André. As you can see at this slide, PPI is continuing to deliver strong growth in Q2. We started the quarter with acquiring Assisted Living Services portfolio, 16 years average lease term, 100% CPI. Also included in the portfolio are one asset in the central part of Oslo. In this quarter, we also strengthened our position in the Helsinki metropolitan area, among others, by acquiring Life Science property in the Aalto University area in Espoo. Espoo is the fastest growing part of the Helsinki metropolitan area and the fastest growing part of Finland, but also strengthened our position in Bergen by acquiring Nordnesbodene 3-5 and the Åsane Politistasjon .
However, the main, how to say, transaction in the quarter has been a transaction with Aker, where we raised NOK 2.3 billion in new equity from Aker and at the same time acquiring mission-critical industrial infrastructure assets for NOK 1.5 billion. Those assets are 100% lent to solid tenants on triple net lease contracts. Those are 15 years. Leases are 15 years on average. It is full CPI indexation, 7% yield with total rental income of NOK 106.5 million. On top of that, on completion of two small planned development projects, we will have additional NOK 12.2 million in yearly rent, totaling yearly rent from Aker transaction to NOK 117.7 million. The quarter was not ended with the Aker transaction. Before the end of the quarter, we actually acquired a large asset in the Helsinki metropolitan area, EUR 63 million, including, among others, a hospital with a 12-year vault.
As you can see at this slide, after the quarter ended, we were able to strengthen our position in social infrastructure. André pointed out that based on the effect from Aker transaction, our exposure to government income has decreased to 80%. With the transactions done after Q2 ended, we have increased our government exposure from 80%, 84%, 85%. The main transaction was announced or was closed 1 July, including seven nursing homes for elderly care located in central Oslo and the greater Oslo region, 100% lent to Skar OMSOR with annual rent of NOK 30 million and with a vault of 35 years. This is a clear step from PPI in a market that will be affected heavily by the mega trend of the ageing population and where we are expecting to be able to continue to grow in this core social infrastructure market.
Just as an illustration, André mentioned in the beginning that we, in Q2, increased the vault from 5.6 to 6.5 years. If you add on top of that the leases that we acquired after the end of the second quarter, we are probably now touching the average length lease of longer than eight years. I think I will stay there on transactions and give the floor to our CFO, Ylva Göransson.
Thank you, Ilija. Let's start with the financial highlights for the second quarter. Rental income for the second quarter reached NOK 233 million, representing an increase of 42% compared to the same period last year. The increase is mainly driven by CPI and acquisitions. During the second quarter, 19 properties were acquired, contributing with NOK 26 million in additional rental income in the quarter. Net income from property management reached NOK 116 million, up 51% year-on-year, reflecting our strong underlying operational performance. Our EPR NAV per share has declined to NOK 24.5, but the reduction is due to the increase in the number of outstanding shares used in settlement in transactions, particularly the Aker transaction. The reduction is also connected to allocated dividend of NOK 0.5 per share. On the next page, it shows our P&L for the quarter and year to date.
As mentioned earlier, rental income increased significantly to NOK 233 million in the second quarter, up from NOK 164 million in the same period last year. For the first six months, rental income was up by 40% to NOK 438 million. Net operating income amounted to NOK 213 million in the quarter, a solid improvement with 41% up from NOK 151 million in the same quarter last year. Our NOI margin was 91.4% in this quarter, still slightly above our guided run rate, but this is mainly due to the timing of maintenance activities so far this year. For the first six months, net operating income was up 44% to NOK 402 million compared to the same period last year. Administration expenses amounted to NOK 24 million in the second quarter, reflecting a larger portfolio, higher activity, and the establishment of outsourced management for the Finnish portfolio.
However, these costs were partially offset by a reimbursed property management fee of NOK 4 million, resulting in net administration expenses of NOK 20 million. Net realised financials amounted to NOK 77 million in the quarter, and this includes interest income from capital invested in our two Finnish projects in Finland, generating 6.2% yield during the construction period. Net income from property management was up by 51% to NOK 160 million compared to the same quarter last year, and by 61% to NOK 208 million for the first six months of 2025. Net unrealised financials amounted to -NOK 88 million in the second quarter, mainly driven by a negative exchange rate for the bond loans in Euro. Year to date, net unrealised financials amounted to -NOK 41 million.
Value changes in investment properties had a positive impact on net profit of NOK 203 million in the quarter and NOK 273 million year to date. The positive changes are mainly driven by the progress of the two Finnish projects. Profit before tax came in at NOK 221 million in the quarter, compared to NOK 13 million in the same quarter last year. Year to date, profit before tax was NOK 430 million, up from NOK 203 million in the same period last year. We can go to the next slide and have a quick look at our balance sheet. By the end of this quarter, the value of our portfolio was NOK 14.9 billion, up from NOK 11.7 billion in the last quarter. Change in the like-for-like portfolio from Q2 last year to this quarter is 3.1% and is mainly driven by CPI and extension of leases.
The net yield of our management portfolio was 6.5% by the end of the quarter. Investments in our Norwegian properties amounted to NOK 33 million in the quarter and NOK 144 million in the Finnish projects. Total investment year to date for the group was NOK 225 million, whereas the Finnish projects constitute NOK 183 million. On the finance side, we issued another NOK 200 million and SEK 550 million in the two bonds originally issued in the first quarter of this year. In late June, we also issued a new EUR 350 million unsecured Eurobond under our EMTN programme, maturing in October 2032. Gross interest-bearing debt at the end of the quarter was NOK 11 billion, and with NOK 4.8 billion in cash end of quarter, net interest-bearing debt was NOK 6.2 billion, giving us an EPR loan-to-value ratio of 44.1%.
The cash holdings by the end of June provide us with the flexibility to both continue our growth journey and to reduce debt. The 12-month rolling ICR stands at 2.2, and in the second quarter, the isolated ICR was 2.5. Our most important debt metric, net debt to EBITDA, is solid at 7.8x as of the end of June. On the next page, the chart to the left illustrates maturities of our interest-bearing debt, showing a well-distributed profile. Debt maturing within the 12 coming months is NOK 288 million and will be repaid with cash at maturity. After the quarter ends, Public Property Invest ASA has established a revolving credit facility of NOK 700 million with Nordic Banks. This strengthens our liquidity buffer and improves financial flexibility going forward. The weighted average debt maturity has increased to five years, up from four years by the end of last quarter.
The average interest rate has further decreased from 5.05%- 4.97%, reflecting improved terms in our latest financing arrangements. Our share of fixed interest rate remains solid at 70%, providing continued predictability. The decrease from 88% in Q1 is driven by the addition of three cross-currency swaps based on NIBOR and STIBOR. The unencumbered asset ratio is improved to 2.6x from 2.2x . As mentioned earlier, the loan-to-value is reduced to 44.1%, and the ECR is improved to 2.2 times. The net debt to EBITDA is reduced to 7.8x . All in all, we have strengthened our balance sheet and extended debt maturities, while at the same time lowering our financing costs. Our key metrics continue to trend positively. PPI remains committed to maintaining our financial policy, and most important, keeping the net debt to run rate EBITDA below nine times.
The next page presents our normalised annual run rate. We expect annualized rental income of NOK 1,033 million based on the current property portfolio as of the end of June. To relate what André Gaden spoke about earlier, the property Otervegen in Kongsvinge will reduce rental income by NOK 20 million from the next quarter. On the positive side, recently announced acquisitions will contribute with an increase of NOK 35 million, resulting in a net rental uplift. Property expenses are expected to be around 10% of rental income, giving us an anticipated NOI of NOK 931 million. Normalised administration expenses are increasing as the group grows, particularly due to the growth in the Finnish portfolio and the external management agreement for this portfolio. However, administration is still offset by a reimbursed property management fee, resulting in a net administration expense of NOK 86 million.
The run rate EBITDA is, as a result, estimated to NOK 844 million. The net financial expenses are estimated at NOK 279 million. This figure includes interest income from our Finnish properties currently under construction. These will generate a net yield of 6.2% of invested capital and will be reported as interest income until completion. The new EUR 350 million Eurobond is not put into work and is therefore not included in the run rate calculation. Based on these assumptions, we expect net income from property management of NOK 565 million, which equates to NOK 1.64 per share. With our strong balance sheet and solid operational performance, the net debt to run rate EBITDA ratio is estimated to 7.8x . That was all for the financial part, so now back to André for concluding remarks.
Thank you, Ylva. Let's move on to summary and concluding remarks. This timeline highlights significant milestones in PPI's journey since the IPO on the 29th of April 2024. In connection with the IPO, PPI acquired 13 properties from SBB, resulting in a property portfolio of close to NOK 10 billion. Through the IPO, PPI raised NOK 2.8 billion in equity and a refinancing of the existing debt in the company. In addition, the full Norwegian SBB organization was transferred to PPI, moving the company away from a syndicate structure to a property company with all the necessary functions in-house. In Q4, we did our first transactions after the IPO, adding approximately NOK 59 million to our annual rent. We also reached an important milestone by achieving a BBB investment grade rating from Fitch and established our EUR 2 billion EMTN program. Shortly after, we issued our first EUR 300 million bond.
We also added NOK 0.1 billion in new equity through transactions. Our transactions activity continued also into the first quarter of 2025, adding five new properties and NOK 68 million to our annual rent. In this quarter, we took our first step outside Norway and acquired properties also in Finland and Sweden. We also issued two new unsecured three-year bonds in NOK and SEK, with additional TAP issues later on. In this quarter, we have added another 19 properties to our portfolio through seven different transactions. We have added close to 200,000 sq m and NOK 270 million in annual rent. We have raised NOK 2.4 billion in new equity that was mainly as a result of the Aker transaction. On the financing side, we successfully issued a EUR 350 million, 7.3 years unsecured Eurobond in order to further improve our financial structure.
As a result, the run rate rental income has increased by 75% from NOK 590 million pre-IPO to the current level of NOK 1,033 million. This slide sums up the growth journey that we have been through since the IPO. The run rate rental income has increased by 49% from NOK 692 million to NOK 1,033 million in one year, and the run rate EBITDA has increased by 46% from NOK 575 million- NOK 844 million. Completion of ongoing development projects will add another NOK 80 million in rental income, and with the current balance sheet with NOK 4.8 billion in cash and relatively low LTV, we have an investment capacity to add further growth. To summarize, we have delivered a strong quarter and first half year and present strong rental income and margin development.
Rental income was up by 42% in the second quarter of 2025 and by 39% in the first half compared to the same period last year. Net income from property management was up by 51% this quarter and 61% first half of 2025. We have also increased our cash flow from operations from NOK 162 million in the first half of 2024 to NOK 384 million in the first half of 2025. Our operations continue to be solid, and we have a stable underlying cash flow. In the quarter, we have delivered high letting activity by signing leases of NOK 39.8 million in annual rent. Our portfolio occupancy has increased to 98%, and we have increased the vault to 6.8 years, up from 5.6 years in the last quarter.
In the first year as a listed company, we have delivered on our strategy to be an operator, manager, and developer of social infrastructure properties, supporting government in the Nordics to fulfill their social mandate. We have taken the role as a leading consolidator in the market by delivering value-accretive transactions. In our first year, we have acquired 48 properties totaling over 300,000 sq m and established a Nordic presence. We have raised NOK 5.3 billion in new equity over the last 15 months, fully refinanced our balance sheet, and obtained a BBB investment grade rating. We have also started to pay dividends for the first time now in July 2025. That was all from our side. Ylva and Ilija, please join me on stage for the Q&A session.
We will move over to the Q&A session, and I will start with a question for you, Ylva. How much of the forex position on the euro-denominated bond debt is now hedged?
That's a good question. By the end of June, EUR 150 million of the new EUR 350 million Eurobond is hedged, and EUR 100 million is hedged from the bond issued in December. If you include natural hedge from our Finnish portfolio yielding in euros, the hedge ratio of total euro exposure at maturity is approximately 72%. This is with completed projects in Finland. When it comes to interest payments, more than 70% of our interest payments are hedged, and this includes then natural hedge from our Finnish portfolio.
André, the small lease you mentioned in Otervegen 23, is this for the whole building after SSB is moving out? What is the duration on the lease?
No, this is a quite small lease of approximately 500 sq m, and it's short term and has the flexibility that we need in order when we are in the process of developing the building that we are right now.
What is your plan for the large amount of cash on the balance sheet following the last Eurobond issue?
Yes, the large amount of cash will be used to a mix of repaying debt and new investments. While we are working with this, we will keep net debt to EBITDA below 9x . It's our most important key figure. Current net debt to EBITDA is 7.8, so there is further investment capacity within our current capital structure.
You have grown significantly over the last year. What's next? Will we see further growth in the infrastructure segment?
Our strategy is to be a sustainable owner, developer, and operator of social infrastructure properties with tenants that are backed by the government. That will also be our main focus, growing the company forward. We will also look at opportunities in all the Nordic countries.
On that note, Ilija, how do you see the transaction market and the deal pipeline going forward?
We see that there are good opportunities both in Norway in the syndicate market, but also in Finland, where many mutual funds are struggling with their balance sheets. We have a decent pipeline and are expecting to announce a few more transactions already after the summer.
Are you focusing on Norway, Sweden, and Finland, or are you evaluating other countries as well?
Norway is our main market. However, we have been very active in Finland. We do see more opportunities in Finland. We are looking at some deals in Sweden. As Yiva said before, the Nordics is the best market for social infrastructure. However, we have both knowledge and capacity to go outside the Nordics.
The new industrial segment, is this also to be considered a pan-Nordic segment of strategy?
It is always difficult. I mean, if you look at that, we bought Egersund. It is amazing real estate controlling 500,000 sq m of very important mission-critical infrastructure. If we find that kind of assets outside of Norway, we will be happy to look at that.
Will there be full run rate in rental income for Q1 2027 from the development projects in Finland?
Yes, the Finnish project will be completed by the end of 2026 and will provide full rental income from the first quarter of 2027. During the project period, these projects will provide a yield of 6.2% of capital invested, and this will be reported as interest income.
What is the plan for further dividends, and what is the dividend estimate for the second half of 2026?
Our general meeting determined a dividend of 0.5% per share for 2024. It's too early to predict anything for 2025, but PPI, we have a long-term stated ambition to pay out 60% of cash earnings.
What is the status of the secondary listing process in Sweden?
As you know, we have been quite busy with transactions in this quarter, so that process is postponed.
Thank you very much. That concludes the Q&A.
Thank you.