Good morning, everyone. This is Henrik. This has been a quarter that no one of us has experienced before. It has meant a lot of work for us in the group, but I can proudly today say that we have shown that Castellum stands strong under these tough circumstances and have delivered. I'm today sure that we will also deliver growth in 2020. We will start this presentation with giving you a view of the report as well as the market. Next slide, please. The situation right now is that you know that we are active in three countries. Three countries that have different regulations, laws, and support from governments. Denmark and Finland that are more or less domestic open now, but hasn't opened the borders 100% yet.
Sweden, that has taken another path and have all the time been more open than the most of the countries. We can see that our customers are paying and so far not in the need so much of aid that we was expecting from the beginning. This together with a fantastic job done by team in Castellum and the shape of the portfolio meant that we could perform well even under these special circumstances. The short version of this report is simply this, that all rents are more or less collected. We have achieved 9% growth in cash flow, and the cash flow has been built up with a lot of work from income side, but also through decreases in the cost side.
We today reached the goal of our cost savings programs to simply decrease cost by SEK 100 million during three years, the last year has stand for 40% of that. We have also achieved 8% on NAV grwth, the net lettings have been strong, with effect from the last big contract with the government. Even out of that, without that, the net leasing is better than last year in all lines. Even if the investment volume is not that impressive for the quarter, we have started new developments for approximately SEK 3 billion. That's extremely important in the future. All this together resulted in a decrease of the LTV down to 43%. On top of this, we have been active, started new construction, as was mentioned, for SEK 3 billion. We are starting the buyback program and a climate neutral program to reach neutrality in 2030.
As well as then started construction of one of the largest solar cell projects in Europe. With that said, I think we'll go back to the report, please. Next slide, please.
The TML, I will not go through every detail in this slide, but to summarize, the first six months can be summarized in an increase in income from property management with 9%, 10% isolated quarter. That is mainly due to renegotiations made earlier and CPI uplift, which has increased rental values, continued cost efficient control, and lower funding cost. The small unrealized change in property values on a portfolio level, mainly driven by project gains and better cash flow. On top of that, a realized change in value due to transactions made earlier. A negative change in derivatives, mainly due to lower market interest rates. Finally, a tax of roughly SEK 364 million, of which SEK 80 is paid. To finish, finally, low impact so far due to COVID-19. Let us dive into the rental income and cost on the next slide, please.
The like-for-like portfolio stands roughly 8% of the growth of the 9%. The big contributor is, as I just mentioned, rental growth, cost control, and lower funding cost. Looking into the rental growth, the average increase in like-for-like is 3.8% and consists of CPI of roughly 1.7% and made renegotiations with an average increase of 15%. However, high vacancies and incentives mitigate that growth with 0.8%, meaning a rental income growth of 3% net. Worth mentioning, looking into this number, is that Castellum has given roughly SEK 14 million in incentives under the Governmental Rental Support Aid Program. Of that, the government will compensate the landlords and Castellum with 50%, meaning that we have accounted SEK 7 million in incentive costs this second quarter. If we adjust for that, the like-for-like growth is 3.2%. The expenses have also moved in the right direction.
In like-for-like, it's down 2.8%. We have to have in mind that this first half year we had really high property taxes due to taxation last year. If we adjust for that real cost development in like-for-like is lower cost with 7.5%. Finally, the funding cost. It is 10 basis points lower in average, and that has contributed with SEK 70 million. A part of that is, however, mitigated by increased debt volume. Let us go to the next slide, please, and mention something about COVID-19 on Castellum. When we released the Q1 report, we had a knowledge of the payment part and its pattern for Q2 rents. At that point in time, 96% of the rents was paid as normal. 4% were outstanding that we had to have discussions with regarding need of liquidity help.
The 4% had one thing in common, if I should simplify the picture. Apart from needing help, of course, it is that they almost all can be found in the service sectors such as hotels, restaurants, traveling, leisure, retails, et cetera. The reason the numbers was not bigger is that our exposure is so little. Looking into the 4%, it is now down to 1%, meaning that we have got roughly 99% of the Q2 rents paid. As we see now, the rents for Q3 will follow the same pattern and share payments. With that said, we are humble and would not be surprised if it gets worse in Sweden and the world for some time of businesses before it gets better. The liquidity help we're giving so far is mainly going from quarterly to monthly payment.
Today we have helped roughly 230 tenants with a quarter rental value of SEK 110 million. To give you a reflection, Castellum have a tenant base of 6,000 clients. Of that help, one-third, you could say, is already back on normal invoicing rules, and two-third we have said that we will help them going into Q3 and in some cases Q4. On top of that, we have given the government a rental aid program with SEK 47 million net cost for Castellum. As you all know, COVID-19 hits everyone. It's more a question of how and the magnitude. The logistic warehouse is doing really, really well in the tenant base. Among other things due to increased e-commerce shopping, and public tenants had increased demand for new premises before COVID-19, and we experience that is the same.
Regarding offices, there are at the moment no big discussions, but we experience that companies, CEOs or boards, or what you would say, are trying to understand what will be the new normal regarding offices. Less offices due to working from home more, more offices, but smaller ones and on different locations. More office space with own desk and spaces between desks is needed. Therefore, we can say that offices at the moment are on, you could say, hold. Retail and hotels have had tougher time, as everyone knows and fully understands. Our view is that the COVID-19 hits very differently. Depending on how long this will go on, of course, the impact can be broadened, and we will get back to that when we talk of property valuation. Now to the market. Next slide, please.
Thank you. Going into the rental market. First of all, from a Castellum perspective, this net leasing we have on the half year and the quarter was very strong. I said very strong with SEK 200 million. That was of course, a result of leasing out to E.ON's headquarters in the first quarter and the government in the second quarter. That stands for approximately SEK 150 million. Even excluding that, we can conclude that this quarter has been better than the last years. We have had a good activity and good results of that activity. The net leasing from the existing portfolio, excluding all projects, was surplus and we signed more contracts than the last Q2. We have no bankruptcies at all the last quarter, simply strong.
We expect to include even more government contracts in the short-term basis, but we'll come back to that in the next reports. The next slide, please. If you look at the rental market, we can now see in the market that activity increases in the office market. The market levels are still in the same levels that before the pandemic. As you've seen, the gross volume in the leasing are intact for us. In the office market, they're also benefiting now from the increasing of investment volume from the government side. The logistics market, as Ulrika mentioned, the activity is strong and stronger than historical, driven now by expansion into the market towards e-commerce. The shopping is now moving into our logistics sector for real. The rents are stable to growing and in the most attractive locations for e-locations.
You can ask yourselves, are the markets the same? Of course not. In the short term, looking back for the last crisis, Stockholm CBD and Kista have been the only real volatile markets and towns. Towns like Örebro, it's the opposite, where it's actually hard in the aftermath to see the difference of the pricing after crisis. My point is that our portfolio have a very good resistance in a market like this. The next slide, please. Going into something else. The first to be hit in a crisis like this is the short-term contracts, and therefore it's extremely important for us to see the development in our co-working company, United Spaces. This is also our test arena for new technical solutions.
Far, we can conclude that approximately 12% of all members are using the spaces on a daily basis, and that we have approximately 85% of the total income still contracted. On top of that, of course, all meetings have been canceled, then 15% disappears of the income overnight. Since we are certain that this type of business will be the first to benefit from the recovery in the market, we continue to invest. We invest right now in four new sites in Uppsala, Helsingborg, and expand in Stockholm and Gothenburg. Then back to the balance sheet, please, Ulrika.
On the next slide. The balance sheet of Castellum is strong. The LTV is on 42.9%, while the net debt-to-EBITDA is down on 9.9. This together with a strong cash flow makes the company very good positioned. The valuation yield on portfolio level was unchanged on 5.1%. The NAV depends on how you do your calculation. When we tend to look at the EPRA NAV, the long-term net asset value, and that was landed in SEK 199 per share. The balance sheet leads us into thoughts about the valuation, the property valuation that we can see in the next slide, please. Valuation on portfolio level means that we move the value in a positive way with SEK 299 million. The main part is project gains and better cash flow.
In our valuation, you do have a reflection of what was mentioned earlier talking about our tenant base and how the COVID-19 had hit it in different way. Meaning a very good situation for the logistic warehouse side and for offices if the tenant is a public tenant. A more traditional office is on hold in order to try to understand changed demand for premises and office location going forward. Finally, retail and hotel has been taken down in order to reflect its much tougher market. That means that the asset class has been more polarized. To give you a reflection on the retail part, on portfolio level, we have written that down 4%, but we have half of the retail that is doing very well also, of course, groceries, et cetera. On single assets, you can see write-downs up between 10%-20%.
On the other hand, warehouse logistics is really doing really well. Let us go into the property market, Henrik, on the next slide.
Thank you. The volume of transactions in Sweden totaled to approximately SEK 78 billion the half year. That means a decline of 9%. We feel like the market is waking up and could bring good investment opportunities for us. The deals have been stable in our markets, office and logistics. Examples that logistics deals down on 4.5% and some transaction not closed, but seems to end up in deals in line with before the crisis on the office side. The interest from the foreign investors increased, and they stood for all the 35% of the deals in the Swedish market the last half year. If you look at our developments, we can take the next slide, please. As you see in this picture, we have a lot of mid-size and large developments. These 15 developments represent SEK 5.8 billion in investment volume.
The average mean is approx SEK 400 million per project. You can say an average yield on all this portfolio is normalized to 6.2%. The pre-let volume of this is approximately, at this moment, 79%. It's a low risk and good return on equity. I'm not sure that we will find more interesting developments, but we will only invest if it's in a low risk at this moment. Looking at some pictures and some developments. We can take the next slide, please. These three are the three latest ones. Malmö, the court that we have described before that are under construction. It's more or less fully let with the government on a 20-year lease. That will be ended in the 2022. The next one is Jönköping.
In Jönköping, that is the new court that we will build and lease out to the government for 15 years. This lease agreement is now signed. The construction will be signed at the latest in August and we'll start up with that. This construction will also be finished 2022. On the last one is in Örebro. The police department will rent this for 12 years. This building that will be the first carbon neutral police house that we ever heard of, 100% leased out and will be finished in 2022. All the three projects stand for investment volume of SEK 2.9 billion and the rent volume of SEK 182 million. Financing case, Ulrika.
Yes. Of course on the next slide all those developments need to be funded.
Castellum stands strong, as we have said earlier, from many aspects so also the funding situation. With many tools in the toolbox, many to talk to, a good liquidity buffer and confirmed credit opinion from Moody's this June on Baa2 with stable outlook. Castellum has a good situation in these more turbulent times. We experience relative good access to funding within the Nordic banks and at the moment, relative stable margins. The bond market experienced falling margins or spreads during the most part of last year and in the beginning of this year. This trend was broken at the same time that the market realized the progress of COVID-19. During the second half of the first quarter, the credit spreads increased dramatically steep. As for Castellum, it indicated an increase of 2 to 4 times pre-corona prices for duration 2 to 7 years.
During the second quarter, the spreads have, however, fallen down, even if they are far from pre-corona prices. Worth mentioning is that the real estate sector is lagging a little bit compared to other industries regarding spreads falling down. To give you a price reflection, Castellum would have paid roughly 100 basis points for 5-year money at the year-end. Today maybe price on screen is around 200 basis points or just below. The CP market has also been hit by COVID-19 with increased spreads at least. During a period of calmness in March, we have issued some volumes during the second quarter and has now 2.7 million outstanding in volume compared to Q1 4.4 million.
Here the spreads have increased. At the moment, to give you a reflection, maybe we would pay 65 basis points, which can be compared to year-end prices at 35 basis points, however lower price than what the Riksbank is buying on. Let us go to the next slide, please. What have we done? We have done a lot. A lot of it was pre-corona, meaning earlier this year we renegotiated some bank debts, terminated some and at the same time issued new Swedish bond for roughly SEK 1.5 billion in the domestic market. During this first half year, SEK 2 billion in bond has matured of, as I said, SEK 1.5 billion was refinanced and half a billion is refinanced with existing bank facilities.
To summarize it all, Castellum has at the moment roughly SEK 12 billion in unused credit facilities and that will cover existing debts that mature this year and a good way into 2021 while we, at the same time, can meet the need from the business. Our duration the rest of the year consists of SEK 2.7 billion of what was mature, SEK 2.7 billion in CP and SEK 1.2 million in bonds in the autumn. Our ambitions as we see it now is to refinance that in the capital market if it so allows us to do. Of course we can always use our credit facilities within the bank system if needed. Go on the next page, please.
On to something totally different and extremely important, sustainability. Our objective is that we shall be one of the most sustainable property companies in Europe and a major player in the construction of sustainable societies. Castellum's target is to achieve now 100% climate neutrality in their operations to 2030. Therefore, the board has approved to implement two roadmaps, one for property management and one for the development to achieve this. Since the big polluter is the new developments, we decided to try to build the first carbon-free police house, as I told you earlier. The objective is that this building shall have net zero carbon emission during its lifetime. There will be more projects like this to come. Another example is our program to build 100 new solar cells panels on our roofs.
We have started 40 new ones. The largest one is 30,000 sq m with 8,500 panels that will produce approximately 3.3 GWh per year. This is one of the biggest in Europe. We will come back to this and you will follow us on this objective we have during the years simply going forward. The next slide, please. As we have stated, the pandemic is not gone and the economic effect of the pandemic is not gone. It will continue and will affect us. In our market, we have a strong position. The markets are also in a good and stable at the moment. It's divided. It's a divided market. You need, for example, to have capacity to invest. Our belief is that we will create opportunities for us. I think we will see very interesting next coming months.
We have an already active office market that will develop. We are rightly positioned for that. We will see a logistic market develop strongly. We are also there. We have created a strong cash flow inside Castellum and a strong balance sheet that will give us opportunities. Simply to summarize this strong first half year will give us the opportunity to report in the Q4 for 2020, despite the pandemic, that we will have an increase in income from property management. With this, we will leave over for some questions. Thank you very much. Next slide.
Thank you. If you wish to ask a question, please dial 01 on your telephone keypads now to enter the queue. Once your name is announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial 02 to cancel. Once again, that's 01 to ask a question or 02 if you need to cancel. Our first question comes from the line of Tobias Kaj of ABG. Please go ahead. Your line is open.
Yes, thank you and good morning. I would like to start to ask some questions regarding your rental income. You wrote that you gave SEK 14 million in discounts and expect to get SEK 7 million back from government support package. Have you included those SEK 7 million in your income for Q2?
Yes, they are taken as an incentive cost in Q2 totally.
Okay. Have you received all other income for Q2, or do you have other outstanding receivables?
Now we have of what was invoiced for Q2. When we finally closed that one, 99% of all that was invoiced has been cashed on the banks.
Okay, thank you. Regarding your occupancy rate, it improved by 1.7% in the quarter, and it seems to improve in most segment. However, the like-for-like growth for rental value is stronger than the like-for-like growth for rental income. Why is that?
I think we write that in the report, we have changed the definition on how we calculate the occupancy rate. In Q1 and the earlier report, we have had incentives treated as vacancy. What you see now is just the vacancy part that deducts rental value. The number for Q1 with the new definition would have been 93.8% on portfolio level.
Okay, thank you. Your reported rental income increased by 3.2% quarter-over-quarter. You don't have any really significant acquisitions in the first half of the year. Can you give some more information of the sequential increase in rental income? How much is related to developments and what's the rest related to?
As you see, the like-for-like growth is in this market good. It's also adjusted for, you could say the incentives the government gave, incentives that we have given. We have also this second quarter. I think that is mentioned in report on the total portfolio extra, you could say, one single income that we don't have going forward. That is all summarized to SEK 20 million this second quarter isolated. It's a lot of small insurance cases that, to be honest, in Q2 suddenly were closed from the insurance company, everyone, and money was received. That one is extraordinary, you could say, second quarter.
Okay. Thank you. Regarding, you talked about your start developments in Q2, and I just want to ask if the rent contracts and the developments in Jönköping and Örebro, are they included in the net letting for Q2?
Yes.
Yes.
Yeah. In total, I think the total investments and remaining investments in ongoing developments are, to my knowledge, at an all-time high level. Do you think you need to divest something to fund all the investments? Are you able to fund this internally?
No, we don't have any pressure of divest, selling anything. We will carry it on like this. We like to have turnover in the portfolio, but we don't press to sell anything at all.
Are you also looking for acquisitions or all your focus on investments in the developments?
No, I think this will give us opportunities for investments, and also to have a turnover in the portfolio. I see an active market in front of me after the summer.
Okay. Thank you. One final question, if I may. Regarding the valuation, I was a bit surprised that the valuation yield is actually up year-over-year for warehouse and logistics. What's the reason for that?
You could say that there is still a little bit cautiousness. What we experience may be cautiousness in that sense that the cash flow is really, really strong. Maybe we haven't showed everything in the valuation in that sense. That's why you have that movement.
Okay. Thank you very much for taking my questions.
Thank you. Now, next question comes from the line of Erik Granström of Carnegie. Please go ahead, your line is open.
Thank you very much. Good morning. I had a few questions as well. I'd like to start off with the like-for-like development. Ulrika, I believe you mentioned it was 3.2% or something like that in Q2. Could you say something about the sort of breakdown of that within the different segments? Where and how have you seen the biggest movement in terms of like-for-like in Q2 over last year?
You could say it's a reflection a little bit of, you could say, how the market is hit. We have a good like-for-like growth or could say what supports the like-for-like growth from a segment point of view is the logistics side. Of course, it's part of the office side also because that is renegotiations made earlier. The retail part is not a contributor, you could say, to this part. In some cases, also public tenant. Logistics, offices, public tenant, positive with different magnitude and then more cautiousness or not so big support from the retail part.
Okay. Thank you. Then, also perhaps on Henrik's statement regarding the opportunities going forward. You expect the property market or the transaction market to continue to improve after the summer as well, it seems like. Is there a difference in where you see things opening up in terms of transactions geographically? Is this something that is happening at every place in the Nordics where you guys are looking?
I should say it's not geographically divided. It's divided between markets and owners, so to say, to give us opportunities in the future, I think. Also, developments that are not 100% finished or anything. To summarize it with one word, I think you can use the word financing.
Okay. You've previously stated that your focus is to become pan-Nordic over time. In terms of these opportunities showing up now, do they play into that strategy that you have going forward? Is this more of a situation where you're going to be opportunistic and see that there might be situations that come up in areas where you sort of haven't communicated before that you're looking, but now there might be opportunities there? Should we expect you to stick to the comments or statements you've had before where you would like to grow?
No, I think you should pencil in that we geographically, we're looking at the Nordics. We monitor the total market. We will see what simply occurs on the screen, so to say, to make it happen. My prediction is simply out of what I'm seeing on the high activity and also that I expect that some interesting opportunities could occur simply after summer.
Okay. Then my final question is regarding the statements that you made, that you do expect that there might be a situation where tenants will have a tougher time in the second half of the year, seems to be mainly due to the slowdown of the economy. Has this been something that you've noticed at this point? In what sectors, if that's the case, because I believe that sort of pertains to sectors outside the service sector then.
No, we don't see that. It's more just a reflection from outside, it's more a reflection what can happen maybe in the economy in general, I think that Castellum will not be insensitive to it in that case, we don't see any signs of it. What we can say is that with all the aid packages that is flowing out into the system in the economy, together with that liquidity reserves doesn't exist forever, that means that the economy need to be better, we need to do more, if certain companies will have, you could say, a sustainable way going forward. It's not Castellum specific.
Okay. Thank you very much. Those were my questions.
Thank you once again. If there are any further questions on the line, please dial zero one on your telephone keypads now. Okay, there seems to be no further questions coming through, so I'll hand back to our speakers for the closing comments.
Yes. We thank you very much for listening, and we wish you for the ones in the Nordics, we wish you a happy summer, and for the ones that have it in August, we wish you also a happy summer, and we will be back in October simply. Take care.