Thank you very much. Good morning, everyone. We will present the Q3 for 2020. With me here today is Ulrika Danielsson, CFO. Okay. We are standing here now in the middle of the pandemic, and after a half year of this, we can so far conclude that the Nordic market has been resistant, and that Castellum has had a good position in this so far. Of course, it doesn't mean that the effect is gone or anything. We are just in the middle of this, and it's of course humble in what we see around us. We can take the next slide, please. This quarter has been calmer than the last one in the sense that we have proven our strengths and our portfolio's position that is well-positioned.
The situation right now is that, of course, we are active in three countries with still different regulations, laws, and other restrictions under the COVID pandemic. Denmark and Sweden so far is more or less open borders. Finland with semi-closed borders. We have been able of operating everything the last three months in all these three countries. We have also been able of continuing with the constructions of our developments without any interference of just the pandemics or other regulations. The short version of this report is that almost all rent is collected in the same pattern that we have seen the last quarter. That means that we see a strong businesses in especially Sweden, where mostly all the rents are collected.
We have also been able of creating 9% growth in cash flow and 8% on the NAV, and kept the LTV down to 43%, even though we have paid out dividend. The last three quarters have been strong in all lines. The cash flow has been up with still good effects on negotiations, and that we have very few losses and no bankruptcies. This, of course, with the good management of financing and all other costs. Even when the net leasing is better than last year, both in existing and of course in the developments, we are now on record figures. As we stated before, we have ongoing developments standing right now for approximately SEK 6 billion. It's also a new record for us. Ulrika, let us go through the report, please.
Then the next slide, please, and the P&L. Our delivery so far this year can be summarized in an increasing income from property management with 9%, due to mainly negotiations made earlier, CPI uplift, and continued cost control. A small unrealized change in property values on portfolio level, mainly driven by project gains, but also on specific assets, yield changes, and in some way, cash flow changes. Of course, as early quarter, there has also been adjustment downwards on specific assets. A negative change in derivatives and a tax of roughly SEK 640 million, of which SEK 140 is paid. Finally, I would end it with saying that so far we have had no impact due to COVID-19 in the P&L, at least regarding earnings up until now. However, going forward, there can be a somewhat other story. It's early this year when COVID-19 became a reality for everyone.
Negotiations, you could say, almost stopped. Of course, there is some exceptions from that, but that is the general sense, and that is the conclusion. That means that growth in like-for-like and top-line growth starts to slow down, and we can see that impact already a little bit in this quarter if you look into the growth in the like-for-like portfolio. On top of that, the net leasing is negative in existing portfolio, and that was also the case last year. This can also indicate everything else, lesser growth in rental income in the like-for-like portfolio going forward. On the next slide, please. Looking into the rental growth, the average increase in like-for-like is 3% and consists of the CPI uplift of 1.7 and made negotiations earlier.
Higher vacancies and higher incentives, a part of that, of course, connected to COVID-19, mitigate the growth with 0.7%. All in all, like-for-like holding has an increase of 2.3%. This is, if you look into the Q2 report a little bit lower, it's an indication of what I just mentioned. If you look into the different segments, you can see that the public sector and the warehouse logistics have really good momentum. The offices is slowing down and the retail park has a negative development so far. This happens at the same time when you could say the office market is going through changes from a demand perspective, and we will not be surprised if there will be an efficiency trend, you could say, or a new way to look at the use of offices from a tenant perspective.
On the cost side, we can conclude that the cost has gone in the right direction also. In like-for-like, it is down 6.5%, and that is due to continuously work with the cost, of course, but also a milder year so far compared to last year. If we look on the next page, please, and we look into specific, the COVID-19 impact, you can say that since the last quarter or the last report, there has not been so much more new liquidity help. Only SEK 5 million more in going from quarterly to monthly and no more incentive given. What we can see is that tenants that have got help earlier this year seek further liquidity help going into Q4 and the next year. That indicates that companies still suffer from COVID-19.
You can imagine that if this goes on for a longer period, it will increase the risk for even tougher problems for those type of tenants. Our view is that the market in general is dealt with a lot of aid packages, and the COVID-19 is still here impacting us all and changed behavior is here to stay. Of course, this means that companies in general can be hurt, have tough times, and that will in the end affect landlords such as Castellum. However, so far, we are very lucky in Castellum in that sense that the tenant base so far that is hurt in this way is not big for us. The market, please.
Yes. Next slide, please. Here we have the net leasing. First of all, it's actually, even then it was negative on the existing portfolio, like Ulrika said, historically, this is actually better than last year. What is good now is what Ulrika touched on, is our tenant base. For one example in this is that we rented out to a Nya Porten in these figures, that will be built in Jönköping. That of course is fantastic to having the government as a tenant. On the negative side, we have lost a tenant in Copenhagen. This is something we knew when we bought Norrporten in that acquisition, that is hurting us now, of course, in this figure. That said, is that we can conclude that we have more or less no bankruptcies.
That we was actually able of signing contracts for SEK 241 million during this time and SEK 142 million after March. That the market is still effective and you can lease out, and it's good action. Let us move to the next picture, please. If you look into this, you see that we, as Ulrika touched on, the office market is just one part of it. We have the logistics. Here we experience a very strong market because of the expanding e-commerce. It means that we have seen rent growth in all types of location. That is something we haven't experienced earlier because of the larger assets outside the big cities have normally not have that growth that we're now seeing in the market. We have the government buildings or the public ones.
They are on stable grounds with long contracts and are benefiting from the expansion that is onshoring, especially in Sweden right now. Together, these two categories stand for approximately 40% of the value. We have the multi-tenant situation. There is no large changes in the market right now. We have the same market levels like before. It's a lot of speculations on the market will develop, and we believe that we will see changes in the behavior of that, and we shall contract in the future. I will come back to that later. As said, there's no changes at this moment in the market trends. We can also see it's a huge difference between the cities where we are and it's no discussion about the future office space in the mid-sized towns. That comes down to that it's easier to communicate.
It's not only about the office setup and design, it's also about communications. We can take the next slide, please. As said then, and here is the four categories. We have a huge growth then in the warehouse, logistic market. There is our position is that we are strong in Stockholm and Gothenburg with the potential of building more and good yield are still around 7% of yield on total cost. Of course, we have been calculating with the existing portfolio will benefiting from the lower vacancies and in some way also the adjusted rent levels. In the public sector, we are benefiting from the stability long contracts, a fixed portfolio, and that in all assets are more or less 100% leased out. On top of that, the governments need more expansion, and that we are benefiting from right now.
We are one of the very few real estate companies or owners that are developing assets for the government and courts, for the police as well. We have the co-working. We are right now developing new sites, that is because we want to meet the flexibility demand from the existing and new tenants. We will meet them with more sites than we actually believed one year ago. We have the office sites, office buildings with multi-tenant houses. Here, I must say, we are well-positioned in that way that is either bought by us or built by us on locations where we see that it's normally growth, this is simply a high-quality portfolio. We will meet the new situation in this part, I will come back to that.
All in all, it gives a very stable portfolio with potential ongoing growth in the future in all our 20 towns.
The balance sheet on the next slide, please. The balance sheet, as we heard earlier, is still strong in Castellum with an LTV that has not moved much since Q2, despite dividend made in September. It's still on 43%, while the net debt to EBITDA is down on 10. This, together with a very strong cash flow, makes the company strong. If we look at the valuation of the property, the valuation yield is unchanged on 5.1%. As I mentioned earlier, we have done write-ups on portfolio level. However, we have done write-downs also, mainly on retail and hotels, while upwards can be found in the warehouse logistic parks with public properties due to both yield adjustments and cash flow. On top of that, of course, we do have project gains on our development pipeline.
Let us go to the next slide and the market, Henrik. The property market.
Yes. If you look at that, as you said, we hold yields in the market. We also see a strong market in Sweden. If we talk about Sweden, we have totally deals done for approximately SEK 103 billion, and the market is more and more active for every day. That you can also see the valuation in the balance sheet. The interest from the foreigners is still very strong, and the foreigners actually stand in for, in Sweden, for one-third of the deals done. I can take the next slide, please. This is as we like to show it, and we have shown it before. This is 15 developments. As we've said, we're building up to approximately SEK 6 billion in investment.
This is on an investment on cost on approximately SEK 6 in average, and they are rented out approximately to 80%. This is the backbone. I will come back to that why this is so important, because we are not dependent on one project, we are dependent on a lot of projects. Under this, we have a long list of mid-size and smaller ones as well. If we're going into the future, we have not stopped any of the developments. We have been fortunate that the tenants in the development pipeline have been governments. We haven't been looking at that. Going forward, of course, we will look into the market situation before we start anything. Next slide, please. When we build anything, we are now targeting that we should go down to CO2 neutrality into 2030 on everything.
That also means that we're taking the responsibility to try to build CO2 neutral. We have started one development in Örebro, building the first, what I know, our police house that's CO2 neutral. We have also been the first property company in the Nordic region that is climate target approved by the Science Based Targets, SBT. That's one of the very big steps for us going forward in the future. We would like to have help, of course, from the market and try to make this happen and be a reality in the future. Next slide, please. Shortly back to developments. These four is the example that we're not only building the large office buildings. This is the backbone of the development sites. It's actually where we are building. We can take the first on left-hand side, what's named Heliumgatan in Mölndal.
That's a small-to-mid-size logistic asset of a building for one tenant that we're now moving out from an existing space they have, and that space is rented out to another tenant. This means that investment like this is done between 7% or 8% yield on total cost, and it's a backbone, of course. You can take the beautiful building on the right-hand side. It's what we are refurbishment an old retail house in absolutely CBD of Uppsala, where we are making it into a co-working space. We actually bought it with that in the calculation, and we will open it after Christmas. That's also a fantastic investment that will be attractive. Of course, you have the airport, Säve, where we are looking into the next step.
Hopefully we come back in short term to announce an investment, especially on the research and development side, where we hope to take care of some new tenants for sustainable transportations. On top of that, we hope to very soon be able of starting developments for logistics as well. This is just some examples what's ongoing in the pipeline so far. Financing, Ulrika, please.
Yes. On the next slide, please. Of course, all those developments and the pipeline and the existing portfolio need to have cash flow funding in place. In Q2, I said that Castellum stands strong from a funding perspective. Many tools in the toolbox, many to talk to, a good liquidity buffer and confirmed credit opinion from Moody's in June on Baa2 with stable outlook. In Q2 now, we can reinforce that with an even stronger liquidity position compared to Q2. The reason for this is mainly explained by the pricing in the bond market. As you all know, the trend for the credit margin was falling last year and in the beginning of this year. This trend was broken abruptly when it became obvious for the market that the COVID-19 has developed to a global pandemic.
During the second half of the first quarter, the margins increased extremely steeply, and for Castellum, it indicated an increase three to four times pre-corona prices. During the second quarter, the margins fell back somewhat, and this trend intensified during August and September. That made it possible for Castellum that had not addressed the market due to the high prices in the spring and early summer to actually address the local bond market now. We have issued new bonds during Q3. Worth mentioning is also that even if the margins have come down on considerably lower levels, they are not fully back on pricing that was at the beginning of this year. Another market that has developed in a positive way is the CP market that really has recovered, you could say, since Q2.
Yield is back on the same levels, roughly, as at the beginning of the year. Of course, the cost reduction or yield reduction, you could say, is partly driven by lower STIBOR, meaning that spreads are not fully back on previous levels. Regarding banks, our experience is that good access to funding within the Nordic banks and at the moment, relative stable margins from our perspective. Let us go to the next slide, please, and see what we have done in Castellum during those circumstances. We have renegotiated SEK 5.3 billion. We have got SEK 0.6 billion in new debt from a new supplier. We have issued SEK 3.8 billion, of which SEK 1.5 was refinance, you could say, pre-COVID-19 of this year. The duration is from two to seven years. At the same period of time, SEK 1 billion has matured.
Meaning a net issue of roughly SEK 2.7-SEK 2.8 billion. For the rest of this year, only SEK 200 million more is falling due. Outstanding volume in the CP market is over SEK 5 billion compared to SEK 2.7 billion in Q2. This indicates what I said earlier, that that market is back on track. To summarize it all, we have at the moment SEK 15 billion in unused credit facilities, and that will cover existing debts that mature this year and next year while at the same time can, you could say, meet the need from the businesses. Our duration the rest part of this year is SEK 3.2 billion in CP that falls due before the year end, and as I said earlier, SEK 200 million in bonds. At the moment, a really good liquidity position for Castellum. The future, Henrik.
Okay. It's a very tough target to talk about the future in this situation. We can conclude that the pandemic is not gone, and the effect of the pandemic is not gone. If I should try to generalize on the Nordic situation, I should say it's rather stable. It's a little bit worries about the second wave of pandemic, but it has not been any dramatic figures so far. That said, of course, the effect we can see in the economy, as well as the behavior, is in front of us. This will, of course, affect the market. It will, of course, affect the real estate market. Our conclusion is that Castellum is in good position. We don't have any hotel volume. We are affected by the changes in the retail sector on the negative side, actually more on the positive side.
We are a winner when it looks to the e-commerce that are affecting almost 15% of the value that we have in that part of the sector, and of course, the income from the public sector that stands for more than 20%. That leaves us with the multi-tenant office buildings and the trends in that sector. This is globally discussed, and many are looking for the Holy Grail in this question. Our view is that it's not one solution we will see. It's going to be a lot of different solutions. It's going to be different because of size of cities. It's going to be a huge impact for the near time frame, how the transportation system works, and of course, how the companies will be able of having the staff using and taking the car or commuting in any way.
I'm also certain that we will make the office into more meeting place. That was also a trend long before COVID and now accelerating. We will also see a huge difference between the types of work that people are doing inside office and in the companies. Of course, the quality of the possibility of working at home. The last factor is actually family situation. We see a big difference between young and older staff in this way. We are strong believers that the work that we have done so far with decentralization, flexible work spacing, and looking into the future with more services is something we're going to benefit with now. We will help, of course, our tenants in this way. Looking into the short-term, we will, with this result, of course, deliver growth into Q4.
We will also have an effect, like Ulrika says, in the cooling down on the negotiation side. Because it was simply not possible to continue the negotiations under the pandemic. We will also be affected of that we are going back to a more normal CapEx situation in the assets. This together means that we will not be able of delivering the strong 9% growth that we have done so far in the Q4. We are still very pleased with the growth that we have been able of creating under the circumstances. I am especially proud of all the work done in negotiation with tenants that have made all our losses, or our losses more or less down to zero. We will simply give the board the opportunity to decide to take a decision to continue the increasing dividend even next year.
Thank you very much. We open for questions.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There will just be a brief pause while any questions are being registered. Just as a reminder, that was zero one on your telephone keypad now. We have a question from the line of Erik Renström from Carnegie. Please go ahead.
Thank you very much. Good morning, everyone. I just had a few questions, if that's okay, and perhaps I could just ask you about the property value situation and the property market and what you see for Q4. How are external evaluators looking at the market now? What's your experience of having those kind of discussions in Q3, and what should we look for Q4?
Yeah, I can take that. Let's start with the market. It has shown its strength in the Nordic market, and I would love to come to this meeting and say that we have been able of putting together golden nuggets in the market, and that's absolutely not possible. I see it's still a competitive market on all types of assets. That's the first part. I think it's more a question about if you are worried as a valuator of the cash flow going forward, if that it's any changes. What we see on the yield side, we see actually lower yields more than we see anything else in the markets, both on logistics as well as on the office stocks. We see an open market.
I would say it's possible to sell everything that Castellum holds in the balance sheet, and we are having a lot of calls that investors want to see if we are willing to sell anything. That's the situation. Strong still we are standing in a strong market.
Okay, assuming that external evaluators don't expect market rent to come down substantially in terms of evaluations for Q4, you would actually expect to have some positive momentum in terms of valuation driven by stable or decreasing yields?
Yes, I should say yes on that.
Okay. Perhaps you could at least, I don't know, I'm probably the only one that didn't understand this, but it was regarding the discussions that you mentioned in the CEO comments in the report that following March where you had positive rental value development from renegotiations that has now come to some sort of a slowdown or a halt. Could you just perhaps explain that a little more? Because to me, I would assume that renegotiations must have been at its toughest during Q2 rather than Q3, given the pandemic situation.
Yeah. This was more set on hold because of the pandemic and also because no one was knowing what's in front of us, simply. We stood still. Just standing still in that situation lowered the volume of negotiations. The result of the negotiations done is still positive with the 15%, but the volume is less. That's on more practical reasons than on market reasons, to be honest.
Okay. Basically what you're saying is that you're just highlighting that we should know that these effects will come going forward rather than what we have seen so far.
Correct.
Correct.
Okay, good. Now I understand. Thank you very much. Appreciate it.
Thank you.
Those are my questions.
The next question comes from the line of Jonathan Kownator from Goldman Sachs. Please go ahead.
Good morning. Thank you for taking my question. I just wanted to go back on this comment that you made in the statement in the management comment about the delayed maintenance. You said it needs to be back to normal level. Does that mean that management has to anticipate the sort of catch-up of what wasn't spent over the last quarters? Therefore, are you able to quantify how much maintenance you expect for the last quarter? Thank you.
The quantification I can't do, but the technique is right. Yes, it's some sort of catch-up volume, but it's also practical problems, of course, because we have to make them happen, order them, and deploy them. Of course, we're taking care of our assets, and that will technically end up in the P&L as a catch-up effect.
It's a catch-up effect, but ultimately, so you have your normal level for Q4 plus whatever should have been normal, say for Q2 or Q3, that you have to do extra. Is that a fair way of looking at it?
Yeah, you can say just to have a guidance. Guidance is that if you look to early quarter this year compared to the same quarter last year, you can see that we have had a lower pace. From what we can see now, if you make assumptions about Q4 isolated, maybe you can more have the last quarter last year as a guidance for that.
Okay.
Meaning that we are back maybe on the same pace for that quarter.
Okay. there's no real catch-up effects on Q2 and Q3 then if you're just going to do the same level as last year?
Yeah, the last quarter was you could say a high pace last year also. It's more that we are back on track on a higher level.
Okay. That's clear. Just to confirm from following the previous questions, because you talked about volume being lower but still 15% increase in renewals, which is obviously still quite strong even though not as strong as it's been in the past. Now you said that it's not going to be only volume, but effectively, you would expect that 15% to go down as well. Is that a fair?
Yeah.
Uh-huh. Okay.
The prognosis of that is after all, of course, extremely hard to make in this situation.
Sure. Of course. I can understand.
Yeah.
Okay. All right. Very helpful. Thank you very much.
The next question comes from the line of Markus Henriksson from Pareto. Please go ahead.
Good morning. I just have a question on acquisitions. I think you have a strong balance sheet right now. Could you elaborate a bit on geographical expansion or segments or if there's any change due to the pandemic for your cost strategy? Thank you.
I see no changes. I think it's extremely important to be active in a market like this and see how we can use our balance sheet. That means that I would like to see turnover in the portfolio, but with the volume going up. The sector is Nordic sector, it's office logistics. Yes, we would like, of course, to still expand into outside Sweden in the Nordic sector. That said, if the government ask us to do something else, of course we'll look into that because we are one of the preferred owners from their side right now.
All right. A follow-up. What's the pipeline for acquisitions for you right now?
From the pipeline is, and like all, it's huge. The pipeline going through is less. From our standpoint, we are looking into what's in the market and what we can find off-market right now that's of interest, but we are active.
All right. Thank you.
As there are no further questions, I'll hand it back to the speakers for closing remarks.
Okay. Thank you very much. I hope you will have a nice working day today. Thank you very much, everyone.