CEO, Benny Thögersen. Please go ahead with your meeting.
Okay, thank you, and warm welcome to Catena and today's webcast presentation on our half year result. As said, Peter Andersson, and then me, myself, Benny Thögersen, will host it. If we go to slide two, we will walk our way through the highlights, the resulting balance sheet operational review, capital deployment, and output going forward. And as I said, at the end, there will be a Q&A session. Slide three. The market remains favorable, and I'm happy to announce that coming out of this quarter or this half year, almost with all of our key indicators getting improved. We retain our focus on development project and acknowledge high demand from existing as well, from potential new customers. Slide four, results and balance overview.
I will now hand over to Peter, and moving forward to slide five.
Yes, thank you, Benny. Slide five, income statement. I have a few comments of that, and if I start with the realized change in value of about SEK 12.5 million, which we find in the lower rows. It relates to a reversal of a guarantee reserve that we did on a sale that we did in 2015. It was a property we sold in Gothenburg, and it was a few guarantees, especially a rent guarantee. And then we have approximate SEK 12.5 million that we have the rest of reversal of. If we're looking on the income from property management, we increase it with 16% if we compare with the last year.
Last year, we had one-off effect of value change in Böckeberget with SEK 9 million. If we take that one-off effect aside, we increase the income from property management with about 20%. We have also new standards that we told last quarter, IFRS 16, leases, even we and if we take that aside, the under 2018, just the figure for 2018 was SEK 5.2 million under property expenses. Today, in the half year report, the leases are reported under financial.
If we go to slide six, statement on financial position, even here we have a new standards, IFRS 16 leases, that have some effect of the balance sheet, with approximate SEK 350 million on both sides. So it, it increased outside of the, the balance sheet, and then it affects some of the key figures. Slide eight. Catena is a, a strong, cash flow company, and we have a key figure that's important to us to show that cash flow-driven part. For each, income, Swedish income crown, we have- when we have paid every expenses, property ma-, you know, property expenses, financial, administration, and so on, we have SEK 54 left. So it's a very cash flow-driven company. Slide nine.
This slide shows the organization, and we operate in five regions, and yeah, you can look at the figures, and if you have any questions, we can take that later on. Slide 10. Here's some interesting facts about the properties and our tenant profile. If we look at the middle of the charts, you can see that the 10 largest tenants equals to 44% of the income, and the large tenants contains of DHL, ICA, PostNord, Apotea, and so on. So it's a very good structure of tenants. Slide 11, property value and yields. We have increased our property value since last year with SEK 1.9 million... SEK 1.9 billion , I should say.
And if you're looking to the rolling twelve months, we have the unrealized value change in that period was SEK 600 million. And so we can calculate backwards that we did some acquisition, and we have done some projects that equals to SEK 1.3 billion. The EPRA net initial yield is 6.1%, and last year it was also 6.1%. But the acquisitions and the projects are made within the area of 6.5%-7%. And thereof, you have the unrealized value change in the income statement.
Back to Benny.
Slide five, yeah, slide twelve. We acknowledge a high demand for logistics property, specifically in certain key areas. In some of the most urban areas, supply of land and logistics property remains scarce, supporting redevelopment opportunity and also, the rent levels. In, general terms, could say that, the levels range from between SEK 400 to SEK 1,200 per square meter. This is, depending on, on the number of, factors. The market is stable, with some higher price of rent development on those certain key locations.
The logistics real estate sector is getting more and more attention, and, for the last half year, a couple of transaction have indicated net yields on a high 4% to low 5%, and we have tested the competition on the existing stock of properties is getting tougher. Slide 13. We also have an increase of new leases contracted of SEK 30 million , and then net was SEK 16 million . Our focus on getting to know and even partnering up with our customers pays off, and we expect high customer retention going forward. The maturity of our contracts remains well distributed over time, and it's ranging approximately five years. Slide 14, Peter.
Yes, the funding structure. As you know before, that all funding within Catena is secured by mortgages. And, for 2019, we have done all the negotiation of SEK 2.3 million. We still have to write some agreements, but we have done the negotiation. For 2020, we have approximately SEK 4 billion to renegotiate, and then we are going to start that after the summer. So we're doing it in a very early stage. When we go to the debt maturity, it's 1.4 years, and then we are aiming to get over 2 years. And I think we're going to do that after renegotiation of the 2020. Slide 15, capitalization.
You can see two charts here, and I could only comment the one to the left. We have a LTV level of 56% today. Back to Benny and slide 16.
The history of growth. We have been able to grow at a steady pace of the profitability. Profit from property management came in at SEK 8.43 per share, and it's up 15% year-on-year. Annually, the compounded growth rate have paced at 18% for the last five years. When it comes to return on equity, we came in at 9.3% on the first six months, first half year, and the five-year annual average is at 17.5% . Capital deployment, slide 17, and we move directly to slide 18, development projects in progress. I'm happy to inform that our project development portfolio keeps the timetable.
At the end of this period, we have some 14 ongoing projects of magnitude, including new constructions, redevelopments, extensions, and energy efficiency projects. And four of those comprises new constructions. Our most recent project regards to the extension of a 7,500 square meter at Speed Logistics in the municipality of Sigtuna, northwest of Stockholm, which I will come back to later in the presentation. Outlook and cases. We've developed logistics position, and we are linking the Scandinavian goods flow. Just following here, we are at slide 18. 20, sorry, yeah. And east of Helsingborg, in the Greater Copenhagen area, we are about to finish a highly automated, omni-channel, multi-client distribution center operated by Nowaste Logistics.
On the same position, we have just started the construction work for an 18,300 square meter terminal for PostNord. Together with existing retail and e-tail warehousing on the position, we have added great value for the physical supply chain in the Greater Copenhagen region. Going to slide 21, and there we have just started PostNord 2,000 square meter terminal in Katrineholm. For us, it's important to link and source also in the smaller and mid-sized cities, all in regions in regions all over. We foresee an increase in demand also on those positions.
Slide 22. Growing with our customers is one of the things I like the most. The 7,500 square meter extension of the Speed Logistics warehouse in Rosersberg Stockholm is an excellent example of that. Each property is a business opportunity, and this investment here is agreeing up to a total of SEK 65 million. I'm also happy to announce that we are working hard on energy efficiency projects, and right now we have some 10 different projects going on within that area. This example, we have the Dikartorp property that we actually have disconnected from it, the district heating, to meet the energy needs by combining geothermal energy storage and solar cell modules on the roof.
We could already now see a reduction in energy consumption by 78.2%, normal year adjusted. Slide 24. Our land bank is of major importance to us, and in conjunction with existing land and ongoing development plans, we continuously maintain discussion with a broad group of stakeholders to ensure the future development of modern logistics positions to come. Slide 25. Over to the question and answer section, which will be moderated by financial analysts. Please.
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. Our first question comes from the line of Markus Henriksson from Pareto Securities. Please go ahead.
Hi, guys. Do you hear me?
Yes, loud and clear. Hello.
Okay, good. I'm wondering about the recent transactions now in the logistics segment, if it's affected your property valuations here in the quarter, and if you expect more impact ahead?
Yeah, well, it's obviously we've—we are looking at the large acquisitions on the market. We have discussions with the external evaluator as well, but as we always do, we evaluate every contract and every property on its own ground. So if we're looking at the premises that have long rental contract and is located in a very, very good location, then we are going downwards with yield. If you're going outside that area and you have competitive land as well, then we are not going so far downwards with yields. So it depends on where it's located. But in a short answer, yes, we are looking at the external acquisitions that are made on the market, and we're all doing the valuation within that in our mindset.
Of course, also need to add the portfolio discount, so to say, with the portfolio that has the transactions of portfolios.
Yeah. So, follow up, if we look at the Corum transaction, the big one they did, it was not in like prime locations as we've seen before in the other larger transactions. So in my view, that should have a bigger impact in some of your other locations. Have you seen any of that or any discussion with your external appraiser?
Yes, some, a little bit at the moment. You have to evaluate on the market on the exact day of the 13th of June. So to say, if you have to have a buyer, and those kind of buyers, not, they're not growing free, so to speak. So it's a difficult world in valuation, because if you have one buyer that could buy a large number of real estates, it's not sure that there's two buyers on the same premises. So, but we have taken this into account, and we have done some revaluation of our—we have SEK 200 million only in the is isolate the quarters, but we have increased our value of the property.
So we have done some of the calculations.
Yeah. Yeah. Okay. Then if we look at the net operating income margin, it looks very solid in the quarter. So cost control seems very good. Is this, do we have any one-offs in the rental income or property costs, or is this a kind of new level for you?
No, when we're going to property expenses, it's always going up and down. So it's the large one in that one is to go on to repairs and maintenance cost on the property. So that can vary from the quarter to quarter. But I should say, we would think ourself that it's very cheap quarter, Q2, so to speak. So,
But also we have the two effects, it's the weather. We had a very nice winter compared with the last year, and also the starting of the summer, it's not that hot. So we have it with us on both sides, so to say.
We have done some investment in the property as well, to decrease the property expenses as well. We have LED lighting and so on, that we have put in in some, and as I've been working hard with the energy efficiency, not only by installing, but also with daily contacts with our tenants.
Mm. Okay. So optimal weather, but we've seen a lot of cost efficiency. So that should continue forward if we exclude the weather effect.
Yes, it should.
Okay. And then in the beginning, you mentioned a one-off in the joint venture. I missed that. How much was it, and what was it related to?
It was last year, the one-off effect. When you compare 2019 to 2018, then we have—in 2018, we had a one-off effect that we have reevaluate, a property in a joint venture, then we later on sold.
Yeah.
So that's SEK 9 million. So if you take the comparison between 2019 and 2018, and we're looking at the pro, profit from the, property management, then if we, if we take that one-off aside, away, we're increased by 20%.
Okay. So nothing now in the, in the 3.6, no one-off here for this quarter?
No. No.
Okay. Thank you. That was my questions.
Just as a reminder, if you do wish to ask a question, please press zero-one on your telephone keypad now. Our next question comes from the line of Jan Ihrfelt from Kepler Cheuvreux. Please go ahead, your line is now open.
Okay, thanks for that. I have a couple of questions, and I'll start with your rental income. As you reported, SEK 294 million in first quarter, now SEK 291 million, that's a decrease of SEK 3 million. At the same time, as I expect, the project in Sunnanå contributed with a positive effect. So just a little bit curious about what's driving down the top line in your business.
It's when it comes to rental income, we have a large number of property expenses that we are paying, and then we invoice the customer. So in Q1, was a larger one when it comes to heating and electric, so the reinvoicing was larger in Q1. So in Q2, we have less property expense that we are paying and then invoice the customer.
Okay.
Going forward, of course, you will see the effect of Sunnanå coming in Q3 and Q4.
Okay. Just going back to the joint venture line, as you reported a negative number there, that was a little bit higher than if you compare with your earnings capacity. So my question is really whether any value change has been included in the joint venture line?
This is related to our joint venture on the Foodhills in Bjuv. There, things are moving forward. It's development property that we're working with, and we are on target, on plan for that one. This is the reason for that. One of the cost drivers that we have there right now is the change of the heating system, which has the impact on this quarter.
Okay. So going forward, we should look at what's in the earnings capacity number more than the isolated Q2 number?
Yeah, I would say yes, yes.
Okay. And question on your value changes. You mentioned in the report that there weren't any effect of a yield decline in your property revaluations. So, I just wonder how that come, as you said, that you had adjusted for the lower yields on the market?
Yeah, I don't know if I follow you. But if you're saying with-- we have done some compression of the yield in which valuation? In some valuations. So we are doing a valuation on each property, and then we are looking to the acquisition that are made on the market. So several of that property that we have a long contract and with the tenants and so on, then we have done some yield changes.
Okay.
If you're looking at, if it is the EPRA net initial yield you're looking at or?
Yeah, just saw that it was down from the first quarter a little bit, slightly, some very slightly. But you explain on page 8 that there weren't any effect of any yield shift. So I just wonder if the 2.5% that you changed the values, how much comes from the yield shift?
Yeah. We are not going for a number, especially because there is several of contents in a, in a valuation. You already have to valuate the normal expenses of the property, you have to valuate as well as of the normal rental income and the vacancy rate and so on. So we have not gone out with the exact number of the yield. Should I guess something, I should say half and half. We have done some effects on the property expenses, but we are decreasing the property expenses, and that drive down the or drive up the income from the properties. So to speak, there's a number of revaluation down on that case, and we have done some yield shifting as well.
Okay.
On the property.
That's-
Yeah.
Okay. That's very much in line with what our forecast is. So, thanks very much for taking my questions.
You're welcome.
The next question comes from the line of Rikard Engberg from Erik Penser Bank. Please go ahead.
The answer, but I have one question. Can you please shed some light on the rent levels of the new contracts with PostNord and Speed Logistics that you have signed this quarter?
I would not announce the exact figures, but I could say that on Speed Logistics we actually had an agreement from when we acquired those. So they are at about the same levels they have already by now. And the PostNord, it's good position and if we compare with some of the others, I would say we are slightly higher.
Okay, good. Thanks.
We have a follow-up question from the line of Jan Ihrfelt from Kepler Cheuvreux. Please go ahead.
Okay, thanks. Just one single question. It's regarding your net operating income margin, which is up 2.6% first half this year compared to the corresponding half year last year. So with this good start, do you think you could exceed your NOI margin that it comes from your earnings capacity?
Tricky question.
Yeah, but if it...
We don't do any forecast, but if you're looking at where we are today and what we said before, we are only looking at the property expenses. They are coming, especially the maintenance and the repair situation, then it could fluctuate between the quarter. So but we have the, in the current earnings capacity, we have a number that we are fairly satisfied with that one.
Okay. Thanks very much.
As there are no further questions, I'll hand back to the speakers.
Okay. Since I think you there is no further question, we just say that we are happy with the report, and thank you for taking part in this session.