Hand you over to Benny. Please begin.
Welcome to today's presentation of the Q1 report for Catena. I happy to introduce my colleague, Peter Andersson, who is CFO, and we will do this together. Slide two. The content of today's presentation will be shortly highlight, then we go over to the result and balance overview, continue with the operational review, and then capital deployment and some outlook and cases. At the end, we will have a live question and answer session. Slide three, starting with highlights. I would say that the market is still strong with fundamentals that remains very favorable for Catena. We are keeping the pace of project development driven by structural changes, changes in the industry and supply chain.
But we also see higher intensity and more fierce competition among investors, suggest a strong market going forward. Slide 4. I here now hand over to Peter Andersson. Welcome in.
Thank you very much, Benny. I should try to guide you through the income statement on slide 5. If we're looking at our income and our net operation income, it's a little bit more expensive the first quarter in than general, which we took out to the other quarters, especially when we're talking about the property expenses. We have also a new standard, IFRS 16, leases, which we have some effect of the income statement. For 2018, the leases were reported under property expenses, but for this year, 2019, they had their own row line under financial. And in this diagram, you see it under the others.
If we should compare with the previous year, we have a one-off effect last year in 2018 in value adjustment on the joint venture company, Regulatorn, which approximate SEK 9 million. So if we take aside that one-off effect, we should look at the income from property management have increased with approximate 25.3%. Slide six, the balance sheet. Even on the balance sheet, we have some standard change regarding the IFRS 16 about the leases. And when we're looking to this side, we have approximate SEK 354 million, and you find the increase by this amount on other assets and on under the other liability. This have only the effect which are key figures.
For example, the equity ratio. If we take this aside, the equity ratio would rise with 0.73%. Over to Benny.
Slide eight. On the left-hand side, you see we are visualizing the relationship between the income and the profit from property management. We are very happy about the profit surplus of Q1, which reached 53%. And I now see that we are stable on a high level. Q1 is typically the toughest quarter of the year, and therefore, I'm extra happy about that. On the right diagram, we are visualizing the rental value and the rental value per square meter, which indicates we invest and buy good quality property. Slide nine, Peter.
Slide nine. We are organized and operates in 5 regions, where the Stockholm region is the largest one. You can also see the economic letting ratio in this diagram. We are up in 96% in letting ratio, so it's a very good number. If we go to slide ten, you can also see some figures from our side, and you will, especially if you look at the middle one, when we have the 10 largest tenants, which represent all, yeah, almost 45% of the income. PostNord, DHL, ICA, Boozt, Apotea, Menigo, Nowaste, and so on, is in this group.
Which to guide you also, if you're looking at the lettable space types by area, we have approximately 12% of terminals and and distribution and logistic warehouse is the largest one. Slide 11. Here you can see the property value and the return of the property. If you're looking one year back, we have increased the property value with approximately SEK 1.6 billion since last year. Back to Benny.
Slide twelve. Logistics is the new retail. We're often saying that, the work in the retail, in the stores are kind of moving back to the warehouse. The rental market remains steady and favorable going forward. Demand is high for logistics properties, both from investors and tenants. In 2018, a couple of transactions indicated net deals are at between 4%-5%. The increasing number of creditworthy tenants seeking well-located logistics properties with long contract is attracting to many investors. We experienced that, third-party logistics companies are getting an increasing number of inquiries, and they need more floor space. Historically, the logistics sector have been kind of characterized by a larger portion of properties being owned by suppliers themselves. The shift in consumption behavior have made the sector more professionalized.
The structural themes of e-commerce on the channel and the urbanization underpins our business, and especially our high-level focus on development. Meaning that our well-spread portfolio is getting smarter and better for every new development completion. We experience a high customer demand in certain areas, and we believe that our significant long-term pipeline and land bank have substantial potential in taking advantage of this situation, delivering attractive development returns going forward. The benefits of active management and high customer demand is also reflected in our high letting ratio. Can we move on to slide 13? Active management have led to strong operational performance indicated by our work related to net rental 20 million SEK worth of increase in new leases contracted in the period, and net 8 million SEK in the period.
During 2018, that number was SEK 58 million, yeah, net SEK 40 million. Our focus on getting to know, even partnering up with our customer, pays off, and we expect high customer retention going forward. The maturity of our contract remains well distributed over time, averaging approximately 5 years. Slide 14, Peter.
Yes, we're talking about the funding structure. I should start to say that all our funding is secured by mortgages, so we have none unsecured. Even our certificate or the commercial paper are secured, but it's the backup facility that we have put in mortgages to secure it. When we started 2019, we had approximately SEK 2.3 billion to re-negotiate in this year, and we have already done something like SEK 1.5 billion. So we have left for the year, say, approximately SEK 800 million. We have a little bit to work with when it comes to the maturity loans. So we have to- we want to increase the length of our funding. Slide 15, capitalization.
If you look further, we have the cost of debt is 2.6, and we have reduced it with something like 40 basis points year-over-year. The LTV ratio has been reduced to 56.1%, and it's down 190 basis points from last year.
Back to Benny, and slide 16.
Share-related performance. If we look at the profit for property management per share, dividend per share, and EPS per share, we see that we have had a nice growth over year, stable, and we expect moving forward in the same way. Also would like to point out that the return on equity was 4.5% versus 3.8% a year ago on a quarterly basis, and the earning per share was at SEK 6.52 per share, versus SEK 4.72 last year.
Capital deployment, slide 18. We have a lot of development project in process, in progress, and we are coming from another record year of development. The majority of which we have already been leased, and we keep up the pace going forward. The number represents projects in progress in an amount of at least SEK 5 million. Out of the 15 projects in progress, 5 of them is about to be finalized with tenants already moved in. Six projects comprises new construction in the total amount of SEK 980 million, and one of our projects are partly based on speculation, and that counts to 18,000 square meters. But we already have a lot of requests on that one. Slide 19. Investment in development projects.
The development CapEx so far is at 145 million SEK for the quarter, and the remaining investments moving forward are 671 million SEK. Slide 20, outlook in cases. We are developing logistics position, and that is very important to us. We'll give you some cases, some example that we would look into. Slide 21, it's an example of a logistics position. Sunnanå , just outside of Malmö, in the Greater Copenhagen area. Here, we now have the multi-tenant warehouses. We have filled it up to 50%, and negotiations are ongoing for the remaining 18,000 square meters with several tenants. Slide 22, logistics position Tostarp, east of Helsingborg, in the Greater Copenhagen area.
This is a high quality location nearby critical transport routes. We completed our first development project in September of 2018. This vision center was tailored to fit one of our most exciting customer, Nowaste Logistics AB, a modern thinking top player in the third party logistics business. The lettable area, totaling up to 30,400 square meters, was built at the cost of SEK 220 million, with an annual rental value of SEK 18 million. We managed the process end-to-end to ensure the quality at each step of the project. Slide 23. Still on the same position, we are right now building a highly automated warehouse based on omni-channel logistics for retail and brands.
It's also a multi-client warehouse, which we projected in a very, very tight cooperation with the automation vendor and the tenant, Nowaste, themselves. We came from a first meeting to contract, and we'll be ready for full operation in less than one year. Slide 24. On the same position, we also signed a 15-year lease project with PostNord, and we be investing SEK 250 million in a new terminal at the position in Helsingborg. This will be the fourth facility to commence development at the site. The emerging logistics cluster at Tostarp, the position with tenants operating primarily in online trade, is excellently situated adjacent to the Helsingborg east exit from the E6 motorway.
Catena properties in the area, including several existing logistics facilities, cover a total of some 280,000 sq m of land. An additional part will now be made use of for the new construction of an 18,300 sq m terminal, intended for the handling of parcel, packages, and letters. The tenant, PostNord, is signing a 15-year lease with Catena. The rental values of which amounts to slightly more than SEK 16 million. We are building a top-notch logistics position in the main junction for Gothenburg, Oslo, and Stockholm in the Greater Copenhagen area. Slide 25. Since Catena are linking the goods flows Scandinavia, we also need terminals for cross-docking and distribution all over the country.
Katrineholm is in the Mälardalen region of Greater Stockholm, and there, we are about to construct a new facility for PostNord and a terminal for the local distribution. Slide 26. The forthcoming potential for future development projects. In total, we have a land bank of 2.8 million square meters, and the potential of the lettable area is +1 million square meter. And the total potential investment going forward is some +SEK 8 billion. I would especially like to point out the Stockholm Syd, where we will have 450,000 square meters of land.
The Örebro with 700,000 square meters of land, and down in Ängelholm, Greater Copenhagen area, we will amount to 600,000+ square meters for coming future development projects. Slide 27. We have some upcoming event. May ninth we are hosting Real Estate Trend for the ninth consecutive year, and we will also take part in the Capital Markets Day in Båstad, ninth, tenth of July, 2019. Thank you for listening, and now we move over to the question and answer session. Thanks for now.
Thank you. Ladies and gentlemen, if you do wish to ask a question, then please press zero one on your telephone keypad. Our first question comes to the line of Markus Henriksson from Pareto Securities. Please go ahead.
Hi guys, do you hear me? ... Good. About the value changes in Q1, what is the m ain drivers behind the figure SEK 183 million?
There is several changes. It's the yield compression in some way. We have done some work with our property expenses in some cases, and we have leased out to a higher level of income in some cases. So I think it's something like 38 different property changes. So it's ups and, and some small downs as well, but it's- the summary is 183.
Okay. Could you say some, like, you know, what is the main driver? Like, is it mainly yield requirements or, or is it mainly cash flow and, and lease driven?
I should say, yeah, you have a yield compression, especially in when we have a large, a good tenant and a long lease period. If you have 10 years left of the contract in a very good position, and we have no alternative than with building around, then we have put some yield compression to that. Especially when we look at other, other transaction on the market, we could, we could see it, the lower yields is coming out, and we have changed a little bit. But, I should say, something like 50% of the yield compression and, and then the others of other things too, that we have changed.
All right. Could you mention some renegotiations done, and what kind of rental growth you see, and also geographically speaking, Stockholm, et cetera?
Yeah, but we have done some minor developments, and we have yeah put some LED lights installation to some customers and so on. So then we increase our rent. I don't go into one special, but this is, I should say, 10-15 property that may be done some small changes to that.
Okay. Okay. My last question, are you up for any more speculative project starts ahead?
Not for the time being. We have the one that I mentioned in the presentation down in Malmö on our 18,000 square meters. Right now, we are not planning any buildings for speculation.
All right. Thank you for taking my questions.
Thank you. Just as a reminder, if you do wish to ask a question, then please press zero one on your telephone keypad. Our next question comes on the line of John Vuong from Kempen & Co. Please go ahead. Your line is now open.
Hi, good morning. You mentioned that the investment market is currently relatively strong, so you see more competitions in transactions, and you often refer to Helsingborg and Malmö as Greater Copenhagen. Should we read this as you're going more into Denmark, or should we read this as you're going to develop more?
I think you should read it as that we are going to develop more. We do not have any plans right now for going into Denmark, but we follow it closely, and we must understand the strength of that region.
All right. Thank you.
Do you have any questions via email?
Nope.
No? I think that, we can just close this call then, if you want to say any closing comments.
On a very high level, I'm pleased with the result and what we have achieved this first quarter of the year. And I especially would like to point out that it is Q1, and Q1 is typically the, so to say, the toughest quarter of the year together with Q4.
Thank you very much. This now concludes this conference call. Thank you all for attending. You may now disconnect your lines.