Hello, and very warm welcome to Eastnine's year-end report. My name is Kestutis Sasnauskas. I'm CEO of Eastnine, and with me I have Britt-Marie Nyman, Deputy CEO and CFO. Before I start, I would like to ask you to post your questions during our presentation, which we will respond to after we finish the presentation. W hat an amazing year we had. Our property portfolio grew by 63%, and our profits from property management actually grew by 25% during the year, on a top-line growth of 15%. A ctually, the biggest acquisition happened in the last quarter, and we can see immediately that our profits are growing by 37% during the last quarter. Profit per share increased by 24% during the year, 32% for the quarter. A n amazingly strong result, but also the full effect of the acquisitions will only be seen throughout 2025.
We're actually looking forward to quite nice development during the year. We have a positive net letting during the year and during the quarter, and our occupancy now is at 96.1%. Our surplus ratio remains very high, at 92.8% during the year. It's even higher during the quarter, but I will go into it a bit later. We did two big acquisitions during the year, Nowy Rynek E in Poznań in June and Warsaw Unit in November. The board proposes an increase in dividend of SEK 1.20 per share in total, which is actually 50% of profits from property management. The biggest acquisition, Warsaw Unit was totally transformative for our business, so that's why we put an extra highlight on it. It's the central Warsaw, and probably the best location on Rondo Daszyńskiego.
It's a 202 m high building, 46 floors, one of the most modern buildings in Europe, and also 60,000 sq m approximately. I t's a very, very big property. It's fully leased, with fantastic tenants, Warta, Amazon, Moderna, Stryker, CBRE, Panattoni, and [audio distortion], which is now below the current market. It's around EUR 24 per square meter and month, while the market today is reaching approximately EUR 27-EUR 28 for similar types of properties. Annual income from this property is EUR 18 million. We acquired it for EUR 280 million and a yield of 6.4%. I t's been an amazing, great addition to our portfolio, and actually we established ourselves in Warsaw with probably the best located and best property to buy in the market overall. I f we look in our markets, what is so special about us?
You can see we entered Poland, and actually Poland has received quite a lot of media coverage, in both Swedish media, but also internationally. The coverage of Warsaw Unit has also put our brand on the European level as well. What's so interesting in this region is actually we are in the fastest-growing part of the European Union, on the east and southern flank of the Baltic Sea. We are present in Latvia, Lithuania, and Poland. A lso, if we look at the GDP growth in the region, actually this is the fastest-growing part of the EU. It has been the fastest-growing part of the EU for the last 25 years. It is bound to continue growing very, very fast for the next coming five years.
The economies that we are in are also very lowly leveraged, so they have not been affected as much with big increases in interest rates. A lso, there is a potential actually to do additional investments, lever- up the economies as well, do infrastructural investments. T his all looks very, very positive, especially in light of current transformation that is ongoing overall in the economies. We have this nearing to the more developed markets going on. We see more infrastructure investments coming in the region, which will overall boost further the growth. We also see a very strong demand in the office jobs overall. The office employment has increased quite substantially over the years. It actually tripled in the whole of our regions over the last 20 years, and it continues growing.
If you look, maybe Warsaw is reaching this kind of European average for the biggest cities in terms of number of office employees as of total employment in the cities. We have still, Riga, Vilnius, and especially Poznań lagging significantly behind. I always try to compare Poznań to actually Munich, which is at 33%, and it's a more industrial part of Germany. Poznań is a more industrial part of Poland. It's an amazing market, which is still growing, and there is pending demand going forward for office jobs and of course this employment is bound to continue. I've just got off the call with one of our tenants actually, and I was told that they are increasing the number of employees by 1,000 people this year. We are actually in a very, very positive overall mood.
What makes our case very attractive is actually that we are in the region where rents are still relatively low and among the lowest among the peers, while the yields are among the highest. This, in combination with the same financing cost, we basically finance ourselves with the Nordics and German banks, makes the investment very, very attractive. Capital values are still very low, but also we generate similar kind of yields. Our portfolio generates similar kind of yields as logistic companies do, and it's coming from the prime office segment. I f you look on our operations, today we have 16 properties, 271,000 sq m of lettable area. I t's relatively chunky, big properties. Total property value is EUR 935 million . Per square meter, it's valued at EUR 3,400 on average, an average age of approximately seven years.
It's a very modern, very young portfolio. If we look on our operations, our surplus ratio is very high, especially for the office operator. It's triple net lease market, but we actually continuously improve it. I f you see over the quarters, we're coming from 91%-93%. A ctually, if you look on our earnings capacity, it's bound to grow up to 95% by the end of this year. Occupancy ratio is also continuously improving from 93% at the end of the year to 96.1% at the end of 2024. A ctually still, it will most likely increase, as we have some tenants moving in. W e are actually probably recording a figure of 97 and slightly above that. Yield in the portfolio has actually flattened out.
In valuations, it came from 6.4% up to 6.7% during the last quarter, and actually down now to 6.6%. I t's all positive in terms of yield development. Poland today stands for 51% of our portfolio, Lithuania 41%, and Latvia approximately 8%. Y ou can see that actually the only vacancy we have is basically in two properties in Latvia. I f it looks even high in terms of figures in the market as such, it's about two properties. W e are actually in the good process of improving them, and actually reletting them later during the year. I f we look on the net letting, it was positive during the year. Again, in Q4, we still have a positive net letting.
With these very high figures, it will be difficult to show any significant positive net letting going forward, but we also see relatively positive dynamics overall in the market on the lease market per se. WAULT, again improved, so basically, we improve on every single metric of our business during the year. Tenant concentration is down. It's something that we are totally aware of, and we're trying to bring it down, so coming from 16 just a year ago for one largest tenant, I think at that point of time it was Allegro, now we're down to 11%. W ith further acquisitions, this ratio will go down and our risk will be more spread out, but we also have very, very strong tenants.
Our largest relationship with Warta, is a Polish insurance company, Allegro, one of the largest Eastern European e-comm players, Danske Bank, Telia, Vinted, McKinsey, Swedbank, CBRE, Rockwool, Moderna, all of the names that you recognize and actually represent the modern part of the economy, of the service economy in these countries. We also worked a lot on sustainability, and improved our performance quite significantly during the year. Now we have a 100% certified portfolio. All of our properties are either BREEAM or LEED certified on the absolute highest brackets. We have only one property in LEED Gold, and that we will move up to LEED Platinum during the year. That's the intention. B asically, we will have only LEED Platinum or BREEAM outstanding properties. N ot only are they certified, they are actually certified in the absolutely highest level.
We received 92 points in GRESB, and we worked quite a lot on reducing our energy per square meter, both with working with our tenants. That reduction is around 10%, but actually if you look on the properties alone, we reduced by 12% and we continue reducing. We have a slightly higher energy consumption overall in our premises compared to Nordic peers, but the main reason for that is actually that we have humidity installed in our buildings, which is not present in this market here in Nordics. Green financing is 76% of total, and green lease is 45%. It decreased, but just because of the addition of a u nit property in Warsaw. O n this, I will hand over to Britt-Marie.
Thank you, Kestutis. It's a pleasure to present Eastnine's earnings for 2024 and the last quarter. We saw a large increase in profit from property management, both during the year and the quarter. T his was of course related to the acquisitions of the two properties in Poland, Nowy Rynek E in June and Warsaw Unit in November. As you can see, the profit from property management increased by 25% during the year and even higher during the last quarter.
Acquisitions mainly increased rental income and increased also the interest expenses, but we saw a decrease in the interest income, and this is of course related to the fact that we used cash in the acquisition. During the full year, we saw an increase in the interest income, and this is because we sold our investment in MFG in August 2023, so we only had four and a half months that year with interest income, and we had a lot more income in 2024. Sorry.
The central administration expenses were affected by one-off costs in the first quarter, and affected by increased legal and sustainability costs during the full year. The earning capacity is a theoretical assessment based on current agreements, certain assumptions, and also in some cases, 12-month figures. We compare on this slide the end of December with the end of September, and the acquisition of Warsaw Unit has substantially increased the rental income, the net operating income, and also of course the profit from property management, and 32% on the last one. Central administration cost is a 12-month figure, thereby affected by the increase in one-off costs during the first quarter and also affected by the increase in sustainability and legal costs during the year.
The interest income has decreased since the end of September, since we used cash in the acquisitions, and the interest expenses have increased due to the acquisition, but slightly affected by a decrease, positively affected by a decrease in the interest rate level. If you look at the key ratios in the earning capacity, the profit from property management increases by 21% looking forward. The surplus ratio is also positively affected, up almost two units, 2%. The interest coverage ratio decreases, and the net debt ratio increases due to increased costs for the loans and also that we have less interest income. A s I said before, the interest rate level decreases somewhat during the fourth quarter. Now we have seven different banks on the financing side and also a pension fund.
As you can see in this chart, five of them finance almost the same amount, around 20% each, and that's very good. It's spread out between different banks. We had two German banks, Berlin Hyp and Helaba. Helaba financed 50% of the latest acquisition, and the other 50% was financed by Erste, an Austrian bank. Still, SEB and Swedbank, around 20%. If you look at the interest- key figures, the interest rate level decreased somewhat compared to the last quarter, but increased of course in comparison with the last year-end. We have increased the share of fixed interest quite a lot due to new swaps during the fourth quarter related to refinancing and the new financing, and the fixed interest period increased after the refinancing and the new financing. Interest coverage ratio increased compared to Q4 2023, but a little bit lower compared to last quarter.
Liquidity has decreased of course, since we used cash as planned in the acquisitions. Loan-to-value on the level that we actually prefer it to be, around 50% after the acquisitions. The capital tie-up period, 3.4 years, quite long now, has increased. The property value increased by 63% to EUR 935 million , 10.7 billion SEK. Eastnine has become a medium-sized real estate company now, and that's good. All of that increase during 2024 is related to acquisitions, since we saw hardly any changes in values and not much of other investments either. They were around EUR 4 million each. In Q4, we had a slight decrease of the unrealized changes in value, and they were related to building rights in one of our properties.
If you look at the chart in the middle, you can see that we had a lot of negative unrealized value changes in 2023, hardly any in 2024 and hopefully this is a shift in the trend. Yield requirements also decreased somewhat in the fourth quarter. A little bit of information for the shareholders. The profit per share from property management increased by 24% in 2024, and also as you saw in the earning capacity, plus 21%. If you look at the total shareholder return during the last year, Eastnine presented 11.6% compared to only - 2% when it comes to OMX Stockholm Real Estate. T he average during the last five years, Eastnine had 10.6% compared to - 1.3%, an extraordinary result.
As Kestutis said in the beginning, the board proposes an increase of the dividend to 1.2% per share , split over four installments and corresponding to 50% of profit from property management, less current tax. The board also proposes a new dividend policy. Eastnine sees increasing profit from property management, and has also identified interesting investment opportunities, so t herefore, a change in the dividend policy. Eastnine has the ambition to annually increase the dividend per share. Dividends are to correspond to at least 1/3 of profit from property management, less current tax. I think this was about it in the presentation.
Okay, thank you very much. Now we go over to questions. [audio distortion].
Yeah. We have received quite a lot of them. The average interest rate of 4.5% seems high compared to other real estate companies. Do you expect this level to go down? I suspect the question is. Yes, of course we do, but since we have 84% with fixed interest rate now, this will not happen very quickly. It will happen on the part that we actually have with floating interest rate, and also sometimes when we refinance. How do you view the future? Can't read that one. Now we have to go to the next one I think. Concerning rents in Warsaw Units, will you raise the rents to EUR 27 per sq m or close to it during this year or will you stay at EUR 24 ?
Now, when it comes to rents in Warsaw Unit, I think we have an average WAULT of around five years, and it will not happen quickly. It's 100% leased today. O f course, when there will be rent negotiations, we will be able to adjust it to the market. I n general, it's quite positive that we see an upward trend in the market overall. T he rents are going up. We see that in Warsaw, especially in the office segment, there is very little supply coming in the next two to three years. W e also see that demand is very, very strong. We believe that the overall rental levels will come up. How it will affect us, of course in valuations, values include the market rents. O f course, if they go up, we will see a positive appreciation in value.
You changed your dividend policy this quarter. Could you elaborate on what made you change it?
Yeah, primarily we see enormous opportunities for growth. T he intention actually is not to decrease dividend per share. The ambition is to continue increasing dividend per share. At the same time, we keep some of the cash for further investment and for the growth of our business. W e see an enormous amount of very interesting opportunities today.
Your net LTV is now slightly above 50%, after being well below the Swedish sector average for quite some time. How are you thinking about acquisitions, investments, and how do you fund them going forward? Yeah, about the LTV, we think that 50% is a comfortable level. O f course, in some cases, as we did when we acquired Warsaw Units, we can decide to go a little bit further up. P robably this is a better opportunity to do it now, when we have seen a lot of decreases when it comes to values, but around 50 over time.
I think it's also very important when you look at LTV, you should look also at the yield level that we are generating. The yield level in valuations is 6.6%. I t's very high compared to our peers in the Nordics, a nd that's why higher leverage is justified.
I think we had another question. How are you thinking about acquisitions, investments, and how do you fund them going forward?
We have a number of opportunities. Of course, now we have a portfolio which we can start optimizing. W e will probably reallocate in the future, some of our proceeds if we divest something. A s before, we have all the tools as any real estate company has, yeah.
What are the fundamentals for rental growth in the short and medium term in your respective end markets?
Yeah, so Warsaw, I already mentioned, we see quite strong demand remaining and very little supply. We saw a very stable situation in Vilnius evolving over the years, with also positive dynamics in terms of rental rates. I n general, we see that demand for prime office remains. The demand might shift towards even stronger, once the policies to return back to the office are fully in play. We see that more and more. I f I compare back two years ago, maybe eight discussions out of 10 were about decreasing the premises, which also benefited us because we were quite attractive with our premises for tenants.
They were decreasing and moving into us, and paying slightly higher rents. We see a complete shift, where maybe now eight discussions out of 10 are about managing the expansion needs. Most of our tenants continue employing all across. T hey are growing as companies, and the policies are more towards bringing back people to the office. T he demand looks to be probably even stronger than we expect. We might see a spike in it really soon.
What is the outlook on the direct transaction market in the Baltics and Poland for the next 12 months?
We see quite an increase. There were maybe three or four larger transactions taking place right after our acquisition of Warsaw Unit in the Warsaw area. T he expectation is that there will be more transactions taking place. Of course, liquidity in the Baltics has been quite low for now, but there were no pressed sellers, no pressed buyers or no very keen buyers either. I think this is shifting now, because we see normalization in the yields. We see normalization in the interest rate levels. It's now easier to make those decisions. We see that actually interest from the players that were in the market before is coming back. There is more discussion. There is more activity. W e expect that actually activity overall will increase during 2025.
Is the investments primarily in Riga?
No, not necessarily. I think we will look into various options, but we also probably will tweak a little bit our portfolio.
We are always looking into optimizing our portfolio.
Especially creating higher returns per share, s o this is our main goal.
I think that was basically all of them, y eah.
Yeah, okay. Thank you very much for listening, and look forward to meeting you at the next quarter.
Thank you.