Hello and a very warm welcome to Eastnine's First Quarter Presentation of 2025. My name is Kestutis Sasnauskas, and with me I have Britt-Marie Nyman joining for this presentation. For you who are watching our presentation for the first time, just a very brief reminder: Eastnine is a real estate company focusing on prime offices in prime locations in the fastest part of Europe today. We have 272,000 sq m of leasable area, approximately a billion in asset value, an economic occupancy of 96%, rental revenue, which is in our earnings capacity around EUR 62 million, average yield 6.5%, loan to value 48%, and average interest of 4.5%. With this, I will start going into the quarter. Before I do that, I would like to remind all of you to post questions whilst we hold the presentation so we can start with answering them straight after that.
We had a wonderful first quarter, very strong results. Our net operating income is actually growing 75%. We also have record profits from property management, up 46%, reaching EUR 7.8 million, and per share it grows 33% just because we had a capital increase during last year. Still very, very strong results. We are also very happy to announce that we have positive net letting for the quarter. We are already at a very high occupancy level, but we still improve it. We also have positive value growth in our portfolio due to unrealized value changes mainly in Poland. Very stable occupancy, as I mentioned, 96%. Surplus ratio improved by 1.7 percentage points, so it is reaching almost 94%. Again, very, very high figure. The board has proposed a dividend of SEK 1.2 per share, which is an increase compared to last year.
If we go back a little bit to our key target markets and why we think it's so exciting, it's actually about growth. Our region, Poland, the Baltic states have been growing faster than most other European countries over the last 25 years, and we believe they will continue growing faster for the next coming years. This is shown, you can see it actually in the figures, but Poland and Lithuania are actually performing extremely well, somewhat letting in Latvia, but the performance continues very, very strong despite the turbulence that we see globally today. These countries are also very low indebted, which opens up additional possibilities to do infrastructure investments, defense investments, etc., etc. That is now on top of the agenda. All of this, the very positive macro environment, is also combined with growing office usage and growing demand for office.
Our biggest challenge today is not a vacancy, it's actually the lack of premises that we have. We see very, very strong demand, primarily in Poland, actually for office space, as the trend for coming back for office is increasing. At the same time, we see that structurally there is huge potential to grow, and especially in combination with lower production numbers of new offices as well. This all positively drives the rental levels as well. Of course, probably the main point is actually we are in the market with lowest rental levels combined with highest yields, which creates very attractive capital values for investment. Over time, we think this gap should close, should narrow down, and definitely it will have a positive impact on the value growth of the portfolio should that trend happen.
We believe that this actually, we see positive signs of this actually moving upwards. We see positive trends in rental levels, and we see positive moves in the yields as well. If you look on our properties, we have 16 wonderful properties. There is no change since last year, so I will not probably spend too much time on them. If you look on the distribution overall, 51% of our revenue comes from Poland, 30% from Warsaw and Poznań, Vilnius with 41%. Lithuania's capital remains our core market, and then followed, of course, we have 7% of revenue coming from Riga. Property values and revenues are approximately the same. If you look, we are very sort of on our kind of segmentation in business. Office is 96%, which is, and basically 4% is mainly services surrounding the offices. We are a very, very pure office play.
If we go into the tenant side, our tenants are very strong multinational players in many cases. You can see the sort of the top list of the 15 tenants, all multinational names that you would recognize. If you look on the rental value, basically the distribution is pretty similar. It is just Warsaw somewhat lower compared to the values, but it is around 1/3 . 51% comes from Poland. On average, we have four years WAULT, EUR 221 per sq m and year on average in rent. We have approximately more than 200 tenants in our portfolio that we offer services today. In terms of sustainability, we have very ambitious targets, actually also very strong results. These are figures as per year rent. Sustainability certification is 100% of our portfolio. We received 92 points in GRESB last year and five stars.
78% of our financing is green. Of course, when we do refinancings, this figure we expect to increase even further. Green leases, 45%. It is mainly dominated in the Baltics. Poland is not yet there, but we will be working on that. As of last year, we have 82% of our portfolio EU taxonomy aligned. We also work quite hard to reduce our energy intensity. If you look on the total energy during January-February, we reduced by 4%. If we look on just building energy, not excluding the tenant energy, we reduced by 5%. We continue that work on improving our operations and making our buildings much more efficient, even though the portfolio is very modern. We have a very professional, very strong board led by Liselotte Hjorth . She will be leaving us as of this AGM.
The new proposed chairman is Louise Richnau, which we have an AGM tomorrow, so we hope that she will be elected. We expanded our executive management team. Before it was myself and Britt-Marie only. Now we have Erik, Emil, Julius, and Janis joining the team. With this improved team, we hope that we will further run the business in an efficient manner. On this, I will leave to Britt-Marie and yeah.
Thank you, Kestutis. It's a pleasure to once again present a very good result from Eastnine. We start by comparing the first quarter this year with the same period last year. As you can see, we had a huge increase in profit from property management and also in the profit for the period. The increase in the profit from property management was related to the two acquisitions last year, but the profit for the period was also positively affected by unrealized value changes related to properties in Poland. The interest income decreased during the quarter and the interest expenses increased, and both these changes are related to the acquisitions of properties during 2024. The rental income in a comparable portfolio increased by 4%, mainly related to indexation, higher occupancy in average, and also compensation for pre-terminated leases during the quarter.
If we compare the first quarter for 2025 with the last quarter 2024, we saw an increase in profit from property management with 27%. This is, of course, related to the fact that Warsaw Unit and the income from Warsaw Unit was included in the full quarter this year, but in Q4 only for one month. The figures are also positively affected by the indexation of rents, a higher average occupancy, and also the compensation from pre-terminated leases. The earning capacity is a theoretical assessment of Eastnine's earnings during a 12-month period based on current agreements, could be lease agreements and loan agreements, and certain assumptions.
We compare the situation by the end of the last quarter with the previous quarter, and normally we can see large changes if we acquire new properties, which we did not during the first quarter, and thereby we can only see minor changes this quarter. Still, the rental income increases by 1%, and that is due to the indexation. The interest income decreased due to a lower interest rate level. The interest expenses decreased after amortizations and slightly lower interest rate level. On the bottom line, profit from property management increased by 2%, mainly due to indexation and lower interest expenses. The key ratios, it is positive to see that profit from property management per share continues to increase, now up to 0.33 during the quarter, an increase with around 2%, and this is related to indexation and also lower interest expenses.
The surplus ratio is somewhat lower but stable, and the change is mainly due to higher property expenses. The ICR increased somewhat after lower interest expenses, and the net debt ratio continues to improve, now down to 8.5 due to higher NOI and decreased net debt. We have a healthy leverage level. The LTV is now down to 48%. It was 50% by year-end. The interest-bearing debt is slightly below EUR 500 million. Liquidity improved somewhat, up a couple of millions to EUR 34 million. The interest rate level seems to be the same as previously, 4.5%, but on the second decimal, somewhat lower. The interest coverage ratio is 2.4%. That is slightly lower than if we compare with the same period last year when it was 2.7%. Capital tie-up period and fixed interest period are slightly lower compared to year-end, but still quite long, around two years, both of them.
The share of fixed interest is high, 84%, and that's the same level as we had by year-end. We didn't have any new financing or refinancing during the quarter. We have a small amount to be refinanced during the autumn this year, EUR 38 million in September, and the interest from banks is very good, actually, so we think it will go very smooth. Most refinancing will take place in 2027 and, as you can see, in 2029. When it comes to debt sources, the portfolio is very diversified. We have five different banks with approximately 20% each of the loans. Berlin Hyp finances both properties in Poznań, SEB properties both in Vilnius and Riga. Helaba and Erste, 50% each of Warsaw Units, and Swedbank finances properties in Vilnius, and also small amounts from Luminor, LHV, and OP Bank.
The property value has increased substantially during the +5 years from now, from 2020 going forward. The increase during the last 12 months was 66%. If we look at unrealized value changes for properties, we saw EUR 19 million+ during the last quarter, corresponding to 2%, after a decrease during 2023 and quite stable values in 2024. This increase was related to properties in Poland. We saw a decrease in the yield requirements in Poland and also an increase in the assessed market rent for properties in Warsaw. We externally valuated three properties during the quarter, of which one in Poland. That was one of the properties in Poznań. The yield requirement in the total portfolio decreased from 6.6% at year-end to 6.5% by the end of the quarter. We have a proven growth and strategy execution.
If you look at the property value, it has increased by 157% since 2020. If we look at the profit per share from property management, it has increased with 128% from 2020. If we include also the earning capacity and the figures in the earning capacity, the increase is as high as 182%. That was the end of the presentation. Now we are ready for questions. Let's see. Do you expect your current average interest rate of 4.5% to decline when you refinance bank loans in the future? Yes and no. Of course, that will vary depending on which level they are financed on today. When it comes to the refinancing during the autumn, these interest swaps that we have today for those loans will probably be lower than the level during, at least they are lower than the level for swaps today.
On the other hand, we can see that margins have come down also, so it will vary over time. Hi, congrats to a great quarter regarding the one-off income from tenants moving out early. How much has that affected the rental income in Q1? I don't actually have the exact figure for that, not that much. I can come back to you, Martin. How do you view share buybacks?
I think, as before, I think our key target is actually to grow the business, and for that, we need basically all the money we can have. We see that can actually deliver over time significantly higher returns. Of course, should the discount widen, etc., that will be on the table of the board anyway. Yeah.
Okay, any more questions? Please post them. I think we'll have to wait a little while because it's a delay.
Maybe during this time we'll wait, I can elaborate a little bit about the strong demand. I think this is really worth mentioning that demand is extremely strong in Poland today. We see basically recovery in all of our markets, even Latvia that has been lagging a little bit. We see actually positive tendencies in Latvia as well. The rental levels are somewhat lower there, but the market is picking up. Vilnius has been stable, somewhat softening in the last quarter of last year, but now actually recovering. Poznań, primarily Poznań, we see very, very strong demand. We wish we'd have more space, but in general, Warsaw as well. The rental levels are actually picking up and that looks very good.
That was actually a question. What rent increase potential do you see for Warsaw Units?
Today the average rent is 24 in the building, and we see in the market leases signed closer to 30 today. It is difficult to say exactly because we still have quite significant WAULT coming out, but the tendency is very positive. In general, I think the market rents have moved, which also resulted in a positive revaluation of the property as well.
Do you expect to keep your high economic occupancy rate?
Yes, we believe that the premises will be well occupied going forward. Of course, there will be moves, and I think having this high level of occupancy will probably have a, there will be some changes in the tenancy in the future. Of course, this could decrease somewhat. In general, we are not concerned. We see that actually today there's a bigger risk of losing tenants just because we do not have anything to offer if the companies grow. That could create some volatility. In general, probably that will also lead to somewhat higher rental levels. Overall, we work hard to make sure that our tenants are happy, that we find space for them. In general, we see that it looks quite positive, actually.
What are the main components for Eastnine behind the difference in NAV and long-term equity value? I hope I understand that question right. Is it the difference between the NAV in SEK and euro?
No, it's the book value, and I think it's the deferred tax.
Okay.
Could that be?
No, I don't think so. If it is actually, if you're talking about the NAV and the long-term NAV, I guess there is a difference. The long-term NAV increases in euro, but not in SEK, since we can see that the SEK has improved versus the euro during the quarter. The person post the question might send another one if we didn't understand it right. Okay, any more questions?
Okay, it seems that no more questions are coming in. Thank you very much for listening to us today, and we look forward to meeting you at the next quarterly presentation, which will be in July.
Yes, in the beginning of July. Thank you very much.