Morning, and welcome to this presentation of Eastnine's interim report for the first six months of 2020. As you probably have seen, we have not only launched a new report, but we have also recently launched a new visual identity, as you will see in today's presentation. The report will be presented by Eastnine CEO Kestutis Sasnauskas and myself, Britt-Marie Nyman, CFO and deputy CEO. As usual, there will be an opportunity to ask questions in the end of the presentation. The presentation will also be recorded and available on Eastnine's website. Over to the presentation and Eastnine CEO Kęstutis.
Thank you very much. Let's move directly to page number four on the presentation. Eastnine in brief. Eastnine is a Swedish real estate company listed on Nasdaq Stockholm on the Mid Cap list. The only difference from being a pure Swedish company is that our properties are all in the Baltic. At the same time, we serve mainly Nordic large corporates and international businesses. Our property value is around EUR 336 million. Total assets, EUR 440 million, and our rental potential for this year amounts to EUR 20 million. In total, we manage 114,000 sq m of rentable area. On average, our properties are valued at EUR 2,950 per sq m, and our market cap is around SEK 2.5 billion. Eastnine's vision is to create and provide prime venues where ideas can flow, people can meet, and successful business can develop.
We shall be the leading long-term provider of modern and sustainable office premises in prime locations in the Baltic capitals. Here I would like to stress the word modern and sustainable because if you look on our portfolio, it is really outstanding in those parameters. If we look on page number eight, sorry, number six, the portfolio consists of a real estate direct segment, which stands now for 76% of our total assets. We still hold a property fund, number two, East Capital, managed by East Capital. That investment amounts to EUR 23 million and approximately 5% of our assets. We still hold an investment in Melon Fashion Group, which stands for approximately 11% of our total assets. If we go to our core segment, property, page number seven you see the full complex now of S7 that was acquired during the year.
This S7-3 is our last addition that was completed during the quarter. Today, we hold approximately 13% market share in all offices in Vilnius. If you look on the A-class segment, our market share is approximately a quarter of that, of the total A-class segment. We are quite a large operator in Vilnius. Today, we are actually the largest A-class property owner in offices in Vilnius. If we turn the page, you see other properties in 3 Burės and Vertas. If you could see on the map, they are all actually concentrated around the CBD area of Vilnius. If we move to Riga, where we started building up our position gradually. Today, we stand for approximately 3% of the total office volume in the market and approximately 8%-10% of the A-class segment.
Our properties, Valdemara Centrs and Alojas Biroji are very centrally located and of very high standards. In Riga, we also have a number of development projects, one adjacent to the Alojas and the other is in between Valdemara and the rest, and it's called Kimmel. Both of them will enable us to increase our office areas by approximately 50,000 square meters, which when completed, will definitely turn us into the largest player in the market. What is important to stress, actually, that all of our properties have very high environmental certification. If you look on the Lithuanian properties, we have BREEAM Excellent and LEED Platinum certifications for most of it. Vertas is now in the ongoing certification. If we look in Riga, we just received LEED Platinum certification for Alojas Biroji and Valdemara Centrs will gradually be initiated.
I will speak about this a bit later in the presentation. If we move to our tenants, we have a very strong tenant base in our portfolio. Danske Bank stands now for 28% after completion of S7-3 part, and followed by Telia, Swedbank, Visma. All of these are very strong Nordic names. If you look on the total list of top 10, you see a number of internationals. All in all, we have a relatively high concentration to a number of bigger players, and that concentration will gradually go away when we continue to build our portfolio. At the same time, having such strong tenant base also makes our revenues very stable. We have an average remaining lease term of around 4.7 years. The largest tenants, the largest term for 5.2 years on average.
If we look on the effects of the pandemic, those are limited, very much limited to us. We have applied some discounts during the quarter, which now totals to 0.6% of our total annual rent, which is not very significant. At the same time, certain discounts were significant to most vulnerable tenants, where we still expect them to continue and they need our support. Those are mainly related to the restaurants and services in our office centers. If we move to page number 12, Property Fund. It's a minor holding. Our intention is to divest this holding over time. A realized value change was EUR 700,000 approximately. No dividend was paid mainly due to corona. Total return around 3.3%. Total value now in our holding is around EUR 22 million. If we move to Melon Fashion Group, other investments. Melon actually surprised us most during the quarter.
The surprise was very positive. Despite very big challenges for the business, Melon developed actually quite strong given the circumstances. If you recall, most of Melon stores were actually closed, physical stores were closed beginning of April, and gradually started to open during May and June. Today, approximately 80% of the network is open. As of the end of the quarter, that figure was around 75%. All in all, the revenues dropped by 2% for the company during the first six months. E-commerce was central here, and e-commerce sales grew by 140% during the six-month period, amounted to 43% of the total sales. That figure is somewhat on the high side looking forward because, and it was a result of basically all physical stores being closed for the most part of the second quarter. Melon also managed to actually surprise on the cost side.
The company made a positive EBITDA figure. Second quarter EBITDA was around 9%, and in total, 0.4% EBITDA margin for the six months. Very strong performance given the circumstances. The value of the holding was adjusted to a change in the value of Ruble. Yeah, we look forward to quite positive development in the future. Actually, June was very encouraging. If we move to page number 14, sustainability, what we do here. As I mentioned, Alojas Biroji was certified with LEED Platinum certification. The new S7-3 has BREEAM Excellent certification, which now means that 84% of our floor space is actually either LEED Platinum or BREEAM Excellent certified, which is on the higher end of the certification brackets, which we are very proud of. Certification process ongoing for Vertas in Vilnius, and will soon be initiated for Valdemara Centrs in Riga.
Those two properties are a little bit older. We'll see where we will end up with them. We also start reporting under GRESB this year. We will have in September our official score and working quite actively actually on green leases and green financing. We're also in the process of implementation of a web-based supplier review system. Gradually we're building up our capacity to also engage socially. Over to you, Britt-Marie.
Thank you, Kęstutis. We have a short summary of the report, we can say that there were strong results from property operations during the whole period and positive value changes during the second quarter. We start with some key figures on page 16. The occupancy rate increased by 3.4 percentage points during the period, of which 0.4 during the last quarter. This means that the properties are more or less fully let. Surplus ratio increased compared with the first six months of 2019. This is a very high level. The average rent increased in comparison with year-end. It was EUR 14.9 compared to EUR 14.7 per square meter and month. By the end of March, it was EUR 15. LTV is low. It's higher than year-end, but lower than at the end of last quarter when it was 50%.
Return on equity real estate direct was positive during the period after a negative first quarter. It includes profit from property management and a positive value change during the period for properties. Return on equity total was negative during the period due to negative unrealized changes in value for MFG, but it was positive during the second quarter. Profit from property management per share almost doubled compared with the same period last year. Earnings per share was negative due to MFG, but improved during the second quarter. The long-term net asset value in SEK is affected of both profits and the exchange rate, thereby decreased during both the last quarter and the period. In euro, long-term NAV increased during the last quarter. Continue with page 17, the income statement, and S7-3 is included from the end of June from the 23rd, to be exact.
The rental income in a comparable portfolio increased by 7% during the period, and even more during the last quarter, 8%. The rental income is affected by higher occupancy rate as well as higher rental levels. Other financial expenses mainly consist of commitment fees for S7 and will, in the future, disappear. Profit from property management increases more than rental income in percentage, and this is a clear scaling up effect. Fixed costs do not increase at the same rate as rental income, and the effect is even clearer during the second quarter than if we look at the first six months. We have negative changes in value, as mentioned before, for all items during the first quarter and positive for properties and MFG during the second quarter. We haven't received any dividend from investments during the period due to the effects from the pandemic.
They usually occur in the second and fourth quarter. Tax consists of deferred tax in Lithuania on the difference between fair value of the properties and the residual value for tax purposes. Over to page 18 and the statement of financial position. Taking possession of S7-3 in the end of June has increased property value and debt and decreased cash. The property value was also affected by positive unrealized changes in value during the second quarter, partly related to S7-3 and partly to higher rent levels. The value of other investments decreased during the first half of the year due to MFG mainly, but still the second quarter was positive. Equity decreased during the first quarter, but increased during the second. Other assets and other liabilities have temporarily increased due to VAT effects on S7-3. They will be netted going forward.
Page 19 and the earning capacity. This is not a prognosis. It's a snapshot of the potential in terms of profit from property management based on the situation by the end of June. There have been some changes during the second quarter. The acquisition of S7-3 is the most important one, and it's now included in the figures. Some costs for employees directly related to property administration have been transferred from central administration to property expenses. The occupancy rate has increased during the second quarter, and we have in the future no more placement fees for S7 loans. as in the income statement, we can also see economies of scale in the earning capacity. Profits from property management increases more than rental income in percentage, and this is really important. Page 20 on financing. Not much changes during the quarter. Only new financing in relation to the S7-3 acquisition.
The LTV increased. Loan maturity was a little bit lower, decreased a little bit during the quarter to 3.1 years, and interest maturity is 2.5 years. 73% of total loans has been fixed by interest rate swap. We have no capital market financing. The first loan maturity is in September 2021, and we have received signals from the bank that interest margins is more or less back on the same level as before the pandemic. Page 21, share and shareholding. The share price has decreased during first quarter and increased during the second. The share price was SEK 117 by the end of June. I think it's trading around SEK 115, 16 today. We have approximately 73% Swedish shareholders, and the list of the major shareholders is more or less unchanged during the last quarter. Over to you, Kęstutis.
Thank you. If we move to page number 23, we want to notice that during the quarter there was an annual general meeting, and we have new members in the board with Christian Hermelin, former CEO of Fabege, and Ylva Sarby Westman from Kungsleden joining us. Today we have a very strong board with very strong real estate background. If we move further to why Eastnine. We have actually a unique opportunity with a combination of relatively high yields in the Baltics compared to the Nordic capitals, a relatively low rental levels, and similar type of financing opportunities as here in the Nordics. Which makes actually our story much more compelling given the spread between the financing and the yield, and assuming a relatively similar type of risks.
If you look on our performance compared to most of the Nordic peers that have already reported, we are pretty much doing very similarly but slightly higher growth and higher yields. Our property portfolio is very modern, with highest environmental ratings. As I mentioned before, LEED Platinum and BREEAM Excellent account for 84% of the total space that we have. Very stable tenant base with relatively long contracts. Remaining contracts is 4.7 years and a strong and sound financial position with 49% LTV. Today, no outstanding capital markets financing. At the same time, we have a fantastic growth opportunity in the market, both through new acquisitions coming in the future but also development. The market is actually developing relatively rapidly right now. In the background, you can see a timeline actually of Vilnius, and it actually looks completely different just 10 years ago.
If we move to last page, future focus. Of course, looking in the future, today our growth is our core focus. We look to acquire more cashflow-generating assets, and you can see the effects of those acquisitions on our profitability. That, of course remains our core focus today. Of course, development of remaining non-core holdings will allow us to do that, and looking to develop the new project. As mentioned before, the Pine and the Kimmel projects in Riga which are in the focus. With this, we open for questions.
Thank you. We will now begin our Q&A session. Ladies and gentlemen, if you wish to ask a question, you may press zero one on your telephone keypad. Ladies and gentlemen, I would like to remind you that if you wish to ask a question, you may press zero one on your telephone keypad. We have one first question from Mr. Rikard Engberg from Erik Penser Bank. Sir, please go ahead.
Morning, guys.
Morning.
I have just one question. Can you elaborate a bit about the transaction market in the Baltic? Because we have seen some transactions in Tallinn, for example. Do you believe that the pace will increase now during the summer and autumn?
Yes. I think in general, it has been much calmer. Some of the transactions were put on hold, but we've seen actually three larger transactions, one bigger transaction in Tallinn, one completion taking place besides our completion in Vilnius. Things that have been started before pandemic, I think they are going through, especially when it comes to higher quality top properties. At the same time, I think overall transaction volumes will probably still be significantly lower this year compared to where we were last year. We hope that with travel restrictions being lifted now, hopefully by the end of this quarter, we will see much more of the transactions taking place. By the way, I think I was referring only to Sweden. If you look at other countries that the intra-travel in the Baltics is now fully free.
I think most of European countries can also access the Baltics right now. It's getting better and better.
Yeah. The yield levels on those transactions that's been both in Tallinn and Vilnius, are they on the same level as your yield? </edited_transcript
They were at the same level as they were pre-crisis. Somewhat lower, maybe even. No shift in yield. No significant shift in yields.
Cool. That was all for me.
Okay. Thank you.
Thank you, sir. We have no other questions. Ladies and gentlemen, I would like to remind you that if you wish to ask a question, you may press zero one on your telephone keypad. It's zero one on your telephone keypad. Ladies and gentlemen, if you wish to ask a question, you may press zero one on your telephone keypad. We have no other questions.
Sorry, no further questions? </edited_transcript
No.
Okay.
thanks. Interim report for January and September will be released on the 5th of November. Thank you. Thanks for listening in.
Thank you, and have a nice summer, everyone.