Good morning, welcome to this presentation of Eastnine's interim report for the first quarter of 2020. 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, either over the phone or on the website. The presentation will also be recorded and available on Eastnine's website. Over to the presentation and Eastnine CEO, Kestutis Sasnauskas.
Thank you very much. We move immediately to page four, describing effects of COVID-19. We want to start with this right away and then move into further presentation. We stand very strong in this crisis right now, with very solid tenant structure, long duration of our leases, 95% exposure to office premises. So far, effects of the COVID-19 on our real estate operation has been really minor. We also have very strong financial position with strong cash position, LTV at 50%, and capital tie-up of 3.3 years. There are no maturing loans during this year, and only a minor part maturing next year. We do not have any capital market financing either. In general, we entered this crisis on a very solid base.
We had a very strong development in the beginning of the year in the market, with very falling property yields and strong rental market. Of course, there is some stop during the crisis right now, we have also valued our whole portfolio externally in this situation. Our portfolio is just marginally affected, mainly for two reasons: down adjustments of inflation forecast and expected minor rental losses. Far, losses are really minor and significantly lower than expected. Of course, the biggest implication on us is the value write-down on Melon. Melon Fashion has been very badly affected in the crisis as all of its stores were closed during April. Today, we operate only 26 stores after a start of relief of some of the quarantine measures, and will gradually be coming back. I will talk more about Melon later.
It actually resulted in a EUR 22 million write-down in value. Half of this write-down comes from the weakened currency, as ruble slided as a result of the very low oil prices as well. The other half is a more conservative view on the sales and effects of the closures right now. In terms of our operation, we follow all the official recommendations. None of our staff have been ill actually so far. We're very happy for that. Overall, all our properties are operating. We've also done some community initiatives supporting hospitals and our restaurants by buying food from them and delivering to the hospital personnel. During April and May, we're serving now 230 meals a day to the Vilnius hospital. If we move to our company presentation. Eastnine in brief, for those who listen to us first time.
We are a Swedish real estate company listed on Nasdaq Stockholm Mid Cap and headquartered in Stockholm. Our core tenants are Nordic tenants operating in the Baltic countries, but also servicing their main core businesses in the Nordic countries. Our property portfolio consists of prime office buildings in central locations, central business districts with a top-quality portfolio. If we move to page number seven, you see our asset distribution. Total assets of EUR 403 million, of which majority is in properties today. Melon Fashion Group constitutes 11% of total assets, we have one fund investment consisting 5% of our assets. The rest is properties and cash. If we look at our property portfolio, majority of it, 80%, is in Vilnius, both in value as well as in square meters. Why do we think Baltic capitals are so attractive?
Over the last 10 years, actually, Baltic markets have been growing twice as fast as, or both economies have been growing twice as fast as the average E.U. economies. There's a big convergence movement going on. We believe it will continue. All of the countries are members of E.U., Eurozone, and NATO. We are operating in euros. Countries have done a lot to improve the business environments, Lithuania ranks, for instance, 11th in the ease of business, just after Sweden. We are very similar to the Nordic markets, Estonia being 18th globally and Latvia 19th. All of them top the list of the business-friendly countries in business friendliness. We have very strong demand for office space operating in relatively low vacancy rates. We have very many international tenants as Nasdaq, Danske, Moody's, Uber, and Swedbank.
Maybe not all of these names are our tenants, but you see Danske, Uber, and Swedbank are actually among our tenants. We have very stable real estate markets, disciplined financing, quite attractive yield levels between 5.8%-6.2%. This in combination with significantly lower rental levels compared to any of the Nordic peers you see on the graph on the right makes a very attractive combination as the spread between the financing cost as well is very, very high. Financing conditions are basically very comparable to the Nordic markets. This combination makes our case very appealing. If we move into property portfolio, you can see some pictures on page number nine and page number 10. The far right picture on page number 10 is a property called S7-3. This property is something that we expect to complete now during this second quarter.
There was a delay due to some administrative technical matter for the separation of land and that is now in the process to being resolved. We still expect this completion to happen in Q2 of 2020. If you look on our position in the market, Eastnine has 80,000 sq m of Class A office space. We are definitely the largest today in Vilnius market in the Class A segment, concentrated in the CBD area around Konstitucijos prospektas and we intend to further build on that position and having a very strong offer in that area. If we move to Riga on page number 12, you can see our portfolio with the latest acquisition being Valdemara Centrs. I see a small mistake actually, that the tenants are actually moved between the Valdemara and Alojas iela.
They have.
Yeah.
Yeah, they mixed it a bit, but otherwise it's correct. Of course, if we move to page number 13, the future projects in Riga, we have two development projects. One is in building permit process now, The Pine, and we expect some news or passing the first stage of that during this quarter still and having a final permit by the end of the year so we can start constructing it. The second is the acquisition that we made in Q4 last year, it's a Kimmel project which we are now developing a new concept for. Both of them will give us additional 54,000 of leasable area on top of our 20,000 square meters in Riga today. On page number 14, you see where our portfolio concentrated also in relation to competition.
Total premium office market stands for approximately 100,000 sq m in Riga which implies that actually our small position of 20,000 is already a significant position in this market as well. If we move further, on page 15, you can see our tenants. We have 160 rental agreements and 120 tenants. Our 10 largest tenants constitute for 64% of our contracted rent. Average lease term is 5.5 years. 10 largest tenants is 4.9 years. Danske Bank is the largest tenant today with 70% of annual rent, and the share of Danske will increase further due to acquisition of S7-3. However, as portfolio build-up will continue, that position will gradually decrease. If we move to page 16, very briefly on Eastnine's report on property fund number two, total return of 1.6% during the quarter derives mainly from net operating surplus.
The fund has five properties in office logistics and retail, mainly food retail of that for the retail part, and we plan to exit that investment still during this year. If we move to Melon Fashion Group, of course, it's sad to report a 32% write-down of the value. We still believe that this company has extremely strong chance of becoming a strong winner out of this crisis. The company went into the crisis in a very strong position, very solid financial position without any debts, very strong growth. During the quarter we see 37% growth. February growth was 60% almost. We have very strong growth on our e-commerce channel that I have been addressing for now many quarters. E-commerce standard was 29% of our total sales.
Today, when most of our physical stores have to be locked down due to corona situation, internet stands for almost 100% of our sales. That growth is still above 50%, if you look on a month-to-month basis. Even if it has been somewhat negatively affected during the crisis, the growth on e-commerce is still very, very strong. We see also strong growth in stores that are open. As I mentioned, 26 stores. Actually, now we see the message that we have 30 stores open today, this morning. In these 30 stores and the ones that have been operating for a couple of days, we see that actually very strong demand and very strong sales. It gives us a lot of confidence that once situation will normalize, we will continue in a good way. Now I hand over to you, Britt-Marie.
Thank you, Kestutis. Eastnine released the best ever result for a quarter in terms of profits from property management due to larger portfolio, of course, but also due to a higher occupancy and higher rental level. Coronavirus pandemic has had a large negative impact on the value, of course, of MFG, as Kestutis said. We continue with page 19, key figures in brief, divided into four categories: efficiency, rental leases, financials, and share related. Yield requirements in the valuation was 6.1%. The surplus ratio has been stable around 90%, which is a very high level. The return on equity total is negative mainly because of the effects on MFG and the return on equity for the real estate direct is slightly negative due to the corona pandemic's effects on the property values. Rental leases.
The average rent was EUR 15 per sq m a month at the end of March compared to EUR 14.7 at the end of last year. WALT approximately the same as by year end, 4.9 years. Occupancy rate increased by 3 percentage points during the first quarter to 95.7%, which is more or less fully let. Financial LTV increased to 50% after we took a new loan on an existing property. It's only the real estate that is leveraged. Equity assets ratio decreased to 61% due to that loan and to negative value changes. It's still on a very high level. Average interest level stable around 2.3%. Share related profit from property management almost doubled to EUR 0.11. Earnings per share negative due to negative unrealized changes in value and the equity and long term NAV per share was EUR 126 and EUR 131 by the end of the quarter.
Page 20. Highlights during the quarter. The average rent level of net letting increased to high EUR 16.3 per sq m a month, which can be compared to EUR 14.7 by the end of last year. Net leasing is likely negative, but should be viewed in the context of the high occupancy rate and the occupancy increase, as I said before. Page 21, the income statement. Rental income, property expenses, and interest expenses increased in comparison with the same quarter last year due to the larger portfolio. Rental income also increased because of higher occupancy and higher rental levels. It's a mixed effect. Other financial expenses contains mainly of commitment fees for the loans related to coming acquisition of S7-3. We had a small unrealized value change for properties less than 1%, and of course, also a negative effect on MFG as said before.
Over to page 22, the statement of financial position. On this page, we compare the end of the quarter with the end of last year. The value of the property portfolio is almost unchanged. No acquisitions, a small change in value of the properties. Long-term securities decreased. Cash increased because of the new loan. We can say that Eastnine also received an overdraft facility of EUR 3 million during the quarter, which has not yet been used. Equity affected by the unrealized changes in value and liabilities to credit institute increased with the new loan. Over to page 23, earnings capacity. What's new during the last quarter, this page, and as you know, the earnings capacity describes theoretically the company's current earnings as of the end of March.
Figures are based on the property portfolio per the end of March and should not be mistaken for a prognosis. We don't make any assessment of the rental levels, vacancies, expenses, and so on in the future. As you can see, there is a substantial increase during the quarter due to lower vacancies and higher rents. NOI is increasing more than rental income and profit from property management even more. This is natural since Eastnine mainly has triple net agreements and that central administration is unchanged. S7-3 is not included in the figures and will improve the figures even more after it has been taken session on. Over to page 24, share and dividend. Listed at Nasdaq Stockholm Mid Cap, as you know. We have slightly more than 22 million shares, of which 1.2 in treasury.
The board has proposed a dividend of EUR 2.70 to be decided later today at the AGM. Page 25. The number of shareholders decreased from 5,600 to 4,400. 72% are Swedish and around 55% of the foreign are investors from the U.S. What about the future, Kestutis?
Yes. Thank you. Of course, our focus remains on building up our portfolio. Of course, first is to complete the acquisition of S7-3 during the coming quarter. We still continue looking for new opportunities and buying portfolio within our core strategy. We are still looking for divesting remaining non-core holdings. Of course, divestment of Melon will be delayed due to COVID-19, I have to say it right away. It depends a little bit how this pandemic will evolve and what implications it will have. We are proceeding with the planning stage and development of The Pine and Kimmel. Of course, by handling the situations from pandemic now in the number of discussions, we see also quite a lot of interesting opportunities where we can find actually value creative solutions, both for our tenants but also for us. We are working quite actively.
We see actually that we could improve efficiency of some of the portfolios even further some profits.
Yeah.
On that, we open for questions.
Thank you. If you would like to ask a question, please press zero one1 on your telephone keypad. If you wish to withdraw a question, you may do so by pressing zero two to cancel. That is zero one on your telephone keypad. Just as a reminder, that is zero one if you would like to ask a question. Our first question is from Rikard Engberg from Erik Penser Bank. Please go ahead, your line is open.
Morning. Could you please elaborate a bit about the transaction market in the Baltics, and if you see any other actors on the market right now?
Just before the crisis, we saw increase in competition from German players and even some other players coming from South Korea and other places, which also indicated that there has been quite strong interest in the market. Of course, right now there's a travel ban, so if you go to the Baltics, you will be put in quarantine for two weeks. I guess to date it's really very calm, and we'll see how it will all evolve. Overall, just before the crisis, we saw an increased interest among internationals.
Okay.
Just as a reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. There seem to be no further questions. I will hand it back to the speakers for any final comments.
The interim report for January, June will be presented on the 17th of July. Thanks for listening in then.
Okay, thank you very much, and until next time.