Hello, very warm welcome to our first half results result presentation for 2023. My name is Kęstutis Sasnauskas. I'm CEO of Eastnine, and with me, I have Britt-Marie Nyman, Deputy CEO and CFO. Together we will go through today's presentation. Before I start, I would like to remind you that there is a certain little delay in what we send and actually when you hear us. Please post all your questions during the presentation so we can actually start answering them directly after we finish without any delays. With this, I go into highlights of the quarter. We had actually a very strong continuous growth, growing our net operating profit by 41%.
Profit from property management continues up 49% during the first half compared to the first half of last year. There is a weakening end result in terms of profit from Property Management versus Q1, but this is mainly explained by increased interest expenses. If you look on net operating income, we continue performing very strongly, and this is mainly driven by increased occupancy, increased average rents, et cetera. We have a negative unrealized value changes, maybe not a surprise given the increasing yield requirement in the market. There is a weakening ruble effect affecting value of MFG in our exit discussions. If you look at overall, we have refinanced all the maturities going...
that were about to expire during this year in autumn. Actually, we're very proud to mention that we came out number one in terms of Allbright Foundation's comparison of gender equality among listed Swedish companies. It's around 361 companies participated in the survey this year. If we go to our region and look at basically economic development, of course, we clearly see a slowdown in economic activity. This is, of course, effect of increased interest rates all across the border. There is a downturn in GDP growth as a result of that. We also see inflation coming down from very, very high levels, especially in our part of the universe, reaching topping basically at 20% in Lithuania last year.
Actually now coming down, but of course, it remains to be seen, and it's very much an effect of the interest policy by the central banks. We see somewhat weakened employment figures in our markets. It is also a natural effect out of the slowdown economic activity. Still, Poland performing extremely well in terms of extremely low unemployment figures per se. If you look on the Prime Offices, we see again still very, very strong performance in Prime Office locations in terms of rents. Vilnius, actually, we see now an increase closer to actually EUR 20 per sq m for Prime Office rents. We see a positive trend in Poznań, and basically stable situation in Latvia.
In terms of vacancies, we have statistics that we show here for the whole market, but if you look on the premium segment, we see clearly that there is a very strong demand remaining. Somewhat maybe slower in terms of lease outs, but overall, vacancies remain actually quite low, and rents still continue performing very strongly. At the same time, we see higher vacancies going into a bit of sort of B-class locations, worse locations, and worse properties. There's a very, very clear divergence right now that started already some time ago, but it continues very, very clearly. Yields are going up, and we see that effect in our valuations. I think an average yield is up around-
0.5%.
-0.5%. 50 bips, actually compared to year and last year. If you look on our properties, we have 14 properties with sort of across this land Rail Baltica line. Approximately 67% of our properties are actually in Vilnius, followed by Poznań in Poland and Riga. All of overall, 183,000 sq m , and a value that around EUR 580 million in total. Out of all of our space, actually 96% is office, and approximately 4% is other, dominated by retail. That's a small portion. Very, very much focused on offices. And if you look on the sectors that are actually represented in those offices, it's ICT, finance, e-com.
Manufacturing maybe sounds a bit odd in the office, but it's not manufacturing per se, it's actually services provided to the manufacturers that have shared service businesses. Law and audit, co-work, public sector, and medical and health. If you look on maturities, we have basically 22% maturing during this and next year. The biggest maturity is coming actually much further into 2027 and 2029. In terms of sustainability work, 94% of our floor space is now environmentally certified, again, in the highest brackets of each LEED or BREEAM certification systems. Green lease agreements stand for approximately almost 70% of our total leases. We also have 91% of our turnover from properties is a taxonomy aligned today.
These are our internal measures based on different metrics that are available today. In GRESB, we scored 92 points. We now, as I mentioned before, number one in Allbright's ranking in terms of gender equality and Great Place To Work indexed is at 95%. So very motivated team that is bringing this company forward. On the financial overview, over to you, Britt-Marie.
Thanks, my pleasure. Please remember to post questions, right away, so we can answer them afterwards. The profit from property management during the period increased by 49% and 31% during the quarter. Why is it that the increase was higher during the period than during the quarter? It's because we acquired Nowy Rynek D in May 2022, meaning that the profit was included for two-thirds of the quarter already last year, and only for one-third during the period last year. The larger property portfolio affected mainly the rental income and the interest expenses. Besides that, we also saw that higher rent levels and lower costs for energy had a positive effect on the profit, and we saw that higher interest rate level had a negative effect on the profit.
The rent level increased slightly, from slightly above EUR 15 per sq m and month during the period last year to above, or around EUR 16, the same period this year, and the interest rate level increased from around 3% during the first six month last year to around 4% during the period this year. Finally, we saw negative unrealized value changes, both for the properties and MFG during the quarter and period. We had negative unrealized value changes of around EUR 25 million during the period. This corresponds to 4.1%. It was slightly higher during the first quarter than during the second quarter.
The reason was, as Kęstutis mentioned, mainly because of an increase in the weighted yield requirement, up 0.5% to above 6%, but we also saw a positive effect from an increase in the average market rent, up SEK 0.4 to around SEK 16. If we look at unrealized value changes for the properties in the long run, we can see that the decrease during the six months this year is about the same amount as the increase during the last two years. Quite a substantial decrease or quite a low increase, depends on how you see it. The earning capacity, as you know, the earning capacity is not a prognosis. It's a theoretical assessment based on current agreements, some assumptions, but also from this quarter, rolling 12-month figures for property expenses and central administration.
It shows how much money we can earn during the coming 12 months. We compare the situation by the end of the quarter with the end of the previous quarter. We saw that the rental value and the rental income are basically unchanged compared to the first quarter. The vacancy value increased a little bit due to lower occupancy, slightly lower occupancy. We had a decrease in the property expenses, mainly due to lower costs for energy, but also due to low costs for repair and maintenance. The central administration is lower due to the new calculation method. The interest expenses increased due to new loans, the refinancing and higher interest rates. The profit from property management decreased, mainly due to the increased interest expenses.
Some key figures on the financial side, the interest rate level increased up to 4% compared to 3.4% by the end of the last year. Net LTV properties increased. This is because of the new loans, because of lower values for the properties, also after some amortizations, of course. The equity asset ratio decreased a little bit due to lower value for assets. The ICR, slightly lower, because of increased interest expenses. The average loan maturity is slightly longer after the refinancing. The average interest maturity, slightly lower. If you look into that chart to the right, you can see the dark blue bar is showing the loan maturity. Since we refinanced all loans maturing 2023, and loans with Swedbank until 2026, we only have 1% left, and that's amortizations, no loans.
You can see that we have maturities next year, that's including bank loans in February, the bond in July, and also some bank loans in December. We have already have some discussions with the banks in February, and we have had positive reaction from their side, and interest. We will start directly after summer. If you look into the green bars, you can see that we have around a third of the loans with floating interest rate, meaning the others are of course, fixed. Shareholders, this table shows the shareholding by the end of May, since the June figures are not official yet. The shareholding by the end of May, we had around 5,500 shareholders.
Approximately 80% of the shares are owned by Swedish, and we had three major shareholders, which owned around 50%. In the end of June, we also got a notice about Bonnier Fastigheter Invest, one of the largest shareholders. They acquired another 3.5%, meaning that their new ownership will be above 17%. Kęstutis, over to you.
Thank you very much. Basically, if you look on our portfolio, you see that over time, we gradually continue growing our portfolio. Of course, there's now a negative implication of around 4% of decrease of value changes, so basically unrealized value changes affecting the portfolio value. Other than that, we of course, have ambitions to grow. If you look on our revenue stream that is generated from our business, we actually continue growing very, very strongly, and we see it growing basically by 15%. If you look on up until Q2, equity, somewhat affected, of course, by the unrealized value changes, that is down, but the overall trend is very, very clear.
Profit from Property Management, which is probably our major metrics, is growing very rapidly, up 22%, on a sort of annualized.
It's rolling.
Rolling 12 months basis. Long-term equity per share has negative implications of the value changes. We see a certain weakening of SEK that is actually compensated by underlying assets being in Europe. Dividend per share growing by 13%. Overall, it's a long-term growth story continues. Why we think Eastnine is a compelling investment opportunity is that we have actually today a very unique portfolio of prime properties in a very rapidly developing and growing region. We have very strong and stable underlying tenants. Those properties also generate very strong cash flows at higher yield levels, significantly higher yield levels today compared to the Western peers.
We have been leading from the very beginning, working very, very thoroughly with our sustainability work. We lead the work in terms of sustainability in our region, we also hope that you can join that journey. We also not only that we have an exciting region, we also have a very clear ambition to grow and continue growing. Of course, the planned exit of Melon, which is kind of last thing that will boost our growth possibilities going forward. On this, let's turn over to questions.
Yeah, please continue to send questions. We have a couple of questions already. The first one, is there an alternative plan if for the MFG, for the divestment, if it doesn't succeed, and what is it in that case?
Well, if we don't sell it, we keep it. It's as simple as that. There is no other plan.
Yeah.
Yeah
we think there is, of course, potential.
Yes
We are working on it.
The key route is to still exit it.
Yeah.
Yes.
Another question, how much of your current cash and cash equivalents at hand, EUR 29 million, can be made available to amortize the outstanding bond debt, due in July next year? We will not give you a precise number on that, but of course, some of it. It's also important to keep a certain amount of liquidity in the company. Always good to have some liquidity left. Please post more questions. 'Cause these were the only ones so far.
Well, I guess it's a holiday season, so-
Yeah
... probably we will not also keep you up in there waiting for somebody to post a question. Thank you very much for today. We wish you a very nice summer, and hope to speak to you in later?
In August.
In August.
Thank you.