Hello, and very warm welcome to our 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, talking about the year, I just want to remind you, please post your questions online. There is a certain delay between what we speak and what you hear, so to avoid any unnecessary delay, please post it during our presentation. So 2023, what a year we had! A true rollercoaster from the highs to the lows to another highs. But actually, operationally, we also made one of our best years, or this is absolutely the best year. Profit from property management increased by 32%. Our top line grew by 19%. Net operating income, 22%.
I'm starting in this order to show you that the performance that we deliver, actually, our growth is very, very profitable, and it's much more profitable than the top line. Our NOI reached EUR 17 million, or 0.80 EUR per share. We finalized our sale of Melon Fashion Group, which been a truly rollercoaster for us, but now it's done, and our balance sheet and our results will be much less volatile going forward. We managed to deliver 46% return to our shareholders, which we are very proud and happy, and I would like to thank the whole team for actually contributing to doing that. Q4 was quite eventful as well. We actually redeemed our bond, which strengthened our financial position, and we adopted new business plan.
We also saw positive net letting after two quarters of negative net letting, but we came from a very, very high level, and this is a natural movements that we will follow. We will see, you know, ups and downs in this net letting going forward. We have slightly positive unrealized value changes in properties. So what we see is probably the bottoming out in terms of valuations, and The board proposed a dividend of 30, up 36%, SEK 4.64 per share, which will be paid on a quarterly basis. Dividends stands for approximately 53% of property management after current tax, and this is totally in line with our policy.
So if we go back to our region and what has actually been happening during the year, I mean, we had a slowdown in economic activity in general all across the region. This is nothing different from the rest of the world. We're coming down in terms of inflation. We had a very high inflation the year before. 2023, we saw a slowdown in inflation, and this process continues. But we also see that the region is performing very well, and our strongest market remains Poland. And I would like to remind you just to see how strong historically Poland has been performing and overall our region. So we've been... We are in a very, very fast developing and growth region overall.
If we look on the rental levels, vacancy levels, overall in the market, you see a slight increase during the year. We've seen probably the most positive situation in Vilnius as our core market, with market rents increasing, [prop] rents reaching 21 EUR. We see a slight increase in Poznań. We see a slight increase, or stable situation in Riga, but we have experienced higher vacancies in Riga. This is valid for the whole market. This is valid for us, too. If you look on the other markets, the Poznań market, and Vilnius, are lower vacancies in general. But there's also very, very big difference in those vacancies because overall, we see a very big shift towards quality.
So quality properties experience almost zero, or zero vacancies or very low vacancies, basically just some kind of transitional vacancies. There is a stock that is not as modern, not as well-located, that has actually bigger vacancies and need to do something with them. So in general, the market picture might look gloomier on the graphs than actually it is underlying, and especially when it comes to our business. The prime yields have been pushed up. That's no news to anyone. And if you see, you know, Vilnius and Riga, somewhere around 6.5%, as most of the capital cities, probably in the eastern flank of on the eastern side of the Baltic Sea.
We see that regional cities in Poland are in excess of 7%. So if you look on our portfolio overall, we are in three cities. We are in Riga, Vilnius, and Poznań, and I always draw this yellow line of the future infrastructure coming up with Rail Baltica. That will connect basically the whole eastern flank of the Baltic Sea towards the western part of Europe. And this is something that will be very, very important going forward for the development of this region going forward in the future. Property value around EUR 570 million. We have 14 properties, 182,000 sq m , and 94% of those are sustainability certified at the highest brackets of their respective certification.
We're talking about LEED and BREEAM, LEED Platinum or BREEAM Outstanding. If we look on tenants and rents, I mean, we have surplus ratio of 93%. It's one of the highest in the industry. Rents have increased. WALT is 3.8. Of course, it's going slightly down, and green leases stand for approximately 68%. As some of our loans mature and will be refinanced, we will reclassify them as more green in the future. So this is connected with this kind of process, that some of the loans that are older were not classified properly. Or properly, they were simply not available classifications for green loans before. 96% of our premises are actually in offices, and it's a prime locations in prime quality.
Retail stands for 3.4%, and it's mainly restaurants and services that are provided for those offices. The tenant mix represents probably the most vibrant part of the economy. ICT, finance, e-com, and other sectors stand for 25%, but these three sectors actually are the fastest growing. From the past, we've been dealing mostly with the growing clients, and meeting their growth requirements. Lease maturities are pretty balanced, going forward. So, in general, on this, I will move... hand over to Britt-Marie.
Thank you. And, please, I want to remind you to post questions. It's a pleasure to present the results for 2023 and also for Q4. Profit from property management increased by 25% during the quarter and 32% during the year, the year, despite the increase in interest rate levels. Most important events, changes, was the historic sale of MFG in August, followed by an early redemption of the bond in October, and interest income on liquidity since August. We had a larger average property portfolio and a higher average occupancy during the year, affecting NOI. And also, and this is very important, since I know that some of you might have thought that the interest expenses and the financial expenses was high during the quarter. That's correct, and it's related to the early redemption of the bond.
Total in Q4 was EUR 1 million, and around 800,000 affected interest expenses, and the other 200 was financial expenses, one-off costs. We had negative profit for the year, and this is mainly related to negative unrealized value changes for both properties and derivatives during the year. And we also saw a negative realized value change for MFG, and that's related to a high book value by the end of 2022. We had almost flat unrealized value, flat value of the properties during the quarter, slightly positive, but almost flat, and during the year, negative by almost 6%, EUR 35 million. The weighted yield requirement increased both during the quarter and the year, affecting the unrealized value negatively.
And the average market rent increased both during the quarter and the year, during the year by 1 EUR per sq m and month. If we look at the last eight quarters, you can see that this quarter, 21,000 EUR, and this is followed from. We were, we are coming from three quarters with negative, quite substantial negative value change for the properties. We have a very strong financial position. The interest rate level decreased during the quarter to 4%, and this is after the redemption of the bond. But still, market interest rate continued to increase, and that also affected our bank loans. We have a lot of cash after the sale of MFG during the third quarter, but due to the redemption of the bond, it decreased during Q4.
If you look at the ICR, it looks okay, but not as high as it really is. This is affected, these figures during Q4 and also a little bit during Q3. They are affected by these extra one-off costs due to the redemption of the bond. You receive them when come to the earning capacity, that if we are looking forward, it's as high as 2.9. The LTV, still low, 27%. The net debt in relation to EBITDA, 5.2, also low after the sale of MFG. And maturities, when it come to loan maturities and the interest maturities, they have increased during the quarter, and this is also after the redemption of the bond. But we have also bought some new swaps during Q4, and that's related to loan agreements and new loans, which we took in June.
Earnings capacity. This is a forward-looking slide. We are looking into how much money can be earned in the coming 12 months, based on current agreements and certain assumptions. The profit from property management increases by 2%, and this is mainly after the redemption of the bond. We had a higher vacancy during the quarter, meaning that the vacancy value increases and also the property expenses. Central administration costs decreased a little bit due to less employees, and the most important thing then, the redemption of the bond means that the interest expenses are much lower and also had an effect on interest income since we used cash. And as I mentioned on previous slide, the interest coverage rates are going forward 2.9. Very good figure.
The share price increased by 42% during the year, and this was, of course, mainly an effect of the sale of MFG in August. But we also saw an effect during the last couple of months related to lower inflation figures and hope for lower interest market rates. We have around 5,600 shareholders. 85% of those are Swedish. Three major shareholders owned more than 50%, and the long-term NAV slightly above SEK 200, a little bit less than previous year end. During the year, we saw an increase of the shareholding among the 15 largest shareholders, and the biggest increase was the shareholding of Bonnier Fastigheter Invest. Over to you, Kestutis.
Thank you very much. So, we are in a position where we actually have been growing but are ready to continue on our growth. We have a very strong cash position. We have fantastic opportunities right now, and our pipeline today is as strong as ever. And we are actively working on a number of transactions right now. We also work quite a lot or very much on sustainability. It's a part of our DNA, and we lead that work in the region overall, and we will continue. So, and in general, I mean, our tenancy is very, very stable.
We have exposure to the most promising industries going forward, and this combination of attractive yields, attractive financing possibilities, relatively low rental levels, makes properties investments very, very interesting, especially when the underlying market is in such a growth phase, and actually growth that will continue. So if you look historically on us, we have been growing our rental income quite significantly, up 19% during the year, despite the fact that we haven't made any significant investments this year. But we have a very, very promising deals coming up. At the same time, our growth has been always very, very profitable, so our profits are growing at a much faster pace than the top line.
which means that we have a very, very great effect of adding all new properties, and we have significant effect out of it. And the dividend per share has been growing even faster. So we are actually a fast growing company. Summarizing the year, we can see that actually total return in Swedish market among the listed peers we came second returning 46% to our shareholders. But before I finish, I would also like to take a little journey back to the history, actually back to 2016 when we changed the strategy from investment company towards the real estate company, and actually you can see on the green lines the developed market real estate performance globally.
If you on the blue line, you see Nasdaq Stockholm Real Estate Index performance, and the yellow line is Eastnine. Actually, the ones who invested with us during the start of our journey, EUR 100, it turned out into just above EUR 300. So we are also would like on this, thank you everyone who followed us on our journey. We are now ready for questions. Thank you.
Yes. We have some questions. Could you please elaborate a little bit on the increase in vacancy levels when comparing Q3 versus Q4?
We had one large tenant moving out in Riga, and that's mainly it, I would say.
Yeah. And, in general, I mean, that's a natural move. We have 14 properties, so every single move will have a bigger impact as long as we are on the build-up phase. But in general, we see quite a good demand actually for our properties overall. Somewhat weak in Riga, but in general, we are actually very optimistic. And, it also allows us to to improve our properties and actually bring it to the next level, and actually achieve a bit higher rents in the future.
How much was the non-recurring cost related to the repurchase of the bond in Q4? It was EUR 1 million, as I said during the presentation, and included in that figure is the cost. When you issue a bond, you have costs spread out all over the period of the bond, and since we made an early redemption, we had to take these remaining costs for the remaining period during Q4. So that's the most important thing in these EUR 1 million. Have you included indexation in your earning capacity? No, we haven't. Can you elaborate on what you believe the annual indexation will be for you in 2024? Yes, we can. Around 3.5%, and most of it from first of January.
But we have some indexations also in February, March, and September, so around 85% of these 3.5% from January. Little bit preliminary figures, but almost, it will be close to 3.5%. You write in the report that at year-end, 1,400 sq m were yet to be occupied, and 2,200 were yet to be vacated. Will this happen in Q1 or later in the year? I think we have to come back to that. I'm not sure. I think, a big part will be vacated during Q1, but, I give you the exact figures by email. Based on current market conditions and tenant discussions, what do you think of net leasing in the coming six to twelve month?
Yeah, based on the fact that the occupancy is a little bit lower now, it's easier for we have more premises to lease out. So that's good. And the demand in Vilnius is very good. Riga, a little bit less, but-
Yeah, I think in general, we see quite strong demand in the market, even though, of course, there is a certain slowdown, overall. The take-up figures in Vilnius were very, very strong. Actually, take-up figures even in Latvia were quite strong, in general. But Latvia has added so much new premises. And before, especially in the Riga market, we were struggling because clients couldn't come because there was no vacant space enough to actually for anybody to grow and new establishments to come. We see a change now. We see more, actually newcomers. We hear that the newcomers are looking into the market, and that will probably change the dynamics of the whole market.
So overall, of course, there is little bit more cautiousness in the market, because of, the slowdowns, in general, because of increased interest rates, and so on, and the economic, and the economic slowdown. But most of our industries or most of our exposure is actually not so much exposed to the local economy. It's a global economy, that we have exposure to. I would like to remind you, most of our tenants are actually multinationals, and the businesses that are in our premises are the, businesses that save a lot of cost for them. So from that perspective, we see that, even in the sort of more negative, environment globally, we probably will not, see a major shift in the kind of demand.
Another question regarding indexations. If I remember correctly, some have caps, and some lease agreements are indexed by based on EU inflation and local inflation. What was the local inflation levels in 2023? It's correct. Some lease agreements have caps, mainly large lease agreements in the Baltics. In the Baltics, we have lease agreements which are linked to EU inflation sometimes, and local inflation in others. The local inflation was around 9% on average during 2023. I guess that was all. In Poland, we index by the inflation by the end of October every year.
In EU.
Yeah, EU.
EU inflation, yeah.
Yeah. Next question: "Are sellers less stressed overall in your target acquisition markets? Has your return expectations when evaluating prospective acquisitions opportunities changed at all since inflation and expectations came down during the last quarter?
Well, I would not like to comment on the stress factor of the potential sellers. I think the market is less liquid in general. I think it was difficult for everyone to adjust to the pricing in terms of, you know, what to expect. And I think it's also been quite difficult for, on the buy side as well, to establish what are the real, you know, cap rates that you should use and what kind of expectations for valuations you expect. We should remember that interest rates have risen. They are still on the high level. I think we probably see a kind of end of, not end of, but we see a kind of a shift in the curve.
It's flattening out, and this, of course, allows us easier to navigate in this universe, and I think it's easier also for the sellers to meet with the buyers. Nevertheless, we are in a number of very, very exciting talks. Yeah, I'm looking quite optimistic.
So if you have any more questions, please post them. Okay. I think-
If there are any questions coming slightly late, we will probably respond to you directly on email.
Yeah.
So on this, thank you very much for listening to us, and look forward to meet you the next quarter.
Yeah. Thank you.
Thank you.