Good morning. Welcome to this presentation of Eastnine's interim report for the first nine months of 2020. The report will, as usual, be presented by Eastnine CEO Kestutis Sasnauskas and me, Britt-Marie Nyman, CFO and Deputy CEO. We will be happy to answer questions at the end of the presentation. The presentation will also be recorded and available on Eastnine's website. Over to the presentation and Eastnine CEO, Kestutis.
Thank you very much. We are very pleased to report to you a very strong third quarter. If we look on the agenda page, we'll talk about the Baltics. We view it as the new Nordics. I would like to really put your attention on this. We will tell you about the new business plans and our targets, highlights, and the property portfolio. Of course, Britt-Marie will go to financials. I will round up why we think Eastnine is a very interesting start. If we look to Baltics, the new Nordics, I think a lot of people actually missing out completely that Baltic region is quite significant. We have around six million people in the Baltic region. That is bigger than Finland, that is bigger than Denmark. That is bigger than Norway.
If you look on the GDP, of course, and if you look on the transaction volumes and on the real estate volumes overall, this market is still lagging behind. It's a historic matter. It's a historic matter of occupation of the Soviet Union for the 45 years, 46 years, which ended 20 years, or almost 30 years ago now, and we are catching up very rapidly. This market, it still offers you significantly higher direct yield but also combining very low rental levels. The Baltic markets are actually growing faster, and there has been the convergence case already from the start of the independence back in 1991. During the last 16 years, Baltics were growing 3x faster the pace of the Nordic countries. As you can see, it's in the middle graph. It's not that visible on this nominal kind of graph.
PPP adjusted, that gap would be closing it much faster. If we look still at the nominal, it just gives you a perspective of how big gap there is still and how much potential there is. Baltics are developing much faster and narrowing, there is a huge convergence story going on towards the Nordic market. We also are in the market where stocks of real estate, of modern office, is still very underdeveloped but it's growing fast. You can see on the graph on the right-hand side that the stock is growing in all three capital cities. Riga is now lagging behind. If we look on the overall stock per number of inhabitants, we're still three and a half times lower compared to the Nordic peers. Still market is not saturated, there is still a lot of potential for growth.
If we turn to the next page, just to give you a picture of Vilnius. You can see the names of the highest or the biggest tenants in the market. Again, just to recap, Vilnius is 700,000 inhabitants. All Baltic capitals are actually among the top largest 10 cities in the Nordic region. It's the capital city of Lithuania, 2.8 million inhabitants in the country. 15 years ago, the Vilnius office market could actually fit in Stockholm's Hötorgsskrapan. The ones who actually can relate to the Stockholm market. If you don't know where Hötorgsskrapan is, it's around 100,000 square meters of office space centrally located. The total transaction volume in Lithuania was around EUR 100 million a year. Today, that stock is actually at close into 1 million square meters, and transaction volume exceeds EUR 500 million in the country.
We have seen an enormous shift, an enormous transformation, and we are actually in the middle of it. Even in the middle of this picture, the closest, biggest properties you can see are actually the complex S7 that belongs to us. Let's move to the next page. Our new business plan and targets. We look at the business targets as such, we have been growing very fast during the last couple of years, and we intend to continue that. We aim for more than doubling of our profit from property management by the end of 2023. We're also ambitious though to double our portfolio to reach EUR 700 million by end of 2023. We will continue on refinement of our portfolio. Of course, non-core holdings will be divested at the time when we feel it commercially optimal.
Our financial targets, return on equity should be at least 10% over time. Share dividend shall correspond 50% of profit from property management. We have lowered our loan-to-value ratio. That should not exceed 60%. We were never close to former target or former limit of 65%. We're lowering it and hence the risk. The equity asset ratio shall be at least 35%, interest coverage 2x . We also would like to speak more about sustainability. I will speak more about this during this call as well. We are committed to have 0 carbon emissions from our property management by 2030. Entire property portfolio shall be sustainability certified. We've reached quite far on that already. Renewable energy shall account for 100% of our property energy by 2030. Today, all electricity that we buy is already green. Green leases will be gradually introduced from the end of 2020.
We are starting this process and increase over time. We have very ambitious plans going forward. Now back to highlights to the quarter properties and investments. If you look on Eastnine in brief today, our property value is around EUR 360 million. Our total asset is EUR 460 million. Rental income, based on our earnings capacity, is around EUR 21 million, LTV 49%. We have 121,000 square meters of lettable area, top modern, most sustainable area. The average property value per square meter is there EUR 2,950 per square meter. This is very low given the quality of the stock and it actually provides us an enormous upside potential. Market cap 2.4 billion SEK. Our surplus ratio in our operations is 90%, among the highest in the industry. If we move to highlights January, September, we, as I mentioned already, are growing very rapidly. Rental income increasing by 52%.
Comparable portfolio growing at 6% despite the pandemic, despite all the challenges that we have in the market. Of course, growing portfolio gives us an enormous boost in profitability. By growing the portfolio, we actually, even if we grow revenue by 52%, we managed to grow our profit by 83%. If you like value changes are negative, this is history from back from first quarter, where we took a write-down in Melon. That write-down is now back in rubles.
The value is increased in rubles, but we have a negative impact of the currency in Russia, which weakened during that period. Still remains somewhat negative. Overall, I will tell you more about business in Melon, is also developing very nicely. Again, the average rent of newly signed leases still at EUR 15.9 per square meters, renegotiated agreements at EUR 15.3 per square meters versus portfolio average of EUR 14.8 per square meters.
It means that the market is actually very stable, and we see stable rental levels in the market overall. Overall, property portfolio increased by 76% since during the last 12 months. There is more growth to come as we have just added one more property at the very last day of the quarter. If we need to move to next page, Vilnius. 42,000 square meters of most modern complex S7-1. That is a home for Danske Bank and Telia. If you move to next page, our 3Bures properties, again, 42,000 square meters of very modern, LEED Platinum certified properties, that houses quite number of different tenants, international tenants. Among them, Swedbank, Visma, Unilever, Uber, Holiday Inn. Very strong international mix. Third page on Vilnius, Vertas complex around 17,000 square meters.
Again, strong tenants like Invalda INVL, asset management, Lithuanian asset manager, Citadele, European Social Fund. The Vertas-1 was also LEED Platinum certified just recently, and Vertas-2 is just newly acquired and we will start certification of that building soon. Over to Riga properties. In Riga, we have approximately 20,000 square meters of prime properties in best locations. All of them are actually concentrated around one street. Again, we try to be a create an efficient volume of properties around same area, and this is the most central area of Riga. We also have fantastic projects in Riga. If you turn to the next page, we have actually a project pipeline of around 54,000 square meters of new offices, with The Pine being the first.
Pine will be the first office constructed in actually wood as main material, and it will be the largest office ever built in wood of that size in the Nordic region overall. If we look to next page, our tenants. We have a very strong tenant base, 120 tenants with approximately 170 lease agreements. Danske Bank is our key tenant today. If you look on the list, you see all international or Nordic names. That brings a lot of stability, and that actually brings much more of the Nordic exposure in reality, but at significantly higher yield at the lower property prices, which means lower risk, in my view. The concentration is relatively high, but this is a result of the portfolio buildup, and over time, that concentration will go down. If we move to next page, a short view of one of our holdings, Property Fund.
It stands for 5% of our total assets. This holding is unleveraged in our books. It's EUR 23 million. The fund is under divestment. We plan to exit this fund before, as soon as possible. Of course, the COVID situation might affect something. Overall, the fund has performed very well. We also received a dividend from the fund in October in amount of EUR 640,000. Over to other investment. The only investment in that category is historic holding, Melon Fashion Group, a Russian fashion company. Melon has actually developed amazingly well, which also resulted in a write-up during this quarter. We have very strong bounce back after the closure of the stores. Overall, we see that during nine months, sales are actually up and not down, which is amazing. Q3 sales are up 22%. Total e-commerce sales are growing by 120%. Now stand for 35% of turnover.
EBITDA, somewhat lower during the nine months. If you look on Q3, EBITDA is up 11% and cash flow is up 22%. Comparable stores during nine months delivered 11% growth. If you look on Q3, comparable growth in the comparable stock is plus 16%. Really an amazing bounce back despite the difficult pandemic situation. Of course, this resulted in a write-back of the value, and the value today in ruble is higher than it was at the end of the year. We still have a negative effect of weaker ruble as this asset is in Russia and is accounted in rubles. Before we move into financials, I would really like to draw your attention to sustainability and the work that we do there. We launched a green financing framework in September. That framework received dark green and excellent from CICERO.
Just for reference, I think in Sweden, there are only two real estate companies that have this type of framework. It is Vasakronan and Akademiska Hus. I think Wallenstam has some, but it's not directly to real estate. This is very high rating in terms of very high valuation of our attempt to work with sustainability in the Baltic region. It is definitely the highest of any of the Baltic companies. By the end of September, we have almost 80% of our property portfolio LEED Platinum or BREEAM Excellent certified. It's also among the highest brackets within each of the category. Already, in October, we actually 87% certified. Again, in these two highest brackets. Certification of Valdemara is now initiated, and it will be soon initiated for Vertas-2. We also were ranked as number three in Allbright Foundation in terms of gender equality.
This is a ranking among more than 200 companies in Sweden listed on Stockholm Stock Exchange. We are reporting under GRESB since 2019. 2019 was our first year, now we're waiting the first official results to be released on November 16. We expected that to be already done by November 1st. Work in progress, we want implementation of green leases. As I mentioned, we're doing this starting from Q4 in Vilnius, we will continue working on that in all of our properties. We also implemented web-based supplier review system, we are now will be evaluating all of our suppliers in terms of sustainability. Last but not least, I'm very happy to announce that we are received 95% trust index, according to Great Place to Work, 100% of our employees consider Eastnine to be the great place to work.
We are very, very pleased with those results and over to financials with Marie.
Thank you, Kestutis. We are proud to release today's interim report. The real estate business developed positively, and the results from all segments were strong during the last quarter. We start with some key figures in brief. The occupancy rate, the surplus ratio, and the average rent level have increased compared with the turn of the year or the same period last year. LTV is slightly higher but still low. Only properties are leveraged, so net LTV is lower. Return on equity real estate direct is lower than last year since unrealized changes in value are lower. Return on equity total is negative due to negative unrealized changes in value of MFG during the period, but was positive during the last two quarters. Profit from property management per share almost doubled. Earnings per share was negative during the period, but positive during the last two quarters.
Long-term NAV and equity per share are almost back on the year-end level. We continue with the income statement. A larger property holding, thereby we have rising figures, of course. S7-3 and Vertas-2 is included from the end of June and end of September respectively. The rental income increased by 52% during the period and by 6% in a comparable portfolio. Higher occupancy rate and higher rental levels have affected rental income in comparable holdings. Profit from property management increases more than rental income and NOI, both during the quarter and period. This is a clear scalability effect. Fixed costs do not increase at the same rate as the income. Very positive. Negative total value change during the period related to MFG and explained, as Kestutis said, by weaker ruble. It was positive during the quarter.
No dividends received from the real estate fund or MFG during the first nine months. However, as Kestutis mentioned, the fund distributed EUR 640,000 in October, and tax consists only of deferred tax. We continue with the statement of financial position. The property value has increased during the period due to the acquisition, but also due to some positive value changes during the second quarter. Value of long-term securities holding, meaning MFG and the fund, has decreased, as we said, but increased during the last quarter. Cash decreased since we have acquired properties. Equity decreased during the first quarter but has increased during the second and third quarter. Other assets and other liabilities have increased temporarily due to the VAT and the acquisition of Vertas will be eliminated during the fourth quarter. Continue with the current earning capacity. Remember, this is not a prognosis.
It's a snapshot of the capacity, in this case, by the end of September under given circumstances. The capacity has increased during the quarter due to the acquisition of Vertas- 2 in Vilnius, but the effect is partly offset by increased vacancy during the quarter since Eastnine contracts for profit cost for vacant premises to the tenant. Continue with financing. We have new financing of EUR 11 million during the quarter in relation to the acquisition of Vertas- 2 in Vilnius. We have also prolonged a loan on Vertas- 1 on EUR 16 million from a little bit more than two years to five years. We have three banks. There are Nordic banks, SEB, Swedbank and OP, and SEB is the biggest one. LTV has been stable, slightly below 50%, and the interest rate level likewise stable around 2.3%.
No loan maturity until September next year, and 75% of the credit volume have fixed interest rate. We receive signals from the banks that interest margins are back on the same level as before the pandemic for preferred borrowers at Eastnine. The share and shareholding. The share price has decreased during the first nine months, and the share is trading with a discount. Slightly more than 70% of the shareholders are Swedish, and U.S. dominates among the foreign shareholders. NAV is almost back on the same level as of year-end 2019. Kestutis, can you continue?
Thank you very much. If we go to almost page 'Why Eastnine?' I would like just to summarize why we think we see such an interesting opportunity. We have actually created a fantastic and unique portfolio of best properties in the Baltic capitals, in Vilnius and gradually building up in Riga. These are all modern A-class properties with the highest environmental standards in prime locations in the Baltic capital cities. Those properties also generate extremely strong cash flow. We have also higher property yields compared to the Nordics, significantly higher property yields as I told already in the beginning of my presentation. It also combined with relatively low rental levels and actually Nordic financing costs. The yield gap is probably among the highest in the industry today. We also consider ourselves now being leaders in sustainability.
We have done quite a lot in this area and pursuing a very, very ambitious ESG agenda. You're welcome to join us on this. We're really pushing the boundaries today in the Baltics when it comes to all ESG issues, and driving the agenda. We see an enormous growth journey ahead of us. We plan to double our operations by 2023, there's also an underlying growth and convergence story that has been going on and that will continue in the Baltic countries towards the Nordics. Baltics is actually the new Nordics and I think you have to not miss out on that. On this, I end my presentation and we open for questions. Thank you.
Thank you very much. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There will be a brief pause while questions are being registered. First question we have is from Mr. Rikard Engberg from Erik Penser Bank. The floor is yours.
Morning, guys, great reports. My first question is, can you please comment a bit about the development in the net letting during the quarter?
Net letting is basically close to 0. It's around EUR 1,000, so it's relatively small. We had some changes, but as I mentioned, the changes that are coming, they are coming at higher level. There is basically no COVID related kind of moves. Those moves have been planned before.
Good. My next question is, can you please comment a bit about the development on the transaction market in the Baltics? Who are you facing right now? Is it domestic players or other foreign actors?
I would say that we had a pause when the first wave hit. Since then the transaction market has actually started picking up. We face both local competition and still some foreign competition, mostly from the continent from Europe. Overall, I think probably volumes will not pick up to the last year's levels during this year, but we will see a number of very exciting transactions still by the end of the year.
Okay. If we look to financial targets, can you please elaborate how you aim to reach them? Is it by transactions or project development or more of a mix?
Mainly transactions. We are a cash flow generating company and we have an ambitious acquisition target going forward. We also look at certain developments. The developments will be more like add-ons. In Riga we have a unique situation where today pipeline is bigger than the current portfolio. I think gradually that will sort of decrease in volume or in weight. We are still very much cash flow focused.
Okay. My last question is about, can you elaborate about the capital structure, when you reach targets? Will it be close to the financial target when it comes to LTV?
Our LTV will probably stay at around 50%. We do not expect significant heights. Temporarily might change, might go over that, but over time we probably see ourselves at around 50% LTV. You also have to note that 49% LTV today is only on the equity portfolio or only on property portfolio. We still have a significant holdings that will be divested transforming to cash. Net LTV is significantly lower. It's closer to 40%.
Okay. Thanks. That was all for me.
Thank you.
Thank you very much. We have Mr. Victor Krüeger from ABG. The floor is yours, Mr. Victor.
Thank you. ABG here. Would you like to comment a bit more on the development from COVID-19 in respect to your different business units or rather, different types of real estate that you're investing in?
Okay. If you look on our portfolio, 95% of the sort of square footage is leased as offices. The remaining five is around three is retail and two is other, let's say, type of operations. If you look on the office side, the impact is very, very small. The biggest impact we have seen by the COVID was restaurants and services that were actually obligatory closed during the first quarantine measures taken by the Lithuanian government.
Those operations were forced to close. During the pandemic, we were supporting them by rent reliefs, but also buying their food and delivering that food to the hospitals. From that perspective, this was the biggest impact. Overall, that impact stands for 0.8% of our annual turnover. This is really relatively negligible kind of impact. Otherwise, we have a very strong tenant base that of course, somewhat was affected, but not that significantly that it did not result into any kind of meaningful discounts during the whole period.
That's great. Thank you. In terms of geography, it seems as though Lithuania is your top market at the moment. The continuous focus is still on the three capitals in the Baltics. Is that correct?
Our ambition is to be present in all such markets, that ambition, of course, that will take time.
You said all Baltic markets?
All three Baltic markets.
Okay. Yeah.
Including Estonia. Today, we're not present in Estonia. That will take some time. Today, we started with Lithuania. We established a strong position. That position we will try to strengthen even further. We would like to still grow in Lithuania. We would like to grow in Latvia. We would like to enter Estonia. It depends a little bit on opportunities that we see. Today, still best opportunities in both Vilnius and Riga. Once those opportunities appear in Tallinn, we will take them.
Great. Thank you for taking my question.
Thank you.
Thank you very much. At this time, there's no more question. I would like to hand over the floor to our speaker. Sir, you may proceed.
Let me say thank you very much for participating. Remember that we release the year-end report on the 17th of February next year. Thanks for listening in.
Yeah. Thank you very much. Goodbye.