Welcome to Fabege's presentation for the third quarter of 2020. We start with a picture of the classic silhouette of the old town of Stockholm, our home city, also where we have all our operations. The third quarter continued to be impacted by COVID-19, maybe less than we could have expected three, four, five months ago. During the quarter, we have continued to focus on being very close to our customers, among other things, we have worked intensively with dialogues with the tenants. I will directly hand over the presentation to Åsa. Please, Åsa.
Thank you, Stefan. Please turn into page income statement. The trend during the second quarter of rent discounts to exposed sectors and net impairments of property values went into reverse during the third quarter. Although we obviously also still see some continued impact from the COVID-19 in the numbers, so much is now better. Rental income came in at SEK 2.1 billion, slightly lower than the previous year. In an identical portfolio, income increased by 5%. The divestments of Trängkåren and Pelaren alone resulted in decreased rental income during the period of SEK 144 million.
The net discounts amounted to SEK 26 million. This was offset by completed projects, higher rental levels, and index adjustments, which all contributed positively. The warm winter with very little snow meant that operating expenses were low during the first quarter. We also made a provision for increased bad debt losses. However, the amounts involved are not high.
The surplus ratio for the entire period came in at 75%. Interest expenses were slightly lower than the previous year, mainly due to lower borrowing. Earnings in associated companies amounted to minus SEK 43 million and mainly related to capital contributions to Arenabolaget during the period. In total, we reported profit from property management of SEK 1.1 billion, which was a small decrease compared to the previous year. Changes in value turned upwards again during the third quarter by SEK 399 million and just over SEK 1.9 billion for the entire period. I will come back to the valuations shortly. The deficit value in the derivatives portfolio increased during the period. Finally, tax expenses amounted to -SEK 595 million and mostly related to deferred tax. Now please turn to page COVID impact. Some of our tenants have continued to face a tough and challenging time with lost revenue during the third quarter.
Mainly that refers to hotels and restaurants in the suburb locations. We have had a close dialog during this period, and in all, we have granted discounts for Q2 and Q3 of a total of SEK 44 million. Of this figure, SEK 36 million related to the government rent support package where Fabege will get half the amount back. Thus, this means that the net decrease in rental income for the whole period amounts to SEK 26 million. Remaining rent receivables due relating to Q2 and Q3 amount to SEK 11 million. We do not see any risk for further bad debt losses in relation to these receivables. In addition, we have granted around SEK four million in discounts relating to Q4, which will reduce rental income in Q4.
Before the end of the quarter, approximately 50% of the portfolio was externally valued, with some overlap regarding the 50% that was also valued before the end of Q2. The valuers' more positive view on the market trend means that we have now once again reported positive changes in value. Yield requirements are generally slightly lower, while rental rates are in line with signed agreements. The average yield requirement in the portfolio decreased from three point nine to three point eight eight percent.
Upward revaluations in the quarter were related both to investment properties and project properties. For the year period as a whole, this meant a positive change in value of just over SEK 1.9 billion or two point five percent. Please turn to page key ratios. As you can see in the key ratios here, we are in a strong position with an equity asset ratio of 52% and a loan-to-value ratio of 35%.
Reported equity now amounts to SEK 124 per share, and the long-term net asset value, the EPRA NRV, amounts to SEK 153 per share. You can see we are well prepared. Now please turn to page financing. After the complete stop in the capital market in March, a gradual return to more normal conditions began early in the summer. After the summer, this trend has really gained momentum, and we are now essentially back at the levels we saw before the COVID-19 started. We have no upcoming refinancings of bank loans before Q4 2021. However, we have already started the process of refinancing that maturity in advance. We have also an upcoming bond maturity that we intend to refinance in the bond market. In the unlikely event that the capital market would turn sour again, we have bank facilities as a backup in place.
We are also pleased that we can continue to change our financing to green financing. Now we are up to 95% green financing with the goal of reaching 100%, hopefully by the year-end. The average interest continued to fall during the quarter, partly as a result of a larger loan portfolio, and partly due to loans being refinanced at lower margins, mainly related to commercial papers. We did not enter into any new additional fixed-rate terms during the quarter. In total, we have repurchased almost 2.6 million shares for SEK 307 million. We will keep these treasury shares until further notice. At the end of the quarter, we had a capital maturity of five point five years and an interest maturity of four point three years. We also had unutilized facilities amounting to SEK 4.3 billion. This means that after acquisitions, buybacks, and dividends, we have resources for continued investment and possible acquisitions.
We are confident about our stable financial situation. With our strong balance sheet, we can take advantage of opportunities and also manage these more challenging times. Now back to Stefan.
Thanks, Åsa. The third quarter is normally a quarter with lower activity compared with especially the second and fourth quarter of the years. At the end of the quarter, we have seen an increase in activities, especially when talking about inquiries, which has been increasing during the end of the quarter. Of course, there's still an uncertainty about the development in the market, but we have good discussions, and I feel comfortable when we're looking forward. Some renegotiations during the quarter have been deferred, or we have brought them forward, but the ones that have been completed have been at good levels. In Q3, a major renegotiation contributed to the strong increase of 30%. Next slide, please. The net lettings for Q3 came in at minus SEK 16 million.
It's also worth to notice that some of the large terminations, as you can see on this picture, the three ones amounting to SEK 34 million at the Kungsgatan on Solna Business Park and at Sveavägen. We already have very good discussions with new tenants, and I expect that the investments will also lead to potential rental uplifts. Please go to the next slide. The overall occupancy rate was at 91%, but in the investment property portfolio, it's about 93%. We are never going to be in the first place when it comes to the occupancy rate since we are working so actively with projects and refinements of our properties. The takeover of Regulatorn in Flemingsberg has also had a negative impact on the vacancy rate. Please, next slide. As you know, we have very stable customers with long leases.
We have carried out a spot check among our customers and can confirm that the majority of their business are developing even better than we could expect them to do. The presence at the offices are still low. Slide 10, please. Of course, one of the million-dollar question will be or is how COVID-19 will affect the property market in the longer term. We don't know, of course, the answer. In conversation with our customers, most of them want us to wait and see how they will use the office space in the future. That's also too early to make any hasty conclusions or decisions. What we know is during this period, the importance of a modern office is more than ever in focus.
How to use the office space, I think we will have a lot of discussion about, and how to use the office space for work and for meetings. What we probably see is that we will not travel for internal status updates meetings in Gothenburg, for example, as much as in the past. We will probably go for meetings, sales meetings, or creative meetings with important customers, for example. Digitalization has taken a huge step forward during this period, and it will continue to impact how we work. Remote working is certainly likely to increase. In order to develop a company and to build a strong corporate culture, a modern office will also be needed in the future. Our ambition is to be in the front edge of how to optimize future office and workspaces.
We will work very close with our tenants to develop the future cities and offices. Slide 11, please. In the transaction market, especially in our focused areas, we haven't seen any stressful sellers or any sellers at all almost. There also have been very few transactions. Some of our sector peers have been very active in some other segments or other areas in Sweden. We have noted a greater interest at the end of the Q3 compared to during the summer. Here you can see two of the properties we have acquired earlier this year. As you know, we acquired Påsen in Hammarby in the first quarter and Regulatorn into this summer. Slide 12. As also mentioned, the yield requirements were slightly lower once again, and the expectation for rental levels are in line with the contracted levels.
I must say I feel very comfortable with the valuation process and the level of our values. The next slide, please. Our projects are proceeding according to budget and plan. We are in the process of completing Bilia's new head office and are preparing for handover of the property to the customer in the beginning of next year. In total, we have approximately SEK 1.6 billion left to invest in our ongoing portfolio or in our ongoing projects. Slide 14, please. During 2021 and 2022, we will start three larger reconstruction projects with great potential. The total investments for these projects is expected to be about SEK 700 million. Slide 15, please. Now I would like to quickly go through a little bit the future in our areas.
In Arenastaden, as stated and as you know since before, we say we are only halfway. We will be active there for a long time to come. Many people think that all of the properties in the area are ultra-modern. As you can see, there are still some older ones with great development potential. Next slide. In Arenastaden, the Cairo block will go out for the consultation during October, November. The goal is to have an approved detailed development plan ready by year-end 2021. This will provide us with approximately 75,000-76,000 sq m of office space. Another 15,000 sq m residential units. Parts of Dalvägen will also be converted into a pedestrian street, which will further boost the entire area.
Along the rest of Dalvägen, as you can see on the next slide, we have the opportunity to develop another about 30,000 sq m of office space and 35,000, 40,000 sq m of residential space. The local developments of Dalvägen is where we will be working with during the next years. On the next slide, you can see the potential on this other side of the railway in Arenastaden, where we can develop another 65,000 sq m of offices and 14,000 sq m of residential space. Local development plan is expected to be ready during the next years, and we will also move, as you know, our own head office in the beginning of 2021 to Stigbygeln two, as you see in the lower right corner. In Haga and Haga Norra, next slide please, we just started development.
Here you can see a photo of Haga Norra from 2018, a large car park but a low and old-fashioned property. On the next slide, we have the building constructed right now and how it looks today. We are started to transform the area into an ultra-modern facility for Bilia, and as I mentioned earlier, they will move in during the first quarter of 2021. We will also now start the sales of the first 450 apartments through autumn and winter in the joint venture we have with Brabo. When Bilia has moved in, we can see on the next slide, the next step of the development of Haga Norra will start. When they have moved in the beginning of next year, we can begin to demolish their old facility.
In the future, we are planning for building 55,000 sq m of office space and to develop another 1,000 residential units. The goal is that all of Haga Norra will be developed six, seven years from now. The office part should be ready for occupation as early as 2024. On the next slide, we move to Solna Business Park. We haven't done that much since we acquired that for 13, 14 years ago. It is area that has been working, and we have focused on other areas, as you know, for example, Arenstaden. Now start the transformation of Solna Business Park. The area shall be transformed from an office district into a modern city district with also residential units, new offices, more services. As you can see on the slide 23, you can see the plans on how we, hopefully, will look in the future.
The goal is to create another 90,000 square meters of new offices, 30,000 square meters of residential units. Some of our colleagues and some other companies will also develop in the neighborhood. They, for example, Sagax, Castellum, and NCC, they are also own properties in the area. Even, I must say, we are the biggest. On the next slides, we will see some examples of new properties. In slide 24, you can see here Slipan one, for example, where we replace a garage with a modern office building. The next slide, we would develop a new office called Parkhuset. On the next slide, a lot of housing or residential building will also be developed close to facing what the Englundavägen. Flemingsberg, where we also now start take the next step. On page 27, you see our properties today.
In Q3, we took possession of Regulatorn two, the large building in the middle of the picture. As you know, and what we mentioned earlier, the comprehensive plan was approved by the Municipal Executive Board in April. On page 28, you can see the area of Flemingsbergsdalen. We don't own all of it, but a lot of it. We are now focusing on the work with the local development plans in the two areas. The photo at the top is where Opera Mårten will move to during 2024. The process is advancing together with the municipality, and it hasn't slowed down due to COVID-19. It's still a good tempo. Slide 29. The goal is to transform a gray industrial property and car park area into one of the best office locations on the south of Stockholm and a new residential area.
This is what we have been talking about before in Flemingsberg, and we are now having to take it one step further. When talking about the south of Stockholm, I'd like to mention a little bit about Hammarby Sjöstad. As you know, we said earlier, we acquired Påsen one during the first half of this year. Now we also sign an agreement about Korphoppet five, where we have obtained a land allocation permit consisting of 33,000 sq m gross floor area for offices. A land allocation permit is an option with an exclusive right to negotiate with the city regarding a specific area of land. Korphoppet five is used today as a work tunnel for the expansion of the blue Metro line, which will have two new stations in Hammarby Sjöstad.
That district will be even more closely linked to the inner city and will get new and closer connection to Nacka and Hagsätra and some other cities south of Stockholm. In our view, this makes Hammarby Sjöstad even more attractive for both offices and residentials. On next slide, and the last slide, we see the inner city. In the bottom of the picture, we see Wenner-Gren Center. To the left corner, the lower left corner, we see the Sveaplan and where we had a land allocation permit for about 9,000 square meters of offices. That was very excited to develop that area more. We already hold, except from Sveaplan, except the Wenner-Gren Center, five of the buildings close to Sveaplan is ours. This was a brief summary of what we have in our future pipeline.
I think it's important to stress or to mention that we will continue to be cautious. We will not start any projects based on pure speculation, but we are a strong balance sheet. We will also carry out, and we are looking at acquisitions in our selected areas in order to further boost the potential for the future. To summarize, of course, it has been challenging for all of us, challenging first nine months due to the COVID-19 situation. We have respect for the situation and all the challenges we see, but we also see some very interesting opportunities with this. As we said before, we have a strong balance sheet, we have a strong focus on Stockholm, and that is also where we will continue to focus.
As I said before, our ambition is to be very close to the tenants, to our customer, and to be in the front edge to develop the future office and city spaces. Over to the questions, please.
Our first question comes from Niklas Wetterling from DNB. Please go ahead.
Thank you. Firstly, I want to ask about the vacancy rate in your Stockholm inner-city assets, which has increased from five to 10% during 2020. How much of that can be explained by weaker demand, and how much can be explained by wanted vacancies due to project development?
It's a combination of the two. I think the major reason for the increase in vacancy is two specific properties. One is Glädjen on western part of the city, where we are now starting to refurbish for the first tenant, who has still not occupied the building. Another explanation is in the property Apotekaren in central Stockholm, where we're also refurbishing for Mentimeter, who we signed a contract with previous in the springtime. It's not reflecting a weaker market situation. It's more specific objects and specific tenants that have left.
Okay, thank you. I wanted to ask about your latest view on the timeline for Flemingsberg. How likely do you see that it's possible to get a completion ahead of the ones you already signed with the Opera that is completed in 2023? Is it possible to complete the development in Flemingsberg ahead of that, or will it be after?
We hope, and we're working for that about the same timing, end of 2023, 2024, to have the first buildings up. That's what we're working with. Even also first Opera Mårten, and then we work with some other more ones. Yes.
Okay. I'm sorry, but I can't hear you properly.
Okay, sorry. No, what I said was that we are working with some other buildings and some other potential tenants, and what we're going for is to have Opera Mårten 2024, and also some other buildings at almost the same time, end of 2023, 2024. That's the most where we will see the first results out there.
Just to complete, we are still in the process of the detailed planning, so it's unlikely that anything will start before we actually reach the detailed plans.
Okay, thanks. That's all of my questions.
Thank you. Just as a quick reminder, if you wish to ask an audio question, you may do so by pressing zero one on your telephone keypad. Once again, it's zero one on your telephone keypad if you wish to ask an audio question. Okay, there appears to be no further questions. I will hand it back to the speakers for any other remarks.
Okay. As I hope you know, you're always welcome to give us a call and have discussions or ask any questions. Please do so. Looking forward to talk to you soon. Thanks very much for joining us today. Bye.